The current editor of The Irish Times terms his daily publication "a newspaper of reference," in place of the label "newspaper of record," which has been made redundant in the Internet age. However, while the appetite to take on the forces of social conservatism remains, the newspaper has been timid in these turbulent economic times when spin and permanent publicity campaigns at government level, mask the bitter truth that beyond the financial crisis fire-fighting, there are currently no credible economic policies in place to put the Irish economy on a sustainable basis.
The newspaper was first published on March 29, 1859 on a thrice weekly basis. Daily publication began on June 8, 1859.|
A recovery will not bring growth that will take off "like a rocket," which Michael Noonan, finance minister, waxed eloquent about in Paris in March 2012. Despite net emigration which is expected to exceed 30,000 again this year, unemployment will remain high for years to come.
Consider the facts: In December 2000, the total Irish workforce (including the unemployed) was at 1.78m; in December 2012 it was at 2.14m. In 2000, 69,000 people were unemployed and the official jobless level was 295,000 in 2012.
The International Monetary Fund said in a report last month that the broad rate of Irish unemployment was 23%:
"Since the recession started, employment has fallen by 15½%, pushing the unemployment rate close to 15%, the share of workers unemployed for over 1 year to 60%, and the share of very long-term unemployed (over 2 years) to 30%. If involuntary part time workers and workers only marginally attached to the labour force—two groups that registered significant increases - - are also accounted for, the unemployment and underemployment rate in Ireland stands at a staggering 23%."
Exports are important in a small economy but even though the headline value has almost doubled since 2000, Irish full-time employment in the internationally tradeable goods and services sectors (foreign and indigenous) at the end of 2012 was at about 292,000 compared with 315,000 in 2000. The drop of 23,000 in the 13-year period coincided with a growth of the workforce (including the unemployed) by 364,000.
Ponder this: Recent data shows that the typical Irish farmer is overwhelmingly dependent on the EU farm welfare program, known as the Common Agricultural Policy -- now in its 41st year for Ireland; there are more Irish farmers over 80 years of age than under 35.
In the indigenous sector, Elan, the most valuable Irish public company in 2001, once the world's 20th-largest drug company with worldwide employment of over 1,700 in 2006, is in 2013 a shrunken shell operation.
...and the much touted exports miracle of recent years is mainly an illusion with surges in services 'exports' related to the tax-related diversion of revenues from other countries, by mainly US multinationals, unrelated to economic activity in Ireland.
Wonder: What sector could become a jobs engine to lead the creation of 200,000 net jobs?
The Irish Times
Given the current attention to tax shelters, it may seem ironic that the corporate status of The Irish Times company as a charitable trust dates from 1974, when the then 5 shareholders cashed in their stakes prior to the introduction of a capital gains tax in Ireland, through the conversion to a trust that would protect the newspaper from commercial pressures.
Kevin O'Sullivan, the current editor, has set the bar high on the newspaper's position in Irish society
"The Irish Times is the most important national forum for thinkers and doers in Irish society. We offer a platform for critical, constructive and divergent comment in the different spheres including business, politics and public affairs, culture, the environment, health and education. We have moved in recent years from being a newspaper of record to a newspaper of reference.
The Irish Times occupies a special position as a pacemaker for change in the society which it serves."
O'Sullivan took over as editor in 2011 from Geraldine Kennedy who had held the position since 2002.
RTÉ, the public broadcaster, reported in 2011 that Kennedy had denied that her paper compromised its standards with its property coverage during the boom.
She said at a public forum that The Irish Times had been the first and only newspaper to publish in 2007 the views of Morgan Kelly, a professor of economics at University College Dublin.
Kelly began a series of searing indictments of monumental misgovernance, policy and regulatory failures during the years when many thought the free lunch had been invented.
Kennedy said his articles had "astounded" the political and business establishment by saying the property boom was over and how far the market was to fall. "And we were eaten alive for it," she said.
However, the penny had dropped only when the firestorm was out of control.
Kennedy had assumed the editorship when pennies from heaven were needed at the publisher.
The Irish Times had found itself in 2011 reporting on a serious financial crisis -- its own -- despite a jump in circulation by almost a third in the late 1990s.
Peter Murtagh who had experience with The Sunday Times in London and later at The Guardian where he was deputy foreign editor and finally news editor, was opinion editor at The Irish Times when the Celtic Tiger crashed. He was prepared to give a platform to dissenters from the status quo.
In late 2011, Kevin O'Sullivan gave the opinion slot to Chris Dooley who had worked for him as deputy news editor and Murtagh took responsibility for foreign affairs.
Dooley, who had also been southeast correspondent and industry and employment correspondent, is much more likely than Murtagh in the economics/ business area to give a platform to people who "have a status," to borrow a revealing term that David Begg, trade union leader, Central Bank director (1995-2010) and Irish Times Trust governor, used in 2010 when trying to counter on RTÉ Radio an inconvenient truth from myself.
