High Irish GDP is an illusion, Ireland is not that rich

Peregrinus

The relationship between population and prosperity is basically this: output in the economy is a function of (a) how many workers you have, multiplied by (b) labour productivity. You can grow total output by increasing (a), or increasing (b), or (very often) increasing both. Obviously, increasing both will tend to give you the greatest growth in output.

Ireland has been increasing both. Population growth we already know about. Labour productivity has been increased in a number of ways, including:

1. Massive long-term investment in education and training.
2. Attracting inward investment. It may not be immediately obvious that capital investment increases labour productivity, but it does. A worker in a pharmaceutical plant may not work any harder than a worker in, say, a ball-bearing factory, but what he produces can be sold for much more; his labour is therefore more productive. And what enables this is the huge capital investment that is required to establish a pharmaceutical plant.

Britain's industrial revolution, already mentioned in this discussion, was powered both by a growth in population and by a rise in productivity. The rise in productivity was, again, the result of several factors, including:

1. Technological innovation (steam engines, railways, etc)
2. Massive capital investment, initially funded by the slave trade and later on by the rape of India and other colonies

China's more recent boom was also driven to some extent by population growth, but only to a limited extent — as already noted, the Chinese government was actively trying to limit population growth for much of the period. Economic liberalisation, enabling the more efficient allocation of resources, was I think the main driver.

One other point should not be lost sight of. To the extent that growth in output is fuelled by growth in population/labour force, that may make the country richer, but it doesn't necessarily make people richer — 20% more wealth, divided among 20% more people leaves people with, on average, exactly the same wealth that they had before. Plus, regardless of whether wealth is increased by population growth or other factors, the increased wealth won't necessarily be evenly shared — rising wealth can be accompanied by rising inequality, leaving most people worse off. Exactly this happened in the early part of the British industrial revolution. And, in our own time, it is notoriously the case that rising wealth in the US over the past 30 years has accrued almost entirely to the top 10% of the population in the form of increased profits, dividends, asset values, etc. Real wages, by contrast, have stagnated for most of that time, while the minimum wage (and, therefore, the income of people in minimum-wage and low-wage jobs) has fallen steeply.

So that's another way in which GDP — even a more robust GDP than Ireland's — is not necessarily a very reliable indicator of the wealth or well-being of individuals or families.

Mr. teddywinkles

https://www.boards.ie/discussion/comment/121100404#Comment_121100404

Such shite. So why do people want to immigrate to a country for a better way of life. You guessed it because the country was doing well before hand. Im not going to immigrate to some African countries if they've a high population thinking there doing great and there living standards are high.

Does a country need proper vetted migration with hard working people with skills and education yes it does. Wtf are you on about. You think migrants come to a country and all a sudden the economy takes off. 🙄 I'd say investment is more to do with it more than anything else.

As stated countries heavily populated round the world and their not exactly too healthy.

Bluefoam

Again you failed to understand what I said. I didn't say that economic growth is because of population growth, but that massive economic growth is often accompanied by population growth. If you can't understand the nuance that's okay, but stop getting so agitated by stuff you fail to comprehend.

You're off on a tangent now talking about getting immigrants vetted... that's a whole other conversation. Not one I'd want to engage in with you.

3DataModem

The "old ways" of living near where you grew up and starting a family are always tenuous where there has been a massive shift in relative wealth and income. Without wishing to trot out the same old thing as always, the 70s and 80s were a very different time economically in Dublin.

• Even a long-tenured civil servant had to beg their bank manager for the right to apply for their first mortgage. It was not a given. Mortgage decisions were made locally in the bank, so the manager was judged on who they approved. This was centralised to credit teams in the late 80s / early 90s so bank managers didn't (and still don't) care who applied.
• Interest rates were double-digit. I know houses were cheaper, but high rates affected everything like cars, personal loans, business loans, etc. It was brutal. I remember the joking celebrations when mortgage rates dropped to single digits for the first time in more or less living memory. Mid 1993.

