The Invisible Hand or Hands Across the Water?: American Consultants and Irish Economic Policy

THE INVISIBLE HAND OR HANDS ACROSS THE WATER?: AMERICAN CONSULTANTS AND IRISH ECONOMIC POLICY RICHARD B. FINNEGAN AND JAMES L. WILES there has been no lack of advice from the United States to the Irish on the issue of Northern Ireland. On the contrary it appears that there are far more solutions oVered to the Irish from Americans than the Irish, North or South, want to hear. On economic policy, however, the advice of consultants from the United States is relatively scarce indeed. Four major reports have appeared since the end of World War II. They are Industrial Potentials of Ireland: An Appraisal (1952); Dollar Exports: Report of U.S. Consultants (1953); Review of Incentives for Industry in Ireland (1967); and A Review of Industrial Policy (1982). The reports are revealing in both their assessment of the obstacles to Irish economic development and the policy proposals they advocate. We can examine these reports in terms of the relationship of the policies followed by the Irish government to the American assessments and policy prescriptions. It should be pointed out that the Irish, since independence, had not been reluctant to seek the counsel of outside experts with respect to the economy . In 1924 the minister of industry and commerce had turned to the Siemens corporation in Germany to develop a proposal to derive hydroelectric power from the Shannon river. An American, Henry ParkerWillis , had chaired the Banking Commission of 1926, and a Swede, Per Jacobsson , had chaired the second in 1938. Gordon Campbell, secretary of Industry and Commerce, wished to set up inquiries in the 1930s into banking , agriculture, transport, and the like, and had asked his friend J.G. Smith of Birmingham University to suggest the names of men in Ireland capable of executing such inquiries. Smith said that he would have to go outside of Ireland to Wnd a person of suYcient expertise and stature.1 AMERICAN CONSULTANTS AND IRISH ECONOMIC POLICY 42 1 Ronan Fanning, “Economists and Governments: Ireland 1922–52,” in Antoin E. Murphy , ed., Economists and the Irish Economy (Dublin: Irish Academic Press, 1983), pp. 149–150. As Irish economist James Meenan noted, it appeared to the Irish in Saorstát Éireann to be self-evident that once they began to formulate their own economic policy after independence that “progress would be quickly made.”2 In fact, the economic situation of Ireland and the partisan conWguration of interests conspired to structure economic choices into a conservative , neoclassical approach. For a decade the dominant economic perspective was based upon rigid Wscal orthodoxy, and J.J. Lee hardly overstates the case when he observes that government policy “amounted to a virtual abdication in favor of established Wnancial interests.”3 When de Valéra took power in 1932, his party was somewhat more disposed to government intervention in the economy and, moved by his ideas of Irish self-suYciency, it was more willing to adopt protectionist policies. The positive and negative eVects on the Irish economy were diYcult to assess, however, as the Great Depression, the Economic War with Britain from 1932 to 1938, and World War II converged and left the Irish economy in a fragile position. It was after the war, or “The Emergency” in Ireland, that a most signiWcant contact with the United States took place, the Marshall Plan. Marshall Plan aid to Ireland from 1948 to 1950 amounted to forty-six million pounds, of which six million was in direct grants, and the rest was loans at low interest rates. Marshall Plan funding required that the recipient state prepare a plan for the use of the funds. In the rest of western Europe , this requirement proved to be a stimulus to some degree of state planning . In Ireland, the plan, entitled The European Recovery Programme: Ireland ’s Long Term Programme (1949–1953), was something less than a coherent vision for the Irish economy and “ . . . far more a product of McBride’s haste to get U.S. aid. . . .”4 Moreover, it was written by the Irish to qualify for the funds and did not rely on the United States for advice, oYcial or otherwise , on what the Irish should adopt as an economic development policy . The Programme...