Rosenthaler Platz in Berlin is a busy hub to the northeast of the city centre. The last time I sat on the U-Bahn here, the train slowed down and then passed through a creepy, dimly-lit and empty station with only East German border guards on the platform. It was the summer of 1989, just three months before the wall came down. Rosenthaler Platz was what was called a “ghost station”. The underground was constructed before the wall went up in 1962 and this was one of the stations which was boarded up when the city was divided. The trains from West Berlin passed through East Berlin, weaving right through the middle of the city, only to re-emerge back into the West and literally into the light.
Today it is buzzing with foreign students, start-ups and cafes that have turned themselves into communal workspaces. In fact, the one I am in, Oberholz provides a vision of what much of work life in the future may be like: semi-autonomous, creative teams working together on a project by project basis, hiring space in a cafe for a limited time rather than being full-time employees with full-time tenancy in a fixed office. Right now this is still only a small minority of workers but it could become the norm.
Berlin is one of those very few capital cities that is poorer than the rest of the country. Most capital cities, such as Dublin, London or Paris, dominate their economy and generate a disproportionate amount of tax revenue, job opportunities and national income. People migrate to the capital to seek their fortune, enhance their chances and get on. This is not the case for Berlin. Berlin is considerably poorer than other major German cities such as Munich, Frankfurt or Hamburg. Its grungy, slight down at heel neighbourhoods, with their lower rents and younger populations are becoming hubs for the new start-up capital of Europe.
Berliners argue that post-Brexit, cheap Berlin will win business from expensive London, because an isolated UK, where talented European immigrants might need visas, will not provide the creative infrastructure attractive to start-ups. If the UK crashes out of the EU without a deal, this notion will become more not less likely.
However, history indicates that it is difficult to predict how big geo-political shifts will pan out economically. For example, years ago, the prevailing wisdom was that when the wall came down, the central and eastern European economies would blossom under German tutelage. The Euro project was cobbled together by France to ensure that a united Germany would be anchored in western Europe rather than drifting to the east. So much of German history has been a battle between the Prussian, mainly Protestant eastern part positioning Germany to look east and the southern and western parts of Germany, the old Holy Roman Empire, mainly Catholic parts, positioning Germany in western Europe. Unification was deemed to be the signal for Germany to shift to the east and, in the process, lift the eastern countries up. The supposition was that this German pivot would enrich the countries east of the Elbe, to the implicit detriment of the countries in the west.
However, when you look at the data what emerges is an unusual picture. The country in Europe that has done best economically since German unification is Ireland. No one predicted that. At the time the rational bets were being placed on the old Czechoslovakia, Hungary or Poland. But it was Ireland, the perennial economic underperformer that benefitted most from German unity.
This is because when the wall fell, the twin forces of democracy and globalisation under American global hegemony replaced communism and trade barriers policed by the two superpowers, the Yanks and the Soviets. Ireland, although we didn’t know it at the time, was positioned perfectly to become a trading entrepot, taking full advantage of American capital investment, open markets and talented European immigration. The corporate tax helped, but access to this market was also critical. In addition, being open to the type of people who wanted to leave central Europe to make their lives somewhere else, implied that the Irish labour market was no longer limited to the four million odd of Irish talent, but was expanded to the best of 450 million people.
Interestingly, American capital didn’t have to invest in eastern Europe to get access to eastern and central European markets . It could locate in Ireland and do the job from here. Culturally, Ireland is much closer to the US for American executives than, let’s say, Slovakia or Hungary. Thus we offered corporate America the best of both worlds: a tax-efficient, European foothold that looks and feels like New England.
Corporate America responded with a surge of capital investment into Ireland rather than anywhere else. Since the wall came down, American companies have invested more in Ireland than in China, India, Russia and Brazil. Ireland from 1989 to 2018 has become to Europe what Shanghai was to China from 1880 to 1945: a free-trading outpost with full access to the huge internal market, without having to actually set up there. Ireland was/is the launch pad for America into continental Europe. This has made us immeasurably richer than the up-and-coming central Europeans who got German products without German investment driving their own industries to the wall, while Ireland that had precious few domestic industries previously, got an entirely new capital base.
Here in Berlin in 1989, when Helmut Kohl spoke of blooming landscapes in the East, no one imagined that the greatest beneficiary economically from the end of the cold war, would be a windswept rock in the Atlantic as far away from central Europe as it is possible to be while still being in the continent.
Now with Brexit, the UK is providing us with another opportunity to reinforce the impression of an open, free-trading, welcoming, savvy country unencumbered by the self-deluding, nationalist myth of specialness. Brexit is an act of aggression against globalisation. Investors won’t forget that. In addition, the way things are going, the UK may well end up very soon with a new government whose economic policies are more East Germany than west Europe, with an extreme leftist ideologue in power. In fact, Corbyn’s manifesto implies that a Labour government in London would be the most left-wing government in Europe since Eric Hoeneker’s regime in Berlin were boarding up subway stations. Such an outcome will prompt mass capital flight. Where do you think lots of that capital will come? Here of course. Compared to the UK, Ireland looks like an oasis of sanity. As such, Brexit provides Ireland with an unsurpassed commercial opportunity, and we should seize it with both hands.
If we don’t, someone else will.
Hi David, welcome to Berlin. Rozenthaler Platz, is indeed some kind of spiritual hub for the new Berlin economy. You’re bang on target, this place is really transforming itself but it is a slow process. It’s a cosmopolitan place but it is still in the middle of Germany. The willingness and flexibility of the government and institutions and the wider german population to move forward, doesnt match that of the folks you are sat next to in St.Oberholz. In my experience whatever you may say about Ireland, people embrace change and opportunity a lot more readily than Germans. As you… Read more »
Agree with you on the dangers of Corbyn – lets hope that doesnt happen. There’s no doubt that Ireland will have opportunities post Brexit in many industries though in agriculture and food there is now a huge incentive to move all processing and production to Northern Ireland.
