Guetta real about Ireland
When the tide goes out, you can see who is not wearing swimming trunks, says Warren Buffett about investors. Likewise, people, and seemingly very clever people, can be found wanting in their efforts to explain the current crisis. They splash about, short of breath and ideas, and tend to resort to clichés and caricature, to reassure themselves they knew it was coming all along, and that proper order is now restored. The case of Ireland shows this up nicely, notably by exposing the prejudice of French political pundit Bernard Guetta.
The London Times on 11 November on a story by David Charter entitled “IMF rushes to defend Ireland” uses the image not of forlorn building sites or dole queues, but of a near-empty pint of Guinness. The imagery is that the economy is drained, that the Irish have drunk it dry. The implication is that the Irish drink. Pre-Celtic tiger cliché of Irish pubs, alive and well.
The article itself is reasonable enough, though, describing the challenge Ireland faces not only in closing its deficit and reducing its debt, but in bailing out the banks.
The London Times is a British paper, and so when a jaded photo editor comes up with imagery of Irish booze one should not be too surprised.
But how to explain the recent bitter attempt to explain Ireland’s demise by Bernard Guetta, a French radio commentator on the main national radio station, France Inter, and a sometimes annoyingly pretentious one at that. (Quelle surprise). He is the pop intellect of the left, good on issues where political correctness is key, such as on Middle East, and pretty well pro-European Union. Gaza for Guetta is a delicate story, requiring his deft treatment, a moral imperative. Ireland, for Guetta, is just an upstart island off the edge of Britain.
Rather than see it as a European success story that went wrong, he has decided to view it as an Anglo-Saxon market-driven failure, not a miracle, but a “mirage”. The tone of his daily 3 minute slot this Friday 12 November, which you can read via the link below, was one of “I told you so”, gloating, rather than helpful. In short, Ireland was always a mirage, with its stories of its GDP per head overtaking France, its swinging capital Dublin competing with the urinated alleys of Paris, Ryannair stealing accident-prone Air France’s market share….sacré bleu, proper order is restored. People like Guetta have been dying for Ireland to slip up so they could rant out their rubbish, part of the exercise of restoring pride in the notorious (yet undefined) French model.
For Guetta, the only reason Ireland did well was untenably and unjustifiably low taxation, what the French call “le dumping fiscal”. Ireland has had a competitive and attractive tax for investors, but so have other countries, and regions, yet they did not see the same inward investment or heady growth rates Ireland did.
Guetta ignores several facts, probably because he couldn’t care to look further than his dumpy nose, but one or two are self-explanatory: Ireland is not Anglo-Saxon, but it is Anglophone and a euro member. These two ingredients alone were already attracting investors, long before the e-bubble took off (Ireland joined the EMS in 1979, breaking the link with sterling and anchoring itself to Brussels and Frankfurt). Since the 1960s Ireland had invested heavily in mass education, expanding both secondary, tertiary and vocational access. So much so that by the time the Internet boom and e-economy took hold, Ireland was ready to take advantage. Ireland as a small remote island was never very suited to heavy industry, but software and associated services, including international finance combination, were the perfect combination. Other sectors in need of technology, such as pharmaceuticals, rode the wave too.
There are policy reasons behind Ireland’s earlier success as well. Ireland had for a long time the sick man of Europe many called it, but it slowly but surely managed to heal itself, through mean fiscal policies and also fairly progressive social partnerships, whereby wage moderation was achieved in return for good job security. Ireland’s competitiveness and job market both benefited.
Nor, to add a further twist, is France's corporate tax actually higher than Ireland's; according to the table on page 98 of this study its rate is three percentage points lower, ostensibly because of rebates etc. Alors!
Guetta clearly didn’t do any homework on either the causes behind the Irish boom, or its demise. Had he scratched further, this pop intellectual would have had a better, more robust story to tell which has lessons for everyone, left and right: how Ireland, which had so much going for it, managed to squander nearly a decade of well-earned growth! Had he looked hard enough, he would have seen not a mirage, but a merry-go-round. His story would have been about how the property bubble took over, about slack policy and cronyism, weak local and central governance, selfishness, and possibly, corruption and curry-favouring. Guetta lost his chance to get ahead. Indeed, the Times photo of a downed Guinness seems closer to the truth.
Okay, Guetta was right about Ireland having been a miserable, emigration economy until not so long ago, but he should have taken a closer, more objective look at the question about how all that changed. I am not saying that Ireland's low taxation is sustainable or not a factor behind the country's now weak fiscal deficit. But citing low taxation alone to explain the country's rise and fall, while pleasing to high-tax diehards, simply lets the true culprits off the hook.
For Guetta, Ireland is a failed tax dodge that Europe is now obliged to shoulder along. No mention of the 50-60,000 French people who work in Ireland in good careers of the sort they could not find at home. No mention of the massive French, German and other investments tied up in Irish pharmaceutical and technology industries. No appreciation for the interdependence of Europe, that the Europe Guetta so supports is the main reason why Ireland moved from being the sick man to being far more than a mirage.
We all love French intellectuals, they can be entertaining and often make sense too. But they can also talk bullshit. Perhaps France Inter should think hard about who they give their precious morning slots to, or at least varying it a bit: five days a week of Guetta is a bit tiresome, and probably very tough for him too. Or could it be that his bosses see him as the left’s answer to Eric Zemour, the non-thinking buffoon on the right who seems to pop up on every TV channel desperate enough to find his brainless diatribe entertaining.
Guetta and Zemour: if that is all this great country can up with to help us think through what is an unprecedented crisis, then we are likely to be stuck in a rut for some time to come.
Ireland, meanwhile, is a vastly different country to what it was before the long boom started circa 1990. It will probably get over its current problems, though I doubt that Guetta or Zemour will look up from their navels to notice.
Read Bernard Guetta's Irish mirage (in French)blog comments powered by Disqus