Educated workers our key strength
OPINION:We have many strengths as a nation, but courage is now required to confront our difficulties, writes JOHN BRUTON
SOME MAY assume we simply want a restoration of Celtic Tiger conditions, of an economy growing at 8 per cent a year, and of a herd-like pursuit of more property and of more conspicuous forms of consumption. I doubt if many people really want to go back to those disorientating conditions. They did not bring us much contentment at the time, and have not done much good for our bank balances since then.
Prosperity brought us more freedom and it allowed us to make far more choices, about what we could buy and about how and where we could live. But making choices is always hard work. Having to make too many choices at a time can actually make us really unhappy. That is something that happened to many people in the Tiger era. There is no sign, for example, that there was less family breakdown during the Tiger era than in earlier times when people had fewer choices in their lives. And a family break-up brings a lot more pain than a pay cut.
We should all regularly list our strengths and our weaknesses, and the opportunities and the threats that face us in achieving our chosen goals. Moreover, we should write out on paper what our goals are, for ourselves as individuals, and for our Republic. Making such lists may seem trite but it will help us sort out what we really want, from what we only say we want.
In setting a goal for ourselves and our Republic, I believe most people would prefer an Irish economy that was growing at a slower and steadier pace than it was in the Tiger era, an economy growing at a pace that would allow us more time as families and individuals to adjust to change, to understand what change was doing to us psychologically and spiritually, and to get our material and non-material priorities into a healthy relationship with one another.
My own sense is that a steady growth rate of about 3 to 4 per cent would satisfy that criterion. It would allow us scope to devote about 1 per cent of GDP to paying off personal and Government debts, and would leave 2 per cent to 3 per cent to improve living conditions and to put something aside to meet the extra costs we will have to meet after 2020, when the baby boomers have retired and we have a smaller workforce to support them.
A steady 3 to 4 per cent growth rate is attainable. To achieve it, we must, as a society, look realistically at all our strengths, weaknesses, threats and opportunities. We must then set clear goals and make brave decisions to reallocate resources away from all uses that do not help us achieve those goals.
It should not be about what politicians promise us, because politicians are only promising us our own money anyway. It should be about what we can afford to promise ourselves.
The biggest strength we have is our human capital, the educated young workforce we have, some of whom were born here, and some who have come here as immigrants. Their educational level is above that of previous generations and we cannot afford to lose them to emigration.
We need to keep their talent here. Are we using them as well as we should? Are we sure they are not facing a closed shop when they look for work? Are the qualifications of immigrants being recognised, or is non-recognition of qualifications forcing them to work below their potential? If we have a negative answer to any of those questions, then there is a waste of human capital.
My own sense is that the human capital in our public service is not always used to the full. This is because there is too much hierarchy and duplication, and too many grades and layers of administration. The Irish public service wins much praise from foreign companies for its flexible problem-solving approach. We should build on that.
The Irish health service is a big commitment of expensively educated talent. In addition to providing services today, it should become an innovator of saleable services and products. The application of information technology to giving medical care to the elderly while they remain in their own homes is an area in which Ireland should seek to become a world leader.
Our legal system also consumes vast human resources in ways that spend, rather than create wealth. The emphasis on adversarial oral argument consumes talent and time in ways that greater use of written procedures would not. The Irish system places heavy emphasis on legalistic process, in areas like planning, refugee decisions and unfair dismissals. But the result of all this “process” is not fairer decisions, but simply slower and more expensive decisions. The Commercial Court is an example of how to do things better. Foreign-trained lawyers find it hard to set up in practice here. Ireland’s legal system represents a poor use of human capital, in the economist’s jargon.
While the present generation is better educated than previous ones, there is room for improvement in Irish education. Not enough time is given in primary schools to foreign languages, science, and maths, and too much is given to learning the two national languages.
We should reallocate a couple of hours a week on the primary school timetable to science, maths and a foreign language.
Our universities are a huge talent bank, but they could do more. The criteria for advancement in academia may not coincide with the goal society would set for an Irish university in this time of scarce resources. They do not do enough to promote new business development. Their teaching hours are often too short, and they could accommodate far more foreign students, especially if they operated a dual academic year system which would keep them operational all year round. Our visa system for foreign students should be streamlined.
The big multinational presence in Ireland is a huge source of strength. It has helped us change the way we think about business. Individual entrepreneurship is vital too. Those who fail in business should be encouraged to start again. The appallingly heavy personal bankruptcy code in Ireland is an obstacle to entrepreneurship.
So is the lack of credit. We should systematically simplify our laws, to make it easier for banks from other countries to provide the credit direct to Irish consumers and businesses.
The fact that the State owns a share in existing Irish banks must not be a bar to encouraging more foreign competition. The Government needs prudently to scale back the guarantees it has given to the banks, so that the taxpayer is not unnecessarily exposed.
Ireland is an under-populated country with a lot of fertile land. The world population will grow by another three billion people by 2050 and all those people will have to be fed from a diminished global acreage of arable land. The way we use our fertile land in Ireland is not the best possible.
We depend too much on low margin livestock production which produces methane and contributes to climate change. We need a new growth model for Irish agriculture. We need more young people to enter farming, which is something that will now happen on many family farms, as non-farming job opportunities diminish.
These are some of our strengths and opportunities, what of the threats and weaknesses?
The biggest weakness is superficial thinking – blaming others, pursuing scapegoats, waiting for something to turn up, producing unrealistic budgets, and thinking we can pass the buck.
The biggest threat is a panic in financial markets about the Irish public finances, which if it happened, would force the country into drastic adjustments that would cause a huge additional loss in our growth potential.
To mitigate these weaknesses, we need a credible fiscal plan for the next five years, whose assumptions and contingencies should be vetted in advance by the European Commission and the International Monetary Fund, both of whom would be wise to consult the Opposition parties as well as the Government as they go through the vetting process.
John Bruton was taoiseach from 1994 to 1997 and leader of Fine Gael from 1990 until 2001. From 2004 to 2009, he was European Union ambassador to Washington