The wisdom of ages… November 22, 2009
Posted by WorldbyStorm in Economy, Irish Politics.trackback
Precisely how will that save €20bn? Even if they were to walk?
Referring to the obstacles his own company faces in doing business in Ireland, the Ryanair boss added: “What mystifies me is the Government falls all over itself trying to attract the world’s biggest companies to invest in this country. You have the world’s biggest airline resident in this country, willing to invest in this country in an industry which, despite the recession, you can turn on growth straightaway: tourism, hotels, bars, restaurants, the works. We’ve been doing business here since 1986 and yet the Government has followed only two policies. One: pissing us off; and two: promoting and protecting what is clearly an incompetent monopoly at Dublin Airport.”
But, to quote his own words… if you don’t like it, leave. Curiously though, Ryanair hasn’t.
And what of entrepreneurial wisdom on these matters?
Millionaire founder of Baltimore Technologies and former FAI chief executive Fran Rooney for his part believes that entrepreneurs will be the ones to lead Ireland out of the recession, with manufactured export-led growth being the key driver.
“Private enterprise is going to drive us out of this recession. How are we going to be successful driving this forward? The most essential statistic will be the increase in exports in the next number of years. We’ve got to create an environment where we have manufactured exports.
“That can only be created by entrepreneurs.
Hmmm… to a point, to a point. Although knowing what I do about the time from start up to successful profit making and the far from great record of entrepreneurship in this state…well… hmmm.
He continues:
“Where the Government can help is in providing the stimulus for that. There’s no point in creating jobs where we’re just moving the money around. We’ve got to bring money in from overseas either through investment to create exports, or through exports themselves. Without that, there isn’t going to be an improvement in this economy. We’ll just be borrowing, taking money in from banks that has to be repaid,” he said.
Mr Rooney says the Government must introduce imaginative policies to encourage people as the recession bites more heavily.
“We have a lot of people unemployed, and we’re paying for those people to be unemployed, essentially. One very simple stimulus would be to pay companies to take them on board. We’d get two things out of that. We would take people off the live register and we’d also be putting them back into employment which will help to stimulate the economy,” he said.
Ermmm… and who will pay for this given that ‘private enterprise will drive us out of this recession’ and recovery ‘can only be created by entrepreneurs’?
“Another great stimulus would be to match investment by private individuals”
By who again?
“There was a lot of money spent on land.
“Now where did that money go? Unless it was spent again on other development land or outside the country, it’s still in the country sitting in people’s bank accounts.
“You’re talking about a very aggressively sexed-up business expansion plan over one or two years where you’re going to get a return of ‘x’ percent that will be matched by the Government or assisted by them.
Ah…
But, to quote his own words… if you don’t like it, leave. Curiously though, Ryanair hasn’t.
And is himself about to be told to go take a hike by Boeing, as well. As to the ‘entrepeneurship’ culture of which he speaks:
“To secure the deal, the government said it has given Bentley a confidential aid and subsidy package for starting up the office and training new hires.”
http://www.forbes.com/feeds/ap/2009/11/18/business-eu-ireland-us-bentley-systems_7135042.html
Note that Bentley – the above US software company which this week formally announced a re-location of offices from the Netherlands to Ireland – had upped sticks in their former location immediately upon the ending of the ‘aid and subsidy’ they were getting from the Dutch.
Bribery? Blackmail? Protection racketeering? This is ‘entrepeneurship’ in the free market…
@EWI
Bentley’s behaviour shouldn’t be that surprising, given that they were effectively bribed to come to the Netherlands in the first place.
The trick is to structure the incentive (or bribe, if you like) so that its like the gift-that-keeps-on-giving. For example permanently low corpo tax rates as opposed to time-limited wage subsidies or cash grants to cover start-up costs.
The other (complementary) approach is to make the value proposition provided by a highly skilled, highly productive workforce so compelling that they don’t consider leaving.
Finally, you obviously need the presence of the transplant to seed an indigenous high-tech industry. Something we’ve largely failed to do during the noughties, mainly I think because VC-style investment was starved off by the property sector, alongside some crowding-out effects from the public sector.
The other (complementary) approach is to make the value proposition provided by a highly skilled, highly productive workforce so compelling that they don’t consider leaving.
We’ve tried this with Dell – remember? Exceptionally efficient workforce, and we saw where that got them. There’s always someone else willing to undercut or to offer bigger bribes, and so the whole mess spirals further down.
The only ones benefitting from this arrangement are guess who?
Bentley’s behaviour shouldn’t be that surprising, given that they were effectively bribed to come to the Netherlands in the first place.
The point is that there’s a good deal of delusion about the ‘good news’ that this represents – and about that another EU country has just had to pay, and we will in our turn soon enough. The fawning over them by a Government minister is repugnant in view of the reality of the situation.
The trick is to structure the incentive (or bribe, if you like) so that its like the gift-that-keeps-on-giving. For example permanently low corpo tax rates as opposed to time-limited wage subsidies or cash grants to cover start-up costs.
Doesn’t work for dealing with petty crooks; so why, exactly, do you think that it may work for bigger ones? I’m curious.
Finally, you obviously need the presence of the transplant to seed an indigenous high-tech industry. Something we’ve largely failed to do during the noughties, mainly I think because VC-style investment was starved off by the property sector, alongside some crowding-out effects from the public sector.
Here’s my confident prediction: no spin-off or related companies will come of this investment, and we’re just subsidising an upscale Fás scheme and accomplices to a spot of tax evasion – sorry, “efficiency” – on the part of yet another corporation.
