When this proposal appeared in the Portland, Maine
newspaper, it set off a statewide conversation. Its message is
equally pertinent throughout blue-state America.
DUBLIN — The last time I was here, in the late '80s, Ireland
was widely known as the sick man of Europe. It had certainly earned
the label. Its population was aging, with rural counties emptying
out and young people brain-draining away in search of opportunity.
Its educational system, at great expense, was preparing new
citizens for a society that no longer existed. Its economy was
stuck somewhere between a failed agrarian past and a failing
industrial present — even as its neighbors raced ahead to
post-industrial prosperity. It was the poorest country in the
region.
Sound familiar? It should. For the Ireland of fifteen years ago
resembled in many ways the Maine of today. Indeed, the two
situations invite comparison.
— Ireland is a small country relative to its neighbors. With
only 4 million citizens, the Republic must compete with fellow
European Union (EU) members Germany, France, UK and Italy, each
with populations greater than 50 million.
— Jutting into the North Atlantic, Ireland has a strong
maritime culture, replete with rocky cliffs, scenic fishing
villages and sparsely settled islands. (You can even get the
world’s second-best lobster here.)
— A highly desirable travel destination, Ireland’s traditional
economic base has been tourism. (Its principal exports, providing
little relief to the imbalance of trade, were people, poetry, and a
taste for beverages brewed and distilled.)
— Ireland considers itself to be “a special place” and is
determined to preserve its distinctive qualities. (It is a
special place. I was reminded on a visit to Trinity College how
abbreviated English Lit courses would become if the syllabus were
confined to English writers. No Swift, no Yeats, no Beckett, no
Wilde, no Joyce, no Shaw, not even C.S. Lewis — Irishmen all.)
— Ireland also had latent advantages, three of them critical to
success in the global economy. Its people have a strong, almost
legendary work ethic. The entire workforce speaks English. And
finally and paradoxically, its very backwardness provided a
strategic advantage of sorts: with its assets leveraged
effectively, Ireland could “skip over” the heavy-industry phase of
development and enter the modern economy with its environment
largely intact.
Well, the world now knows how effectively Ireland could leverage
its assets. Stunned visitors to the island insist on calling it the
Irish Miracle. (The Irish never do, by the way. They know that
while God loves the Irish, He had little to do with creating the
“Celtic Tiger.”) Here in the capital city, building cranes arch
over both banks of the river Liffey, from the Docklands financial
district to the tourist traps of Temple Bar and beyond. A rundown,
almost seedy place on my last visit, Dublin is now a big, bustling
city on the make. A drive through the countryside reveals a
different side of the new Ireland: an archipelago of clean, green
industrial parks producing high-end goods and services for the
world market — computers, pharmaceuticals, software, financial
services. More than 1,000 multinational corporations have
established facilities here during the boom. As you spot the more
familiar logos — Intel, Bristol-Myers Squibb, Microsoft, Dell,
Wyeth, Citigroup, IBM, Motorola — you can’t help wondering:
Couldn’t some of these employers have found what they were looking
for closer to home? Say, somewhere downeast?
With the high-paying jobs has come remarkable prosperity. As one
measure (particularly savory to the Irish), consider Ireland’s
performance relative to the powerhouse of the Continental economy.
As recently as 1991, Germany’s per capita purchasing power was more
than twice that of Ireland. As of mid-2004, Ireland’s exceeded
Germany’s by 25,100 euros to 21,700 euros. Among the 25 members of
the reconstituted EU, Ireland is now the richest country save only
for tiny and anomalous Luxembourg. In just 15 years, Ireland has
surged from last to first in a very fast league — and in the
process reversed a brain drain that had dragged on almost unabated
since the potato famine of 1845.
THE PURPOSE OF MY VISIT here was to answer the begged question —
how did the Irish do it? And of course tucked in behind that
question was its sibling — how could Mainers do it? After talking
with economists, executives, government officials, taxi drivers and
doormen — this being Ireland, there are approximately 4 million
opinions on offer — I can adduce from the Irish experience three
salient lessons for Maine, all of them easily transportable given
popular consensus and some political willpower.
