Reconciling the Irish with Entrepreneurs

I was an invited speaker this morning to a workshop hosted at Innovation Open Lab at Intel Leixlip,  organised by the Academy of Engineering,  to discuss “Engineers,  Entrepreneurship and Wealth Creation.”  The event was opened by Junior Minister Conor Lenihan.

My speech is reproduced below,  and considers some of the cultural and social heritage in Ireland as a background to the current drive towards innovation and entrepreneurship in the economy…

“To be rich is glorious” Deng Xiaoping purportedly asserted when he toured Guangdong and Fujian provinces in the 1980s, leading to the establishment of China’s first four special economic zones. Since these were modelled on the Shannon export free zone, is it too much to think Ireland influenced the economic transformation of China ? It is uncertain whether in fact Deng did really ever use those words, and Deng never actually held any formal position as head of state or head of government. He is however on record stating that his ethos was “keep cool-headed to observe; be composed to make reactions; firmly stand; hide capabilities and bide time; never try to take the lead, and be able to accomplish something.” Deng never took the formal lead, and he accomplished a great deal.

While I was a child and then teenager in Ireland, many in China were reduced to a survival diet chiefly of grass and leaves in their famine stricken countryside. Most Chinese are reluctant to talk about their personal experiences during the Cultural Revolution period, but occasionally in the relaxed ambience of an evening tea or even baijiu, stories can emerge. Today the Chinese children and grandchildren of that generation have an opportunity to personally exploit the most rapid enrichment that any nation has ever experienced in the history of humankind. A race to a high standard of living with well over a billion participants naturally leads to competition, envy, and friction. Rules are broken, short cuts are taken, and nearly everyone feels an urgent public right, a family expectation, peer and neighbour pressure, to grow rich.

We in turn shake our heads and tut-tut. We express concern over standards of governance in China, and even of bribery and of corruption. But in the last decade, here in Ireland rules were broken, short cuts were taken, and nearly everyone felt an urgent public right, a family expectation, peer and neighbour pressure, to grow rich. I do not assert that the challenges of undertaking business in China are equivalent to those for Ireland, but I believe that if we examine our national conscience, we will admit that so many of us responded to the national excitement of the Celtic boom. Many borrowed excessively relative to salary and income, purchased property both here in Ireland and in overseas resorts, and speculated that asset prices would rise sufficient to not only repay loans but to make considerable profit. Others undoubtedly did bend the rules, take short cuts, and – yes – there was bribery and corruption.

Hidden away in Stoneybatter, tucked behind Arbour Hill prison, guarded just by the vehicles parked in the back car park of the Church of the Defence Forces, lay the remains of some of our 1916 leaders. One wonders what they would have made of the Ireland of 2010. De Valera, speaking at the end of the second world war, said “we have pledged ourselves to the dead generations who have preserved intact for us this glorious heritage, that we, too, will strive to be faithful to the end, and pass on this tradition unblemished”. Have we preserved the heritage which we have inherited, and what are we about to pass to future generations ?

It is interesting to reflect on the economic and social concerns of the founders of our State in the early 1920s. At the time, Great Britain was arguably the world’s superpower, and despite the destitution of the first world war, it still led the world in political and military might. Belfast and Northern Ireland were amongst the bedrock of the British economy, with Harland and Wolff, other heavy engineering companies and the linen industry. Northern Ireland was largely Protestant, an ethos which in turn places an emphasis on the independence of the individual, including a direct relationship with God. Entrepreneurship and individual hard work are understood by its devotees as a duty to society and as necessary to build one’s life and social status.

