Tuesday, March 05, 2019

Ireland’s Faustian Bargain with hyper- globalization

Hyper- globalization, boosted by the digital revolution and mobility of capital in recent decades, has enabled a small number of global firms to make “free trade” a “delusion” according to a United Nations agency. Ironically in a decade when corporate tax avoidance has become a topic of global public interest and the malcontents of globalization have had an impact on elections in several countries, Ireland has become even a bigger facilitator of international corporate tax avoidance while gaining unexpected tax windfalls.

Read also: European Globalization 500 years ago: Savonarola & Machiavelli 

Changing technology and immigration are also factors in public anxiety, and for example the development of driverless vehicles is a threat to about 3.5m professional truck drivers in the United States, according to estimates by the American Trucking Association. The total number of people employed in the sector, including those in positions that do not entail driving, exceeds 8.7m.

“There is an end to everything, to good things as well,” Geoffrey Chaucer (c1343-1400), English Royal courtier and poet, wrote in 1374, while the German legend loosely based on the life of Johann Georg Faust (c1480–1540), an alchemist and practitioner of ‘black magic,’ gives rise to the concern that Ireland may continue to gain in the short to medium term by facilitating giant companies to continue undermining globalization (i.e. Ireland selling its soul as Faust did to the demon Mephistopheles — an agent of the Devil), but Ireland risks losing in the long term — the indigenous international sector is underperforming as productivity, innovation, employer firm startups, and the number of exporting firms, are all at low levels.

Globalization has been very good for the world since the end of calamitous wars in 1945. Under the pre-1914 version of globalization, Switzerland as a small country without significant natural resources was exceptional in being the richest country in Western Europe in 1910, based on estimates of gross domestic product per capita. In the decades from 1950, countries as diverse as Ireland and China had great economic leaps forward after embracing globalization. However in the US and Europe inequality has deteriorated since the 1980s driven by technological change, globalization, tax policies, education costs, and housing price gains in cities that are a magnet for high skill/ high paid workers.

Globalization should be reformed and not be a tool for global firms with winner-take-all strategies. Mainstream politicians should also be sensitive about voters’ perceptions of immigration even though the economics may suggest even higher levels would be positive.

Dani Rodrik, the Turkish-born Harvard professor, who highlighted the downsides of globalization before it became a popular topic, wrote in late 2017:

“The rise of populism forces a necessary reality check. Today the big challenge facing policy makers is to rebalance globalization so as to maintain a reasonably open world economy while curbing its excesses. We need a rebalancing in three areas in particular: from capital and business to labour and the rest of society, from global governance to national governance, and from areas where overall economic gains are small to where they are large. [ ] Our trade agreements and global regulations are designed largely with the needs of capital in mind. Trade agreements are driven overwhelmingly by a business-led agenda.

Raghuram Rajan, ex-governor of the Reserve Bank of India and University of Chicago professor, recently wrote:

"Unfortunately, beggar-thy-neighbour protectionism will make the world poorer. Declining communities urgently need alternative ways to attract new economic activity, and to make their citizens better able to respond to globalization and technological change."

Not only Ireland cannot rely on being a beneficiary of corporate tax avoidance in the long-term, there are existing changing trade trends that also threaten the status quo. Cecilia Malmström, European commissioner for Trade, said last January, "Shortly, the vast majority of economic growth will be taking place outside the West."

The world's economic centre of gravity is moving inexorably to the East.

According to research by McKinsey Global Institute, today low-skill labour is becoming less important as a factor of production. Contrary to conventional wisdom, only about 18% of global goods trade is now driven by labour-cost arbitrage (defined as exports from countries whose GDP per capita is one-fifth or less than that of the importing country). "Factors such as proximity to customers, the quality of infrastructure, and the availability of a more highly skilled workforce are assuming greater weight than the drive to find the lowest possible global labour costs." 

At the same time, service flows are growing 60% faster than trade in goods.

The developing world’s share of global consumption has risen by roughly 50% over the past decade. "Collectively, emerging economies will likely consume almost two-thirds of the world’s manufactured goods by 2025, with products such as cars, building products, and machinery leading the way. In knowledge-intensive services, including IT services, financial services, and business services, 45% of all exports from advanced economies already go to the developing world.

The chart on the right above is from the '2018 Globalization Report: Who Benefits Most from Globalization?' produced by Bertelsmann Stiftung, a German think-tank. 

