The remarkable economic success of our State in recent times owes something to what might be described as demographic good luck. More than half of the extraordinary improvement in Irish output per head in the 1990s was due to the happy chance that exactly at the moment 12 years ago when strong external demand suddenly emerged for Irish labour in Ireland, all our sources of labour supply were simultaneously approaching a peak, writes Garret FitzGerald
No European country had ever previously experienced such a remarkable coincidence of labour demand and supply.
As a result, during the eight years from 1993 to 2001 the proportion of those aged 15-64 who were at work jumped by over one-quarter, from far below to well above the EU average figure. The actual number at work jumping by 45 per cent as against an increase of only 9 per cent in the rest of the EU during that period.
Over the past 20 years economic growth in Ireland has provided so many jobs that the ratio of dependants to workers has almost halved.
The fact that every 100 workers now have to support barely 110 dependants - as against 220 two decades ago - has made an even bigger contribution to the increase in output per head than has increased labour productivity.
The fact that our economic success was hugely boosted by demographic factors - an exceptional flow into the workforce of education-leavers, women previously working at home and returning Irish emigrants - should not obscure the fact that the exceptional demand for Irish labour in Ireland that sparked off this boom was the outcome of good economic policy-making by Irish politicians over many decades.
The key policy changes started in 1956 when a Fine Gael/Labour coalition set about ending the economic stagnation induced by decades of industrial protection by reducing corporate taxation on export profits and using industrial grants as a general incentive to investment.
This was soon followed by the Lemass government's removal of deterrents to foreign industrial investment, the First and Second Economic Programmes, and active preparation for EU membership. In 1966 there was a move towards free trade with Britain and a launch of free secondary education. The IDA was built up during these years to become the world's most effective industrial promotion body.
The 1973-1977 coalition then brought us successfully through the first oil crisis, leaving to its successor an economy growing at 7 per cent a year and attracting emigrants back from Britain. Following negotiations with the European Commission, export tax relief was also converted into a 10 per cent tax on all industrial profits.
The policy successes of 1956 to 1977 were followed by a period during which irresponsible inflationary policies more than halved the growth rate, almost trebled the national debt, and left the government coming into office in 1981 facing a threatened borrowing rate of over 21 per cent of GNP, an inflation rate of more than 20 per cent and imports exceeding exports by 15 per cent.
However, by 1987 inflation had been reduced to 3 per cent, the current balance of payments was back in surplus again, and the budget proposals of the outgoing government, implemented by its Fianna Fáil successor, had reduced the borrowing rate to less than 11 per cent - which that successor administration eventually reduced to 3 per cent or less.
During these crisis years the development of the economy was slowed down, but between 1980 and 1987 the expansion of the educational system was well maintained, the number of students taking the Leaving Cert rising by 40 per cent, and the number of university students growing by 25 per cent.
Then in 1987 a process of national agreements was initiated which during the 1990s successfully traded personal tax cuts for pay moderation. The correction of fiscal policy achieved during the 1980s was broadly maintained by successive governments until the end of the following decade.
Thus, although a failure of macro-economic policy in the late 1970s created an unnecessary crisis that led to the emigration of 200,000 young people during the 1980s, the record of Irish government over the past 50 years in terms of devising policies for economic growth has been impressive and, in European terms, uniquely successful.
And because successive governments of different political complexions have consistently sustained their predecessors' economic initiatives, external confidence in our economy has been well maintained.
The disturbing thing is that these political successes in macro-economic policy-making have been accompanied by a deplorable unwillingness to face up to many issues at the micro-economic level. This has allowed many vested interests a free hand to exploit consumers and society.
Moreover, these serious defects in governance have rarely been challenged by opposition parties. All too often these parties fail to identify issues of public concern and to develop policies designed to promote the public interest. Instead they are too often content just to pursue populist issues, and when, very occasionally, the government of the day plucks up the courage to tackle some abuse, instead of supporting such reforms the opposition often attacks it.
We have seen this most recently in the issues of over-fishing and the over-use of nitrates by farmers at the expense of water quality. In adopting such stances opposition parties greatly over-estimate the votes they may win from the vested interests and ignore the extent to which these political tactics alienate the rest of the electorate.
It may seem unfair to criticise the Opposition in relation to issues where the source of the problem lies in weak Government, but, with an election looming within 12 months or so, it is in the public interest that a clear choice be offered to the electorate between parties offering genuinely different policies on issues of public concern.
If this is to happen then in the months ahead the Opposition parties will need to demonstrate in word and deed that they have the courage to tackle those issues that the present Government has chosen to fudge or avoid - instead of attacking the Government when, occasionally, it faces up to its responsibilities.