80% OF NEW JOBS TO COME FROM VERY SMALL FIRMS

I was in the United States for the past week for the Irish International Financial Services Centre, meeting businesses with substantial investments and employment in the international financial sector all over Ireland , in Dublin , Cork,  Arklow, Claremorris , Letterkenny and  Carlow.

I visited  Chicago, Minneapolis and New York.

The United States economy is recovering and the budget deficit is coming down.

The US budget deficit is around 6.4% of GDP, as against average Eurozone budget deficits of 2.7%.The Irish deficit about 7% of GDP.

The US economy is expected to grow by 1.7% this year, whereas the eurozone economy will contract by 0.8%. Ireland, unlike the rest of the eurozone will grow by 0.5%.

On the other hand the United States has a balance of payments deficit of  3.3%, against a eurozone surplus of 1.3%.  Ireland’s balance of payments surplus is 3.5% of GDP, although this is mitigated by  greater than average repatriation of profits.

There are limits to the extent to which a country can grow by importing more than it is exporting. But the United States has accessed new energy resources, which will help it a lot in the medium term. Europe is not in that position. It is, and will remain, a large net importer of energy.

Worries were expressed to me that the proposed Financial Transaction tax in some EU countries, and the generally more stringent pay limits in the financial sector, will divert some financial employment from Europe. Hyper cautious regulation may have the same effect. 

There was high praise for the quality of the workforce available in Ireland, especially as regards their flexibility and maths skills.

I was told that the nature of work will change radically in coming years. Because of technological development, 80% of new job growth in the US will come in firms now employing less than 5 people. This plays to Ireland’s strengths, in that it is  easier to set up a new business in Ireland than it is in most of the rest of the world.

RESPONSE TO THE “SUNDAY INDEPENDENT”

Two weeks running the “Sunday Independent” has devoted many pages to personal criticism of me.

These criticisms were supposedly based,

first on the content of an article I wrote in the “Irish Independent” about the unwisdom of a threat of suicide being made a legal ground to allow abortion, and 

second on a few tiny extracts from a  long ex tempore speech I gave at the European Insurance Forum on the need for Europe and Ireland to have a growth model that was sustainable, politically, financially and environmentally.

In the speech, pointed out that our economy will only grow sustainably, if it is seen to be paying its way.  We still have a problem in Ireland in that we are, even now, borrowing for some of our day to day Government spending, not just for debt service.   I said that increasing borrowing in these circumstances was leaving today’s burdens on the shoulders of our children, and I did not believe that was right. 

We may look to others to stimulate their economies, but that is not as easy for them as we might like to think.  I said that it had been estimated that the average baby born in Germany has an implicit debt to pay, of nearly 200,000 euros, for entitlements and debts, promised or incurred, by its elders in Germany itself. Similar conditions apply in other EU countries to whom we might look for stimulus.

I also drew attention to EU research a few years ago that showed that by 2050, because of ageing and low birth rates, the debt/GDP ratio of almost all countries in Europe would grow to between 400% and 500%, if policies then followed   remained unchanged. That’s about 6 times what it is today.

Changes needed to remedy these problems would be called austerity by many, but they are inevitable, I argued, because money is only lent where lenders are confident they will be repaid. And sentiment on that can, unfortunately, change overnight.

Similarly, western consumption patterns may need to be adjusted to become environmentally sustainable. Some might call that austerity too.

If western consumption patterns were to be replicated across the world by the 3 billion additional people who have, since 1990, entered into competition with us for scarce energy, scarce water and scarce food resources, humanity would face possible catastrophe. 

The lifestyle of the average German consumes 40 times as much water as that of the average Egyptian. CO2 emissions per head are much higher in Europe.  The amount of acres needed to produce enough food for European consumption patterns is much greater too.

But since 1990, the arable area per person in the world has halved, and yield improvements have not kept pace. Some forms of fertilizer, like phosphate, are in finite supply.

I then suggested a sustainable  growth model for Ireland and Europe. I put forward ideas, including more innovation in the public sector, educational changes, and targeting our R and D at things that can make our lives more sustainable. 

In my earlier intervention on abortion, which also displeased the “Sunday Independent”, I pointed to the inherent legal and ethical difficulty of using a suicide threat as a basis for legitimating anything, and to the fact that an unborn child in Ireland has inherent constitutional rights, the first of which is the right to live.

The “Sunday Independent” did not engage with any of these concrete arguments, which I put forward on the basis of evidence in each case.

Instead its whole thesis was that, because of who I am, my character, where I was educated, and my income, I simply should not be allowed to express a view at all. Strange, from an advocate of free speech!

The paper even accused me of being a demagogue.  Attacking individuals, rather than debating real choices, is what demagogues do.

That is not what I did, or do, and I leave to its own readers to decide if it is the “Sunday Independent“ itself that is acting  as a demagogue in this case.