In founding Ireland in the 1920s, I suspect that there may have been a certain reaction against the capitalist ethos of much of Northern Ireland at that time. Most believed that workers were being exploited, that many were marginalised, and that the standards of living were poor whilst all the time entrepreneurs continued to accumulate wealth. The Roman Catholic Church was no doubt very influential on the themes for the new Irish State: cherish all citizens, high ethical standards, and a socially oriented state, rather than rampantly capitalistic. Whilst Protestantism places an emphasis on the individual, Catholicism expects the Church and its leaders to make decisions on behalf of the people. The people in turn arguably expect the Church to deliver their salvation, rather than each individual by himself or herself. Individual initiative, including wealth creation, may have been seen by some as challenging the role of authority and what was best for society as a whole. Perhaps many today view this philosophy as essentially correct in the light of what has recently happened with the Irish economy, and particularly the behaviour of Anglo-Irish Bank and its consequences for all of us: rules appear to have been broken, and short cuts appear to have been taken.

The Catholic reaction in the south to the Protestant economic culture in the north was perhaps all the more interesting because of Ireland’s strong links the USA. Calvanism came to America with the Mayflower, and was the dominant ethos of the early settlers. The Mayflower itself had been organised as a company financed by London merchants, and the proceeds were to be split between the financiers – the venture capitalists – and the settlers. “Go West young man” captures the spirit of individualism, entrepreneurship and personal control of one’s destiny and fortunes: the nation state provides the opportunity for success, but is in no way responsible for cherishing the careers and employment of its citizens. The individual, not the State, is responsible for personal destiny.

In the last few decades, it has been American companies – including of course our hosts in Intel today – which have created much of the employment and wealth in Ireland. IDA backed companies employ of the order of 140,000, with an average salary approaching 50Keuro; and 16Beuro direct expenditure annually into the Irish economy. Whilst factors such as education quality, euro zone membership, and english language competence have been important attractors, one suspects that corporate taxation structures remain the key. Ireland is not a tax haven, and has a considerable number of mutually agreed bilateral taxation agreements with other jurisdictions. Nevertheless, there is an informal and widely held international perception, that Ireland may be damaging the potential tax bases for other countries. The IFSC has become part of the “shadow banking sector” which generates little employment. The Obama administration and many of our EU partners continue to closely observe our taxation strategies and we may well find in the future that our taxation policies become insufficiently attractive for inward investment. I also believe that Ireland’s international perception is being badly damaged by the dramatic theatre of the Celtic Tiger demise, from the almost arrogant confidence of just a few years ago to sullen anger today. Our self created implosion of our retail banking sector, which has created deep concern and even fear at home, overseas has created economic and political uncertainty for Ireland as an investment target.

I believe that Ireland is at a cross roads. We have created an economy which is open to international trade, but which is now internationally viewed as having an uncertain future. We have created an expectation of the State paternally providing for its citizens, and in particular for employment and for welfare, but which is now threatened by unsustainable national debt. We have created a society in which personal wealth is viewed with deep suspicion about how it was accumulated, what strokes may have been involved, and to what extent tax is being evaded.

For those reasons, I believe that Ireland now needs entrepreneurs more than at any time in its history. Because of the increasing uncertainty on Ireland’s international standing, because we should no longer expect that the State “owes us a living”, and despite the intense reservations apparently at large in Irish society about entrepreneurs, we have to mature our national thinking on enterprise. Our highest enterprise priorities may no longer be to bring jobs to the local electorate and to foster employment, but rather first above all to foster entrepreneurship. Deng Xiaoping asserted “let some people get rich first”. In re-building the Chinese economy, he identified the motivation of entrepreneurs to become rich, arguing that this should happen first and that then wider prosperity would follow to his nation at large. Is it too much to think that Chinese thinking can now influence the economic transformation of Ireland ?

