So did we waste all our wealth?

Sometimes it seems as if only yesterday we were describing ourselves and were being described by others as enormously wealthy as a country. But where is Ireland now? And if we were wealthy, did we make good use of that, at least while it lasted?

All these issues are addressed in a recent report issued by Davy Stockbrokers, entitled Years of high income largely wasted. The main drift of the report is that while we were indeed relatively wealthy as individuals (in terms of average per capita income) and to some extent still are, as a country we mis-allocated resources. In particular, 63 per cent of all capital investment between 2000 and 2008 went into housing stock, while key infrastructure requirements like roads, public transport and broadband were tackled but inadequately. The report adds that we also seriously under-invested in education.

I don’t think we should use reports such as this for recrimination. We all contributed to this problem. But we should note the lessons carefully, and we should use them for national strategic planning. I hope our relative prosperity returns; but then let us use it wisely.

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7 Comments on “So did we waste all our wealth?”

  1. Vincent Says:

    ‘We all contributed to this problem.’ Well, you may have but I certainly did not.
    I lived in London at the end of the 80s, so saw all this shit once and recognised the symptoms. Nor can it be all that suprising that many involved in the UK were also involved here.
    Further if that initiative of the presidents husband is ever to work, than much of the kindling for gold-rush economics will need to be removed.

    • Vincent, if you recognised the symptoms in the late 1980s you were not perceptive but prophetic. At that time Ireland was doing most things right – the IFSC was being created, Intel had arrived, foreign direct investment was being kick-started, and the first wave of useful capital investment was being undertaken. It didn’t start to go wrong until about 2003, when our productivity and competitiveness started to go under and growth focused on property and domestic consumption.

      • Aoife Citizen Says:

        He means his experience of late 80s London meant he recognized the symptoms here in the mid-naughts.

      • Vincent Says:

        I recognised the symptoms of the 80s London in the economy of the 2000 Ireland. And really the day The Guinness sold Farmleigh, should have been the day that people in ‘control’ should have went hold on a bit, there is something odd going on.
        Put it this way, if you gear your economy where you can only conceive of a Bull market, then you will have cycles in the 30 to 66 year range. Basically matching today the system in the landed estates where the leases matured every 30, 66 or 99 years.

  2. gmcmahon Says:

    I too find great irritation with the notion that: ‘we all contributed to this problem.’ As Vincent points out anyone (and there are a lot of us) who experienced the early nineties downturn in the UK and the effect on London property prices in particular knew that the lunacy embarked upon from 2002 onwards was going to end badly. What I didn’t realise was the extent of the vandalism and the wilful cheerleading it received by the establishment in this State.

  3. Perry Share Says:

    The Davy report is of some interest, if narrow. One could raise some questions about its assumptions. For example, it counts all investment in private housing as ‘unproductive’. This obviously depends on how you define ‘productive’. Good quality housing clearly has a value for those occupying it – and presumably also provides a basis for numerous other activities that have an economic impact – from cooking to decorating to home-working.

    Similarly roads are ‘productive’ while cars aren’t! I suppose its only 5-axle vehicles that have a productive role in our society.

    There is also a rather condescending and insulting view of those who immigrated into Ireland to build the aforementioned houses: their departure ‘will not particularly dilute the quality of human capital in Ireland’, due to their ‘low skill’ levels. Of course skill is a socially constructed category, and one might wonder about the ‘skill levels’ of the financial services industry in recent times!

    The positive note in the report, from our point of view, is the stress on the need to continue to invest in education. If the government is not listening to the HE sector in this regard, maybe it will ay more attention to the man from Davy’s?

  4. cormac Says:

    Ireland was never a wealthy country, simply because a wealthy country has a large amount of public wealth i.e. high standard of public transport, healthcare, education etc
    Even he ‘boom’ consisted mainly of knock-on effects of what was primarily private wealth from development, building and indeed, high wages. (Although it should be said that almost full employment was a huge bonus).
    But public wealth? I am convinced that most Irish people literally don’t even know what this is.

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