The Irish GDP data in the report are distorted by the significant foreign-owned sector. The Irish national statistics office suggests that the more realistic value of 2016 economic output was €176bn (Modified GNI: Gross National Income) compared with GDP value of €273bn.

Ireland not a corporate tax haven

When a US Senate subcommittee reported in May 2013 that Apple had used ‘stateless’ (not tax-resident anywhere) Irish shell companies to avoid billions in tax in many jurisdictions, there was panic in Dublin, which prompted  Trumpian denials that Ireland was a tax haven. The tax system was “transparent,” “rules based,” “no special deals” and the effective rate of tax paid by multinationals was close to the headline corporate rate of 12.5%. These claims echoed what Edmund Burke wrote in 1796 about the French Revolution, “Falsehood and delusion are allowed in no case whatever: But, as in the exercise of all the virtues, there is an œconomy (modern word is economy) of truth. It is a sort of temperance, by which a man speaks truth with measure that he may speak it the longer.”

The Irish Times in an editorial called on the Government to launch “a major diplomatic initiative in the US to ensure there is a better understanding of the Irish position on corporate taxation.  As the Taoiseach has pointed out, claims that Ireland is a tax haven are unjustified. The OECD, the international arbiter on the issue, has already decided that Ireland meets none of the criteria of a tax haven.”

Neither did other OECD members such as the Netherlands, Switzerland, Luxembourg or US states such as Delaware, have the characteristics of a tax haven according to the criteria! Hint: typically on small islands.

In 2014 the Irish Government announced it would abolish the “Double Irish Dutch Sandwich” massive tax loophole, for new companies and for existing companies from 2021 — the loophole enables Irish onshore companies owned by the likes of Google, Microsoft, Facebook and others to shift billions of profits tax-free via the Netherlands to Irish shell companies in Bermuda and the Cayman Islands.

Apple’s three Irish shell companies had addresses at its Cork, Ireland campus, and seemed to the world and foreign tax authorities, to be onshore companies while their unlimited status from 2006 protected them from having to publish accounts.

“We pay all the taxes we owe, every single dollar,” Tim Cook, Apple CEO, declared at a 2013 US Senate hearing. “We don’t depend on tax gimmicks,” he went on. “We don’t stash money on some Caribbean island.”

Apple had disclosed in its regulatory filing that 65% of its fiscal year 2012 earnings were "foreign pretax earnings" and it paid $713m in foreign taxes — a rate of 1.9%.

In late 2014 Apple arranged a tax gimmick that would be manna from heaven for Irish public finances.

Irish shell companies Apple Operations International and Apple Sales International became tax resident in Jersey, the Channel Islands, while the third company Apple Operations Europe (AOE) became tax resident in Ireland.

Apple transferred intellectual property (IP) to AOE via accounting entries and other multinationals made similar moves.

Ireland’s capital stock rose about €300bn in 2015 and the IP moves contributed to the rise in Irish annual gross domestic product of over 26% in that year, which Paul Krugman, New York Times economics columnist, called “leprechaun economics.”

According to a European Commission report seen by the Financial Times, multinational companies used Ireland to funnel royalties — a common tool for shifting profits and avoiding tax — that averaged 23% of the country’s GDP between 2010 and 2015.

The FT said the “scale of the net royalty payments channelled through Ireland contrasts sharply with the average in the EU as a whole, where such payments are a fraction of a per cent of the bloc’s annual GDP.”

In 2017 in addition to a surplus (net value between exports and imports; including of course profits shifting) of €43bn on customs tracked Irish goods exports of €123bn, there was also what Apple's Tim Cook would call a "tax gimmick" in play on a grand scale, because of the allocation of IP to Ireland.

Groups such as Apple can book production at their foreign plants in Ireland. It's called "contract manufacturing" — it's simply a tax scam — and in 2017 the net foreign surplus that was shifted to Ireland for tax purposes was worth €63bn. It was added to the Irish goods trade surplus, and utilised for profits shifting.   

Throw another €60bn in fake services exports from the likes of Google, Microsoft, Facebook etc and it starts to add up. 

Irish Corporation Tax receipts have risen by 126% since 2014 to €10.4bn in 2018 thanks mainly to the tax shenanigans of US multinational firms. The chief economist of the Department of Finance said on Jan 3, 2019, that about 7% of the State's total tax receipts — €4bn — now come from just 10 firms.

