FANTASY IRELAND
Aug 18th, 2010 by Conor McCabe
Do you remember holiday homes? How every single unsold house in Ireland was a holiday home so there was nothing to worry about? That there was no bubble? In fact, we should keep on buying homes at inflated prices because there were no inflated prices? All those reports in the newspapers, all that property porn on RTE? We were told not to worry, that the purchases were real?
The figures for Irish service exports are this year’s holiday homes, as they are so obviously a fiction, yet this fiction is being used to justify the deflation of the economy and related cuts in services.
I need to break these figures down more, but in 2008, according to the World Trade Organisation, Ireland ‘exported’ about $22.7 billion in financial and insurance services. The financial and insurance (F&I) sector in Ireland that year employed around 59,940 people.
The same year, the Netherlands, with F&I sector employment of c.165,000, exported $6.3 billion.
Spain, with F&I employment of c.312,000, exported $7.3 billion.
Italy, with F&I employment of 393,764, exported $6.1 billion.
Ireland, with F&I employment of c.59,940, exported $22.7 billion.
The worker:export values are worth comparing.
Spain = $23,398
Italy = $15,492
Netherlands = $38,182
Ireland = $367,033
Either the Irish are 10 times more efficient than the Dutch, 23 times more efficient than the Italians, and 15 times more efficient than the Spanish, or the export figures for Ireland - rather like the property boom figures - are a complete work of fiction.
But let’s say the figures are not lies - that they represent actual business transactions conducted by Irish-domiciled firms.
In that case, the jobs solution being put forward by Patrick Honohan and the government is to encourage a service industry which can produce 16 per cent of Ireland’s exports with less than 3 per cent of the workforce, the profits of which are repatriated.
Enjoy.
We have known now for some time that the Irish economy is merely a transit point for capital accumulation. Or am I missing the point?
That’s true Eoin, but I don’t think most people know that. Last week the Governor of the Central Bank said that there’s nothing to worry about with regard to Ireland because exports are increasing. Similar points are made by Brian Cowen and Brian Lenihan all the time. These are policy makers, and they are using these export figures to justify the closure of hospital wards, cuts in social services, cuts in the public sector, the granting of scrappage scheme funds to their friends in the car dealership sector, the continuing bail-out of Anglo Irish, etc, etc, etc.
None of these ‘export’ fantasies are being challenged by the media or economic commentators, or even by Labour and the trade unions. None of them. In fact, Labour and the trade unions will often use the same mantra, that exports will save us - without making it clear that the practice of transfer-pricing which is boosting these figures is not an export. It’s a scam, one that is destroying our lives, and one that even the Left is seemingly reluctant to challenge.
Yes, that’s clearer to me Conor. It may be part of the same discussion (must…not….use…discourse) which informs the week-long Morning D’Ireland feature series on emigration options and experiences. I guess it is also about telling one story about recovery while hospitals in the west and south are eviscerated.
“(must…not….use…discourse)”
For me, the key to all of this is not exports - which we need to produce - but the relationship those exports have with the rest of the economy. with little sourcing of Irish materials (or knowledge), it’s only that section of Irish business which interacts with foreign exporting companies - banks, commercial property developers, construction industry (and road haulage as CMK pointed out last week) - which really benefits from these exports. I mean, we don’t even get taxation from it. The effective tax rate on foreign exports is around 2.4 per cent once all the benefits and allowances are taken into consideration. The fact that there are very few jobs in service exports doesn’t matter as jobs aren’t how they get paid. It’s all about contracts and commission. It goes back to the structural makeup of Irish capitalism, which is dominated by business intermediaries (a comprador class) between the State and foreign investment.
[…] on from my own little dabbling on this story, last week I put up some numbers relating to financial service exports in Ireland, […]