This Friday Ireland will vote in two elections, one for our seats in the European Parliament and the other for seats in over 30 local councils around the country.
The next election for the Dáil (Ireland's parliament) is not until 2016 so this is a mid-term test for the government parties, Fine Gael and Labour. Both of them are in for a pasting on Friday, thanks to all the spending cuts and tax hikes and new charges that have been imposed on people here under our austerity program.
Yes, we are out of the IMF bailout now, our economy is slowly starting to pick up, and the government may feel it deserves some recognition for getting us out the other side of the financial crisis. But it's been at a huge cost.
There is real anger among voters about how the austerity burden has been shared, about how ordinary and middle class families have been squeezed relentlessly while so many at the top of Irish society have floated above all the hardship. The last straw has been the upcoming water charges.
The government parties are aware of this and their answer has been to fight back with promises about economic recovery and job creation which would allow us to lower tax rates and ease up on austerity. Election speeches by ministers in the past week or two have emphasized the number of jobs they are going to create.
The other reason for all the job promises, of course, is our continuing high unemployment rate, which is now just below 12 percent. But that does not include all those who have emigrated because they could not get work here in recent years. If you added those in the rate would be double that.
There is particular anger among affected families about unemployment and forced emigration of young people. These families are already seething about the unfairness of austerity, and the continuing lack of jobs adds to their anger and depression. As we said, that is why we're getting all the speeches promising job creation.
Let's leave aside the obvious point that it is business people, not politicians, who create jobs. There is a much more interesting aspect to the jobs question, and it's one that there won't be any discussion about in this election.
The fact is that we've always had a jobs problem here, and the political response to this has been to open up the Irish economy and invite in foreign companies to set up plants to provide work. We have been spectacularly successful at this, mainly due to the number of U.S. companies that are here (over 70 percent of foreign companies here are American, as IrishCentral.com reported last week).
Over one quarter of our national output now comes from FDI (Foreign Direct Investment) companies here. Foreign firms in Ireland produce about 90 percent of our exports. It's a success unmatched by any other country and a lot of credit is due to the work of the IDA (Industrial Development Authority), whose main job is to attract foreign businesses to set up in Ireland.
This success is wonderful – but it hides a jobs failure that never gets talked about here. In fact it's seen as kind of unpatriotic to even mention it.
Why are we so dependent on foreign companies to come in here and provide jobs for us? Why can't we do it for ourselves? Why are we such failures in this regard?
You might say it's fantastic that foreign companies produce over a quarter of Ireland's national output and that they provide so many jobs here. But there are two ways of looking at it. You can see it as a great success – or a great failure.
Certainly, in comparison with the Nordic countries we are a failure. We are often compared with Finland, Norway and Sweden, countries that, despite being out on the edge of Europe like us, have been much more successful than us in providing jobs for their own people and developing companies with global status. Think Nokia, IKEA, Volvo, H&M and many other Nordic brand names known around the world.
How many Irish companies and brands have global recognition? Yes, we have agricultural-based giants like Guinness (no longer Irish-owned, of course) and Kerrygold, but outside the food and drink sector what can you name?
The fact is that the few global brands we have developed are virtually all based on our farming output. Outside of the food and drink sector we've developed virtually nothing ourselves.
Of course we have all the pharmaceutical and chemical companies, all the computer and IT and social media companies, and we're always boasting about the bright young Irish people who work in these plants – but they're all foreign companies.
The difference is that Nokia and IKEA and others like them are native to the Nordic countries. In contrast we have very few manufacturing companies here of that scale that are native to Ireland.
We do have a lot of smaller software and social media sector companies that have been started here by talented young Irish people. But it's small-scale stuff in comparison with employers like Intel, Google, Facebook, PayPal, Twitter, Dell and all the other big boys in that sector here, all of whom are foreign.
Why is this the case? There's no easy answer, and there may be historic reasons that are still at play.
Before independence there was very little industrial development in Ireland and almost all of it was in the northern part of the country, the part that became Northern Ireland after partition. Up north, there were industries like ship building and linen factories, both now gone.