Tim Cook, Apple CEO, at a meeting with Leo Varadkar, taoiseach/prime minister, in Government Buildings, Dublin, June 18, 2018

Some optimism on global tax reform

The Irish Government when resisting EU level tax reforms invokes the Organisation for Economic Corporation and Development (OECD), as a more appropriate forum for tax reform as major non-EU countries such as the US and Japan are also members.

The OECD/G20 (Group of 20 leading developed and emerging economies) Inclusive Framework on Base Erosion and Profit Shifting (BEPS) brings together over 125 countries and jurisdictions to collaborate on the implementation of the BEPS Package.

The Irish Government maybe surprised that the slow pace of reform has moved up a gear at least.

Last January the OECD outlined four different proposals to rewrite corporate tax rules that would incorporate the expanding digital economy. The think-tank said a plan led by the US was “forceful” and would significantly change how countries share the right to tax multinationals, Pascal Saint-Amans, head of tax at the OECD, told the Financial Times.

“It needs to be refined but the philosophy of the US tax proposal is pretty strong. They have the US, Brazil, China, India and other emerging economies lined up,” Saint-Amans said.

The FT reported that the new regime, which would limit the opportunities for companies to shift profits from high to low tax jurisdictions, would apply to all multinational groups, not just the digital companies the action initially targeted. The OECD hopes to reach agreement by the end of 2020.

The big change would shift multinational tax revenues out of tax havens and some exporting countries, towards countries with large numbers of consumers.

Saint-Amans said Washington’s position on digital tax reform had undergone “a fundamental change”, which he suggested was driven by a need to protect the US tax base after cuts to tax rates in 2017.

The proposals have been agreed by 127 countries and the US-led proposal is broadly in line with European Commission proposals made last year.

The Commission commented that it was “glad to see this progress from the OECD, which echoes our own efforts to tackle these issues at EU level. We have been unwavering in our support . . . to achieve an international solution to this global challenge as soon as possible.”

Steven Mnuchin, US Treasury secretary, and Bruno Le Maire, French finance minister, met in Paris last week.

Mnuchin said that the US supported a push by France for a minimum corporate tax rate for developed countries worldwide.

"It's something we absolutely support, that there's not a chase to the bottom on taxation," Mnuchin said in Paris after talks with Le Maire.

According to the French government, European small and medium-sized enterprises pay on average a tax rate 14 percentage points higher than large digital companies.

The finance minister had said last month that a minimum tax rate would be a priority for France during its presidency of the G7 industrialised nations this year.

The Institute of Taxation and Economy Policy, a Washington DC advocacy group, shows how little federal corporate taxes Amazon pay — it nearly doubled its profits to $11.2bn in 2018 and paid ZERO!

Trade, “phantom trade” and malcontents

The Organisation for Economic Cooperation and Development (OECD), the economic think-tank for 36 mainly advanced countries, says that only 30% of trade in goods and services is traditional where a company develops all elements of a product in its home country and then exports a final product to a consumer in a different country. Today “the majority of trade (70%) is actually in intermediate parts, components, and services that form segments of global value chains (GVCs).” The OECD notes in its case for trade:

“Not only does trade lower prices, it also provides jobs for millions of people around the world. In a large country like the United States, around 10% of the workforce is involved in producing goods and services that are exported and consumed abroad, which amounts to around 14m American jobs. The share goes up to 20% for France, almost 30% for Germany, and 47% for a small open economy like Ireland (the Irish rate is distorted by tax avoidance). Across all countries, the share of jobs that rely on trade is significantly higher when taking into account “indirect” exports (when a person or company sells a good or service to another actor in the domestic market that uses it as an input in its exports). In some countries like China these can out-number jobs in the exporting industries themselves. These indirect export channels are especially important for smaller firms.

Trade also plays a role in raising incomes and improving overall working conditions.”

However, the OECD acknowledges, “Many people, especially in some advanced economies, are expressing anger and frustration with an entire system that they no longer believe is delivering a better life for them and their families. They believe that the current system is unfair, and is not working for them. There is increasing evidence that many of them may be right.” See here.

