IIn 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 finance department had been secretly working on for months. Its title, Economic Development, may have been deceptively bland, but its message was blindingly clear. The country was an economic mess and unless radical action was taken its very existence as a viable state was in question.
As author Fintan O’Toole put it in his memoirs, Ireland in the 1950s was basically “a huge cattle ranch with a few towns and lots of small country towns attached.” This ranch had two main exports: live cattle and beef products, most of which were destined for the British market, and young people who emigrated by the thousands every year because there was no means of livelihood or prospect of fulfilling life at home.
In July 1958, the Irish government accepted Whitaker’s analysis and commissioned him to draw up a program of economic expansion, which he duly did. A key phrase in the resulting document was that “readiness to welcome foreign capital is a necessary adjunct to securing foreign participation in industrial development.” In one of those occasional miracles which are the hinges of history, this radical idea escaped the attention of the country’s reactionaries and became government policy. And a government body called the Industrial Development Authority (IDA), staffed with zealous technocrats, set out to make it a reality.
And boy, did they succeed. Ireland can still export cattle and dairy products, but foreign multinationals now account for 10.2% of employment and 66% of the country’s exports. In the early days, the earners were continental companies such as crane maker Liebherr, large pharmaceutical companies such as Pfizer and computer manufacturers such as Apple and the now defunct DEC (Digital Equipment Corporation), but in due course the outbreak to establish Europe The headquarters in Dublin included many 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 and on.
Why do these outfits want to be on the banks of the Liffey so badly? Although Ireland’s young, educated, English-speaking workforce is often talked about, there are three main reasons. Ireland is in the EU, its government agencies have bent over backwards to make life easy for them, and the tax regime is, er, favorable. So favorable, in fact, that when the European Commission ruled in 2016 that Apple had to pay the Irish government €13 billion in back taxes because “Ireland had granted illegal tax benefits to Apple,” not only did Apple appeal decision, but so does the Irish government! (The appeal was successful.)
So far, the realization of Whitaker’s vision for the development of his country looked like a win-win outcome. It explains why the republic’s government currently has money coming out of its ears, to the point where the Chancellor of the Exchequer, Paschal Donohoe, has had to warn that high corporation tax collections are creating an artificially positive picture of public finances. Corporation tax generated €16.6bn for the 10 months to the end of October, up 69% on the same period last year. And Donohoe is hearing predictions that total tax revenue for the year could reach €80bn. No other European government is in such good fiscal shape.
Three all then? Not exactly. This flood of tax revenue is happening because big companies — especially tech companies — have prospered mightily during the pandemic. But there is a recession for everyone (except maybe the energy companies). Of greater concern, however, is what this latest manifestation of the luck of the Irish reveals about the state’s dependence on the welfare of those income earners who received the traditional hundred thousand welcome from the IDA wizards. 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 Irish Times colleagues like possibly 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 was beginning to count his billions, word came that several of the aforementioned giants were downsizing. Twitter’s Dublin office was abruptly closed last week, for example, and the IDA has been advising the government of the “risk to jobs in the Irish tech sector following Twitter’s move”. And there are indications that Meta is going to lay off about 350 people.
And morale? 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 great blog post by Maria Farrell about the human consequences of Elon Musk’s irresponsibility.
A world of diversity
Globalization has failed to deliver the economy we need. A great essay by Rana Foroohar on New York Times to the downsides of a neoliberal obsession.
Twitter Is Our Future is a long and insightful blog post about what the Twitter acquisition means for the future of media by veteran American journalist James Fallows.