It may seem incendiary to Dooley, for me to claim that there was no real growth in the economy in 2012 despite a reported GDP (gross domestic product) rise of 0.9%. In contrast of course, the members of the powerless Irish Fiscal Advisory Council aren't going to rattle cages with bitter truths but that is what is needed.
Then this week, John FitzGerald of the ESRI revealed large distortions of data caused by the growth of foreign headquarters in Ireland.
Dan O'Brien, economics editor, does a good job in revealing home truths. However, at the newspaper level, the question of what sector could become a jobs engine, is also revealing.
This year 2013 was the one when Ireland was to be recognised as a "world class knowledge economy" and the failure has given way to a new vision: "Ireland in 2020 is the best country in the world for scientific research excellence and impact."
We would indeed be very wealthy if we could monetise bullshit!
The multi-billion aspiration that was set in 2006 is very important with a serious jobs crisis in need of solutions.
However, the delusional flagship enterprise policy that commercialisation of university research could become a jobs engine, illustrates a dysfunctional system where the fact that patent applications at the Irish Patents Office had dipped to a 30-year low in 2011, evoked no official response. Neither was the Oireachtas interested in the cost of €23bn inpublic science spending in a decade or the black hole at the centre of enterprise policy when high unemployment will be both a drag on the economy and a human tragedy, for years to come.
Last January, I sent a summary of related research findings to John Mc Guinness TD, chairman of the Public Accounts Committee, and to Damien English TD, chairman of the Jobs, Enterprise and Innovation Committee. Neither responded.
The Irish Times also did not report on the failure of a key public policy.
Last year, Colm McCarthy, the economist, had asked me to present a paper at an economics conference in Galway on the so-called knowledge economy.
The top exporters do not do patentable research in Ireland; less than one-third of IDA Ireland assisted foreign companies do research in Ireland and any university spinout with potential is likely to be acquired by a bigger foreign firm.
Following the economics conference in October 2012, I sent materials to Dick Ahlstrom, science editor, John McManus, business editor and Chris Dooley, opinion editor.
None of them were interested.
In contrast, Peter Murtagh had approved op-ed pieces dissenting from the delusional science policy and in March 2010, he published an article from me that coincided with the publication of the Innovation Taskforce report, which Brian Cowen, then taoiseach, saw as underpiining his dream of Ireland as a European Silicon Valley.
The 28-strong group that passed the "status" test, produced a work of science fiction, [pdf] to support a mythical Irish high tech Shangri-La.
The group said that up to 235,000 net new high tech jobs could be created in a decade in Ireland to vault over Silicon Valley in Northern California as the world's leading cluster. This could all have been achieved without a local market!
With a third of the target time past, what is the result of this nonsense?
The putative visionaries like their Irish Times contemporaries likely remain myopic to the shifting sands under their comfortable seats.
In times of limited public funds, research gets priority and there are well-heeled vested interests to satisfy. Meanwhile, at a time of high youth unemployment, the apprenticeship system is a shambles.
Paper on knowledge economy etc:
Irish Economy: Innovation, a failed enterprise policy and inconvenient facts for 2013
Central Bank economists said in a paper published last year that almost two-thirds of private sector workers are employed in indigenous non-exporting firms and despite the focus on exports, "the vast majority of indigenous employment (which makes up 78% of private sector employment) is still accounted for by traditional sectors such as Hotels & Restaurants, Wholesale & Retail, Business & Administrative services and Transport & Storage."
Headline services exports in 2012 overtook the value of goods exports for the first time with the category 'Computer services' jumping by 15% and two 'Business services' categories rising in total by 13%.
Last February, Minister for Finance Michael Noonan attributed the jump in services exports to “the significant price and cost adjustments that have taken place in recent years.”
This claim is a fairytale as the facts suggest otherwise.
In the past decade, Google and Facebook have joined Microsoft in diverting significant global end-user revenues to Ireland and Apple's Irish services operation which is responsible for the world outside the Americas and China has been part of a rapidly growing company.
In 2003 when Apple Inc reported an operating loss of $1m, Apple Cork reported an operating profit of $224m.
After royalty and other business charges, very little profit is usually left in Ireland. In times of low or no growth, timing of charges can impact the economy’s growth data.
Google's global web revenues grew by 29% and 21% in 2011 and 2012 respectively and in 2011, 45 percent of the total was booked in Ireland. Google Ireland reported revenues of €12.4 billion in2011; payroll costs were €218 million; corporate tax in Ireland on trading activities was €3 million; total tax charged at €22.2 million including foreign withholding tax. When the Google Ireland's 2012 accounts will be published this year, they will show revenues of at least €15 billion or 41% of Irish computer services in 2012.