Last year the United Nations Conference for Trade and Development (UNCTAD) noted in a report that international trade is dominated by big firms, increasingly so since the mid-1990s; among exporting firms, the top 1% accounted, on average, for 6 out of every 10 dollars of exports. On some estimates, just 10 firms, on average, account for 4 out of every 10 dollars earned abroad.

"In this winner-takes-all world, it is not surprising that new entrants and smaller exporters have a low survival rate, with three out of four firms dropping out of the export business after two years and with firms in developing countries faring worse than in developed countries. [ ] The worsening of trade-related inequality reflects a combination of elevating profits from intangible assets, higher incomes creamed off by headquarters and squeezing costs in production. And size again matters when it comes to profitability; the rapid growth of profits of the top 2,000 firms is seen as a major force pushing down the global labour income share."

UNCTAD says that the hollowing out (by offshoring) is a familiar story in advanced economies, but the report also tracks a squeezing of income shares of low and medium skill workers in production stages of value chains in developing countries as the share of value added in fabrication has declined. China is a notable exception.

The agency says that many of the big international firms engage in what has been called “phantom trade” involving the movement of intangible assets and their related income flows to low-tax or no-tax jurisdictions. “This is particularly true of payments and receipts for intellectual property which have risen precipitously since the early 2000s in countries such as Ireland, Luxembourg, the Netherlands and Switzerland, with an attendant increase of income accruing to transnational corporations from direct investment in these locations, which is far bigger than in the countries where they make and sell their products (see chart at top of page).

Trade agreements and big firm lobbying

UNCTAD says that between 1990 and 2015, the number of trade agreements increased from 50 to 279, with many of them plurilateral and therefore involving a larger number of country pairs. Bilateral investment treaties (BITs) grew almost tenfold from 238 to 2,239 over the same period.

The UN agency says these developments were designed to enhance international economic integration, boosting trade and cross-border investment. However, they also greatly eased the possibilities for tangible asset acquisition, intangible asset shifting and financial speculation.

It became common to have provisions in agreements that go beyond World Trade Organisation (WTO) rules (see second chart at top of page).

“Almost 90% of trade agreements include at least one of the core WTO-extra provisions and one third include all of them. By contrast, policy areas of great importance for social actors with much lesser voice in opaque closed-door trade negotiations, such as the protection of labour rights, consumers and the environment or provisions preventing corporate tax avoidance, are barely included or remain legally unenforceable.”

Dani Rodrik, professor of International Political economy, at Harvard’s John F Kennedy School of Government, wrote in the Financial Times last year:

“trade agreements are political documents, reflecting the interests of dominant coalitions. Multinational corporations, international banks and Big Pharma play a particularly important role in shaping them. It is no surprise that long-term concerns about development, or indeed labour rights and the environment, are given short shrift.

There is little doubt that China violates the spirit, if not the letter, of WTO rules on intellectual property and subsidies. But when the US and Europe complain that China is infringing ‘global norms and rules,’ they forget their own economic history. China’s policies are not so different from those that they too embraced while catching up with technological leaders of the time. For example, US patent rules were notably lax in the late 18th and 19th centuries, and the US textile industry would never have arisen without widespread ‘theft’ of technological secrets from Britain. Similarly, many of Europe’s industries, such as aircraft, steel and cars, were nurtured by government support.”

Robert H Wade, professor of Global Political Economy, at London School of Economics, added:

"US and many European countries today use aggressive industrial policy to foster frontier industries and companies, much of it below the radar of public scrutiny. The US network of public laboratories and agencies (the Defense Advanced Research Projects Agency), and Germany’s giant development bank, KfW, are cases in point.

Western states have crafted World Trade Organization rules to enable them to use industrial policy instruments appropriate for frontier industries and to prohibit or make actionable instruments appropriate for developing country industries and companies well within the frontier (such as local content requirements). The ‘global playing field’ is ‘level’ only from the perspective of the west. The BIC countries (Brazil, India and China) have been co-operating in the WTO to push back against the western strategy of shrinking developing country policy space, but it is an uphill struggle.”

In contrast with the challenges facing developing countries today, from the 1960s the US government gave preferential access to the US market to countries such as Japan, South Korea, Hong Kong and Singapore, to develop a capitalist bulwark against communism in the region.

Google's worldwide searches for 'Globalization' have been declining in the past 13 years, suggesting falling interest in the topic.

