Ship of Fools

by Fintan O'Toole

  The answer to the question ‘what do I want to be?’ was largely the same as it was for the educated and aspirant Catholic middle-class in the nineteenth century - a doctor or a lawyer. (It is true, of course, that the old version might also have included a priest or a nun and the new one might have included a pharmacist, a vet or a media star.) The prestige of the higher professions - and the financial rewards attached to them - remained glitteringly intact. Their lustre completely outshone science, maths or technology.

  This was clear from the relative difficulty of gaining a university place in these fields. Under the Irish system, the number of points acquired from Leaving Certificate results that were required to gain entry to a particular course gave a brutally frank measure of how much certain kinds of knowledge mattered. The picture was sobering - medicine and law matter an awful lot, science hardly at all. In 2009, for example, the number of points required to study electronic engineering at the largest university, University College Dublin, was 350. Computer science was 370. General science was 385. Law was 470. Medicine was the equivalent of 580.

  The lack of interest in computing was stunning. There was a drop of 70 per cent in applications for computing degrees between 2001 and 2003. The numbers graduating in computing applications from Dublin City University, for example, dropped from 224 in 2005 to just 74 in 2008. Many science and technology courses struggled to fill their places. As a result, more than half of postgraduate places in computer-related courses were filled by students from outside Ireland. Software companies in Ireland were similarly unable to fill the jobs they had on offer - half of new recruits were hired from abroad.

  Some of this had to do with gender - young women, who increasingly dominated entry to third-level education, were particularly reluctant to think about careers in IT. And some of it had to do with class. The Irish professional classes were extremely efficient at reproducing themselves. In 2008-9, almost half of medical students and over one-third of law students in Irish universities came from professional family backgrounds. While higher professionals (doctors, solicitors, barristers, engineers, pharmacists, etc.) account for just 5 per cent of the Irish population, their children account for close to one-third of students on courses oriented towards the professions: 32 per cent of first years in medicine, 27 per cent in veterinary medicine, 23 per cent in law and 19 per cent in pharmacy. (By contrast, not a single student entering university courses in pharmacy or medicine in 2008-9 came from an unskilled manual background.) As the chief executive of the Higher Education Authority put it, ‘The socioeconomic profile on these courses has changed very little over the past decade.’ There was, in fact, a conservative cycle that proved much more powerful than the surface changes in the Irish economy: the professionals dominated the university system and they wanted their children to be professionals. Family cultures, many of them formed with the rise of the Catholic middle-class in the nineteenth century, remained substantially intact.

  The other nineteenth-century impulse was land. What do you do with your money? You put it in property. Most of the wealth generated by the Celtic Tiger was new money. But when it came to spending it, there was a very old formula: bricks, mortar (or at the higher end, steel and concrete) and the land they stand on.

  When Bertie Ahern said that the developers and builders who gathered in the party tent at the Galway races to pay homage (and cash) to Fianna Fáil were Ireland’s wealth creators, he summed up the underlying belief that real money was made by real men by putting up real buildings. Whatever lip service was paid to the notions of innovation and the knowledge economy, these quirks never had any visceral grasp on the governing mind. All the signals that were sent out, not least through tax breaks, were that property was the proper place for money.

  Between 2000 and 2008, Irish venture capital firms invested €1.2 billion in Irish small and medium enterprises. A great deal of this was in high-tech companies, though only around a third of it was in start-up or young enterprises. To put this €1.2 billion in context, it is exactly the same as the sum spent by Irish investors buying properties in London in the first six months of 2008, a period when property investment was in sharp decline. Irish individuals and companies made €41 billion in capital gains from investments in land, property and equities in the three years between 2004 and 2007. In a slightly longer period (between 2001 and 2006) Irish people invested €41 billion in commercial property at home and abroad. In 2006 and 2007 alone, the Irish invested almost €20 billion in foreign property.

