Introduction to
Economics
Lesson of 26 September 2006
IRELAND:-
Starvation in the 1840’s, Boom in the 1990’s
In 1840 Ireland
was, as now, a green and fertile land.
A part of the British Empire, it was virtually only a ferry ride
away from Britain itself, the richest and most economically developed
nation of the day. Yet,
commencing in 1845, Ireland experienced one of the most devastating
famines in history, in which it is estimated between 500,000 and I
million people literally starved to death.
By the end of the 1840’s, death and emigration had reduced the
population by at least 20%.
The immediate cause
of the Famine was an outbreak of ‘potato blight’, a fungus that
destroyed, for several years, almost the entire potato crop, the staple
food of the majority of the population.
But why did the people starve?
One could go one step further and say the country was poor, but
again one asks why? Many explanations of various causes have been suggested;
cultural, ethnic, religious, political, legal and economic.
Conversely, at the
end of the 1980’s, Ireland entered into a period of economic boom,
which to a large extent continues today and that has caused it to be
dubbed the Celtic Tiger. This
is an analogous reference to the East Asian boom economies of South
Korea, Taiwan, Singapore and Hong Kong, dubbed the Asian [or Confucian]
Tigers.
Between 1990 and
2005, employment almost doubled, from 1.1 million to 1.9. Population, which had been declining for decades through
emigration, has reversed itself and through immigration and natural
increase begun to climb. Ireland’s
GDP per head is now the second highest in Europe with the highest
economic growth rate. Again,
many reasons are suggested.
FAMINE
Some of the
suggested reasons for the Famine are as follows;
Overpopulation
Ireland is
sometimes said to have demonstrated the correctness of the Malthusian
principle. Malthus himself
saw Ireland as overpopulated. Like
that of Britain, the population of Ireland had increased dramatically in
the first four decades of the C19.
[It was 4.4 million in 1800, probably 6.6 million in 1845 and 4.4
million again in 2000]. In
the meantime Britain had industrialised and Ireland had not.
As economist Tom
Bethell notes in his book, “The Noblest Triumph”, [which deals
primarily with the fundamental importance of security of property], at
the relevant time Ireland had more cultivated acres per head than the
Netherlands, Britain or Sweden and there was a greater population
density in Britain. Yet the peoples of these countries did not starve.
It is estimated
that as a result of the Famine 1.5 to 2 million people eventually left
Ireland
Ethnic &
Cultural
The charge is
sometimes levelled that the Irish were naturally lazy and incompetent as
a result of cultural and ethnic factors.
Yet this allegation is contradicted by innumerable examples of
hardworking Irish success stories in the Irish diaspora.
Colonial
Oppression
The law in Ireland
and its application to the indigenous people was particularly harsh and
oppressive. The indigenous
Irish stubbornly and continuously resisted Anglo Saxon attempts to
absorb them into the dominant culture.
They were, [and were perceived as], ever ready to rebel and join
in alliance with the enemies of England.
Attachment to the Roman Catholic faith were seem by many as
symbolic of this.
Despite being
nominally, after the union of 1801, an integral part of Great Britain,
the indigenous Irish, particularly outside Ulster, were subject to many
discriminatory laws. They
were effectively treated in many ways as second class citizens. This was
particularly significant with respect to land tenure laws.
Laws in Britain, which promoted security of tenure and
discouraged forfeiture, were effectively reversed in Ireland.
Absence of
Security of Tenure
It is estimated
that at the time of the Famine perhaps half of the tenant farmers of
Ireland were tenants at will. Tenant
farmers were subject to rack renting and the continual threat of
eviction without compensation or payment by their landlords for any
improvements. There was thus no incentive to develop or improve their land.
Yet why did the landlords of Ireland behave in such a manner,
which seems clearly contrary to their own long term interest ?
Bethell, whose book
focuses on this aspect, rejects the suggestion that Irish landlords, as
a group, were naturally, particularly rapacious or stupid.
Rather they too lacked security of tenure. Largely so-called Anglo-Irish and often absentee landlords,
they had, in many instances received their large landholdings over the
centuries as grants from the English conquerors.
Such grants were always seen as subject to revocation, depending
on the political winds from Whitehall.
The indigenous Irish were also perceived as ever ready to seize
back the lands that had been taken from them.
The landlords,
often possessing no other wealth than their land holdings, thus had
little, if any, incentive to develop their properties as long term
investments and every incentive rather to exploit them to the maximum
possible in the short term.
THE IRISH BOOM
On achieving
independence in 1922, Ireland adopted a policy of Economic Nationalism;
protectionist, self-sufficient and welfarist.
It was a policy that resulted in a stagnant standard of living,
inflation, rising taxes, high unemployment, a continually declining
population caused by a tradition of emigration, and an image of being a
poor country.
By the late
1980’s, Ireland was in deep economic crisis.
In an economic revolution, similar to the Lange/Douglas one in
New Zealand and for similar reasons, Ireland changed course.
In particular, it set out to attract foreign investors and to
open itself to global trade. To
foreign investors, particularly American, it offered minimal corporate
taxes, a geographic location within Europe and close to major markets, a
young, well educated, cheap workforce, common law, and an English
speaking population with many foreign links, particularly to America.
Following the
change in course, many new industries, particularly high-tech ones such
as computers, pharmaceuticals and medical products have opened,
employment has nearly doubled and the population decline has reversed
itself. The Irish economy has become the fastest growing in Europe.
The changes have
not been without criticism. Irish
workers are working cheaply and for longer hours.
Given the need to compete there has been a decline in control by
Dublin. There is a growing
resentment against the increasing number of foreigners.
As part of the global economy, Ireland is subject to the
uncertainties and consequences of competition.
Industries can, and do, close as fast as they open and there are
doubts, given the competition from some of the former Soviet bloc
countries of Eastern Europe as to how long the good times can last.
Ireland however is
no longer seen as the poor man of Western Europe.
David Sharp
26
September 2006