The Honorable Society of King’s Inns was founded in 1541 during the reign of Henry VIII (he declared himself king of Ireland in 1542) when the king granted the Society the lands and properties on which the Four Courts now stand, but which were stolen from the Friars Preachers (Dominicans). When the Four Courts were built in the 1790s, King’s Inns moved to Constitution Hill. “Nolumus mutari” is the motto of King’s Inns in Latin and can either mean; “we do not wish to change” or “we do not wish to be changed.” It may also be a response to the removal of some restrictions on Catholic lawyers in 1792. The Inns comprises of benchers, barristers and students. The benchers include all the judges of the Supreme Court, Court of Appeal and High Court and a number of elected barristers. In 2015 after 34 years of reports recommending reforms to the legal profession, the Government surrendered to the legal lobby (see below).
Paddy Cosgrave, the co-founder of the Web Summit, has been campaigning against Crony Ireland in recent times. That depiction of Ireland has a lot of evidence to back it but government leaks are not the greatest evil. In fact, Ireland needs more of them.
Ireland has a problem that significant government leaks involving documentation are rare. This was particularly evident in the 2001-2008 period when there was no evidence of dissent from government policymakers, to the reckless economic trajectory that brought ruin to many people.
In Britain, in 1947 Hugh Dalton, the chancellor of the exchequer, resigned after revealing some provisions of the annual budget to a newspaper on the eve of its delivery. In London and Dublin pre-budget briefings to journalists are now common.
Last month Lindsay Hoyle, speaker of the House of Commons, accused the chancellor, Rishi Sunak, of “riding roughshod” over MPs. Responding to Hoyle’s criticism, Boris Johnson’s spokesperson said the government “recognised the importance of keeping parliament and the public informed when decisions are taken.”
Forty years ago a civil servant leaked 1981 Irish budget documents to journalist Vincent Browne: Exclusive: How Charles Haughey cooked the books in 1981 and in 2017 a European Commission report that was critical of the UK's Brexit negotiating stance, was leaked from the Irish Department of Foreign Affairs.
Leo Varadkar, when taoiseach (prime minister) in 2019, the current deputy prime minister, leaked a government document to a friend. It had been prepared for the main Irish medical doctors' trade union on provisional pay structures. Varadkar's friend was head of a fledgling rival union.
While it wasn't a wise thing to do, it's hardly a hanging offence. A criminal investigation is ongoing.
A bigger issue is international money laundering which in recent years Germany's and Denmark's top banks, facilitated.
Dublin's International Financial Services Centre (IFSC) is among the centres that have been charged with ignoring illicit funds.
Transparency International in a report on Ireland this year said "Everyone from corrupt heads of state to child traffickers and arms dealers are using international financial centres in Dublin and Singapore, or real estate in New York, London or Paris to launder the proceeds of their crimes. We will never get to grips with these and many of the world’s most pressing and intractable problems unless we stop the flow of money back to these criminals."
According to research from Trinity College economists James Stewart and Cillian Doyle, between 2005 and 2017 there were 106 Irish registered shell companies at the IFSC connected to some of Russia's largest state-owned and private companies which raised gross funds of approximately €118bn, making Ireland one of the main jurisdictions for the raising of these funds. "The ‘special tax regime’ means effective tax rates on profits are zero/near zero because deductions from income are allowed as if the firm were a trading company."
Irish lawyers, accountants and bankers are estimated to generate about €200m in fees in Ireland from these unregulated vehicles, which largely have very little to do with the domestic economy.
The Dublin centre has become the world's top funds' domicile. It likely also helps to provide other business opportunities.
Ireland is the only English-speaking common law jurisdiction in the Euro Area and is known for its regulatory framework. The funds are exempt from Irish tax on their income and gains, irrespective of where their investors are resident.
Ireland also has a 65% share of the global aviation leasing marketplace, with 50 aircraft leasing companies based there, including 14 out of the world’s top 15 lessor companies.
However, the trillions in funds inevitably risk reputational exposure and that is an Achilles' heel as the multinational companies which used Irish shell companies for massive tax avoidance showed.
2021: Bank of Ireland linked to fund involved in massive European tax fraud — BoI subsidiary, Bank of Ireland Securities Services (BOISS), was the custodian bank of an investment fund involved in the scheme. "While Irish tax authorities were not defrauded, Ireland facilitated the scheme, with Irish investment funds used as vehicles to carry out trades targeting larger EU countries, such as Germany."
This year Dublin legal firm Mason, Hayes & Curran noted "Ireland as a Centre of Excellence: Ireland is the largest fund administration centre in the world with more than €4.9trn assets under administration. There is currently over €3trn in fund assets domiciled in Ireland. Ireland’s attraction as a fund domicile is based on the combination of the Irish legal and regulatory system, the specialist skills and expertise of its workforce, the country’s pro-business approach, infrastructure, competitive tax environment and government support."