  The sheer scale of this rush to buy buildings in foreign climes is remarkable. In 2007, the second biggest slice (after the UK) of money invested in the entire European property market was Irish. The Irish spent nearly €14 billion that year. The French spent €11 billion and the Dutch €8 billion.

  When the property crash came, Irish people were rather surprised to learn that of the €90 billion in development loans that were dragging down the Irish banking system, €25 billion related to property in the UK and €3 billion in the US. (An unknown, but probably very substantial, amount was related to continental Europe - €2.6 billion was invested from Ireland in France and Germany in 2007 alone.)

  In truth, this outflow of money (which came from moguls buying office blocks, barristers buying villas in Portugal or Florida and middle-class investors buying apartments in Bulgaria) combined two primeval instincts: put money into property and get it out of the country. While the ideological justification for the government’s cosseting of the rich was that their money would trickle downwards into the Irish economy, much of it actually flooded out of Ireland. The total stock of foreign portfolio asset securities held by Irish residents at the end of 2007 amounted to €1,338 billion - that’s €1.3 trillion, about the same as the projected US budget deficit at the end of 2009. While much was always made (rightly) of US investment in Ireland, it was easily forgotten that there was also a powerful flow in the other direction. Little Ireland is now the tenth largest investor in the United States - not in relative but in absolute terms. In 2004, for the first time, outflows of foreign direct investment from Ireland exceeded inflows into Ireland. The number of Americans employed by Irish companies in the US is about 75 per cent of the number of Irish people employed in Ireland by US companies.

  The reluctance to invest in innovative Irish companies, the complete failure to get within a sniff of the world-class broadband infrastructure that was supposed to be a national priority, and the failure to create through the education system an organic technological culture were huge cracks in the facade of high-tech Ireland. They were indirect but deeply damaging effects of the cronyism, lack of ambition and idolatry of raw money that dominated the political system. While money, energy, ingenuity and political support were stoking the property boom, Ireland’s response to the technological forces that had helped to create the Celtic Tiger were increasingly less reminiscent of Silicon Valley and more of The IT Crowd.

  8

  Unknown Knowns

  ‘Those who have shaped our modern, thriving nation can

  escape as a little reward once in a while, without ever losing touch

  with home’

  - brochure for the Island of Ireland

  ‘The “Island of Ireland” is strategically located at the centre of “The World”.’ As a statement of the self-absorption and grandiose delusions of Celtic Tiger Ireland, this one would take some beating. But it is intended literally. The ‘Island of Ireland’ is not the island of Ireland. ‘The World’ is not the world. The island is part of a man-made archipelago off the coast of Dubai, 300 artificial platforms in the Arabian Gulf, surrounded by an oval breakwater shaped to form the map of the world.

  On the 225,000-square-foot Island of Ireland, owned by a consortium led by the Galway-based property developer John O’Dolan, the plan was to have just a hint of ‘the architecture of Ireland through the ages’. In case potential investors might be put off by the thought of damp thatched cottages festering in the rain or dreary bungal
ows on windswept hills, the promotional brochure stressed that this would mostly consist of a ‘landscaped courtyard area, evoking the wide Georgian squares of Dublin’. For older property developers, there would presumably be a warm glow of nostalgia for the Georgian squares that they and their mentors had done their best to obliterate in the 1960s and 1970s.

  The plan, aptly enough, was endorsed on the scheme’s website by the serving Taoiseach Bertie Ahern who evoked ‘substantial Irish achievement across a wide range of human endeavours’ and expressed the hope that the ‘Island of Ireland’ would be ‘seen as symbolic of the best of those achievements and reflect the confidence and vision of Irish people in the new millennium’. These achievements, the brochure made clear, were those of the millionaires who had made Ireland what it was and who now deserved a literal place in the sun: ‘We had a vision . . . to bring a little piece of Ireland to the sun. To create a luxury hotel resort to which those who have shaped our modern, thriving nation can escape as a little reward once in a while, without ever losing touch with home.’