Now houses are expensive, because a lot more people want to live here. The reality is, Irish youth should be looking at the benefits of the anglophone world and the EU bring, so their "home country" is really some of the best parts of the world. I know it's harder to get the Sunday roast from mammy each week when you live in Seville or Sofia or whatever... but limiting yourself to your parents postcode is inexcusable.

timmyntc

https://www.boards.ie/discussion/comment/121101919#Comment_121101919

Its not true at all - most countries huge economic growth comes from widespread access to education.

Converting workforce from uneducated to highly educated of the #1 predictor of economic growth.

Jim2007

https://www.boards.ie/discussion/comment/121103648#Comment_121103648

I would not agree at all with this.....

This idea of home ownership and having a housing policy that requires people to take on huge amounts of debt or relying on social housing to put a roof over your head is a very Anglo sphere thing. My kids grew up in Switzerland and are now young professional and they like all their friends have not plans for home ownership on the horizon, because it is not a thing for most young people. They see rental like booking a holiday for what it is - you pay and you get a service. And they are more concerned sticking to the traditional rule of thumb of not paying more than 20% of your salary for accommodation. And their cousins in Germany and Italy seem to be of a similar view on this. So I don't thinking sending young Irish people off to other part of the EU is then answer. Starting a talk about a more realistic housing policy would be a start.

As for Dublin in the 80s/90s I was there and I put in may loan applications for clients. And while knowing the manager might make the difference in a credit squeeze to get the loan through, the reality was the rules 2.5 times salary for a single person and 3.5 for a married couple with both partners working was very strictly applied. It was not until David Solo came up with the idea of securitising bank debt that mortgages really left the ground and bank management no longer cared.

orangerhyme

There's a construction crisis looming in Germany.

I wonder would that benefit us.

It could provide us with construction workers and also cost of materials might drop. Germany's huge so even a small crisis could benefit us.

I'd be interested in anyone's opinion on this.

Also China might be in crisis. This might result in drop in price of commodities.

eire4

I would say it all depends on how you view rich. Ireland by world standards is a rich country. But if viewed against our peers in just the developed world things look less rosy. Housing costs which are ridiculous, the health system and renewable energy are the issues we need to get our act together the most IMHO.

Charles Babbage

https://www.economist.com/europe/2023/10/12/our-european-economic-pentathlon

The Economist reckons we will do OK, in a rather light hearted assessment. Housing output can only grow slowly, but it is growing year and year and the decline in office demand will free up some construction resources. If a few people come from Germany, then so much the better. We can catch up on green energy.

Peregrinus

https://www.boards.ie/discussion/comment/121256904#Comment_121256904

The problems with our health system aren't the result of not being a rich country. In terms of health outcomes, the health system performs well in international comparisons, but it's massively expensive — costs are out of control. Ironically, we can afford (at least in the short term) a massively expensive health system only because we are a relatively rich country. What we need to do is learn to make our health system more efficient, but the barriers to doing that, whatever they are, do not include a lack of wealth.

maninasia

There's also large scale immigration ramping up our population at the fastest pace in , what 150 or 200 years . It's not birth rates which have plummeted. Just look around Dublin or any town. It's a major factor and pretty obvious factor in terms of driving up demand for housing and therefore scarcity . I'm not saying that we have not done a piss poor effort in building housing !

maninasia

I don't know how folks can tell bald faced lies that our health system stacks up well internationally. On what metric exactly?You can't even see a doc or a dentist in large parts of the country!

Developing countries offer much better options even , with relatively low cost private providers and very rapid access . In many Asian countries you can see a consultant/ specialist THE NEXT DAY. Not two bloody years later.

Ireland's has failed, often with little to no access for many (ridiculous GP referral system that barely works..years waiting lists...no national digital records system...no GPs available in many locations) but eye wateringly expensive in terms of tax revenues required and also areas like dental work being a rip off.

Padre_Pio

https://www.boards.ie/discussion/comment/121257372#Comment_121257372

It's not a fair comparison if the only metric you're using is wait times.

