Sunday, April 03, 2011

Facts, Ireland and the Euro

Aengus Fanning, the editor, has an article in today’s Sunday Independent: ‘We need leaders who will ignore the eurobabble and just say no’
In my (no doubt ignorant) opinion, we should be threatening to kick the table over and leave the eurozone while remaining in the EU, joining Britain in an Atlantic alliance that will still have the clout to maintain access to the single market.

There’s no hope of that happening — we’re too inherently Anglophobic for that. It is 38 years since I listened to government officials in Brussels telling me that our future lay with the deutschmark, and that our curse was the link with sterling.

It is surely strange that, after all these years, the perfidious Brits are still our biggest trading partners.”

Interesting argument expect for the strange fact: exports to the Eurozone in 2010 at 38% of total exports (goods + services) are double the level to the UK.

In the Irish Independent in Sept 2010, celebrity economist David McWilliams, used false export data to also argue against the euro.

He wrote:
"The most damning statistic of our entire euro venture is that from 1990-2000 when we had our own currency and we devalued in 1993 to get competitive, Irish exports grew by 360%. Between 2000 and 2009 with our overvalued new euro currency, Irish exports grew by 0.3%. That says it all really and yes, that figure is 0.3%, not 30%!"

Absolutely wrong!!

We at Finfacts take facts seriously and it's very important when commenting on economic trends and policy.

There is the simple support for an argument by citing relevant facts. There is alternatively the selective use of facts to support a position and there was a classic example of both in the Irish Independent.

In 2000, tradeable goods and services exports were €102bn; in 2009 they were valued at €144bn - yes, an increase of 41%! McWilliams said 0.3%!

There was a 10% devaluation in 1993. So that is a fact but it is not credible to claim that an export boom depended on a small scale currency revaluation while ignoring a key fact that with 1% of Europe's population, we were attracting 25% of US greenfield investment. Besides, a paper published by the Central Bank in 2005 shows that the trend of exports from Irish-owned firms in the period 1990-2002, hardly changed. Have a look at a chart here which shows the true facts.

Intel, Dell, Hewlett-Packard, Microsoft and a raft of world-class pharmaceutical companies triggered the export boom not the Minister for Finance Bertie Ahern who was left with no choice but to agree to a market-forced devaluation in 1993.

We need leaders who will ignore the eurobabble and just say no

Ireland and leaving the Euro: 10 questions for pub-stool economists