  The pitch was perfectly tuned. The great men who ‘shaped our modern, thriving nation’ could have their Irish pride in villas with ‘more than just a hint of Irishness to them’, but they would not actually have to be in Ireland - a particular advantage for those among them who were tax fugitives. This would be the perfect Ireland, with a vague sense of ‘history’ in its mock-Georgian squares but no politics, with a simulacrum of Irish conviviality (‘bars that will remind you of home’) without the bother of an unruly plebeian populace (this is ‘the most exclusive real-estate development on the planet’). It would also be the perfect form of globalisation - a world with Ireland at its centre, like Jerusalem in medieval maps. The multi-millionaire’s solipsism and self-regard would mesh seamlessly with the fantasy of a Hibernocentric universe: ‘The World can actually revolve around you!’

  The Island of Ireland in Dubai was the incarnation of a fantasy that had hovered around the collective imagination of Ireland’s elite for a long time. In the late 1980s and early 1990s, Irish intellectuals revived the idea of the Fifth Province (Mary Robinson evoked it in her inaugural speech as president in 1990). They meant a place of art, ideas and ideals. But the real fifth province of the Irish imagination was a sunny Ireland, washed by a bluer, warmer ocean, where there were no taxes, no history and no social obligations.

  In Charles Haughey’s era this fifth province was Grand Cayman island, where money frolicked under palm trees, free from the predations of the taxman and the prying eyes of those who wondered about its origins. In Bertie Ahern’s era, it was Bermuda, whose tax-haven status Ireland hoped to emulate. It was not for nothing that while English critics referred to the Irish Financial Services Centre in Dublin as ‘Liechtenstein on the Liffey’, the Industrial Development Authority preferred, as we have seen, to aspire to be ‘the Bermuda of Europe’. The Island of Ireland in Dubai brought these two notions together - a sunny island that was far away but still, somehow, ‘home’.

  Even when this fantasy had to be actually brought home to the process of making money from property development in dark, rainy Ireland, it retained its grip. In the Celtic Tiger era of property development, Ireland was always subtropical. As the property editor of the Irish Times, Orna Mulcahy, noted of one of the iconic (doubly iconic in being unbuilt) developments of the boom years, Seán Dunne’s would-be ‘new Knightsbridge’ in Ballsbridge:I dug out the architects’ drawings from the bottom of a heap under my desk and yes, there it was: sunshine, flooding the imagined plazas and courtyards and bouncing off the glass of towering apartment blocks. Pert-breasted women strolling around in T-shirts and sunglasses. Even the underground shopping mall appeared to have an abundance of sunlight spilling in via a mini Eden project jutting up at ground level, filled with palms, orchids and cacti. The central piazza, with 14- and 15-storey buildings all around, had the baked ochre look of a Las Vegas resort slumbering in 100 degree heat, with office windows above flung open . . . On the property developer’s compass, you see, there is no north. Invariably, their computer-generated plans for housing or office schemes are forever drenched in sunshine, no matter what the aspect. High noon-type shadows are cast by computer-generated people . . . the vast majority of balconies built during the boom faced south - even the many that actually looked due north and enjoyed direct sunlight about once a year, Newgrangestyle, on June 21st at four in the morning.

  In other countries, global warming is a threat. In Ireland it is a fantasy. The sun-drenched country of the developers’ plans actually became the place in which much of the population took up mental residence. During the boom years, people under forty stopped wearing overcoats, even in the dismal winter. The Atlantic wind that stabbed through a flimsy jacket and T-shirt or turned the bare legs of short-skirted girls blue was really a gentle zephyr. Cafes and restaurants began to colonise the footpaths outside their doors for the alfresco dining appropriate to the rain-free, sunlit climate.

