State must work hard to break down the barriers that hamper firms doing business

In his epic work The Wealth and Poverty of Nations, David Landes tells an old joke that explains why communism failed. Boris and Ivan are two peasants; Ivan is jealous of Boris because Boris owns a goat. Ivan's fervent wish, his daily prayer, is that the goat will die.

Landes describes this as “the equality of poverty”, and most calls for the reduction of inequality should be seen in this light. Even if, unlike Ivan, we seek to acquire rather than destroy our neighbour’s goat, in the belief that we know how to milk it, we often end up killing it and are all ultimately worse off. A well-intentioned (or not) tax or regulation on goats often results in a few bowls of goats head soup.

Is there much difference between this simple fable and how we view business? Is there concrete evidence that points to a society that admires, values and encourages the private sector?

One legacy of the financial crisis is that anyone working in financial services is viewed as belonging to an “untouchable” caste, whose members are unfit for most human relationships, unless solely with each other.

Private matters

Sometimes it seems that most of the private sector is viewed in this way, if not untouchable then at least in possession of goats that deserve to die. My suspicion is that most of us are torn: we know, perhaps only in the vaguest sense, that private enterprise is the only source of sustainable growth but we would prefer if it were otherwise.

Business is a bit like the sewage system: essential to our wellbeing but best kept out of sight and preferably downwind.

These may be legitimate choices and they may also be simple expressions of envy. Either way, cultural anthropologists will one day enjoy the wealth of material provided by a body politic that says one thing – we love business – and almost invariably acts to prove exactly the opposite. Incoherent taxation of business is but one aspect of this.

Consistency needed

Our inner confusion about the true worth of business inevitably leads to bizarre policies. Believers in business are rare but they do exist: IDA Ireland is a prime example and a very successful one at that. Even here though, there are puzzles: why doesn’t someone champion a massive increase in IDA resources rather than indulge in pointless fretting over the inevitable ending of the “double Irish”?

Every business-friendly initiative proposed by the multiple arms of the State and its even more numerous agencies should always be subject to the same tests. Where does the new policy fit into the overall strategy? How does it square with similar or overlapping initiatives? What does the cost-benefit analysis look like? And so on.

Here is a small but telling example: travel between Ireland and our most significant trading partner. Tourism, as well as pretty much every kind of business activity, depends on smooth transportation links. Immigration controls are an unnecessary pain for most tourists and businesspeople. Europe, in recognition of the importance of all of this, has the Schengen group of countries that permits passport-free passage across borders.

We have the Common Travel Area (CTA) between Ireland and the UK, something rooted more in links with the past than with trade, although politicians now claim to be building on the CTA in order to help Irish business. The Minister for Justice earlier this month launched a visa initiative designed to boost tourism within the CTA. Indeed, the CTA is at the heart of this new legislation.

In practice, the CTA is utterly inconsistent: it means no queues and no passport controls when we travel to Heathrow and Gatwick, but usually involves queues and always a passport check when travelling through Dublin Airport.

Malaise

Mr Justice Gerard Hogan said in the High Court a couple of years ago that

Joseph Heller

of

Catch-22

fame would be proud of the way we operate the scheme. He also said that he had to undergo an archaeological legal dig to figure how the scheme was supposed to operate.

Surely it would be better to clarify how the CTA is meant to work and to get it operating consistently at both ends, rather than tacking on new bits that will only confuse and annoy travellers even further. It may be well-intentioned but again reveals little coherence when it comes to business-oriented policy. It is symptomatic of a much deeper malaise.