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Newstalk’s Marc Coleman has a nice perch on the Financial Times comment page today to outline his fairly optimistic long-term view of the Irish economy despite the current property downturn. His essential argument, to be outlined in more detail in his book, is that Ireland has two key assets for its long-term growth prospects: people and land. But the article (perhaps constrained by length) doesn’t really go into why these assets have not been better exploited already. Because that would be a can of political worms.
First, here’s part of Coleman’s thesis –
The country is vastly underpopulated. Like a vacuum in a high-pressure globalised economy, it has huge potential to continue drawing in labour and capital for decades to come. While that fact will not save it from a temporary correction of its overheated property market, it promises fantastic potential once that correction has run its course … This demographic dividend needs to be complemented by something else; a density dividend. Poor transport, high utility costs and weak competition in many markets are raising the costs of doing business. More seriously, the failure to adequately urbanise, resulting in population sprawl, is holding back productivity in indigenous industry and significantly raising the cost of delivering public services.
The problem is that a raft of vested interests has built up precisely around that model of development and it’s going to be very difficult to change. Hence the asterisk in the title. While Marc refers to high utility costs, there are utility costs that are too low. What use is “free” water in Ennis and Athy (and previously Galway, and next?) if you can’t drink it? The water problems in turn are linked to bungalow bliss with all those stand-alone septic tanks running into the water table. Lack of water charges results in underinvestment in water facilities. Then there are the build-and-run developers and most of all the speculation linked to land rezoning. The rubbish that everyone agrees should go somewhere else but not into dumps or incinerators — so in practice into ditches in Fermanagh. And on and on.
Unless this Gordian knot is cut, we’ll continue to have what we have now: a property market driven more by speculation and boom-bust cycles and delivering a lot of low quality housing. And that demographic dividend won’t be exploited.
i am almost finished the book - its a fascinating read and a slightly depressing one. at each step its almost like “and then there was a great chance to do (insert something worthwhile), but instead they did (something not worthwhile and more expensive).
things are being done that will last several generations and arent easy to undo. hopefully the book has a happy ending.
(i see that its out of stock on amazon, i got it from the publishers ( http://www.blackhallpublishing.com/ ) before christmas with no problems)
The whole world, including Ireland, is due for a major recession. It’ll be many decades before the effect of our low density, as mentioned in the article, will help. It won’t do anything for us in the next few years.
The housing boom and the bust that has only just got going is just a symptom of a greater malaise in our economy. When you look behind the jargon such as ‘equity release’ what you see is a nation that has borrowed heavily from abroad in order to import heavily from abroad. We have lots of rubbish we don’t need (SUVs and so on) and we have hardly started to repay the loans. Basically, we owe China for all the stuff we’ve borrowed from them. If you don’t believe me, then why is it that China is sitting on trillions of dollars? Those dollars represent our debt to them for the goods imported. House prices were a mirage created by a good old-fashioned pyramid scheme.
We’ll waste all our land if we allow our towns and cities to grow like Dublin has. We need to realistically plan(decide?) where people will be living in 50 years and plan accordingly.
Have to say that Aaron’s points are correct. The point I would make about Coleman’s article and your right it is too short to get into detail (better buy the book….) but why would people and capital move to ireland without a coherent policy vision for what that could achieve?
The ideas that have been circulated around the sphere by the likes of Michael Taft and others are correct, we need to get to grips with policy on local enterprise, generation of a targetted, focussed upskilling in the economy in order to stand some hope.
Economists like Marc Colmena fail to see that there is a direct link between our present and future environmental difficulties and population growth. As economists are obsessed by growth, population growth is, for them, a good thing.
Let us turn his proposition around… Ireland has huge potential because it is relatively underpopulated. The necessary adjustments to attain a sustainable population level will be less dramatic than in the more overpopulated states of Europe and elsewhere. Government policy should be ensuring that the fall in population is acheived gradually - in particular by a lowering of the birth rate. There will be a cost as the ex-baby boomers will need to assisted through their old age. A smaller population would mean less pollution, less use of non-renewable ressources, the possibilty to develop a sustainable economy.
Gordon
Yea, thats all we need, a double in population. Wont the M50 (and roads in general) be fun then…