Cronyism and transparency
It’s the fact that I am a complete and utter crony insider who understands the crooked little system on this island that ultimately scares establishment types. I’m not, nor never have been, an outsider https://t.co/ZO2FJgnX5T
— Paddy Cosgrave 🏴☠️ (@paddycosgrave) November 24, 2021
According to the Oxford Reference, the word "crony" derives from the Greek khronios "long-lasting," which was based on khronos "time." In the 17th century crony was Cambridge University slang for "an old friend" or "a contemporary."
In more recent times in Greece "rousfeti" (of Turkish origin) means expensive political favours and cronyism. "Fakelaki" is the Greek for “little envelopes” and a “4-4-2 system,” is not a reference to football tactics but to taxes: €10,000 in taxes, would be divided with €4,000 for the inspector, €4,000 for the punter, and payment of €2,000 to the state!
Nepotism could be considered as a sub-branch of cronyism as they both involve favouritism.
Nepotism was common among medieval popes and the term relates to popes appointing nephews as cardinals and bishops (even teenagers.) It was a strong feature of employment in Dublin's big firms a century ago as it was later at Ford's plant in Cork where 7,000 were employed in 1930. Secure jobs were scarce and at the turn of the 20th century, 75% of Belfast's workforce was employed in industry. In Dublin, there was a surplus of unskilled workers and 7,000 of Dublin’s 30,000 unskilled workers were employed on a casual day-to-day basis as dockers or carters.
Credit Suisse, the Swiss bank, has published research that shows that family-controlled businesses — defined as founders or their dependants controlling at least 20% of the equity — generate faster sales growth, higher margins and use less debt to achieve this than regular listed companies.
About 90% of German Mittelstand mid-size firms are family-owned and the Economist reports that fully 30% of companies with more than 500 employees are in the hands of their founding clans. However, that doesn't mean these are always harmonious. "The latest generation of Aldi Nord heirs has fought over money and power for a decade" according to the self-styled newspaper.
In 1995 Maurizio Gucci, the one-time head of the Gucci fashion house, was murdered by a hitman hired by an ex-wife.
The Financial Times reports from Italy on "the bonanza that has been enjoyed by many of the country’s largest family-owned empires, which have outperformed by an often eye-popping margin."
In China, about 80% of the private companies are family-owned.
In dictatorships such as Russia cronyism and corruption are rampant while in democracies there can also be vested interest capture and also regulatory capture.
Despite his military background as Supreme Allied Commander in Europe during the Second World War, US president Dwight D Eisenhower in his farewell address in January 1961 warned the nation about the corrupting influence of what he called the "military-industrial complex."
In 2009 during the financial crisis, US senator Dick Durbin said in a radio interview "And the banks — hard to believe in a time when we're facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place."
Just 12 megadonors — at least eight of whom are billionaires — contributed a combined $3.4bn to US federal candidates and political groups between January 2009 and December 2020, according to a report.
In the US the average hourly wage in 1964, when converted to 2018 dollars, is $20.27. Compare this to $22.65, the average hourly wage in 2018. That represents a mere 11.7% increase over a span of 54 years.
Almost a third of the American workforce is subject to occupational licensing. Professional groups lobby states to impose irrelevant training, education or apprenticeship requirements for new workers and would-be entrepreneurs. This is cronyism and is aimed at restricting entry and while the public should be protected in respect of medical and legal services, lower-income occupations such as auctioneers, upholsterers, funeral attendants and florists are also ensnared.
The Economist Intelligence Unit's (EIU) Democracy Index 2020 has 22 full democracies from 167 countries (micro states are excluded). Mauritius, an Indian Ocean island nation, off Africa, was included in the EIU rankings as a full democracy but later developments show that it's not.
There are 13 full democracies in Europe including Ireland.
In the European Union, the Nordic countries are regarded as the least corrupt of all nations on Earth. Most of the former communist countries in Eastern Europe are corrupt while the Southern member countries have had a strong culture of cronyism.
The Transparency International's Perceptions Index 2020 has Denmark at the top ranking followed by New Zealand, Finland, Singapore, Sweden and Switzerland. Ireland has the 20th rank; France 23; Spain 32 and Portugal at 33rd place.
There are inevitably some aspects of cronyism in even the best-ruled countries and even if politicians are careful not to be seen to promote friends, cronyism is also involved in business companies.
However, the likes of Boris Johnson, UK premier, can get away with some ethical lapses, but if that is going to continue he may become synonymous with sleaze.
In France, the Economist reports that a recent poll suggested that 78% of the French feel happy about their own lives, but 60% are convinced that their country is going to hell!.
Being idealists, the French find that the real world always disappoints. "Taught from a young age to adopt un esprit critique, they delight in disapproval. Last year, as Covid first spread, a poll suggested that only 39% of the French thought that their government was managing the crisis well, compared with 74% in Germany and 69% in Britain. Bleak is chic."
