First Ministers on jobs mission for St Paddy’s day…

SO Marty and Robbo are off to America after all, combining the St Paddy’s day festivities with some schmoozing for foreign investment and trying to save jobs under threat. Good luck to ’em. If they’re going to chase the rainbow of FDI, they’ll need it. Now that the FDI boom is over, at least for high-wage jobs, should there be a greater emphasis on helping out the local small and medium-sized businesses that have more commitment to Northern Ireland than the ‘grab a grant and go’ multinationals? It’s an issue that has been debated by the Assembly very recently.

  • Dave

    “I would appeal to Invest NI in particular to nurture and support in every way that it can local existing and perhaps new small and medium enterprises rather than chasing a rainbow as it where, or the crock of gold at the end of the rainbow, in terms of foreign direct investment that isn’t there at the minute.” – Alasdair McDonnell

    FDI hasn’t stopped in the UK, but it did decline by 51.5% between 2007 and 2008, and 2009 will see that contraction continue. In the Republic of Ireland (and you might want to think twice about merging your economy with ours), the contraction in FDI between 2007 and 2008 was catastrophic, with a crash of 120.1% that left us with negative FDI (6.1 billion).

    So, alas, our fabled FDI saviours have all abandoned us, leaving us to our uncompetitive wage rates; sky-high welfare rates; inevitable tax increases; bloated public sector; overvalued currency, and to repay all of that cheap credit (1.67 trillion worth of it) that was injected into the country under the expansionist monetary policy of the ECB.

    Ms Foster has it correct: it’s not an either/or choice between FDI and indigenous investment for NI – it’s both. But if she had to make a choice due to limited resources, then she should favour indigenous investment where the profits are reinvested in NI rather than repatriated by foreign corporations who will never have any loyalty to the host nation.

    The only advantage they offer an educated populace such as NI is instant jobs, but if you look more closely, you’ll find that most of the FDI investors will hire EU workers under EU regulations so the taxes of the indigenous nation often ends up being used to create employment for non-nationals which, of course, totally defeats the purpose of attracting the FDI, i.e. to create jobs for the nation.

  • Dave

    Just to reinforce the point about FDI in the UK not serving to create jobs for UK workers (which is touted as its purpose by the government when proffering UK taxpayers money to attract it), “Official figures have shown that immigrants have taken four out of every five new jobs in Britain since 1997.”

  • kensei

    Dave

    The UK economy was at roughly full employment from that time, immigrant labour likely played a big role in stopping the economy overheating and sustaining the boom.

  • Greenflag

    Dave,

    “Official figures have shown that immigrants have taken four out of every five new jobs in Britain since 1997.”

    And one in 4 ouf those jobs went to immigrants from outside the EU.

    Northern Ireland’s two rainbow chasers are facing the well known leprechaun’s lemma ( dilemma ) i.e When you get to the end of the rainbow there’s no pot of gold . Alas they are also 35 years too late . A post Sunningdale (1974) would have been more timely but for a part of the world that hovers between 1690 and 1916 for it’s ‘identity’ I guess 1974 was too close to the latter and too far from the former 🙁

    Better late than never I suppose . They might want to swing past Beijing on their return home . I read the USA is awash with newly rich Chinese investors scooping up 3 million dollar homes in California for less than half price and in Florida if you buy one condo cash they throw in another for free . The Chinese are of course only getting their rightful pound of flesh as they’re the ones propping up the US economy and dollar in particular to the tune of a trillion dollars ?

    Ah yes nothing like the pleasures of having complete sovereign control over your own currency is there ? It makes all the difference . It prevents bankers from becoming greedy and enables neo conservatives to loot the world unburdened by even minimal regulation .

  • Lidl Richard

    But the UK could not have been near full employment at the time because the wicked (Booo! Hiss!) Tories had been in power and they had to be repalced by that nice Tony Blair and the Prudential Gordon Brown who got rid of the boom and bust cycle of the economy.

  • fin

    “Official figures have shown that immigrants have taken four out of every five new jobs in Britain since 1997.”

    Because 4 out of the 5 jobs were so crap in terms of conditions and pay that the natives wouldn’t take them.

    which reflects badly on a Labour Government

  • NCM

    What the hell are these guys doing coming to the US looking for investments in NI? Don’t they read the newspapers? I mean, if Caterpillar is laying off workers in Peoria, I don’t think they’re going to be expanding in “the British province,” as the article calls it.

  • Greenflag

    NCM ,

    Don’t get too upset . The ‘dynamic duo’ are justing heading west to partake in the begging bowl sorry shamrock bowl festivities . Shure they need a dacent break . They’ve been working their butts off for the past week or two or may be three to decide on the names of the new Council Districts . They’re not machines you know 😉

  • Dave

    Kensei, that makes no sense. In case you failed to notice, the UK’s economy massively overheated in an unsustainable boom fuelled by increased consumer wealth. The supply of immigrant labour aided that overproduction instead of hindering it. And because that increased consumer wealth was borrowed and not earned, it would all have to be repaid, causing a reverse of the expansion (the recession that the UK is now in). The ‘boom’ was entirely illusionary as it was artificially engineered by monetary policy of the Bank of England that increased the supply of money within the economy and also increased the demand for it by lowering the policy rate, but the excess of imported labour created by that policy and the considerable cost to the economy of providing welfare to it and to the indigenous labour that has been displaced by it is now very much a bleak reality. As with any oversupply, the price will fall, so the indigenous labour market within the UK will now ‘enjoy’ a contraction of wage rates.