Our health services are fantastic, so long as you get to use them.

maninasia

https://www.boards.ie/discussion/comment/121257395#Comment_121257395

If you get to use them lol, delusional stuff, much of it is broken right now. It exists as vaporware for many of us. it's also quite expensive even though we pay high taxes e.g. GPs charging 70 Euro a visit not including meds (that is if you could find one in much of the country they are refusing to take on new patients and have two week times to see their current list of patients. And how do you get a consultant appointment if you can't see a GP to get the stupid referral letters. You could be dead by then).

Why do you ignore wait times of years for specialist appointments? That's a KEY metric for a health service.

How is the lack of a digital health records system 'fantastic' in 2023?

Also what is the definition of fantastic that you are using exactly?

DataDude

https://www.boards.ie/discussion/comment/121257420#Comment_121257420

We have one of (if not the?) highest life expectancies in the EU and the highest self reported health status for both males and females in the EU.

So we live longer and consider ourselves healthier than any other country in the EU. Surely our health system has to take some credit for that?

https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Self-perceived_health_statistics#:~:text=More%20than%20two%2Dthirds%20(69.0,good%20or%20good%20in%202021.&text=Self%2Dperceived%20gender%20health%20gap,their%20health%20better%20than%20females.

Podge_irl

https://www.boards.ie/discussion/comment/121257420#Comment_121257420

Yes, it is a key metric that we perform poorly on.

We perform very well on many others. Someone is welcome to go to Turkey to get quicker access to dentistry, but I doubt it's a good idea to do it for oncology care.

maninasia

We are also amongst the most obese, gonna the healthcare system with that as well? :).

maninasia

Which metrics are we performing very well on? I'm very curious. For instance beds per head of population is another key one. How do we stack up?

Well colour me surprised, we are woeful, amongst the worst in Europe.

https://www.irishtimes.com/health/2023/01/04/how-many-hospital-beds-does-state-need-to-fix-the-overcrowding-crisis/

techman1

Because by gdp statistics ireland is one of the richest countries in the world, many international experts have been pouring over the Irish data to see what is really going on. Alot of the big tech companies moved their IP to ireland in 2015 from tax havens like the Bahamas and cayman Islands Because ireland changed its incorpotion laws to facilitate this.

On the surface that would suggest that the iPhone is designed and made in ireland based on Irish gdp figures, but on the back of the iPhone it says " designed in California, assembled in China "

When these experts travel to ireland it doesn't strike them as a particularly wealthy country, no high speed rail or metros , no dubai style sky scrapers. Ireland has nothing in common with the other high gdp wealthy countries like Switzerland, Luxembourg or Norway.

The fianna fail government of the celtic tiger is rightly blamed for crashing the economy, however they did alot of stuff like building lots of houses, motorways, the port tunnel and the luas ,our only quasi european infrastructure.

This government has built nothing all it has done is give loads of cash handouts to welfare recipients but has built no infrastructure except the delayed and seriously over budget children hospital

Sam Russell

Wealth can be measured in lots of ways, and crude statistics can often rely on metrics that are chosen to show a particular result.

Health is a difficult metric because it is a demand led service. The healthy do not need it so for them it does not matter. We have a strange dual system of private and public that is mixed in a strange way. I can see a consultant privately in short order, or I can be referred to the public system and be seen sometime - whenever - often by the same consultant. Sometime the public system is quick, and others - sometime, never.

However, when measured by outcomes, we do well, and most who do get attention from the service speak very highly of it - the vast majority. Now there are some bad outcomes, and most are unfortunate rare occurrences, but some are systemic and inexcusable. On the whole, we are doing well, but the increase in population is affecting the system. We have 95,000 Ukrainians and another 75,000 in direct provision - that is outside our normal provisions.

Wealth is determined by long term investment - most wealthy people do not become wealthy overnight, and if they do, they become poor in similar order.

We overprovision for social welfare, and under tax the super wealthy. That is a political choice.

We have fallen down on infrastructure because - reasons. We stopped building public social housing since the 1980s - again political.

However, we have gone from needing significant funding from the EU to being a net contributor. That is a massive sign we are wealthy as a country.