Despite all the so called American and foreign investment in Ireland since 1991, average workers wages has continuously gone down in real terms.
Workers are working longer hours under worse conditions for less buying power.
The influx of eastern European workers has and is benefiting the owners of big capital while driving down the wages of those Irish workers who have to compete with or are displaced with them.
The extra demand for housing, health services etc has left Paddy in a longer queue.
The Brits, bless them are engaged in a political civil war and the situation is extremly volatile and could change fundamentally in a week, so speculation may be taken with a pinch of salt. What I find really significant is the arrest of Nissan Renault chief Carlos Ghosn in Japan for financial impropriety. Worldwide car companies are collapsing under the pressure of new technology and it is going to get much, much worse. The 4th industrial revolution is now taking its toll – when EVs and AVs kick in all their factories will be a wasteland – and in Asia… Read more »
“… providing us with another opportunity to reinforce the impression of an open, free-trading, welcoming, savvy country unencumbered by the self-deluding, nationalist myth of specialness. ”
BUT, A CERTAIN GEO-POLITICAL MEETING PLACE OF 3 CONTINENTS, & WHICH RULES THE USA, & MORE … 8-) REMOTELY, IS MORE SPECIAL THAN OTHERS
IN FACT, SO SPECIAL THAT THEY WILL ALWAYS BE HAILED AS ALWAYS SPECIAL & NEVER DESERVING OF SCRUTINY BY THE TALENTED WORD-SMITHERY ONE ;
David’s strength is his honesty, and he also provides a platform here for opposing views, which is something I imagine is becoming quite rare. He is also clever. it was bad enough to read about Ireland being an “entrepot”. I don’t think many Irish people realise this. But this bit took my breath away with its, er, honesty: “Now with Brexit, the UK is providing us with another opportunity to reinforce the impression of an open, free-trading, welcoming, savvy country unencumbered by the self-deluding, nationalist myth of specialness.” The delusion, of course, is not the “myth” of the nation, but… Read more »
It seems that “money has no conscience” sums up the world today. It always did, and always will. It is time to go back to the garden and contemplate the weekend sail coming on Sunday. C’est la vie. Ideologies are the most dangerous things in the world. Give an ideologue the control of money and the result is a psychopathic economy which in the long run is good for nobody. Fire the central bankers and bring back honest money. Of course, I forget, nobody is interested. They are too busy following where the pursuit of money leads. BUT is it… Read more »
I agree that Brexit could be Ireland’s opportunity but my concern is that we lack the infrastructure right now in terms of housing, transport, schools etc to support incoming large scale companies unless some speedy radical solutions are provided by government.
Such an outcome will prompt mass capital flight. Where do you think lots of that capital will come? Here of course. Compared to the UK, Ireland looks like an oasis of sanity.
Nasdaq is off another 1.5% today. Perhaps the cost of commercial space will be cheaper in the next 12 months. Dow is off another 2%. Is it the retraction before new highs. Crypto currencies off 5-15%. What will replace the fiat in the coming global reset. Oil off 7% Does this reflect the real world economy. PM’s are off 1%, Good for China to accumulate yet more. While the CFTC can find the time to investigate the Alleged Bitcoin manipulation it finds no cause to investigate the manipulated suppression of the PM markets that has occurred this last 40 years… Read more »
London Bullion Market deserves to lose bullion market as the criminal enterprise is gradually exposed. The question is //would Dublin operate an ethic enterprise that could be trusted.
Being positive now is to anticipate the coming recession. Be Prepared. QE pumped in 14 Trillion to avert the last crash being a wipe out and recently the cash flow has come to a trickle as central banks try to rebalance their ledgers.
It is now the time for the exchange of the ‘seigneur des anneaux’ between the Kingdom of Kerry with Windsor and reclaim the magical powers of our own primal intuition.
Hi The thought crossed my mind the article reminds me of Michael d Higgins. Just because the speaker or writer is eloquent doesn’t mean they are not foolish. I presume you mean the opportunities will be hqs of finance and insurance operations plus apple type tax evaders will locate here as a Base. Not a mension of what will happen to exporters exporting to the uk. If Ireland is such a Mecca why are the best irish leaving it in droves and not coming back? Do you think that we should all move to somewhere inside the m50? Why did… Read more »
-> WAKE UP!
=> DO YOU THINK BREXIT COULD BE LEFT TO CHANCE?
-> THE BREXIT “NEGOTIATION”
=> PURE PANTOMIME
-> MAY IS FIFTH COLUMN
-> SHE IS THERE TO SPIN WHEELS
=> AND RUN DOWN THE CLOCK
WATCH HER SIGNAL TO HER COMMIE FRIENDS
MAY AND MERKEL GO BACK A LONG WAY
-> I HAVE A BRIDGE FOR SALE
The death of a US missionary at the hands of Andaman Islanders illustrates what happens when the chimera of happy-clappy-let’s all dance around the maypole-John Lennon BS hits the reality of how the human species really is. It was Adam Smith in The Wealth of Nations, Book I, Chapter X who said: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Raising and protecting your own world and income by excluding the competition and getting a local monopoly on… Read more »
Sovereign money for a sovereign nation. Money that has no counterparty risk. Money that is not an IOU. Money that is not a debt. Money that has stood the test of time. Honest money rather than dishonest paper script worth in reality nothing at all.
I don’t think the title of your article matches the content lol. Just kidding, mainly because I had some doubts after reading the article. https://accounts.binance.com/fr/register-person?ref=FIHEGIZ8