To see the difference between high incomes and high wealth, fly from Ireland to the Netherlands (or, pick your Northern European country).
Ireland is a country with high incomes. They have been comparable to those of the Dutch for 25 years.
But if you move through a Dutch airport, take a Dutch train or walk Dutch city streets, it’s clear Dutch wealth is on a different level.
The Dutch, in particular, are master builders. The Netherlands has been one of the most densely populated countries in the world for centuries, so they have had time to practice.
But it’s true across Northern Europe. European countries do a better job of investing in their physical infrastructure. The airports are smoother, the trains are more frequent, and there are more homes per person. The paving is nicer. As Angela Merkel once said of Germany, it has the best-sealed windows in the world.
The relatively poor state of Ireland’s physical infrastructure is more frustrating when you consider the money that has washed over this country since 1990. There’s been more than enough money to build abundant homes, hospitals, and transport. But all we got was greenfield housing, wider motorways, and two tram lines.
Why is the Ireland state so bad at investing? Two pieces in The Currency this week touch on this question.
On Tuesday, Ronan Lyons wrote about the census. Ireland’s population was measured at 5.2 million; Eurostat expects it will continue to grow at a rate of five per cent per decade, which is the second-highest in the EU.
Ronan’s piece focuses, not on Ireland’s population, but on our forecasts of Ireland’s population. In short, official Ireland has a bad habit of underestimating Ireland’s population growth.
“What Ireland is suffering from now is growing pains – a failure to plan for growth that, while not inevitable, was certainly possible and maybe even probable, with a sufficiently open imagination. The latest Census figures are a confirmation of this.”
This bias towards conservatism has serious consequences. As Ronan points out, local authorities have capped the number of homes that can be built in their areas based on official estimates of population growth – estimates that have since turned out to be far too conservative. Similarly, the Department of Education’s forecast for student numbers in higher education over five years was surpassed after just one year.
It’s not just that we’re building less than we need every year. It’s worse than that. Years of underbidding have left us with an infrastructure deficit. To overcome the deficit, we need to build more than is justified by our population growth – not less.
Ronan is focused on the officials. Stephen’s piece, which is more broadly about our priorities heading into the next budget, is focused on the politicians (and their voters).
Stephen lays out a national dashboard over the next few years, with estimates of growth, inflation, consumption, and employment. His conclusion:
“In times of such incredible uncertainty, with the economy flashing warning signs, one does not spend more. One spends less.”
Stephen is not dogmatically anti-spending – he was in favour of a big-spending package through the pandemic. But, he said, “asking the future to take care of a once-in-a-century event does not seem too much of an ask. Asking the future to do that every year feels like an imposition, especially in an era of climate change.”
Why does the state consistently fail to make long-term investments? Look no further than the budget process, said Stephen.
“Risks are everywhere. One would imagine, then, that as the fiscal fracas begins, the parties of government would focus like lasers on two or three major policy areas plus a smattering of sweeties for everyone else.
In fact, the exact opposite has happened. Ministers, Senators and backbenchers are falling over each other promising wage increases, tax cuts and expansions of service.”
“Very low interest rates and reasonable growth prospects should have produced a truly enormous increase in capital investment. We should be riding monorails around the place. But we are not.“
Elsewhere, John Reynolds interviewed the billionaire Anglo-Irish inventor, David McMurtry. McMurtry is the founder of the engineering giant Renishaw, and at 82, is not for slowing down. He tells John about his designs for a world-beating electric car, next-generation 3D printer and lasers for industrial use.
Francesca has a superb long read on life among criminal barristers. “The barrister sits down with the woman for a quick consultation in the body of the court which is far from full. He is back up addressing the judge a few minutes later to set dates in two further cases mentioned in the list. By this stage, the callover of cases is close to concluding. If the Penneys sentencing matter goes ahead in the afternoon, I calculate counsel will have earned around €125 for his work in court that day,” she wrote.
The cost of shipping to the US has roughly doubled in the last year, wrote Devin Seán Martin. In a detailed piece, he explored how exporters are navigating the fallout from the Ukraine war and the supply crunch.
Peter Casey, the former presidential candidate, has a long-standing friendship with two of India’s wealthiest families, some of whom hold Irish citizenship. He talked to Rosanna about the death of a patriarch, the fall-out between the two clans and their Dublin connection.
Finally, over the last week, we have been running a special summer offer where you can sign up to The Currency for just €2 for the first month. The offer ends today, so just a gentle reminder if you were planning on becoming a member.