Google, Microsoft, Apple, and commercial aviation leasing, employing about 6,500, account for 52% of Irish services exports.
Up to half of the services exports total of €90 billion in 2012 may be effectively fake i.e. unrelated to Irish economic activity.
As regards goods exports, in the current Irish Times Top 1,000 Companies rankings, Dell Ireland is ranked as the country's biggest manufacturer and exporter with a turnover of €9.9 billion. However, most of the manufacturing is done in Poland following the closure in 2009 of Dell’s Limerick plant.
About 50,000 direct workers are responsible for almost 60% of headline exports and if the headline annual value of exports was discounted for profit and revenue shifting by foreign firms, indigenous exports would only account for 20% of the adjusted total.
The indigenous economy
The indigenous export economy has performed poorly since the 1990s despite corporate and employer social security rates being among the lowest in Europe and no requirement to provide employees with an occupational pension; a large number of public supports, and current hourly wage costs at 78% of Denmark's level.
About 7% of local SMEs (small and medium size enterprises with employee numbers up to 249) export and the European Commission says there are approximately 20 SMEs per 1000 inhabitants in Ireland, which corresponds to only half of the EU average. In Denmark there are approximately 37 SMEs per 1000 inhabitants and they have a high level of internationalisation.
Richard Bruton, jobs and enterprise minister, in recent months has been highlighting that the Irish private sector added 12,000 jobs last year. However, CSO data [pdf] show that private sector jobs classified as 'Self employed/Assisting relative' grew by almost as much, which given the state of the economy, hardly indicates success. Part-time jobs in the whole workforce grew by 13,000. Besides, the data for Agriculture, forestry and fishing (+12.1% or 9,700), is likely incorrect.
Bruton's 333-point Action Plan for Jobs is more akin to the output of a national ideas competition than a strategy and in recent weeks Bruton announced the goal of adding 20,000 manufacturing jobs by 2016. It's a challenge to add manufacturing jobs in any developed economy and the announced measures lack conviction and credibility. An expert group proposed that 43,000 new jobs or 21% could be added by 2020. The Government effectively halved the target to fit into the period to 2016.
Only 3% of Irish SMEs are active in manufacturing, whereas the equivalent figure for the EU is 10%. Besides, as suggested above, the old-fashioned Irish apprenticeship system is a shambles with Ireland having 10 apprentices per 1,000 employed compared with Germany at 39, Switzerland at 44 and Denmark at 27.
IDA Ireland announced last January that foreign firms added 6,570 net jobs in 2012, the best year since 2002. However, as outlined above, the exporting sectors have not been an engine of jobs growth since 2000. Besides, foreign nationals are believed to comprise a significant portion of the payroll in high tech firms.
Inconvenient truths are unwelcome even though the country needs a multi-decade strategy to put the economy on a sustainable path. Believers in rocket growth are akin to cargo cultists and need to be challenged by an informed media. The unvarnished facts suggest that an international recovery will not trigger significant job creation in Ireland.
Ministers and private lobby groups regularly conflate foreign firm and indigenous data to sustain their fairytales and maybe rather than try to develop exports with for example India, which is currently at a decimal point, the data suggests that attention to the internal Irish market and its resources may provide the bigger long-term return.
Irish Economy: Sustainable growth dependent on foreign firms since 1990; Now FDI has peaked
Eoin O'Driscoll, currently a governor of The Irish Times Trust and a director of the limited company, in 2004 as chairman of the Enterprise Strategy Group, produced the 'Ahead of the Curve: Ireland's Place in the Global Economy' [pdf] report, which was a rarity in Ireland for an official report. It presented an unvarnished assessment of the challenges.
The report said Ireland lacked capability in two essential areas: international sales and marketing and the application of technology to develop high value products and services.
It said: "We need to ensure that research in Ireland is led and informed by market needs (demand-driven), so that we obtain economic value from the research investment."
On indigenous exports, it observed: "Over the period 1990-2002, exports by agency-assisted indigenous enterprise grew in nominal terms at 5.5% per annum (versus 15.9% for foreign-owned companies). When inflation is taken into account, the real growth in both sales and exports was negligible."
Eoin O'Driscoll's vision remains to be met but it will not be met by burying inconvenient news.
O'Driscoll quoted Charles Darwin in 2007: “It is not the strongest of the species that survives nor the most intelligent but the one most responsive to change.”
Ireland remains a conservative society where change if it happens at all comes at glacial speed. The adoption of the Internet has been a slow process (in May 2011, Taoiseach Enda Kenny said at Google's Dublin headquarters, that 40% of Irish SMEs including sole traders did not have a website or an online presence!) and the challenge for people like Hugh Linehan, the Irish Times online editor, is to prepare for change while those in positions of power resist it.
The market for fairytales endures.
Execute access is denied.