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Prof Pat Gibbons comments on the fiscal and banking crises
Date: 29 Jul 2009
Publication: Sunday Independent Business
Date: Sunday, July 26, 2009
Author: Pat Gibbons
Headline: SHORT VIEW
The fiscal and banking crises facing the country have evoked dramatic responses. Swingeing budgetary cut-backs have been recommended by Colm McCarthy, while the establishment of Nama and the full or partial nationalisation of many banks has transformed our financial services system.
While all these moves have captured headlines and provoked commentary, we risk forgetting that the competitiveness of domestic and foreign-owned entitles in Ireland is central to our future living standards.
While the National Competitiveness Council has valiantly produced report after report highlighting areas where our competitiveness was at risk, politicians of all stripes have opted to trade off electoral success or popularity against the real take-home incomes of current and future generations. Moreover, the competitiveness issue has all too often been reduced to comparisons of unit-wage costs.
The gap between policy rhetoric and policy in use is wide, as illustrated in:
Infrastructure: While the National Development Plan has intensified physical infrastructure development, digital infrastructure and IT literacy significantly lags behind leading competitor countries.
Education: We have traditionally seen our well –educated workforce as a key advantage. However, the education system has not adapted to reward risk-taking or independent thinking – which are central to innovation. Educational achievement as evidenced in adult illiteracy remains a severe problem.
Firm-level support: Legislation and regulation ensure important policy objectives are met, yet all such policy instruments should be tested to ensure the objectives of the legislation and regulation are reasonable in relation to the costs of compliance. The gap between rhetoric and action needs closing. At a time of fiscal crisis, we need to outpace our competitors who are not standing still: an ambition to catch-up is futile.
Pat Gibbons is Professor of Corporate Planning at UCD Smurfit Graduate Business School.
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