Ireland changes luck with bold moves

DUBLIN, Ireland -- American Ambassador James C. Kenny established in the first few minutes of our interview the unlikely importance of today's Ireland -- often fondly called the "Celtic Tiger."
& quot;This is a good story and a story that should be told," he began, "because of its ramifications for the rest of the world." Then this respected diplomat, formerly head of the Kenny Construction Co. of Chicago, launched into the how and why of the "Irish miracle."
& quot;By the 1980s," he went on, sitting in his dignified but simple embassy office, "the country was basically bankrupt. It had 18 percent unemployment. It was on the brink of another mass exodus to the States because there was no future here.
& quot;But by the late '80s and early '90s, there had been big changes here, particularly in education. They wanted foreign investment, and so they changed the tax rates and invited in high-tech and pharmaceutical industries. By the late '90s, for instance, IBM was paying only 12.5 percent in taxes. Directly, the eyes of America looked at the island as an operating base from which they could move into Europe.
"In trying to invent a model that was new -- that was market-friendly to America -- a lot of the success was due to the way they treat American CEOs. They can get to the prime minister and talk to him. The prime minister has a CEO advisory board."
Somehow Ireland is transforming its still vivid memory of repression by the English, of famine and massive exile, into highly sophisticated and immensely self-controlled economics.
First, today's prosperity -- Ireland's per capita income is second within the European Union only to Luxembourg's and well above England's -- is based upon a "social partnership." Government, unions and other interest groups in Ireland came together in the '90s and agreed, for instance, to lower wages in return for low-interest mortgages (currently still only in the 3 percent range) and other bonus rewards for workers. Ireland agreed to consolidate then in order for everyone to gain later and, quite simply, to analyze its advantages and disadvantages and to build upon -- or in spite of -- them.
Social agreement
Second, the Irish Development Authority set out to market Ireland to America. Big U.S. companies, drawn by the social agreement, an English-speaking, educated population, and the economic opening to the E.U., began pouring in: Microsoft (the average salary about $80,000), Intel ($6 billion to $7 billion invested in Ireland), Dell Computers (producing 40,000 computers a day) and Bausch and Lomb (which has devised a new contact lens process). Today, U.S. investment here is three times as high as investment in China, or $73 billion, according to the embassy.
Third, the country is moving up so rapidly in research and development that Ireland is already competing with Scotland, India and China. The R & amp;D base here is one of the major reasons why $l.8 billion crosses the Atlantic between the E.U. and the U.S. every day. In fact, 100,000 Irish now visit New York every November and December for Christmas shopping.
Today, immigrants are so eager to come here that 7 percent of the population (of 5.6 million) is foreign-born, with 100 Poles alone arriving every day, and Irish investment in America now peaks at $25 billion, employing 70,000 Americans. The country has an extraordinary number of graduates in science and math, in sharp contrast to its literary/theological past, and the first Irish cadet is now in the American Naval Academy.
Even more interesting, the Irish are considering the idea that independent Ireland's model of prosperity should gradually and inclusively bring in the until-recently war-torn Northern Ireland. In fact, economists here are working on an all-island economy. Borders are totally open, and cross-border trade is thriving -- 1.6 million Irish cross over for visits every year.
There are, of course, problems, even ones special to prosperity. The worst headache for everyone is the exorbitantly high cost of real estate. In downtown Dublin, you're lucky if you get a small two-bedroom apartment for less than $500,000.
But the fact is that Ireland, through its unique and sophisticated use of the E.U.'s advantages for small member countries, plus the corporate advantage of American business, has created a model that allows it to reach out to the world.
Universal Press Syndicate