Presentation overview• Back to the Future

• Reality check

• Reaping the Destiny Dividend

• Conclusions

Executive Summary•Celtic Tiger doesn’t exist

• Ireland’s economy no miracle; a coiled spring waiting to unwind

• The economic slowdown is a needed pause for breath…more the “end of the beginning” than the “beginning of the end”

•BUT

•Productivity growth is running into the sand. A range of interconnected and mutually dependant obstacles to the future exist

• East-west population imbalance• Failure to urbanise• Poor infrastructure• No economic planning • Bad use of land• Dysfunctional local authority structures

•Ultimate debate: Political Technology of decisions making is part of our economy and needs to be upgraded starting with Electoral system

BACK TO THE FUTURE

Back to the Future

• 1841: Population of island 8.2 million

• Net exporter of food• Post famine (1851) 7 million • Since 1851 population of Europe

has trebled • Island’s pop today would be around

20 million today• Only EU country to have fallen

Back to the Future: Policy Permafrost

• 1847 Although repealed, legacy of penal laws hugely influential on economy and subsequent development– Capital flows to UK– No native industrial entrepreneurs

• 1847 to 1917: Even after famine, emigration encouraged as substitute to developing indigenous economy

• 1932 to 1957: Protectionism cripples domestic economy

• 1957 to 1977: Brief respite• 1977 to 1987: Fiscal insanity

• Policy permafrost only ended in 1987– NCB: Population of Republic to hit 6 million by

2050– 2 million in the six counties – so finally recovery of pre-famine

population levels by 2050– But since 19th Europe’s population has

trebled

• This implies a higher population level for Ireland by then than 8 million.

• How high?

Back to the Future: Then and now

• 1841 - 1987: – Huge dependance on agriculture– Inward looking economy– Real (policy-driven) or effective (incompetence-

driven) closure to world economy

• 1987-2007: – Agriculture falls to less than 4 % GDP– Globalised, diverse economy – Currency union in a market of almost 400 million

people– Strong links with US & developing links with

China, India

Back to the Future

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Back to the Future

• What is Ireland’s “steady-state” population potential?

• How quickly can it be reached?

• What obstacles have to be overcome to reach it?

What if Ireland was as densely populated as…?

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Back to the Future

• The case of Israel– 1948:2 million people– Now: 7 million people

• Land mass– Size of Leinster.

• If they can do it……

REALITY CHECK

Reality Check

• Coldwell international estate agents:“Ireland 2nd most expensive in world for executive property costs after Beverly Hills”

- CSO - “Between 1996 and 2002 the average

distance traveled to work nationally had risen from 6 to 10 miles”

- And this with just 4.2 million?

Reality Check: Growth runs into the sand

• Since 2002– Growth increasingly domestically

driven– Absence of competition and lack of

efficiency in non-traded sector (especially public sector) hits traded sector hard.

– 1957: Economy’s external side opened to competition

– 2007: Challenge is to open non-traded sector to competition.

Reality Check: “Cain Slew Abel”

• “Cain Slew Abel”– January 2000 to today

• General prices rose by 30 per cent• Electricity prices rose by 240 per cent• Various local authority charges by 240 per cent• Health costs (largely public) by 93 per cent

– More generally• Chronic underperformance of public sector &

over-protected parts of private sector generally – transport / postal services / electricity is holding economy back and retarding Ireland’s future

Figure 5 Year-on-year growth of Domestic Demand and External Demand

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Source; Central Statistics Office 2007

Question: Dream or Disaster?

• In a high technology, well-planned economy rising population guarantees growth

• In a low technology, poorly planned economy it guarantees congestion, rising prices and falling living standards

• As latter looks increasing the reality Ireland must start reaping the Density Dividend

DENSITY DIVIDEND

Density Dividend 1: East v. West

1. East / West Imbalance– Post famine eastward bias remains.– Overreliance on Dublin as a source

of employment– 40% employment outside is Ag /

Construction– In 19th century, west was

congested– Now it’s the east.