    In Ireland, the situation is far more extreme because the monetary policy of the ECB was to rapidly expand an already expanding economy that was in considerable danger of overheating. The UK has extensive indigenous industry that remains loyal to the country whereas Ireland has imported its industry, and it is highly vulnerable to mobility. The completive advantages that attracted this industry are long gone: the fiscal conservatism of Reynolds, McSharry, McGreevy; the competitive labour market; the dynamic pro-business ethos or a hardworking nation, etc. In addition, exports stagnated as soon as we gave up our currency and joined the Eurozone and they are now on our last downward spiral into economic ruin, helped along by a Euro that is grossly overvalued and that we have no means of deflating.

    Since 94% of exports from Ireland are by foreign-owned companies, we are dependent on the mercy of those who don’t have any. The patience of those folks is long gone, and they bitterly regret investing in this country. Anyway, it’s not just their patience that is gone: their money is gone too. We got no FDI from 2007 to 2008. None. Zero. Zip. The UK got 112 billion worth of FDI from 2007 to 2008. The UK and Ireland are very similar English-speaking countries but one is inside the Eurozone and the other is not. The one that is outside of the Eurozone got 112 billion worth of FDI and the muppet that gave control of its macroeconomic policy to the Eurozone got zilch. Clearly, the UK is now in a vastly better place than Ireland.

    In regard to the household debt, the CSO’s Statistical Yearbook of Ireland 2008 states that Irish households borrowed €148bn in 2007, up from €134bn in 2006. The average household debt in Ireland is about €120,000 per household. The UK, by comparison, has average household debt of just £9550. Ireland’s external debt increased by 1.162 trillion in the five years to 2008. That is where the money that sustained the ‘boom’ was coming from. It was all borrowed wealth, not earned wealth. That was massive overheating. The immigrants contributed nothing bar help fuel a pitiful fantasy. Now, of course, we have to pay their unemployment benefit when we wake up to the cold reality as they won’t get jobs anywhere else in the bankrupt EU either, and as Ireland’s welfare rates are among the highest in the world (ramped up by the government on the back of this ECB-engineered monetary boom) they’re be crazy to leave.

    Price stability? Good lord! Inflation, overheating, massive amounts of debt, and stagnant exports, etc, are what we got from the Eurozone. The Irish central bank could not raise interest rates in order to constrain the spending and the rampant borrowing. The result was an economy that was out of control, overheating to boiling point, because the government had given control of its macroeconomic policy to the ECB. Eventually the muppets will wake up and return to reality, and recognise that surrendering control of your economy to external forces that do not recognise the legitimacy of a national interest is never a smart idea. I’ll give the Irish a couple of years of abject penury (and its coming) before they realise their mistake and return to basics.

  • Greenflag

    Fin ,

    ‘Because 4 out of the 5 jobs were so crap in terms of conditions and pay that the natives wouldn’t take them. ‘

    This is true and Dave’s solution is to pay even more people less so that even fewer ‘natives’ will take these poor paying jobs . This is what happens in a public sector dominant economy when the private sector cannot afford to pay their workers the same rate of pay with similar conditions to the public sector . The reasons for this are long and complex . We in the Republic may /are /could be facing into an ever greater disparity between both sectors .

    An analogy with the human body facing starvation and eventual death is appropriate . When all the food is gone and the consumption of human fat becomes the only way to survival then that is what happens . Eventually once all the fat is gone then the vital organs are attacked with of course fatal results for the body physical and the body politic . 🙁

    Anyway the Dow Jones is now heading down to 6800 down over 50% since just over a year ago and the wheels are coming off . Is it a free market or a free fall ?

  • realist

    Why bother going to USA with a begging bowl – If I were a yank I would like to think that if Caterpilar were to be laying off people they would do as much as they can to preserve American jobs – surely NI comes a very long way down the list.

    This is just a jolly outing costing vast sums more than it will ever generate.

    By the way Marty and Robbo – I am also going to be in New york over St Paddy’s day – I hope very much that you will be flying in the same class as me there and back – although I doubt it!

  • The Raven

    “But if she had to make a choice due to limited resources, then she should favour indigenous investment where the profits are reinvested in NI rather than repatriated by foreign corporations who will never have any loyalty to the host nation.”

    Sound of loud applause from the North Coast to that.

  • NCM

    Maybe these fellows ought to just ask Obama to throw in some US taxpayer bailouts for NI… no one would even notice and it would be a better way to spend US public funds than the idiotic bailouts of AIG, Citigroup, BoA, et al.

  • No need to fly to US. With better investment they can start in home town itself. But i think due to limited resources they are fyling to US. Any way ALL THE VERY BEST…