Our work in the Innovation Taskforce put considerable emphasis on the new importance of entrepreneurs and start-ups in the economy. It seems clear that export focussed indigenous companies, both high growth and start-ups, and leading to good returns on capital for both founders and investors alike, may well become the key economic bedrock of the Irish economy in this and the decades to come. Ireland also currently has much to offer overseas entrepreneurs, having a better enterprise environment than many other alternatives across Europe, and this perspective is beginning to be noticed. We should actively attract overseas entrepreneurs to locate their latest ventures in Ireland, and augment our own pool of entrepreneurs and business leaders: Deng said “It doesn’t matter if a cat is black or white, so long as it catches mice..”. If the 1980s and 90s were the decades of attracting overseas multinationals via the IDA, and the last decade was that of attracting overseas scientists via SFI, then this decade must be that of attracting overseas entrepreneurs. The fact that the founders of Twitter, Skype, Bebo, WordPress and many other high value web companies are collectively coming to Dublin later this month says much for the regard in which Ireland and Irish technology entrepreneurs are held.

I believe we need a very fundamental change in Irish attitudes, the Irish public and society: we need to reconcile the Irish to the importance of entrepreneurs, place entrepreneurship at the very centre of our enterprise policy and so re-build an Ireland which we will be proud to pass to future generations.

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About chrisjhorn

https://chrisjhorn.wordpress.com/about/
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8 Responses to Reconciling the Irish with Entrepreneurs

  1. Edward Phelan says:

    Chris, you’re on a very sensitive subject here but, nevertheless, what you say is true. Apart from religion, there’s the political problem that seeks to eliminate any example of Catholic success from the time of the British administration. It’s as though nothing other than abject poverty was visited on all Catholics prior to the glorious revolution, when in fact there were some very imaginative and successful Catholic entrepreneurs in the second half of the 19th century.
    One in particular was outstanding for his imagination and drive in the small village where I grew up and where I now produce products for a world market. After the Famine, at the onset of the Victorian era, he a small catholic shop keeper, identified a growing demand for starch and began to produce it from potatoes, first for local consumption and then for a wider market until eventually for dozens of overseas countries. Demand increased to a point where he had to import rice from Rangoon to fill the void in locally sourced raw materials. Along the way, as new technology was continuously being introduced, electricity was adopted for some of the processes and this was generated from a horizontal waterwheel in a millrace. At night, of course, there was no demand for this electricity, so it was used to provide street lighting for the village.
    Today, there is almost no trace of that enterprise, it’s as though a curtain was pulled over that era’s success stories for the sake of political convenience. It’s time to move on and widen our horizons as these early entrepreneurs did over a century ago.

    • chrisjhorn says:

      Thats very interesting indeed – do you know his name ?

      I’m sure there were very successful Catholic entrepreneurs during the period — in fact that might be a very interesting research project to undertake..

      Thanks for the comment.
      Best wishes
      Chris

  2. Chris,

    Having read Constantin Gurgdiev’s recent posting True Economics: Economics 27/8/10: Manifesto I (?) http://goo.gl/b/Gnn3, I posted a few suggestions in response.
    I have summarised them below.

    On Cultivation of Enterprise:

    1. A corporate tax “entrepeneur’s exemption” for 1st 5 years of operation. Subject to clawback if the enterprise is sold within say 10 years.
    The timespans are open to suggestion but the spirit of “cultivation of enterprise” needs to remain.

    2. Incentivise employee-shared operations. There is strong evidence (http://www.ffw.com/211.aspx) that they out-perform other models.

    3. Guarantee x% of GDP to the Irish Innovation Fund every year.

    4. Make profits from enterprises set up by returned scientists/innovators tax-exempt, provided that the operation is employee-owned. Tax exemption to be in affect for at least for a fixed-term period, then scaling up to normal rates.

    5. Enforce State procurement constraints such that a specific percentage will be through Irish small and medium businesses which are employee-owned (preferrably following partnership models).

    6. Change unemployment benefits so that employers are subsidised to teach/train unemployed workers to be employable e.g. Apprenticeship schemes supporting employers during the period they need to make apprentices into productive employees.

    7. Make it an explicit measurable objective of government that the no.1 ranking in the World Bank’s “Ease of Doing Business” index be targeted.
    See http://data.worldbank.org/indicator/IC.BUS.EASE.XQ

    8. Allow seed capital, capped at €60K, which is invested in small Irish-owned businesses which are employee-owned, to be eligible to be offset against income tax.