Lagging regions and declining economic convergence

Until recent times the typical economist in the West saw globalization as a “win-win situation” for all parties with short-term losers finding reasonable alternatives elsewhere. However, lost manufacturing jobs through offshoring and automation were often replaced by low-paid non-exporting service jobs.

Last month The Wall Street Journal noted that with US headline unemployment near lows seen a half-century ago and labour so scarce that companies routinely complain of shortages, American workers should have been gaining real wage increases and reversing a downward trend since 1970.

However, the Journal reports that, “Employee pay and benefits as a percentage of gross domestic income fell to 52.7% in last year’s third quarter, for the fourth straight quarterly decline, according to data from the Bureau of Economic Analysis. It was as high as 59% in 1970 and 57% in 2001. If workers were commanding as much of domestic income as they did in 2001, they’d have nearly $800bn more in their pockets, or $5,100 per employed American.

While the labour share has fallen, business profits are on the rise. Income of corporations, proprietorships, landlords and other businesses has climbed from less than 12% of gross domestic income in the 1980s to more than 20%.”  

David Autor of the Massachusetts Institute of Technology and others in a recent paper wrote, "Analyzing outcomes from the 2002 and 2010 congressional elections and the 2000, 2008, and 2016 presidential elections, we detect an ideological realignment that is centred in trade-exposed local labour markets and that commences prior to the divisive 2016 US presidential election.”

Research presented at a US municipal conference in 2016 showed that for about 100 years, per capita incomes in poorer US states had grown more rapidly than incomes in richer states, narrowing the gap between them.  However, over the past three decades, the rate of convergence has slowed sharply. It has become more difficult for poorer states to catch up with richer states.

Peter Ganong of the University of Chicago and Daniel Shoag of Harvard attribute this slowdown in convergence to increasingly tight land use regulations in wealthy areas.

The authors of the paper say that historically, much of the convergence in income across states was driven by the migration of labour from poorer states to wealthier states. This pattern held down wage growth in richer states and boosted wage growth in poorer states. However, rising house prices in rich states made migration no longer an attractive option for low-skill, low-wage workers.  However, migration remained attractive for high-skilled workers, and they continued to move to wealthy places.

The authors also say that the trend increased wage inequality.

“The US is increasingly characterized by segregation along economic dimensions, with limited access for most workers to America’s most productive cities and their amenities.”

Besides housing costs, welfare states also provide disincentives for people to move from familiar places.

Just over 2% of Americans move across state lines each year, whereas only 1.5% of Europeans move between regions within their home country.

European Globalization 500 years ago: Savonarola & Machiavelli 

In Europe, according to the World Bank, between 2005 and 2015, "low growth" regions (lower part of chart below) experienced zero growth in GDP per capita — compared to the EU average of 2.1% annually. In stark contrast, "low income" regions grew by 4.6% annually (upper part of chart). Thus, ‘low income’ regions are on the path to convergence, while ‘low growth’ regions are going in the opposite direction.

Lagging and non-lagging regions differ significantly in their structures of employment. "Low income" and "low growth" regions both have markedly higher shares of (low productivity) agricultural employment relative to non-lagging regions (see chart below).

They also have a significantly lower share of activities that tend to have high productivity growth, notably industry and advanced services.

The Rethinking Lagging Regions  World Bank report, which examines convergence and disparity within the EU, highlights the danger of “low-growth traps.”

In the period 1950-1973, Europe had what was called a Golden Age of Growth.

Italy and West Germany both grew a real national annual average of 5%.

In 1950 Italian output per head was 35% of the US by 1973 it was 63%. However, Ireland's comparable rate only rose 6% to 42% of the US level in 1973.

Italy's Mezzogiorno region covers the southern half of the Italian peninsula combined with the islands of Sardinia and Sicily. In 2017 at 44.4%, the region had the lowest employment rate of any region in Europe and the lowest birth rate since 1862 — a year after the unification of Italy.

There has always been a Centre/North-South divide but in the period 1950-1973 the Cassa per il Mezzogiorno state agency, invested in developing both food and capital intensive industries in the region.  GDP per capita increased in the South from just under 53% of that of the Centre-North in 1951 to more than 61% in 1971. Then after a national deceleration of growth from the mid-1970s, weak governments, corruption and rising deficits, the Mezzogiorno returned to its dismal state.

Last December, Istat, the Italian statistics office, reported, "In the South and Islands area, per capita GDP was €18,500, 45% lower than in the Centre-North area."

