Gullibility as Economic Development

This is a lesson about how careful we must be in the effort of chasing “growth.”  As the reality sets in that our whole growth-dependent way of life is not re-starting, our leaders are likely to resort to extreme efforts.  And, as any reader of parables knows, the person who desperately seeks something they consider beyond precious is extremely susceptible to being hoodwinked.

Here’s a fairly benign but important example that shows the lengths to which people want to succeed. It involves a trip organized by Greater Louisville, Inc, the chamber group there. In 2007, the leaders of that group took 80 folks to Ireland to learn about that country’s economic “miracle.” This trip was touted as to how to make Kentucky more competitive by learning how Ireland used low taxes, an educated workforce, and the “can-do spirit” of the Irish.

Watch the video of the trip here – Ireland appears to dazzle.

Many of the group touted the similarities between Louisville and Dublin – size, prime city in a small state (nation), remarkable “growth” etc.  The Lousiville people saw Dublin as a “city on the rise.”  Louisville folks even saw Dublin as a global competitor for talent and “money.”

The participants expected to learn about education.  Quoting from Greater Lousiville Inc’s report:

“Joan Coleman, president of AT&T Kentucky, and David Jones Jr., chairman of Humana Inc., each see the trip as an opportunity to delve into how Ireland turned around its educational system — a key factor in improving the quality of the work force.

“In the past, economic growth was fueled by natural resources,” Coleman said. “Future growth is being driven by intellectual resources.”

Ireland has done well in attracting human capital — the educated, creative, technically skilled Generation Y employee who Coleman refers to as the “creative class” and the same type of talent she wants to bring to Kentucky.”

Jim Kirchdorfer Sr., chairman of ISCO Industries LLC, shares the opinion that there are lessons to be learned from Ireland, which he calls one of the “golden spots in the European arena.” (mine)

And it did indeed appear that it was all good.

Ok, so why am I telling you all this?

Because all the “gold” the Kentucky leaders saw was only fools gold.  When the Kentucky folks went over there, Ireland was in the middle of what has turned out to be –on a per capita basis – one of the  largest swindles on Earth. The swindle was simple:  use debt to go on a spending spree in order to make everyone think you’re rich. This held true for both the private sector and the government. And now the bill comes due.

David Lynch, author of When the Luck of the Irish Ran Out: The World’s Most Resilient Country and Its Struggle to Rise Again, says “Ireland had incredibly reckless banks, coupled with weak regulators and a complicit political class,” he said. “The result was a housing and credit bubble that dwarfs even what we’ve had here in the U.S., with a bailout tab that would make Tea Party advocates run for the hills.”

Ireland’s unemployment rate is well over 13% and talented people are leaving the country in droves.  Sprawl developments sit empty, and will probably be bulldozed.  Austerity will mean years of pain.   Read more here.

All this so an entire nation could appear to be “growing.”  And what about all that BS about low taxes, skilled workers, “can do spirit”? That’s all it was – bullshit.  The only growth was debt fueled.  Low taxes, education, can do spirit had nothing to do with it. And our leaders fell for it – at least for a time.  There is no more “growth” without bubbles anymore in the Western world.  The Irish bubble didn’t even last a decade and the hangover is crushing them.

Lesson for today?  The secret of growth is not “out there” to be found.  The secret of growth, if there is one at all, will be found in the transition to a solar economy. The wholesale transformation of our current carbon based economy ought to be enough to keep things humming along far longer than the measly few years we get from bubbles.  And the solar economy is one that truly values education, place, and a “can do spirit.”  I love traveling and learning from others.  But we can find the secret to lasting prosperity right here if we chose to.

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2 Comments

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2 responses to “Gullibility as Economic Development

  1. Danny

    Gullibility as economic development, indeed. Nice work to head back to the archives and see how things shook out–and to what claims were made regarding why Ireland was so great. Was this the official beginning push to economically back Kentucky’s infatuation with the creative class, which hit Lexington a couple years later? (We’re always so gosh darn late!)

    I remember Thomas Friedman’s Flat-world dominating the discourse on the race to the bottom before this, predominantly with Lee Todd’s incessant citation of him across the state while selling his Top 20 Business Plan in, say 2006 or so. Over the next 3 years–as Bush ideology waned and Obama’s rose (the 2 mainly different superficially), Todd had re-branded himself from Friedman’s The World is Flat to Richard Florida’s The World is Very, Very Different. Of course, the exploitation of these imagined world geographies remained much the same: pay more for the people at the top.

    Here’s something I wrote on the Creative Class and Richard Florida that might speak a bit to the Louisville trip to Ireland to meet all those hip creative types:

    http://noclexington.com/?p=477

  2. Pingback: Kentucky business leaders sure can pick ‘em | Bluegrass reVISIONS

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