    9. Make available an “Entrepeneur’s Visa” whereby non-EU entrepeneurs are eligible to remain after starting a business provided they employ a minimum no. of Irish nationals & their business includes employee ownership scheme.
    (Possibly subject to EU immigration law.)

    10. Incentivise the creation of spin-off companies which exploit MNC’s or indigineous companies’ R&D which is carried out in Ireland.
    This could be done by allowing tax benefits on the cost of attaining the spin-off’s IP from the R&D.
    Again, further benefits could be made available if the spin-offs are employee-owned to any extent.

    Education reform:

    1. Maths & Science teachers must have MSc & reward them appropriately.

    2. Remove obligation to study Irish but retain an incentive (for those who genuinely want to study the language) in term of Leaving Cert points.

    3. Incentivise Maths & Science students with higher bonus Leaving Cert points.

    4. Support internships in public sector & semi-state operations for IT, Engineering & Science undergrads, on contracts rewarded based on completion & grading of projects only.

    5. Incentivise the best international universtites/ITs to locate in IRL. (Admittedly, needs detail.)

    I was interested in getting feedback on the above. What do you think. Do any have merit. Prehaps some have already been considered & implemented, or dropped.

    Finally, if you have read Dr. Gurgdiev’s piece, do you have any comment on that.

    Thanks & Best Regards,
    @BriMcS

  3. david says:

    Hi Chris,

    I am surprised by the tone, and to be honest the accuracy of your piece. Monaghan town where I’m originally from has a very strong indigenous sector for decades. Through the 1970’s and 80’s and until the past decade these local companies were doing very well and spanned everything from food-processing, furniture and footwear, textiles to engineering companies such as Moffett engineering and Combilift. For much of this time North Monaghan was without political representation and hence got no FDI. People in Monaghan tend to be doers rather than talkers and this has been to their cost politically. Despite the obvious pool of talent and entrepreneurial spirit little or nothing was done by government to support it. As a result many companies lost competitiveness through the boom years. While the local protestant community were behind some of the ventures, catholics and mixtures of the two founded and continue to drive the other businesses.

    -David

    • chrisjhorn says:

      David,

      I don’t think I was trying to focus on the recent history of indigenous entrepreneurism in Monaghan and elsewhere across Ireland; but just to try and get insights into what was the culture and thinking at the founding of the State in the 1920s…

      I applaud the entrepreneurial spirit to which you refer in Monaghan, particularly when it is focussed on global export markets — we need an awful lot more entrepreneurship..

      best wishes
      Chris

  4. Roy Johnston says:

    Chris I went to Martin Lowery’s EI Presidential Discourse yesterday. He went into the roles of engineers in the innovation process, and made the case for innovative entrepreneurship as a job-generator. The event conflicted with a discourse in the Academy by ESRI Director Frances Ruane, who was on about research policy; the ESRI has been critical of SFI. I had intended to go to the latter, but opted for the former, Martin being an ex-colleague from our Aer Lingus epoch, where we shared an interest in Operational Research. But it occurred to me that perhaps we need more real-presence networking between the economics, science and engineering communities, if the innovative enterprise process is to be better understood. Is there prehaps scope for an effective ‘science, technology and society’ studies centre, with associated active network?

    • chrisjhorn says:

      I was in silicon valley during Martin’s speech unfortunately – which was embarrassing, as past President of EI..

      I think the more real-time networking there is the better, and there’s much that’s happening already in an unstructured ad-hoc way via eg linked-in, twitter and some of the other online groups. Not sure whether a physical studies centre would help, but there probably is scope for a more structured approach..

      best
      Chris

  5. Pingback: An Innealtóireacht i gCroí-lár Ár dTodhchaí Uile agus Ní Leor an Eolaíocht Amháin « Fionn Murtagh’s Blog

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