Italian real GDP per capita grew by 1.4% (not annual average but for 20 years!) in 1998-2017 compared with 28% in Germany, 17% in France and 25% in Spain. 

While the claim that a rising tide lifts all the economic boats can be contested, growth does help lagging regions but the pace is generally slow. 

After almost 30 years of unity, the economic gap between Germany's former communist eastern states and former West Germany continues to narrow, but at a rate that is hardly noticeable.

The annual Unity Report, (Jahresbericht zum Stand der deutschen Einheit) presented to the federal government in September 2018, found that the East German states' economic power is "only very slowly" catching up to the levels enjoyed in the more export-oriented states in the West.

In 2017, gross domestic product per inhabitant in the east was 73.2% of that in the west, roughly the same level as the previous year.

Over a decade, the gap only fell by 4.2 percentage points, according to government data. 

When Amazon launched a competition in 2017 for the location of a new 8m-square-foot second headquarters (HQ2) that would cost $5bn and create up to 50,000 new jobs; its preference was for a metro of 1m+ people with an available pool of talent, tax incentives, business-friendly environment, a “strong university system,” on-site access to mass transit — train, subway, or bus — and to be no more than one or two miles from major highways and connecting roads. It wanted to be within 45 minutes of an international airport with daily direct flights to Seattle, New York, the San Francisco Bay area, and Washington DC, details on congestion, bike lanes and so on.

It got 238 applications from the US, Canada and Mexico and short-listed 20 — Amazon chose New York City but cancelled the plan after turbulence about public subsidies of $3bn and public protests.

Last December, Apple announced a new campus in Austin, Texas — a successful tech hub — that will have 5,000 employees.

Knowledge-based services cluster in the type of cities that were short-listed by Amazon while the number of US manufacturing plants with 1,000 or more employees almost halved to 886 in the 20 years to 2016.

While big manufacturers typically sell services as components of products or after-sales support, what manufacturing provides to regions is support of many small communities while being able to attract well-educated workers

The two images above are of significant factories in open countryside within 12km of my hometown of Bandon, West Cork.

1) the first is the headquarters of Carbery Milk Products, near the village of Ballineen, that was founded in 1965 by a joint venture between 4 West Cork dairy co-operatives and Express Dairies of the UK. The food company is now fully Irish-owned with 600 employees worldwide and 7 other facilities across the world. In West Cork it has more than 2,000 milk suppliers 2) the second is of the American Eli Lilly drugs plant which was opened in 1981 and is located between Bandon and Kinsale. It has 700 local employees.

Reviving regions that fall behind as economies change is not easy, be it in Northeast China — sometimes called China's Rust Belt — and elsewhere. 

The China Daily noted in 2016, that an earlier campaign to revive the region had failed, "the campaign has failed to achieve a breakthrough in structural adjustment and institutional innovation, and the region's structural and institutional contradictions and problems have been exposed once again vis-a-vis the country's economic transformation and upgrading."

The Economist reported in 2017 that research on California where 42 enterprise zones have failed to raise employment in targeted areas:

"Other studies find increases in employment and wages that are modest at best. In the zones franches urbaines with which France started to experiment in the 1990s, small businesses are temporarily exempted from taxes and some social-security contributions. Most of the employment these zones have created appears to be due to firms from elsewhere moving in, which may explain why surrounding neighbourhoods typically experienced employment falls roughly on a par with the zones’ gains. Analysis of the effects of EU structural funds — money invested in poorer regions to promote convergence — finds that such spending appears to boost local output and reduce unemployment, but not necessarily in a sustainable way."

A Vienna economics think-tank report highlights the importance of public investment to raise the standards of education and skills, that could boost low innovation capacity and productivity to attract large national firms and FDI (foreign direct investment) firms. It also stresses the importance of eliminating wage rigidities and boosting the availability of credit.

It's important that locals besides politicians are also involved in efforts to revive an economy.

Conclusion

All good things come to an end, to paraphrase Geoffrey Chaucer's 1374 epic poem 'Troilus and Criseyde.' 

While FDI has been good for Ireland and will continue to be important in the economy, linkages are poor and innovation low (distorted data used in international rankings feed delusion but the reality is different).

