by David McWilliams (MacMillan, £20)
In the 1970s the Irish Republic was as dependent on agriculture as it was in the 1850s. For the landless, emigration continued to be the only option: people left at a rate of over 60,000 a year well into the late 20th century. The "luck of the Irish" was deeply ironic, until the Irish discovered they were Europeans.
In 1973, the republic joined the EEC. As one of the poorest countries, it enjoyed generous subsidies and grants which it put to good use attracting investment, mainly from the US. Domestic spending was kept tight by draconian personal taxation, while foreign capital was magnetised by generous tax holidays and Europe's lowest corporation tax regime. The farmers' kids worked hard at school, got MBAs and became entrepreneurs. Years of pain were rewarded by double-digit growth in the late 1990s. Then came the boom and the inevitable spending spree. It is this loosening of belts which David McWilliams claims to be the cause of the current trepidation afflicting Ireland's economy. "We've convinced ourselves that we're some kind of economic miracle," he writes, "but the reality is that we're a large overdraft… sitting on top of a giant pyramid scheme."
McWilliams is an economist, social commentator and veteran Celtic tiger sceptic. He sees in the global credit squeeze the beginning of the end for Ireland's economic honeymoon, mainly due to the impact on house prices—against which a lot of Irish debt is secured. He points out that, unlike its US and British fellow travellers in the property bubble, Ireland is trapped in the high-value European single currency, with no independent means of devaluation. Its rise has been vertiginous; its fall may be precipitous.
While he allows that immigration, mainly from Poland and the Baltic states, is "unambiguously positive" for the economy, McWilliams also worries that the sheer numbers of migrants to a close-knit island more used to exodus may create social unrest, especially in the coming downturn. It is true that the Irish, despite their image as happy-go-lucky mixers, have not had much practice at racial tolerance. And the country's population of 4m now includes more than 400,000 immigrants. This could be seen as enlightened, opportunistic or altruistic, but McWilliams sees it as none of those. Ireland's open door policy is a direct result of the Good Friday agreement. He claims it was easier to shadow British policy in order to keep the borders to Britain and Northern Ireland open. "We could have [found a compromise]…. But we couldn't be bothered," he observes. Ireland is one of Europe's least densely populated countries: it still has 1m fewer inhabitants than in the 1850s. Immigrants represent more than 10 per cent of the population, but they are concentrated in Dublin, mostly in marginal occupations such as the building trade. The irony does not escape McWilliams: they are not only needed to build speculative developments, they are now required to occupy them as tenants too.
The Generation Game scores some powerful points before belly-flopping in its conclusions. McWilliams observes that the Irish tend to confuse income with wealth—the country is asset-poor but cash-rich, and the cash itself is highly leveraged. Overvalued property may have created "accidental millionaires," but it has also led to unequal distribution of income and a high cost of living that has demoralised some of the young who cannot gain a foothold on the property ladder. But while the "I-Rich" may be more flashy than most, there is little evidence that they are bad for the economy.
McWilliams argues that the flirtation with Europe was expedient, that the Irish are "schitzo-Europeans" and that Ireland is an "Ameropean" nation dependent upon the US but with "more in common with Britain now than at any time during the last 800 years." He goes as far as to speculate that "like all relationships that run their course, a combination of boredom and a roving eye will play its part between Ireland and the EU." This flirty observation precedes the lairy proposition that Ireland might seriously consider exiting the euro or even the EU itself in an attempt to sidestep a long-term recession.
That said, there is a sense that everyone wants to be Irish nowadays, especially golf-loving Americans, whose inward investment has played a huge part in creating Ireland's export economy (Ireland makes eight out of the top ten blockbuster drugs, including Viagra and Prozac). Moreover, Europe's most successful economies are now small ones like Ireland and Denmark.
The Generation Game is an effortless airport read, profound in places, wilfully discursive and contradictory, like a good Irish argument. But it fails to convince because McWilliams cannot bring himself to condemn the funhouse economy. The Irish are recidivist larrikins, spielers and gamblers in a country with no natural resources other than the power of blarney. The current Ponzi scheme had a good run. Who would bet against the newly confident Bono boomers scheming up an even more audacious scam to replace building too many houses in Europe's least populated country and renting them to themselves? So long as they don't expect the plastic paddies to fall for any of that malarkey, good luck to them.
