Reading between the tiger's lines

Bah humbug! - who needs prosperity anyway? If 1997 was the year in which the Celtic Tiger image was fashioned into a thousand…

Bah humbug! - who needs prosperity anyway? If 1997 was the year in which the Celtic Tiger image was fashioned into a thousand bad metaphors, expect next year to usher in a new era of boom angst. The danger signs were there already, even before Seagate. Inflation is creeping back up. World financial markets are rumbling - if Asia sneezes, will we catch flu?

The higher we fly, the further we have to fall. In the manner of some fancy sports car, employment at Seagate went from zero to 1,400 in under two years, before screeching back down to zero this Christmas.

Change at this speed cannot be planned for. Ireland Inc is on a roller-coaster ride, and the customers are advised to hold on to their seats.

It is less than four years since the image of the Celtic Tiger was born. On August 31st, 1994 - the day of the first IRA ceasefire - the investment bank Morgan Stanley issued a report comparing the Irish economy to the East Asian tiger economies.

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Speechwriters have been celebrating ever since, but there is growing evidence that the rest of us are less enthusiastic than first thought. A combination of guilt, envy and old-fashioned compassion has since dented pride in the phenomenon.

Even the most recent Budget, the biggest giveaway in years, got the thumbs-down from three-quarters of the electorate. Was this because it only emphasised an essential truth behind our economic miracle - that the rich are getting richer, some spectacularly so, and the rest of us are just muddling along?

Thus, according to the Revenue Commissioners, the top salary-earners in the country pay an average of 20 per cent in tax, when all their tax avoidance measures come into play. The average PAYE worker continues to pay over twice this. We're guilty about those who are being left behind, and envious of those who are powering ahead.

The property market provides the clearest demonstration of the mixed blessings brought on by the boom. Spiralling prices have made millionaires of many older people who bought redbrick properties in leafy suburbs - especially south Dublin - in the 1960s.

But their children are unable to make the same start in life. Many are in low-paid jobs or unstable employment and unable to afford more than a shoe-box apartment in the city.

Even those with good jobs are finding it more difficult to buy a family home with two salaries than their parents did with one. And this is prosperity?

Everywhere there is evidence that the Celtic Tiger is running up against its own limits. This has been a record year for new car registrations - and for traffic jams. Getting to the holiday carparks in Dublin Airport can take longer than flying to Britain.

Emigrants who returned to Ireland for the quiet life are finding that life here is now very similar to life in the New Yorks and Londons they fled, according to Dr Mary Corcoran, a sociologist at the National University of Ireland, Maynooth.

"They came back to escape things like long working hours, long commuting times and high house prices. And that's exactly what they've found in Dublin," says Corcoran who has made a study of returned emigrants.

In spite of their quest for anchorage, returned emigrants are transient. "They are keeping their options open," she adds.

In his contribution to a new book, Under the Belly of the Tiger, Denis O'Hearn pours cold water on the Celtic Tiger phenomenon. The East Asia tigers, he points out, have had high growth rates since the 1960s, far longer than Ireland.

"Compared to East Asia, the Southern Irish economy can hardly be called a `tiger'. Three-year spurts of 6-8 per cent growth are historic for Ireland, but many economies, in both the northern and southern hemispheres - such as Mexico, Brazil and even Botswana - have achieved similar spurts."

More importantly, O'Hearn points to our heavy reliance on foreign investment, particularly by multinationals. About 80 per cent of manufacturing investment is foreign, three-quarters of it from the US.

"It is barely an exaggeration, then, to say that the difference between Ireland being a `tiger economy' and just another average European economy boils down to a few US corporations in computers and pharmaceuticals."

So a few more Seagates could cause major disruption to the Irish economy. And, in any case, O'Hearn points out, much of the proceeds of economic growth is being removed in the form of foreign corporate profits.

The proportion of Irish people living below the poverty line has risen in recent years, even as Ireland experienced its `economic miracle', he adds.

While corporate profit grew by 20 per cent in 1995, personal consumption increased by 4 per cent. The boom has been converted mainly into high executive incomes and profits which are removed from Ireland, he maintains.

"Because it is based on profits instead of wages or investment, it cannot significantly improve working class living standards or strengthen economic sustainability in the long run."

So the message is: enjoy it while it lasts, the Celtic Tiger. A few more Seagates and it could become a wounded beast, a fading memory of the days of wine and roses.