And what, exactly, is this “crowding-out” effect of the public sector on the high-tech industry that you claim? The public sector has always been technology’s greatest sponsor and benefactor (especially in the US).
Speaking of which, the aviation industry utilises considerable effective subsidies through low or no taxation of avaition fuel. A sweet situation to build a thrusting entrepreneurial business model on.
I’m not sure where the problem is here (aside from taking Michael O ‘Leary seriously on the specifics of his rhetoric).
Any stimulus package is by it’s very nature going to be paid for by the taxpayer, and will, hopefully, benefit those who are in a position to either export something, or bring in foreign investment/revenues in some shape or form. That’s where the money that we don’t currently have resides. Unless you actually believe that ESBI is going to be the vehicle for developing new markets, then you have to resign yourself to private enterprise benefiting from stimulus packages.
I thought that stimulus packages were considered to be a good thing in these parts?
A sweet situation to build a thrusting entrepreneurial business model on.
As a good example of which is the stark fact that the American technology sector’s dominance (and very existence, even) are owed entirely to massive US federal investment in technology – a laudable philosophy which is sacrificed today on the altar of short-term corporate sector profits (an inherent weakness of capitalism).
And on a related note, Eisenhower’s warning about the military-industrial complex is depressingly still as true today as it was fifty years ago – one just has to look at the stranglehold that BAe has on the British state, never mind the US experience. The latest escapade is BAe trying to get the UK to still build the second new aircraft carrier – but for immediate sale on to India, at a loss (for the UK taxpaying public, that is)
By the way, CLR don’t do caption competitions, do you?
http://ftp2.bentley.com/dist/collateral/docs/press/bentley_coughlan_oleary.jpg
I thought that stimulus packages were considered to be a good thing in these parts?
Speaking for myself, the problem lies in the hypocrisy of the private sector which loves to ‘privatise profit, but socialise pain’. They seem to have adopted the bullshit of Thatcherism fully.
There does need to be a quid pro quo for this sort of thing, even if in terms of greatly improved governance, and even – dare I say it – some bloody sense of responsibility for the hole that their own hubris dug them into (see Anglo, AIB etc.).
Speaking for myself, the problem lies in the hypocrisy of the private sector which loves to ‘privatise profit, but socialise pain’. They seem to have adopted the bullshit of Thatcherism fully.
There does need to be a quid pro quo for this sort of thing, even if in terms of greatly improved governance, and even – dare I say it – some bloody sense of responsibility for the hole that their own hubris dug them into (see Anglo, AIB etc.).
Precisely EWI. I couldn’t have put it better.
Well, that would depend on whether “the rest of us” were as close as Mr O’Leary to having the same attitudes and supporting the same economic policies as the banks.
Come again? Which economic policy that the banks advocated is seemingly shared by O’Leary?
…some bloody sense of responsibility for the hole that their own hubris dug them into (see Anglo, AIB etc.).
You’re ascribing the faults of the banks to the entire private sector? That’s pretty convenient don’t you think? Michael O ‘Leary and Fran Rooney, for all their failings, never ran a bank, and are about as culpable for the banking sectors’s screw-ups as the rest of us.
Well, that would depend on whether “the rest of us” were as close as Mr O’Leary to having the same attitudes and supporting the same economic policies as the banks.
You’re ascribing the faults of the banks to the entire private sector?
The prevailing orthodoxy in business schools of the past two decades was the claim that the free market was the solution to all problems, and the proof being offered for this was the financial services sector – whose miraculous ‘success’ has been revealed to be composed of (as it now is indisputable) fraudulant practices by crooks.
And this view of the triumph of Thatchersim does not appear to have changed a whit in the last few years despite the evidence before our eyes (and the ongoing Eircom privatisation debacle has been in progress for longer). This must change if we’re to prevent a repeat of this collapse in the near future.
whose miraculous ’success’ has been revealed to be composed of (as it now is indisputable) fraudulant practices by crooks.
Well – unless the business schools are are advocating fraud and criminal activity as free market orthodoxy, those would appear to be quite different matters.
Clearly, the apparently obstructive attitude of the Irish government hasn’t actually stopped Ryanair being the biggest airline the the universe ever, has it?
@EWI
We’ve tried this with Dell – remember? Exceptionally efficient workforce, and we saw where that got them.
No disrespect to the Dell workers, but assembly of pre-packaged components to make a low-margin commodity product was simply too far down the value chain. In a sense, it was amazing they stayed in Raheen for so long – the exceptional efficiency you mention probably delayed the pull-out by 5 to 7 years.
The sort of high value workforce I’m talking about would have more unique knowledge and skills, and the activities would need to be complex enough to raise the barriers-to-entry for ultra-low-cost competitors.
The sort of high value workforce I’m talking about would have more unique knowledge and skills, and the activities would need to be complex enough to raise the barriers-to-entry for ultra-low-cost competitors.
This is a myth, though. There is no such thing as an irreplaceable worker, at least to the bean-counters who run these mega-corporations, and we’re only playing their game (after which they’re out the door).
The big problem is that our own capitalist class are a pretty mediocre lot in general, and their crony political class has lost any sense of the why or the how of directing public investment to create industry (due in large part to the indoctrination effect of all those O’Reilly, Smurfit etc. “business schools”).
Look at what the first couple of generations of politicians in this State achieved, by comparison.
Well you don’t have to be irreplaceable per se. Instead the worker has to be just difficult enough to replace in terms of expense and risk, that the bean counters don’t get their way.
WRT your earlier comments on the free market, here’s an interesting take on those aspects of a free market economy that aren’t necessarily pro-business and don’t receive enough attention from policy-makers.