  There was, moreover, a physical extrusion of Ireland to the world’s sunspots as Irish people invested enormous sums in property abroad. Of the €50-plus billion of Irish money spent on buying foreign property, much of the large-scale commercial investment was in the UK or the US. But a substantial amount was spent on acquiring either second homes or investment properties in the Mediterranean, the Adriatic or even further afield. No location was too exotic, especially if it was an island and sunny. At the height of the boom a not untypical report in the property pages of the Irish Times stated that ‘Cape Verde Development, a company started by Tom Sheehy, a Clonakilty-based property fit-out specialist and backed mainly by Cork and Limerick business people, sold 200 units of its 449-unit scheme off plans when it launched a few weeks ago, most of them to Irish buyers’. It is questionable whether most of those buyers had never even heard of the Cape Verde islands five years previously.

  Foreign property replaced emigration as the source of the Elsewheres that had long been part of the Irish imagination. The little Irelands of Brixton or Boston were now the little islands in the sun.

  This imaginative displacement was part of the larger confusion of space that came with Ireland’s experience of extreme and rapid globalisation. The question of whether Ireland was a balmy subtropical paradise or a wet, wind-lashed rock on the eastern Atlantic was a subset of a larger question - what continent was Ireland in anyway? That in turn was part of a wider problem - the uncertainties of both space and time that made it hard for Irish people to be quite sure where they were living, and when.

  The question of which continent Ireland belonged in was famously posed by Mary Harney when she told the American Bar Association in 2000 that ‘History and geography have placed Ireland in a very special position between America and Europe . . . Geographically we are closer to Berlin than Boston. Spiritually we are probably a lot closer to Boston than Berlin.’ This idea of Ireland as a liminal space, between one continent and another, its proximity to continental Europe a mere factual detail, was of course highly political. It was intended to identify Ireland as an outpost of American values at the physical and political margin of European ideas. Ireland was really a part of the ‘Anglo-Saxon’ economy, sharing the thirst of the US and the UK for frantic consumption, property bubbles, free-range banking and the elevation of the private sector above all public purposes.

  Harney, to her credit, was quite explicit about this. In that speech, she defined ‘the European way as being built on a strong concern for social harmony and social inclusion, with governments being prepared to intervene strongly through the tax and regulatory systems to achieve their desired outcomes’. She contrasted this with the ‘American way . . . built on the rugged individualism of the original frontiersmen, an economic model that is heavily based on enterprise and incentive, on individual effort and with limited government intervention’. Ireland, she said, ‘sailed closer to the American shore than the European one’. In this tectonic shifting of continental plates, Harney was assuring her
audience that Celtic Tiger Ireland was not much interested in ‘social harmony and social inclusion’ or in governments that use taxation and regulation to limit the inequalities and instabilities of the market. It was interested in those mythically rugged values of the American frontier. This was perhaps just as well, since, in line with Harney’s ambitions, Ireland would indeed go on to develop quite a line in cowboy economics and earn the title of the ‘Wild West of European finance’.

  Yet Harney’s figurative shifting of Ireland a few thousand miles to the west was not seen to be absurd. This was partly because of the close historical ties between Ireland and the US and the large scale of American investment in Ireland. But it was also because the Irish sense of belonging in Europe turned out to be much weaker than it had seemed. The EU had been a crucial part of Irish identity between the 1970s and 1990s when it had been the form in which Irish modernity sold itself to a rural and conservative population. It has, paradoxically, vindicated Irish nationalism by finally breaking the dependence of the Irish economy on trade with Britain. It was not surprising that enthusiasm for the European project was particularly high in Ireland.

  Yet, as it turned out, it was also particularly shallow. Linguistically, for example, Ireland remained a relentlessly monoglot subset of the English-speaking world. For all the talk of globalisation and cultural complexity, the Irish were stubbornly attached to English as their sole means of communication. In fact the Irish were more loyal to English than the English: 66 per cent of the Irish population speaks only English, compared to 62 per cent of Brits. By contrast, just a third of Germans speak only German.