THE END OF THE RAINBOW
June 29, 2005
Ireland today is the richest country in the European Union (EU) after Luxembourg. How it went from the sick man of Europe to the rich man in less than a generation is an amazing story, says the New York Times' Thomas L. Friedman.
"We went on a borrowing, spending and taxing spree, and that nearly drove us under," said Deputy Prime Minister Mary Harney. "It was because we nearly went under that we got the courage to change."
And change Ireland did, says Friedman.
- In a quite unusual development, the government, the main trade unions, farmers and industrialists agreed on a program of fiscal austerity, slashing corporate taxes to 12.5 percent, far below the rest of Europe, moderating wages and prices, and aggressively courting foreign investment.
- In 1996, Ireland made college education basically free, creating an even more educated work force.
The results have been phenomenal, say Friedman:
- Today, 9 out of 10 of the world's top pharmaceutical companies have operations here, as do 16 of the top 20 medical device companies and 7 out of the top 10 software designers.
- Last year, Ireland got more foreign direct investment from America than from China, and overall government tax receipts are way up.
- In 1990, Ireland's total work force was 1.1 million; this year it will hit two million, with no unemployment and 200,000 foreign workers (including 50,000 Chinese).
Ireland's advice is very simple: Make high school and college education free; make your corporate taxes low, simple and transparent; actively seek out global companies; open your economy to competition; speak English; keep your fiscal house in order; and build a consensus around the whole package with labor and management -- then hang in there, because there will be bumps in the road -- and you, too, can become one of the richest countries in Europe.
Source: Thomas L. Friedman, "The End of the Rainbow," New York Times, June 29, 2005.
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