Surely, whether we are wealthy or not is just a political question asked by the opposition parties as a stick to stir the pot.

m2_browning

https://www.boards.ie/discussion/comment/121256904#Comment_121256904

To be fair I would be interested in seeing a developed (and for that matter developing) country where housing is not a problem

Having seen the world extensively Ireland is a nice place to live and work especially if have a young family, the only downside is the miserable weather. But oh well at least the grass is green 😃

Jim2007

https://www.boards.ie/discussion/comment/121258186#Comment_121258186

Oh come on now, that will not suit the usual whiners!

Yes housing is a problem in almost every advanced society without exception. It is just that in the Anglo sphere, the only solutions the voters are willing to any solution that does not involve them getting own a house. And makes it all the worse because it can't be achieved, exposes them to an unacceptable level of financial risk and less mobile during a down turn in the economy. But of course it is easier to blame the banks, the government, the bond holders and so on, than to face reality.

Ireland is not better or no worse than any other advanced economy and of course those that claim the the GDP figures are rubbish, conveniently ignore the fact that the cash does flow into the government coffers and that reduce the tax burden on them and pays for many of the services they benefit from.

Charles Babbage

https://www.boards.ie/discussion/comment/121257420#Comment_121257420

You are 100% correct about the digital health records, that is a complete disgrace, and that contributes to inefficiency which affects the other measures. However, the other issues should not be overstated, in a prosperous country with a higher cost of living it is inevitable that dentists etc get paid more.

techman1

Ireland is not better or no worse than any other advanced economy and of course those that claim the the GDP figures are rubbish, conveniently ignore the fact that the cash does flow into the government coffers and that reduce the tax burden on them and pays for many of the services they benefit from.

Cash does flow to the government as a result of corporation tax but in no way is it related to Irish gdp because that is grossly distorted by multinationals moving revenue through ireland as a result of IP being located here but the californian research facility or the Chinese manufacturing facility is not in Ireland but the Irish gdp figures suggest that. Therefore Irish gdp is a rubbish statistic and is not related to Irish wealth. Actual Irish wealth and productivity is half that figure. We are not talking rubbish

Podge_irl

https://www.boards.ie/discussion/comment/121257923#Comment_121257923

"Many international experts" have most definitely not been pouring over the Irish data, because every man and his dog knows the reason for Ireland's inflated GDP. It's the very reason the GNI* is published.

Also, for the record, Switzerland has no Dubai style sky scrapers, no high speed rail and only one pseudo-metro in Lausanne.

growleaves

GDP per capita and the standard of living for ordinary Irish people is not necessarily going to be raised by anything/everything that leads to "economic growth".

You would swear half the posters on this site were CEOs of big conglomerates hearing people fret about alleged "labour shortages".

"Economic growth" can benefit capital without benefiting ordinary wage earners. This growth may even come at the expense of ordinary wage earners, and often does.

techman1

https://www.boards.ie/discussion/comment/121258771#Comment_121258771

Yes they have Paul krugman for one and many more since. It is the scepticism of these international experts about the true nature of irish gdp that prompted the cso hastily to invent GNI * statistic. But that only happened after gdp statistics were rubbished by krugman embarrassing the Irish authorities.

eire4

https://www.boards.ie/discussion/comment/121257348#Comment_121257348

I absolutely agree. I was not suggesting our health system issues are the result of not being rich simply that it IMHO is one of the biggest issues which negatively impact the overall quality of life in Ireland currently.

eire4

https://www.boards.ie/discussion/comment/121258186#Comment_121258186

Certainly I agree Ireland is far from being the only country among its peers in terms of developed countries where housing is a major issue. I also have and do travel extensively so while there are worse in that regard in my experience also I would say Ireland is pretty bad in that regard. Nonetheless as with health care I brought it up as the problem is IMHO one of the major issues which negatively impacts overall quality of life in Ireland currently.

Sam Russell

https://www.boards.ie/discussion/comment/121259267#Comment_121259267

Most people are not ill, and do not have ongoing health issues that are not being correctly treated.

There are edge cases that get significant exposure in the media (and often rightly so) but for most the health service is brilliant. If the Gov could tame the private health side of the issue, then we could be on the way to Slainte Care, where needed treatment is free at the point of issue.

We need hospitals and other health centres to work seven days, and 16 hour days (or so) for at least 5 of those days.