What for you was the biggest event of the last few days? The thrilling All Ireland hurling final, the brilliant Electric Picnic at Stradbally, the plucky but doomed football display in Stuttgart or the government’s “think in” in Westport? Yes I thought so; Westport didn’t figure much, despite getting wall to wall coverage on radio and in the papers.
At first glance there appears to be little to link these events but in fact, in their own way, all are indicators about the future of the country. While the government’s “brain storming” session – if we can call it that – might try to offer concrete examples of how the country can move forward, we all know that in their hearts and souls, TDs are only interested in the local. They will stand or fall on local issues, which is why the general election winners will be those with the most microscopic rather than telescopic view. It will be a victory for the man with the narrowest world-view rather than the one who sees the big picture. As such, the “think in” tells us little about where the country should be positioning itself in the global economy in the years ahead.
Yet where this country positions itself is the most crucial question we need to address. Just like you in your job, the key to keeping ahead of the posse is to find a niche at which you are better than the next fellow. Once you find that, you gain a reputation, no matter how limited, as being the person to go to for the best service. This means your business builds and then you can charge an extra bit more for your time and ultimately, you begin to generate the extra cash or earn the extra status that keeps you ahead. Economically, countries operate in just the same way although on a myriad of levels. The focus for industrial policy should not be about keeping open industries that can’t compete (although that may be a politician’s natural urge) but rather to assess what the country is best at and to go for it.
Over the past twenty years, our policy of targeting hi-tech has been phenomenally successful. However, that was before India started churning out more graduates per year than we have people and before all trade barriers were dropped. Today with free trade, free movement of capital and cheap Indian engineers who are prepared to work 24/7 for a fraction of our minimum wage, we need to think up another plan. What can we do in Ireland that others cannot do? How can we protect ourselves from this hyper-competition which is being led by India and China?
Given that the objective of a successful economy should be to raise the living standards of all of us and that the best way to increase living standards is to raise wages across the board, what can we sell that will give us all the biggest payback?
This is where the All Ireland and the Electric Picnic come into the frame. Both sport and music are examples of successful industries of the future. Over the past few years, as this country, together with the rest of the West has become more affluent, we have changed our buying habits. We are all starting to buy “experiences” not just goods and services. A new “experience economy” is beginning to emerge. This can be seen everywhere you go in Ireland. Whether you are in a cafï¿½ which offers authentic Colombian coffee or you head up to Dublin for the match with your tribe or you are one of the 35,000 who spent ï¿½175 to go to Electric Picnic to savour the atmosphere, see the bands, hang out with your friends and tell the story when you come home. These are examples of the experience economy – where the things you buy are memorable. “Experience” shoppers are buying things that reinforce the type of people they are, which put them into a certain tribe which gives them pleasure over and above the mere thrill of possession.
The flip side of this new type of buying which puts experience far above the old fashioned, nouveau riche yearning for having the biggest, the brashest or the flashiest is that someone has to provide these goods. There is now a great opportunity for someone or some country to produce stuff that not merely satisfies a need – such as a good, functional laptop – but gives people the sense of an experience which gets inside the head of the affluent consumer and defines them.
The key areas for this type of industry are music, sport, culture (in its broadest sense), film, theatre, advertising, architecture and marketing – any business which draws on experience which leaves people with memories. These creative industries are rather intangible and do not easily fit into economic boxes. For example, in Britain the creative industries account for 14% of GDP, yet are rarely spoken of in political discussion. This is the dilemma for the creative sector – the language of economics which has elbowed out almost all other dialects in modern political discourse is not equipped to deal with the “experience economy”. Modern economics is not capable of articulating or valuing soft economic power.
The crude vernacular of competitiveness, wage rates, productivity and exchange rates does not translate readily into soft economic power. Yet soft economic power will be crucial to Ireland’s well-being in the future and we ought to get a handle on it very quickly.
What is soft economic power? How is it different to hard economic power? Hard power is nuts and bolts power. It is the economic prestige that derives from the manufacturing industry. It is measured by league-tables of output, by comparative GDP figures and by productivity measurements published each week in the back of the Economist. Hard power is gauged by multinational investment records and figures explaining repatriated profits. We have been extraordinarily successful in this sphere, but now, we will have to cultivate soft economic power – the power of the experience economy.
This means ploughing State resources into the arts, literature, and music – all the areas where we have something unique to say and sell. It also implies at a much deeper level changing the education syllabus for every child in the country. We already have -rightly or wrongly – an image of being writers and storytellers and this could easily be turned into a selling point which could make Ireland the world’s centre of excellence for advertising, marketing or publishing. If we managed to move Silicone Valley to Leixslip, why not aim to move Madison Avenue to Merrion Square?
Soft economic power can be seen as anything that results in enhancing the well-being and bargaining position of Irish people over and above the wages we earn now. Unfortunately, in a globalised world, our wages in many areas will be capped not by partnership negotiations but by Indian engineers – so we have to think again.
Ireland of the future could be the creative hub of Europe. We speak in English – which is a huge selling point – we have the people and the talent, all we need now is the vision.