1. Create an independent and aggressive business development
agency. Both adjectives are important. “Independent” because
development agencies are often captured by legacy business. That is
to say, existing companies have employees, investors, vendors and
lobbyists — what looks to politicians very much like a
“constituency” to be served. The future, by contrast, has no
identifiable support group. The captured development agency thus
winds up betting on proven losers over against prospective winners
— in effect, aggravating the problem the agency was designed to
solve. Ireland handled the situation neatly. First, it set up two
agencies, one to promote externally and the other to work with
“indigenous” companies. The former, the Industrial Development
Authority (IDA), was thus placed in the job creation role, the
latter — Enterprise Ireland (EI) — in the job retention role. In
allocating talent resources, it appears, the tendency was to feed
the IDA and starve EI. Second, the IDA reported not to a government
official but to a prestigious board of accomplished men and women,
people of stature who could not easily be yanked around. Their
terms of service were asymmetrical with those of their political
sponsors and they were instructed loudly to discharge fiduciary
duty to the Irish people and not to the temporary custodians of
political power.
In its drive to recruit world-class employers, the IDA gave new
meaning to the word “aggressive.” First they picked the businesses
they wished to enter — businesses that were likely to win in the
future. Then they identified the individual companies with which
they wished to partner. Only then did they make offers which, by
cutting through red tape and tailoring incentives, proved
frequently to be irresistible. The whole campaign was lubricated
with copious applications of Irish charm.
2. Create a tax haven. Those may be fighting words in
the citadels of entrenched bureaucracy, but to investors — those
unsentimental people who move capital around fluidly in this wide,
wired world — they are the sweet song of opportunity. The Irish
knew that they had the workforce and they were betting that they
could acquire the high-tech skills. What they needed was other
people’s money and the only way to attract it was to offer a
higher return than investors could expect elsewhere. The one sure,
upfront way to give that assurance was to cut the corporate tax
rate — and to cut it dramatically. Ireland’s top tax rate
on corporate profits, for all levels of government, is now 12.5%,
roughly one-third of those of its major EU trading partners.
(Happily, Maine does not have to compete with Ireland, only with
Massachusetts and New Hampshire.)
3. Design an education system for the 21st century. One
of Ireland’s problems for generations uncounted was that its school
system educated young people for a future unlikely ever to
materialize. The predictable result was a harvest of frustration,
unemployment and one-way tickets to America, Australia, Canada and
New Zealand. (Ireland’s population in 1840 was eight million. It
shrank for a century and a half. Today, after ten years of modest
growth, it’s back up to 5.7 million, including 1.7 in the
U.K.-controlled North.) Now, the question of education is vexed and
its intricacies range far beyond my own comprehension. But this
much seems clear: in the emerging economy of the new century, the
team with the most engineers wins. The Irish answer — again,
innovative rather than off-the-shelf — was to establish a chain of
regional technical colleges. (I counted 10 of them.) Each college
is situated near a cluster of export-aimed companies and fine-tunes
its curriculum quickly to meet evolving market needs. In other
words, the new graduates are synched up tightly to the job
openings. The result? Between 1987 and 2000, the national job rolls
grew by 45%. The lesson here is that if you put together an
energetic, English-speaking, technically trained workforce with
substantial amounts of other people’s money, you can pass what
observers will insist on calling a miracle.
Maine has for some years been suffering from what used to be
called the Irish condition. Public data show that, relative to our
compatriots in the other 49 states, Mainers are old, poor,
unproductive and overtaxed. The Irish experience of the past 15
years tells us that life need not be that way. One of the
participants in the boom, mixing wit and wisdom in the Irish mode,
puts it this way: “We knew we weren’t dumb and we knew we weren’t
lazy. Which meant that we had three ways to go. We could cry in our
beer. We could compete for capital. Or we could learn to speak
Chinese.”
