Ireland is the 2d richest in Europe

Ireland was one of the poorest countries in Europe, well known for the 19th Century potato famine and emigration to America, tragic poets and murderous civil wars. But Ireland made a change of direction starting in the lake 1960s. Thomas Friedman reports in the International Herald Tribune

... the government made secondary education free, enabling a lot more working-class kids to get a high school or technical degree. As a result, when Ireland joined the EU in 1973, it was able to draw on a much more educated work force.   By the mid-1980s, though, Ireland had reaped the initial benefits of EU membership - subsidies to build better infrastructure and a big market to sell into. But it still did not have enough competitive products to sell, because of years of protectionism and fiscal mismanagement. The country was going broke, and most college grads were emigrating.

They were still on the line.

"We went on a borrowing, spending and taxing spree, and that nearly drove us under," said Deputy Prime Minister Mary Harney. "It was because we nearly went under that we got the courage to change." And change Ireland did. In a quite unusual development, the government, the main trade unions, farmers and industrialists came together and agreed on a program of fiscal austerity, slashing corporate taxes to 12.5 percent, far below the rest of Europe, moderating wages and prices, and aggressively courting foreign investment. In 1996, Ireland made college education basically free, creating an even more educated work force.

The results have been phenomenal.

Today, 9 out of 10 of the world's top pharmaceutical companies have operations here, as do 16 of the top 20 medical device companies and 7 out of the top 10 software designers. Last year, Ireland got more foreign direct investment from America than from China. And overall government tax receipts are way up.   "We set up in Ireland in 1990," Michael Dell, founder of Dell Computer, explained to me via e-mail. "What attracted us? (A) well-educated work force - and good universities close by. (Also,) Ireland has an industrial and tax policy which is consistently very supportive of businesses, independent of which political party is in power. I believe this is because there are enough people who remember the very bad times to de-politicize economic development. (Ireland) also has very good transportation and logistics and a good location - easy to move products to major markets in Europe quickly."   Finally, added Dell, "they're competitive, want to succeed, hungry and know how to win.

An educated work force. Cooperation among owners, labor unions and farmers on economic policy that encourages foreign investment. Low taxes that are simple and transparent.

"It wasn't a miracle, we didn't find gold," said Mary Harney. "It was the right domestic policies and embracing globalization."