Inequality in Ireland

Table of Contents

1. Introduction

2. Prehistory
2.1 Ireland’s economy after 1922
2.2 Development until the 1980s

3. Ireland becomes the Celtic Tiger

4. Growing of Inequality in Ireland
4.1 Income
4.2 Taxation and Social Welfare
4.3 Education
4.4 Poverty
4.5 Health Care System
4.6 The Irish Dilemma

5. Recent Present and Future

6. Conclusion

7. Bibliography

1. Introduction

Ireland, also known as the Green Isle, is known for its sheep, wide meadows, and its mystical stories as well as for their hard-drinking men. For the rest of the world Ireland always was a kind of magic place, although their real history was never a fairy tale. Suppressed (with intermissions) by the English since the end of the 12th century, Ireland had to face many strokes of faith. They were persecuted and punished because of their religion; their land was dispossessed by the English landlords and during the Great Famine in the 1840s a million Irish people should have died. (cf. Donelly, Jim, p. 1) However, in the first half of the 20th century their fight for independence was rewarded and Ireland became a Republic. Even though, the development of an autonomous economy was no bed of roses for the newly founded Republic. In the 1950s a change in the economic policy made Ireland’s economy more liberal and open-minded to foreign investment. (cf. Kirby, p.12) Nevertheless, groundbreaking success failed to appear. As late as in the end of the 1980s Ireland’s successful story got going. From then on a rapid growth in economy took place and soon the Green Isle grew from a “Third-World-Country-in-Europe” to one of the wealthiest on the continent. Due to the just mentioned facts, Ireland was at the end of the 1990s in a fortunate position and a rich and productive country. How is it then possible that an Irish Professor for history makes such a clear statement?

This in an entity – it can hardly be called a society – based on exclusion. It is defined in terms of the exclusion of those who fail to conform to the model of the geographically mobile, who have no need of a sense of place. People exist only as producers and costumers. There is only one generation involved, there being no place for the uneconomic. It is a one-generational Ireland, it is an economy, not a society. It is therefore virtually the polar opposite to the dream Ireland of DeValera, which was far more a society than an economy.

Professor Joe Lee, 1999, 80^[1]

This quote is taken from a meeting of the Céifin organisation in Ireland that states his aim in “generating a capacity for debate on social issues” (cf. Céifin Centre, What is Céifin?) and their first conference, which took place in 1998, dealt with the fear of the loss of Irish community sense as a consequence of the Celtic Tiger phenomenon. So the questions are: what happened in the last decades in Ireland? How is it possible that a country that finally found its way out of the economic misery became a state that neglects the socially disadvantaged people and allows the gap between poor and rich to widen every year? Why do the inequalities in housing, income and health care grow more and more? And the ultimate one: did Ireland reach economic success at the expense of their people and their social well being?

2. Prehistory

Before we can have a look at the actual Celtic Tiger phenomenon it is necessary to cast a glance at the Irish economic history from 1922 until the end of the 1980s, because some origins for the Irish success story lie buried in the history of the middle of the 20th century. This chapter starts with the first phase of the economic development after Ireland’s independence. The second part characterises the liberalisation era from the end of the 1950s until the 1980s and the last part of this chapter examines the economic progress from the end of the 1980s, which became the Celtic Tiger phenomenon. This chapter is aimed to give an overview about the Irish economy in past, that had to develop from Europe’s “poor house” to a prosperous sector.

2.1 Ireland’s economy after 1922

As already mentioned above, Ireland gained its independence in 1922 and was, due to its colonial past and natural disasters, disproportionately disadvantaged. As Kirby states it:

The divergence between the Irish experience and that of the rest of Western Europe can be dated back to the nineteenth century; the incipient levels of industrialisation in the late eighteenth century did not prosper, and particularly following the Great Famine (1845-49), the economy became more and more dependent on agricultural production. (Kirby, p. 12)

Ireland was almost without any industry and was derogatory named Europe’s poor house. Unfortunately, the next years could not change the situation. The country was incapable of acting due to its conservative government that thought industry was not important enough. The only aim was to increase farmers’ incomes. (cf. Sweeney, p. 25) In 1932 the government changed and the Fianna Fáil under DeValera came to power. They tried to change the policy and introduced the so-called Protectionism. Greater self-sufficiency should be achieved by diversifying production to decrease the unemployment rate. However, at the beginning the manufacturing output rose, but the productivity level was simply too low. (cf. Kirby, p. 16) Ireland had to face lacks of resources and was not able to move into export markets. After the Second World War balance of payments problems and absolute inefficiency joined in. Ireland’s young industrialising economy had to come up with new ideas.

2.2 Development until the 1980s

William Norton, who was Minister for Industry and Commerce (cf. Sweeney, p. 36), gave the first impulse to open Ireland to foreign investors, when he negotiated with the US. Together with two other elements, namely “the use of grants and tax concessions to encourage export-oriented production […] [and] dismantling protection in return for greater markets abroad” (Kirby, p. 18) Ireland was able to change its economic policy to its interest. As a consequence, many foreign companies came to Ireland and invested their money. In the 1970s the government decided to settle international companies in rural areas, which concluded in a high unemployment rate in big cities like Dublin and Cork. (cf. Kirby, p. 19) After the 1973 and 1979 oil crises Ireland had to record another relapse in their economy and the national income per capita decreased by 0.4% from 1979-86. (cf. O’Hagan, p. 39) The following chapter finally shows how Ireland altered the course and became the Celtic Tiger State.

3. Ireland becomes the Celtic Tiger

As we have seen above, the Irish economy was in a slight downturn in the middle of the 1980s. In 1987 this changed rapidly and economists state this year as the beginning of the Celtic Tiger^[2] “miracle”. “Miracle” has to be put in quotation marks, because when we consider the reasons for the economic boom, it is not really a miracle but quite easily explainable as becomes obvious in this chapter. Sweeney tries to explain it as follows:

…substantial foreign investment in growing industries, a tighter fiscal regime, a stable macroeconomic climate, good all-round competitiveness, EU transfers, the Single market in Europe and timing were […] factors which helped develop the boom. (Sweeney, p. 71)

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^[1] John Joseph Lee is Professor of History and Glucksman Professor of Irish Studies at New York University. Besides, he is a former member of Upper House of Irish Parliament.

^[2] Ireland is called the Celtic Tiger or Emerald Tiger as an analogy to the four original Asian Tigers (South Korea, Singapore, Taiwan and Hong Kong) that recorded a huge economic expansion and changed from developing countries to industry nations very fast. Just like a tiger before he starts to jump.