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Saturday, November 03, 2007

Remarkable Decades of Change in World but Irish System of Governance Immutable to Reform

On June 12, 1987, US President Ronald Reagan delivered a historic speech by the then Berlin Wall, with the Brandenburg Gate in the background, at the other side of the Wall in East Berlin: Behind me stands a wall that encircles the free sectors of this city, part of a vast system of barriers that divides the entire continent of Europe. From the Baltic, south, those barriers cut across Germany in a gash of barbed wire, concrete, dog runs, and guard towers. Farther south, there may be no visible, no obvious wall. But there remain armed guards and checkpoints all the same--still a restriction on the right to travel, still an instrument to impose upon ordinary men and women the will of a totalitarian state. Yet it is here in Berlin where the wall emerges most clearly; here, cutting across your city, where the news photo and the television screen have imprinted this brutal division of a continent upon the mind of the world. Standing before the Brandenburg Gate, every man is a German, separated from his fellow men. Every man is a Berliner, forced to look upon a scar....General Secretary Gorbachev, if you seek peace, if you seek prosperity for the Soviet Union and Eastern Europe, if you seek liberalization: Come here to this gate! Mr. Gorbachev, open this gate! Mr. Gorbachev, tear down this wall!....As I looked out a moment ago from the Reichstag, that embodiment of German unity, I noticed words crudely spray-painted upon the wall, perhaps by a young Berliner: "This wall will fall. Beliefs become reality." Yes, across Europe, this wall will fall. For it cannot withstand faith; it cannot withstand truth. The wall cannot withstand freedom.

Just over two years after President Reagan's address in Berlin, the Wall had fallen in a decade when Reagan himself and British Prime Minister Margaret Thatcher, were rare politicians, in challenging conventional economic orthodoxy.

The end of the Iron Curtain in Europe and the adoption by the Chinese Communist Party of a capitalist model, gave a significant acceleration to globalisation together with low inflation and interest rates as prices of Asian manufactured goods fell over a sustained period and Eastern Europe provided the economies of Western Europe with a new source of labour.

People easily take for granted the remarkable decades of change for the better in the world in recent decades.

Just consider that on Jan 1, 1974, Spain, Portugal and Greece were run by dictatorships; Eastern Europe was under the jackboot of a Soviet tyranny as was Russia and Central Asia; Most of Latin America was run by dictatorships; a small number of Asian countries were making remarkable economic advances but most of the region's population was living in extreme poverty; life for most people in the Arabian peninsula hadn't changed in more than a thousand years and most of Africa remained in a cycle of despair including the majority of the population of the advanced economy of the region - South Africa.

In Ireland, we've had tremendous success through becoming an important base for US multinationals and having our farming industry hugely subsidised by other European countries but we should be cautious about self-congratulation in claiming some uniqueness when our current level of prosperity has been so tied to the acceleration of trade and globalisation. There have been huge advances elsewhere.

As we look ahead, globalisation will bring new challenges. The benefit of Chinese goods price deflation will disappear; food prices and other commodities are surging. The era of very low interest rates is behind us, bar a severe recession.

In Ireland, do we need some bad economic times before we confront some serious questions?

How can a country that has taken so long to even introduce a credible broadband system, become a "world-class knowledge economy" in 5 years? Why does it take 29 years to complete the building of a motorway between the two principal cites - Dublin and Cork -, on a small island, when countries like Malaysia have already built a comprehensive infrastructural network in a much shorter time?

In 1955, the Irish Minister for Finance Gerard Sweetnam appointed the 39-year old Thomas Kenneth Whitaker as Secretary of the Department of Finance and in the 1956 budget Sweetnam exempted profits derived from exports, from taxation. The imprint of Whitkaker was clearly to be seen. In 1958, Whitaker's Economic Development white paper became the basis for the First Programme for Economic Expansion.

That was the genesis of the Celtic Tiger and today, almost a half century later, there is not one senior civil servant who is known to the Irish public.

Ireland today is in need of another Whitaker who can get the attention of the school teachers, farmers and small-town solicitors that the our old Ireland system of cronyism and gombeenism produces.

I'm an optimist, which by definition every entrepreneur is but it is realistic to ask, how low do our economic fortunes have to fall before attention is given to reforming a paralysed political system of 1920's/30's vintage with its limited accountability and responsibility?

Where is the Outrage? Gombeenism thrives at home while in Paris, OECD staff work on proposals for Irish public service reform


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