The Leinsterisation of Ireland

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Source; Central Statistics Office 2007

Urbanisation• Sweden less densely populated

than Ireland (for climatic reasons)• But three-quarters of Sweden’s

pop. lives in urban areas (Ireland: 55%)

• Swedish cities are really cities.• Galway, Limerick, Waterford,

Sligo, Athlone: Are they cities?

Density Dividend 2: Cities Anyone?

• Shenzen city 1970: 300,000• Shannon/Limerick 1970: 80,000• Shenzen city 2006: 8.5 million

• Shannon/Limerick 2006: 120,000

• Belfast hinterland 2006: 1 million

Density Dividend 3: Shannon v. Shenzen

• 8 % growth in overall population 2002 to 2006

• Cork & Limerick’s population’s actually fell

• Urban population growth was half national growth

• What if we could reverse this latter relationship?:

Density Dividend 3: Shannon v. Shenzen

• Cork (& suburbs)– 300,000 by 2020– 500,000 by 2050

• Limerick /Shannon (& suburbs)– 136,000 by 2020– 240,000 by 2050

• Galway (city area)– 114,000 by 2020– 200,000 by 2050

Density Dividend 3: Shannon v. Shenzen

• Real debate is: Dublin vs. Berlin• Berlin:

– Size: 890 sq kilometres– Population: 3.8 million

• Dublin:– Size: 922 sq kilometres (county area)– Population: 1.2 million (county area)

Density Dividend: Boston vs. Berlin?

• Berlin: – 3 times population density– Public transport (underground/bus/tram) financially feasible– Competition for local goods and services provision high– Apartments (& rights of tenure) designed for sustained

family living

• Dublin:– Lowest population density of any capital in EU, possibly

world: – Logistically & financially hostile to public transport provision– Competition for local goods & services provision poor, so

prices high– As shown by recent Halifax survey – half the Dublin labour

force is now priced out of the capital because of poor land use

Density Dividend: Boston vs. Berlin?

• C&AG: NDP 2000 – 2006 roads programme rose from 7 billion to 14 billion

• 2006 alone, 360 million spent on land acquisition

• High price of land now distorting planning decisions

• Monaghan co. council zones for development 29 villages one center, implying growth in county of 122,000

• Would have been disastrous; no infrastructure provision or economic plan

• Thankfully rescinded by Minister

Density Dividend: Bull McCabe factor

Density Dividend: Bull McCabe Factor

• Massive transfers of wealth to farming community (already benefit 40 billion from CAP)

• Impact on cost of accommodation severe.• Impact on residential, commercial & industrial

rents also severe• Sean Dunne 59 million per square acre;

Unsustainable unless we build up.

• Erskine Childrers 1957 “It is not too much to say that our entire economy will stand or fall by the use made of the land”

• > 100 local authorities• Poor interaction with road / rail authorities / government

departments• Plays havoc with infrastructure planning and cost

effectiveness

• 2006: N.I. local authorities cut from 26 to 7

• Consolidation of local authorities from 100 into around 8 properly planned authorities corresponding to existing regions would– Achieve economies of scale– Provide proper local government– Be consistent with reform of local authority finance and real

local democracy– not to mention segregation of local from national perspectives

amongst our TDs.

Density Dividend: Ireland of the 100 governments

• How do we want to be governed?– National or tribal interest?– Leadership or “followership” ?– Short term or Long term?

• Existing electoral system..– Gives huge weight to organised lobbies

who trade votes or favours– Large mass of voters who seek national

interest ignored

• Electoral reform needed to desensitise system to minorities & facilitate reform

Density Dividend: Electoral Reform

• Ireland is a bicycle in a traffic jam.– It is bizarrely underpopulated– It is linked into the euro zone and US economies

and is forging strong links with Asia

• But…– …although 1957 saw “external” side of economy– ..internal side still needs drastic reform

• Vast gains in terms of potential economic growth are there for the taking

• So….let the debate begin.

CONCLUSIONS