‘Sinn Féin finance spokesman Pearse Doherty urged people to take it with “a ton of salt” and said the number was a “nonsense”. “It is irrelevant. It does not reflect any sort of reality’.
When the Irish government stated in 2016 that Ireland’s economy had a 26% growth spurt economists in the south stated that was ‘farcical’, claiming that while growth was strong, the government figure was radically overinflated.
That inflation was driven by the activities of Ireland’s foreign investors and aircraft-leasing sectors. Direct foreign investment has been a huge driver of jobs and international opportunity, most corporate wealth quietly slips out of the country.
The truth is that Ireland is nowhere near as wealthy as some of the most ardent advocates for a united Ireland like to suggest or rather more often merely intimate.
Indeed, most propaganda in that regard tends to hover around the undoubted political failures of Unionism to advocate for less sectarian version of Northern Ireland, and a long wished for, but yet to materialise, disastrous Brexit.
In a recent QPOL piece, Graham Gudgeon might have taken his queue from the Sinn Féin man when he noted that the Republic in…
…its official national accounts statistics paint[s] a picture of rapid growth and the claim is regularly made, even on the BBC, that Ireland is now one of the world’s richest economies. Would that his were true, but it is not.
Ireland’s economic statistics are close to meaningless. In the words on one US economist, they tell us more about the tax affairs of American corporations than they do about the Irish economy.
To Nobel prize-winning economist Paul Krugman, it is leprechaun economics. No version of Irish GDP statistics give a meaningful account of Irish living standards as former Irish central Bank chairman, Patrick Honahan, has recently written.
All of this statistical nonsense is caused by the Republic’s status as one of the world’s largest tax havens. Huge proportions of the profits of global corporations slosh through Irish national accounts, although little of it ends up in the pockets of either Irish households or government.
In 1999 David B Rottman wrote, “the obstacles to comparing the two Irelands are formidable [since] there is no established tradition of undertaking comparative research on which to build”, but it hasn’t stopped people jumping into the void.
His paper was the first in one of the few comprehensive efforts to map the island in terms of economy, and complex and diverging social science of two parts of an island whose people had been living separate political lives for 80 years.
His caution in approaching the subject matter was not shared in a recent ESRI paper which claimed that the cost of living in the Republic was lower than Northern Ireland.
…household disposable income, which we consider a reliable measure of comparative income, was $4,600 higher in RoI compared to NI in 2017, equating to a gap of approximately 12% after accounting for differences in prices across between both areas.
As Newton Emerson noted wryly in his Saturday column in the Irish News this was because of a peculiarity in the ESRI’s own methodology:
Almost half of adults under 30 in the Republic live with their parents – one of the highest figures in Europe – because housing is too expensive. However, this showed up as reduced costs in the report, because it averaged them across all adults in a household. Only the science of economics can make housing look more affordable due to people who cannot afford it.
Here’s Gudgeon again:
If we use a well-accepted measure of living standards, spending by households and by government on behalf of households, then the data in the Republic is much more accurate.
Fitzgerald and Morgenroth used this measure to calculate that living standards were 20% higher in Northern Ireland in 2012 than in the Republic. When they updated this using data for 2016 their figure was 4%.
They did not however allow for lower prices in Northern Ireland, especially house prices, which mean that households in Northern Ireland get more goods and services for any given amount of spending. When this correction is made, living standards again emerge as closer to 20% higher in Northern Ireland.
The reality sits far from the comfortable nostrums of Dublin 4. The simplest math is that the average house price is £141k in NI but £269k in the Republic. The addition of just 2 million folks from the north won’t depress overall prices.
In any future referendum on Irish unity, the depth of the south’s housing crisis is likely to come under the same sharp scrutiny it has in this recent Oireachtas committee:
Fianna Fáil Senator Mary Fitzpatrick said 53 per cent of renters were supported by the State, either as local authority tenants or being in receipt of such supports as the housing assistance payment or rent supplement.
Many of the 47 per cent renting privately struggled and were “locked out” of buying a home, she added.
“It was really concerning then to read the ESRI identify as potentially inflationary an intervention to help these people access affordable housing.” She said neither mechanisms to increase supply, nor measures to ensure the shared-equity scheme was available only to people who couldn’t get a mortgage from the banks, had been taken into account in this regard.
Those telling us that Northern Ireland (in spite of its endorsement in two independent referendums) doesn’t work, must face up to questions about how republic can improve matters as it struggles with a debt of up to 110% of its own GDP?
A recent Central Bank report challenges the endlessly prosperous state story in other ways too. “The highest housing costs in 2019 compared to the EU average were found in Ireland (77% above the EU average).”It also forecasts 25% jobless.
It also points out that nearly a quarter of the workforce are earning below two-thirds of Ireland median income. The Minimum in Ireland compared to the UK is higher but the share of workers on low pay is 17.3% lower in the UK.
In a poor Covid recovery trajectory that could mean that the Republic’s private sector is decimated on a scale similar to the Great Depression. And that’s before we factor in any dilatory effect of Brexit has on East West trade.
It also rates the value of the UK’s presence in Northern Ireland at zero. As we’ve seen from the UK’s speedier (by nearly three months if current estimates are to be believed) roll out of vaccines, it comes with hard to predict advantages.
Now, the foregoing may sound like I’m giving the republic a hard time. I’m old enough to remember the rural Donegal of the early to mid 60s. no one should gainsay the progress the south has made from independence.
There is much to take pride in in the Republic’s long haul to genuine independence and sovereignty (which is poorly understood by nationalists north of the border). But the boosterism around an imagined proximity of unification depends on an inflated view of where the Republic is just now.
As noted in the cartoon accompanying Eoghan Harris’ column this week, Eamon DeValera got what was needed as far back as 1933. Focus on making Ireland the best, the warmest and most welcoming place it can be for all its would be citizens, not just the ‘Irish’ ones.
It’s a test Irish Republicanism has been failing ever since it first saw light of battle in 1798, when southern co-revolutionaries fell in revenge on the Big Houses of the ascendency, and brought on the Act Of Union setting in train a N/S schism that has yet to be mended anywhere but on rugby, cricket and hockey fields of the island.
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Mick is founding editor of Slugger. He has written papers on the impacts of the Internet on politics and the wider media and is a regular guest and speaking events across Ireland, the UK and Europe. Twitter: @MickFealty