The small indigenous Irish international exporting sector has almost as many direct workers as the exporting FDI sector but the risk of a no-deal Brexit for the sector highlights the vulnerability — the combined annual salaries and purchases of local materials and services of the indigenous international sector, exceed the FDI sector.

Ireland's material standard of living per capita was below the EU average and Italy's in 2017.

Irish 2017 per capita standard of living again below Italy and EU-28 average

Irish workers most productive in the world or the same as Italians?

Ireland's global social, economic, business rankings 2019

Similar economic structures fuel Ireland’s high Brexit risk

Pessimism & Ignorance: The world of common people has never been better

The role of the media in shaping attitudes toward Corporate Tax Avoidance: Experimental evidence from Ireland February 2019 media survey by two Irish academics.

It's interesting that the big stories on tax avoidance have come from foreign sources 1) 2004: the US tax newsletter Tax Notes published data that showed Ireland became the most profitable location for US companies overseas as profits doubled in 1999-2002 2) 2005: The Wall Street Journal in a major report from Dublin discloses Microsoft's Double Irish tax scam 3) 2010: Bloomberg reveals how Google saves  billions in taxes through the Double Irish scheme 4) 2013: Apple's use of 'stateless' Irish shell companies to channel huge profits from across the world through Irish shell companies is detailed by the US Senate's Permanent Subcommittee on Investigations.

Praying for the status quo to remain unreformed would be very stupid for Ireland.

The massive tax avoidance and increasing concentration of a small number of global giants where promising startups are acquired or killed, are not inevitable when conventional globalisation is under threat.

UNCTAD, the UN agency, noted last year that the winner-takes-most world, raises a key question on whether the spread of digital technologies risks will further concentrate the benefits among a small number of first movers, both across and within countries, or whether it will operate to disrupt the status quo and promote greater inclusion.

The agency noted that of the top 25 big tech firms (in terms of market capitalization) in 2018, 14 were based in the United States, 3 in the European Union, 3 in China, 4 in other Asian countries and 1 in Africa. The top 3 big tech firms in the United States had an average market capitalization of more than $400bn, compared with an average of $200bn in the top big tech firms in China, $123bn in Asia, $69bn in Europe and $66bn in Africa. "What has been significant is the pace at which the benefits of market dominance have accrued in this sector: Amazon’s profits-to-sales ratio increased from 10% in 2005 to 23% in 2015, while that for Alibaba of China rose from 10% in 2011 to 32% in 2015."

According to a study published this week in the US, contrary to the popular narrative, "superstar firms have not become more efficient or more productive over the years. Perhaps most importantly, the superstars of today contribute less to productivity growth than their counterparts in previous decades: The contribution of superstar firms to US productivity growth has decreased by over 40% over the past 20 years."

“If you look at their actual operating income, it’s also not that great,” says Thomas Philippon, a French economist who is a professor of finance at the Stern School of Business, New York University. “The big difference between the superstars of today and those of the past is that superstar firms today pay much less taxes. If AT&T had been paying the same taxes that Apple is paying today, it's market cap would have been even higher than it was in the past. That is just plain fact.”

 How globalization affects inequality and populism in one chart

June 2017: From a global perspective, income inequality has gone down. But if you're middle class in the U.S. or Europe, you see the rich getting richer and inequality growing. Economics correspondent of the US Public Broadcasting Corporation, Paul Solman examines the widening gap.
When Globalization Gets Local: Winners and Losers
London School of Economics and Political Science (LSE): In this 2018 film, David Arnold, Riccardo Crescenzi and Mara Giua give an overview of their cutting-edge project: "As the world becomes increasingly interconnected, major cities are thriving. Deeply linked with one another, they have become magnets for increasing flows of wealth, talent and foreign investment. But at the same time, many places are missing out – often just different regions in the same countries. Drained of capital, skills and ideas, these are the places where economic opportunities are lacking and ‘populism’ can thrive." 

Angus Deaton’s economic forecasts | FT World

Oct 2016: The FT’s economics writer Martin Sandbu talks to Angus Deaton, winner of the 2015 Nobel Prize for economics, about staying optimistic on economic change and resisting the urge to make a scapegoat out of globalisation.

Oct 2018:Dani Rodrik – From Globalization To Hyper-Globalization and Back

The Economist, Jan 2017: From the streets of Turin to Silicon Valley, people power is taking the world by storm. With frustrations rising and the old order apparently crumbling, who really has the answers?