In 1958, a young Irish civil servant named Kenneth Whitaker surprised his political masters in Dublin with a 250-page document that he and some of his colleagues in the Treasury had been working on in secret for months. Its title, Economic Development, was perhaps deceptively bland, but its message was blindingly clear. The country was an economic mess, and unless drastic action was taken, its very existence as a viable state was in doubt.
As the writer Fintan O’Toole put it in his memoirs, Ireland in the 1950s was essentially “a vast cattle ranch with a few towns and many small provincial towns attached”. This ranch had two main exports: live cattle and beef products, mostly for the British market, and young people, who emigrated by the thousands each year because there were no means of subsistence or of the prospect of a fulfilling life at home.
In July 1958, the Irish government accepted Whitaker’s analysis and asked him to draw up a program of economic expansion, which he duly did. A key phrase in the resulting document was that “willingness to welcome foreign capital is a necessary complement to secure foreign participation in industrial development”. In one of those occasional miracles that are the hinges of history, this radical idea escaped the attention of the nation’s reactionaries and became government policy. And a government body called the Industrial Development Authority (IDA), made up of zealous technocrats, set out to make it a reality.
And boy, did they pull it off. Ireland may still export livestock and dairy, but foreign multinationals now account for 10.2% of employment and 66% of the country’s exports. At first, the entrants were continental companies such as the crane manufacturer Liebherr, large pharmaceutical companies such as Pfizer and computer manufacturers such as Apple and the defunct DEC (Digital Equipment Corporation), but in due course the rush to establish Europe HQs in Dublin included much of the Silicon Valley crowd. A quick search reveals 19 major companies, including Google, Facebook, Airbnb, PayPal, Twitter, Microsoft, eBay, LinkedIn, Squarespace, IBM, Seagate, Adobe, Dell, Oracle… The list goes on.
Why do these outfits so want to be on the banks of the Liffey? Although they often talk about the young, educated, English-speaking Irish workforce, there are three main reasons. Ireland is in the EU, its government agencies have bent over backwards to make their lives easier, and the tax regime is, uh, favourable. So favorable, in fact, that when in 2016 the European Commission ruled that Apple had to pay the Irish government €13 billion in underpaid taxes because “Ireland had granted illegal tax benefits to Apple” , not only did Apple appeal the decision, but the Irish government too! (The call was successful.)
So far, realizing Whitaker’s vision for the development of his country has looked like a win-win outcome. This explains why the republic government currently has money coming out of its ears, to the extent that Finance Minister Paschal Donohoe had to warn that high corporate tax revenues create an artificially positive image. public finances. Corporate tax generated 16.6 billion euros for the 10 months to the end of October, or 69% more than the same period last year. And Donohoe hears predictions that overall tax revenue for the year could reach 80 billion euros. No other European government is in such good financial health.
Trebles all round then? Not enough. This torrent of tax revenue is happening because big business — especially tech companies — have thrived mightily during the pandemic. But there is a downturn ahead for everyone (except maybe the energy companies). Of greater concern, however, is what this latest display of Irish luck reveals about the state’s reliance on the prosperity of these newcomers who have received the hundreds of thousands of traditional IDA wizarding welcomes. . Because it turns out, says O’Toole, that “10% of all tax revenue in Ireland now comes from just 10 American companies”, identified by one of his irish time colleagues as probably Apple, Microsoft, Google, Pfizer, Merck, Johnson & Johnson, Facebook, Intel, Medtronic and Coca-Cola. Five of them are tech giants.
Just to underscore this point, as Donohoe began counting its billions, news came that several of the aforementioned giants were downsizing. Twitter’s Dublin office was abruptly closed last week, for example, and the IDA was advising the government of the “risk to jobs in Ireland’s tech sector following Twitter’s move”. And there are indications that Meta is about to lay off around 350 people.
And the moral? If you are lucky enough to receive golden eggs, don’t put them all in one basket.
what i read
Twitter Consequences; Not Just for Little People is a terrific blog post by Maria Farrell about the human consequences of Elon Musk’s irresponsibility.
A world of difference
Globalism has failed to provide the economy we need. A great essay by Rana Foroohar in the New York Times on the reverse side of a neoliberal obsession.
Twitter Is Our Future is a long and insightful blog post on the significance of the takeover of Twitter for the future of media by veteran American journalist James Fallows.
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