Down here, there was virtually nothing, since we were seen mainly as a source of food for "mainland" Britain, where all the industry was.
Of course independence did bring a new beginning as the new Irish state expanded infrastructure for industry, mainly through new semi-state organizations for power generation, transport, etc. (ESB, Bord na Mona, Aer Lingus, and so on). In some sectors where private industry was failing to step in, the state also got directly involved in running businesses (like the Irish Sugar Company).
But the overall development of an Irish industrial economy by private business people here remained poor, and it was not helped by de Valera's isolationist policies and his dreamy vision of a simple Irish society with people living simple but happy lives, informed by their Catholic faith.
This was what underlay the massive emigration that went on from Ireland in the 1950s and for years before and after that miserable decade. Our Catholic faith meant there was no contraception, so many of the families living supposedly idyllic lives in rural areas were having five or six children, or even a lot more.
Only one could inherit the small farm, so the rest had to leave. And with no industrial development to provide them with jobs they emigrated, in their tens of thousands every year.
The answer, eventually, was to open up Ireland to the outside world by lowering barriers to trade and by inviting foreign companies to set up here. That process began in the 1960s and was enhanced by our entry to the EU in the early 1970s, but it took time to develop.
We've come a long way since then, through boom and bust. But it's remarkable how this basic failing has remained in place. Even when the Irish economy was growing rapidly, few Irish entrepreneurs were stepping up to the plate.
Instead of diminishing as we became more developed, our dependence on foreign businesses to come in here and provide jobs increased. That dependence has now become an addiction.
Of course there are exceptions to the rule, like the Irish company Smurfit, which became one of the leading packaging companies in the world, or CRH, a huge Irish construction materials company with global status. But, in general, nearly all the biggest companies here are foreign.
Attracting foreign companies remains the central plank in what successive Irish governments call their industrial development strategy. We have become so used to this here that successes in attracting foreign companies are announced by our politicians as major triumphs.
It never seems to occur to them to ask the obvious question: Why are we unable to do it ourselves? Did 800 years of occupation smother our entrepreneurial spirit completely?
It's not that there is anything wrong with foreign companies coming in here. We need them badly. And it is a success of a kind when we are the world leader in attracting them.
But there is a question of balance. Surely we should be developing more businesses ourselves to give employment here instead of relying to such a great degree on foreign companies to come in and do it for us.
And before anyone swallows all the self-congratulatory guff our politicians spew about the main reasons foreign companies come here – our bright, educated young people, English-speaking workforce, access to the EU – we need to remember that the main driver is money. The others are all factors but our low nominal corporate tax rate and the way we facilitate significant tax avoidance by big foreign firms to reduce even that low tax rate down to just a few percent are key.
Instead of putting so much effort into the questionable tax regime we run, maybe we should be putting a lot more effort into developing a new generation of entrepreneurs here and facilitating the development of Irish businesses.
It's not that nothing is being done. There are a range of supports available to Irish businesses, small and large, and there are incentives for job creation.
Right now, for example, there is an X-Factor style nationwide competition for young entrepreneurs with a €2 million ($2.7m) prize fund. But not enough is being done. The main concentration by the state here is still on attracting foreign companies to solve our jobs problem for us.
There is a tendency in some quarters here to see foreign companies, particularly from a huge country like the U.S., as somehow superior to Irish companies, like they are enveloped in an aura of success. This overlooks the reality that most of these American companies that are now household names started in a state not much bigger than Ireland, with a workforce no better than ours. They just grew, across the U.S. and across the world.
We need to have much more confidence in ourselves and we need to invest significantly more state resources in developing our own job creators in this country.
In the meantime, there won't be many laughs in this election, particularly for Fine Gael and Labour, but here's one to keep you going. The Labour Party, which is facing decimation in the vote, has election posters up around Dublin all of which have a simple message: 70,000 NEW JOBS.
To which people here have been adding the words IN CANADA. Or another one I saw had IN AUSTRALIA added along the bottom.