Reopening society will be tougher for smaller nations

Reopening society will be tougher for smaller nations like us Ireland will be torn between internal medical advice and pressure from external trading forces, writes

‘The only way to thrive is to act decisively and quickly’

IRELAND is part of a group of smaller societies that have become very successful. There appears to be a sweet spot of size that is big enough to sustain major social infrastructure as well as economic activity, yet small enough to be responsive and flexible. This lucky club includes Ireland, Finland and Denmark in the EU, as well as Hong Kong, Singapore and New Zealand elsewhere.

Small size alone is not enough; countries also need to have a social and economic openness to thrive. However, this openness can also be a threat in these times of Covid, for three reasons.

The first is that Ireland will need to open up at a pace to match our bigger trading partners. In a week when Texas has decided to unilaterally lift its mask mandate, we are reminded of the gulf that will soon emerge. Reopening after Covid will be a painful reminder that one of the disadvantages of being small is the need to be ‘rule-takers’ who must accept the rules of other bigger markets.

The second is that we will need to allow ourselves to open up to international air travel quickly and at a large volume. Many are unaware that Ireland has the world’s highest level of flights per capita — much of which is driven by business. In normal conditions, Dublin-Heathrow is the busiest air route in Europe, with over 14,000 flights per annum.

Reopening our society will mean reopening our economy, which will mean reopening our air links.

The third reason to be careful is that it is well-recognised that small, open economies are particularly vulnerable to large impacts due to external shocks if these are not anticipated and managed.

Economic forecasting is central to such crisis management. This is something that Ireland is very poor at.

An analysis of our poor preparation for managing the last economic shock in 2008 found Ireland had the highest forecast errors among EU member states.

We need to anticipate that these post-Covid changes will be particularly acute for a country like Ireland, which will be bound to the rules of the EU on the one hand and the needs of big trading partners like the US on the other.

The ending of Covid will be very challenging for every country, but it will be particularly hard for Ireland.

This country will be torn between internal medical advice that will be increasingly beleaguered in the face of internal commercial pressures. This pressure will increasingly align with major external trading forces.

This difficulty will be increased by our exposure to the influence of British media while that country opens up two or three months ahead of Ireland due to the speed of their vaccination programme.

The Government will be vulnerable to criticism when making decisions about reopening in these circumstances. It will be too easy to point to lobbying by business groups while claiming that health will be at risk. A time is fast approaching when the Government will have to be prepared to take a new type of decision that will be as unpopular as the decisions about lockdown.

The decision will boil down to a willingness to be a rule-maker or risk-taker. Our own rule-making will be safer for the vulnerable and will be evidence-based. Risk-taking will promise faster economic recovery but will cause increased infection as well as a possible fourth wave.

This type of choice is difficult but not without precedent. It is familiar to professional risk assessors. They never delude themselves about the possibility of no risk.

Instead, they use the phrase ‘acceptable level of risk’. This tries to balance undeniable risk against genuine wider benefits. This is a social and economic decision, informed, but not made by science and medical advice.

In Ireland we make such a choice every day. Last year, on Irish roads, there were 148 fatalities, consisting of 62 drivers, 26 passengers, 32 pedestrians, 17 motorcyclists and 10 cyclists. To their loved ones, none of these deaths will ever be acceptable, yet, to society as a whole it was.

It should be noted that we are the second safest country in the EU for driving, which in turn is the safest driving region in the world.

Yet, the fact remains that this is the price that we are willing to pay for the benefits of mobility for all.

There is unlikely to be any neat end to Covid. A day will never come when there will be no risk. Instead, different countries, at different times after vaccination, will decide that enough is enough and that the residual level of risk is acceptable.

Ireland will need to make a choice that will balance very real continuing health risks against very real demands of our biggest trading partners.

There will never be a perfect day to make these decisions. They will always be contested.

On balance, it will probably be better to act decisively by taking the risk of being slightly too early than to delay and be too late. One will be a health risk and the other will be an economic and social risk. The best that the Government can hope to do is to take the least wrong decision.

It is important for all of us to recognise that we are entering a new stage of this crisis. The basis of decision-making is slowly but surely moving away from the legitimate primacy of scientific fact towards the necessary pragmatism of politics.

The advantages of being a small, open economy come at the inevitable cost of needing to follow rules made by others. The only way to thrive in these circumstances is to act decisively by quickly responding to inevitable change.

The recent indecisiveness of this Government must be a cause for concern about how they will respond to this last phase of Covid.

Small, open economies are notoriously vulnerable to impacts due to large external shocks.

Our biggest risk will be actions that are too little or too late.