Flawed Ireland needs to emulate Nordics, says former ESB engineering technician Begg
08 March 2016
“I want to advocate a new development model for Ireland,” TASC director David Begg, who is running for the Seanad as a candidate on the NUI panel, has said. “Since independence, 2008 was the fourth time we looked into the economic abyss.
“We need to look at the system; Norwegian Lars Mjoset has considered the question why some other small, open European economies were faring well compared with Ireland.
“Essentially Mjoset concluded that there were deep structural flaws in Ireland. I wish to be an advocate for a new model and I’m especially looking at the likes of Finland, Denmark and the Netherlands.
“I would use the Seanad as a place to argue for these things, to adopt a new approach. One of the things I will be arguing for is the establishment of a commission for infrastructure.
“The Seanad is apt because it is a forum that sets out a much more considered view. We really need to take a long hard look at ourselves. Are others managing things in a better way? We don’t have to invent the wheel, just avoid boom and bust and look at how other countries manage their affairs.”
Ireland must reform its economy to prepare all citizens to achieve the best they can in labour markets that are becoming more precarious and more polarised between well-paid, high-end jobs and low-paid private services, according to Begg.
The think tank director and former ESB engineering technician also said that Ireland has again reached the kind of critical juncture that inspired ‘Investment in Education’, the groundbreaking 1962 report that paved the way for free secondary education, free school transport and the establishment of regional technical colleges.
Polarised between well-paid high-end jobs and low-paid private services
“I believe that we have again reached the kind of critical juncture that inspired ‘Investment in Education’,” he said. “At one and the same time we must create the kind of sustainable economy that avoids boom and bust and prepare all the citizens to achieve the best they can in labour markets that are becoming more precarious and more polarised between well-paid high-end jobs and low-paid private services.
“This is not an impossible task but we have to change how we think about taxation and public investment. The small open economies of the Nordic region offer us an example of how it can be done. It is said of them that they embody three political ideals; the legacy of liberated peasants, the spirit of capitalism and the utopia of socialism. Equality, efficiency and solidarity, the essential principles of these three political ideals, merged into a consensus that enriched each other.”
And he added that “we have developed a bit of a preoccupation with having to have a university education here, whereas some people have a vocational education. We should take a look at the German education system, which puts the two systems on a par – and look at how strong a manufacturing exporter they are”.
He said: “It is important to stress that a university education is not the only route to a fulfilling career. Germany is the strongest economy in Europe and has traditionally favoured a dual system of education which gives parity of esteem to vocational education and apprenticeships alongside university degrees. Actually this system is practised in several European countries including Austria, Switzerland, Denmark, the Netherlands and France.
Critical shortage of engineering technicians
“Recently, Sir John Armitt, delivering the annual president’s lecture for Engineers Ireland, remarked that there was now a critical shortage of engineering technicians in Britain as distinct from graduate engineers. He said that it was a strategic error that the engineering profession had not accorded a higher status to engineering technicians in the past. Generations of Irish parents may have been short-sighted in not valuing a good technical education as a viable alternative to a university course.
“The reality is that many young people do not really know what suits their talents best at 18 or 19 years of age. That, I suspect, is why there is such a high drop-out rate in the first year of college. It may be an overstatement to say that education is wasted on the young but the mature student, who has experienced the world of work, will have a better sense of its importance.”
And he added that Ireland’s long-term sustainability lies in a move away from the current liberal market model towards the social market economy model.
Ireland should look to the small open economies of the Nordic region, the most economically efficient and socially cohesive region in the world today, Begg said. “Ireland has displayed a susceptibility to boom and bust economic cycles, with the 2008 crisis the fourth time since independence that we have looked into the abyss of economic and social desolation.
“I believe that there is a paradox at the heart of the independence project. Britain has so influenced our polity that we have intellectually shied away from considering alternatives to the liberal market economy model. To an extent we can see this reflected in the public discourse about ‘Brexit’.”
“As the country recovers strongly from recession and enjoys a growth and demographic advantage over the rest of Europe, Ireland it is in a good position to act now to shape its future.
Begg made a strong evidence-based case for Ireland to move towards a more sustainable development model – and to look for inspiration from the small open economies of northern Europe, such as Denmark, Finland and the Netherlands. “These countries still tend to top the world rankings in terms of economic efficiency, competitiveness and productivity. But they also come first in terms of social cohesion and equality. Finland, for example, has the best education system in the world.
“For sure they have had, and still have problems. They have had to duck and weave to respond to markets. They have been hit by the 2008 financial crisis but were not overwhelmed by it in the way that Ireland was.”
According to Begg, social democracy has been an influence on the polity of the Nordic countries in a way that it never was in Ireland. Nationalism and the Civil War in the 1920s ensured that all major issues in Ireland have been conceptualised in terms of independence rather than class interest.
Real danger that we will fail to learn from the near death experience of last eight years
“As the country emerges from a prolonged recession and once again experiences strong economic growth there is a real danger that we will fail to learn from the near death experience of the last eight years. Moreover, we are left with significant infrastructural deficits, and a possible long-term social scarring effect, which will require investment into the future. Frank Cluskey, a former Labour Party leader, once remarked that ‘you don’t go through Hell for the practice’.
“But we are not that good at learning from experience in Ireland. The 2008 crisis was the fourth time since independence that we have looked into the abyss of economic and social desolation. It happened before in the 1930s, the 1950s and the 1980s.
“As a small open economy we are very exposed to volatility in international markets and it would be unwise to assume that the current favourable conditions for economic growth will continue indefinitely. Moreover, even if conditions remain favourable there are other challenges to face including, inter alia, the following:
- The possibility of Britain leaving the EU;
- The need to transition to a low carbon economy;
- A twin demographic pressure which will at once increase the demand for education provision and at the same time increase health costs associated with treating chronic illness in an ageing cohort of the population;
- A totally inadequate pensions system which will see many people receive much less income in retirement than they expect;
- A long-term lack of capital investment which leaves us with a weak infrastructure which in some respects is worse than in eastern Europe;
- A severe housing crisis;
- An inadequate childcare system;
- An industrial policy which is over-dependent on tax concessions to attract multinationals.
“Some of these deficits interact in a way that compounds the overall problem. Take, for example, healthcare. People are living longer but often with chronic medical conditions.
“The increase in longevity, while good in itself, means that pensions become more expensive to fund so that people take a bigger hit in their income when they retire. That may mean that they cannot afford to continue paying health insurance – at a time in their lives when they need it most.
“The result is that they may have to fall back on the public system thereby increasing demand on the exchequer. In my opinion the debate about the so called ‘fiscal space’ in the election campaign has had the wrong orientation. The demands on public investment that I have outlined over the coming years means that there is no fiscal space.
“We need to invest every spare penny in improving infrastructure and repairing public services. In fact, I would go further and suggest that we need to bring public spending at least into line with the EU average. It is about 10 per cent adrift of that now. If ever there was a time to invest in infrastructure, now is the time to do it.”