Noun 1. fundamentals – principles from which other truths can be derived

 We have been hearing a lot about fundamentals recently from Brian Cowen.  It seems that our minister for finance is unable to pass comment on the Irish economy without telling us how important it is to get the fundamentals right, before going on to tell us that the fundamentals of the Irish economy are sound.

Financial markets throughout the world are in turmoil, none more so than our own stock exchange. The sub-prime lending crisis is shaking the very foundations of some of the worlds largest financial institutions.  Across the Atlantic the US economy teeters on the brink of recession, and yet, Cowen tells us that we have nothing to fear as our fundamentals are sound.  The old truism that when America sneezes the rest of the world catches cold is no longer true.

The housing market in Ireland has been in steady decline for 12 months, the numbers employed in house-building, one of the largest employment sectors in the state, are about to fall significantly, and yet, we need not worry, the fundamentals are sound.

 I am not an economist (like you hadn’t guessed!), therefore I take a rather simplistic view of the Irish economy.  I remember the 1980s.  Things were drastic.  Unemployment was huge.  Emigration drained over 300,000 of our finest  people, most of them in the prime of their lives, away to America, Australia, Britain and elsewhere.  That was about 8.5% of the total population.  In Britain that equates to over 5 million people! Drastic times indeed.  In the last 15 years or so things have turned around dramatically.  Things have never been better for most of the population.  Anyone who is working has more money in their pocket than they had 15 years ago.  This gives us choices we never had before and we have taken to it with absolute glee.

I grew up in Leixlip, Co. Kildare, and so it seems to me that the Celtic Tiger’s arrival coincided with the arrival of Intel as the IDA’s poster boy for overseas investment (a position it recently seems to have ceded to Google).  Suddenly we were all working in IT or electronics of computer chip manufacture.  Massive campuses sprung up hither and yon housing Microsoft, Dell, Symantec et al, churning out graduate level jobs by the thousand.  Unemployment tumbled.  Tax revenues rocketed.  Fianna Fail got into power three times by returning the stringent, belt tightening taxes of the 80s to the workers of the 90s.  These workers went out and spent this money in unprecedented fits of consumerism.  This caused inflation and the unions screamed for more and bigger pay rises to keep pace with that inflation.  The pay rises duly arrived (benchmarking anyone?), and were splurged in more fits of consumerism.  This self propelled cycle continued for  more than a decade with everyone believing that the good times would never, could never, end.

2008.  Here we are.  What about those fundamentals. 

We are a country with almost no indigenous industry.  We import almost every consumer good imaginable.  Ireland, ‘the food island,’ imports massive amounts of food every year.  Our full employment level sits at the mercy of huge multi-national corporations who, understandably, have no sense of place in relation to Ireland, no emotional, national ties to this island.  As soon as the Poles or the Hungarians or the Indians or Malaysians can offer an equally qualified workforce and a suitable tax environment these companies will be off ‘like a rat out of an aqueduct,’ as Brian of Nazareth’s mother once said. Who could blame them.  Intel very nearly went to Scotland all those years ago and they would go there tomorrow if the price was right.

Maybe I’m naive.  Maybe I’m just uneducated in economics, but I don’t see any sound fundamentals in subcontracting the future of the country to the Intels and Googles of this world.  I don’t feel comfortable about our economy being so vulnerable to something as simple as a reduction in corporation tax in Latvia or Romania or wherever.  those of you more erudite in these matters might explain it to me.