Belfast Telegraph

Over the Moon: how does our economy in Northern Ireland today fare compared to 1969?

Economy Watch by Dr Esmond Birnie, Ulster University Business School

Lavish spending on the space race, it is argued, cost the
US so much it led to inflation which was passed on to other Western democracies
Lavish spending on the space race, it is argued, cost the US so much it led to inflation which was passed on to other Western democracies

Please indulge me one more piece of Moon landing nostalgia but I want to consider two questions.

First, how does today's Northern Ireland economy compare to that of the 1960s? Second, what economic lessons might be learnt from the Apollo Moon programme?

In 1969, total employment in Northern Ireland was about 565,000, with some 180,000 employed in manufacturing (32%).

Now, total employment stands at around 780,000, with just 88,000 manufacturing workers (11%).

In 1969, total TV ownership stood at 32%. Now it's closer to 98%.

Just one-third (32%) had a telephone 50 years ago. According to data from 2017, smartphone ownership stood at 76%, with 84% of homes listing a landline.

Lastly, in 1969 the price of a new Mini was around £600. These days it'll set you back between £21,000 and £24,000.

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During the last half century total employment in Northern Ireland (NI) has expanded by over 200,000. The ownership of consumer products has rocketed. Inflation has been substantial. The NI economy has experienced substantial structural change: notably in terms of the relative decline of manufacturing.

Hindsight can be both a benefit and a blessing. Views of the NI economy in 1969 tend to be dominated or distorted by our knowledge that what came next, especially in terms of the 35 years of the Troubles.

A lot of academic argument has been expended in recent decades trying to demonstrate to what extent there was (or was not) anti-Catholic economic discrimination during the 1960s and how far the Troubles imposed a cost on the NI economy.

The Troubles notwithstanding, the NI economy grew considerably during 1969-2019. For most people the 1960s were also a period of rising living standards. During 1954-70 employment in NI schools tripled and healthcare staff doubled. New investment created 65,000 industrial jobs during the 1960s. NI industrial output grew by 79% during 1958-70 compared to a UK average growth of 49%, and growth of 122% in the Republic of Ireland and 108% in West Germany.

What, if anything, might be the lesson from the Apollo Missions for economic policy? There are two views on this: the optimistic and the pessimistic.

The optimists take the Moon landings as proof that 'where there is a will there is a way'.

If government states a goal and then commits enough resources most things should be achievable.

This is sometimes true but not always so. A few years after President Kennedy made his historic commitment to land a man on the moon before the end of the 1960s, NI's Prime Minister Terence O'Neill said that by the end of the Century NI's GDP per head should rise to be equal to that in Great Britain.

Such convergence has still to be achieved.

Similarly, President Nixon may have been trying to do a Kennedy by declaring a war against cancer in 1971. After 50 years that war has still to be won.

Whilst the optimists view the Moon landings as an inspirational model for economic policy, the pessimists argue that the financial cost of the Apollo/NASA programmes wrecked the US economy and consequentially produced great instability at the global level.

The argument is as follows. The period, 1950-73 was something of a golden age for the Western economies: high economic growth and full employment.

There was also exchange rate stability given that most Western economies pegged their currencies to the US dollar through the Bretton Woods international exchange rate system.

Spending on the space race, so it is argued, helped to push the 1960s-early 1970s US economy beyond full employment levels of demand causing inflation to rise and creating balance of payment deficits.

The upwards pressure on inflation was passed on to the UK and the other Western economies. Eventually, the strain on the dollar was too much - it was devalued in 1971 and Bretton Woods came to an end.

Thus began years of uncertainty and stagflation (rising unemployment and inflation).

Whilst there may be something in this argument it does have to be put into perspective. It has been estimated that the historic (not adjusted for inflation) public spending cost of the various Apollo missions was $25bn - about $180bn in today's money.

That was a huge amount of money but not a big percentage of US GDP. In fact, the annual cost of the Apollo programmes was dwarfed by the roughly $400bn spent annually on US welfare programmes over the last 50 or so years. Also, the total cost of the Vietnam War to the US was probably about seven times that of the space programme.

If the US economy was being over-stretched in the 1960s the blame for that should be placed on welfare and warfare and not the Moon landings.

Belfast Telegraph

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