The Celtic Tiger Defanged

FORTUNE MAGAZINE MENTIONS Ireland's new troubles on the cover of its current edition and then offers a seven-page explanation of the deep challenges affecting the country. "Ireland's economy is suffering the deepest plunge of virtually any country outside of Iceland," says one caption. Seven photos accompany the story, including a double-truck shot looking up O'Connell Street in Dublin (aerial shot shown at left) just before the morning rush starts. The remaining six photographs tell the story by the selection of images. One shows a dole queue, another a shop with 70% off an empty window, and a third snaps pickets at the gates of Leinster House. An abandoned (incomplete) housing estate in Rathnew features on a half page and the smiling faces of Mary Coughlan and Michael O'Leary complete the pictorial review of the demise of the Celtic Tiger era. Inside the piece, journalist Shawn Tully offers some advice and bitter medicine that those elected to serve should consider as their marching orders. In defanging the Celtic Tiger, Fortune explains how Ireland got into its current mess. The suggestions about getting back on track mean lowering labour costs and preserving the favourable tax regime. Some of those interviewed from the pharmaceutical sector think "Ireland has a big advantage because of the skilled labour force and the high reliability of production." In my job at Tipperary Institute, we graduate students with BSc degrees who go off an manufacture stents. Local costs for Boston Scientific and Abbott Laboratories just up the road are falling. And the days of easy pay increases are gone for the near future. But there's still a sense of entitlement that has permeated Irish society with a range of comfort services that do not exist in the States and as long as centrist policies remain at the heart of Irish government, it will be difficult to curtail State services.

The most convincing solutions facing national politicians mean taking difficult decisions to reduce head counts in the flabby middle management of the health service and across a range of services that have evolved to complement government ministries. Many of these public servants and their well-intentioned service agencies did not exist a decade ago. If they do not go, excessive borrowing will be required for Ireland to keep ticking over. But who has the fortitude to face down the wrath of public service unions and to begin slashing and suttering agenceis? And who in government is willing to lead the charge by cutting back on their own administrative staff, throttling their own expenses and reducing their State-supported pensions?

The Irish car crash will make an interesting cover story as it unfolds through a deepening recession.

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Shawn Tully -- "Ireland's New Troubles" in Fortune Magazine, May 25, 2009.
Previously: "Dell Shutting Limerick"

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