In recent months the chancellor of Austria has resigned because of fraud allegations. In Czechia Andrej Babis, the billionaire prime minister, who is under investigation for abuse of EU subsidies, was ousted.
On October 3rd an international journalists’ consortium released the Pandora Papers, which showed Babis had sent $22m through a shell company in the British Virgin Islands to buy a secret villa in the south of France.A New York Times report found that Babis' companies collected at least $42m in EU agricultural subsidies last year.
The EU reported that in 2019 stolen funds amounted to €461m. In total, 1056 fraudulent irregularities were reported in 2020. They had a financial impact of approx. €371m, a 20% decrease compared to 2019.
Laura Codruta Kovesi who was hounded out of her own country, Romania, this year was appointed as the first European Public Prosecutor.
European Union countries lost an estimated €140bn in Value-Added Tax (VAT) revenues in 2018. However, figures for 2020 show a loss of €164bn in 2020 due to the effects of the coronavirus pandemic on the economy.
Ireland's shortfall was €1.7bn or almost 11% while Greece's gap was 30%.
Sweden
In 2016, the world commemorated the sestercentennial of the adoption of 'His Majesty’s Gracious Ordinance Relating to Freedom of Writing and of the Press.' Its passage in 1766 in Sweden – which included Finland until 1809 – was the first freedom of the press and freedom of information law in the world. It remained in force for 8 years and then continuously after a coup d’Ă©tat in 1809.
Sweden also has had a tradition of ombudsmen since 1809 – the word ombudsman comes from Swedish, as a person who acts as a representative and it was decided that an institution independent of the king was needed to ensure that laws and statutes were obeyed. The first Parliamentary Ombudsman was appointed in 1810.
Also in 2016 Swedish media reported on a case of corruption at the Swedish National Audit Office where the directors suppressed audits and granted friends jobs in high positions with record-high salaries. After intense press coverage and constitutional hearings, all three directors eventually resigned, and the event prompted changes to the Swedish Constitution.
However, a paper notes that "Despite the event fitting all criteria for cronyism, this study found that the media discourse was silent regarding elements of corruption. While Swedish citizens view acts such as awarding jobs based on personal relationships to be a grave form of corruption, the media discourse portrayed an event entailing exactly such acts as problematic, but not corrupt."
I worked in a large Swedish multinational. It like other national counterparts, put ethics aside when it suited them.
In the 1980s Bofors, a renowned anti-tank and anti-aircraft gun manufacturer was alleged to have paid a large bribe to Rajiv Gandhi, then Indian prime minister. In 1987 a whistleblower in the Swedish police revealed the payment of a bribe to Swedish radio. The whistleblower said later that "there was no evidence that he [former prime minister Rajiv Gandhi] had received any bribe" in the deal. "But he watched the massive cover-up in India and Sweden and did nothing. Many Indian institutions were tarred, innocent people were punished while the guilty got away."
Ireland
Before self-rule, the Irish had ruled big US cities such as New York and Boston and in 'The Americans: The Democratic Experience' (1973), the late Daniel Boorstin wrote:
"Although the Irish were quickly and spectacularly successful in politics…they did not prove masters of the arts of good government."
Boorstin said in the third of his American history trilogy, that the Irish politician made himself into "a social service or more precisely a personal service agency."
Daniel Patrick Moynihan who was United States senator for New York in 1977-2001 wrote in a 1961 commentary 'When the Irish Ran New York': "New York was perhaps the first great city in history to be ruled by men of the people, not as an isolated phenomenon of the Gracchi or the Commune but as a persisting, established pattern ...The Irish ...brought to America a settled tradition of regarding the formal government as illegitimate and the informal one as bearing the true impress of popular sovereignty. The brutality of the English landlords in eighteenth-century Ireland gave rise to secret societies that fought back by terrorism. An English observer described the results: "There are in fact two codes of law in force and in antagonism—one the statute law enforced by judges and jurors, in which the people do not yet trust — the other a secret law, enforced by themselves. . . ." This habit of mind pervaded the atmosphere of Tammany (the New York Democratic political machine) at its height: City hall, like Dublin Castle, was not to be trusted."
Moynihan referred to Seán Ó'Faoláin (1900-1991), the author of 'The Irish: A Character Study' book (1947: published in the US in 1949). Ó'Faoláin wrote that the Danes and Normans built towns, docks and roads. "The Irish never founded a town."
While commerce has only produced a small number of big firms in Ireland, crony capitalism has been mainly linked to land and construction.
Guinness is a British company; Irish Distillers is French and Jacob's is a brand name owned by both an American and British firm.
Ryanair is the only significant Irish born firm in the past 36 years.
I have commented a number of times over the years that Googling "Irish reform" results in a top billing for "The Representation of the People (Ireland) Act 1832, commonly called the Irish Reform Act." Irish political reform is rare.
Irish politics retains what could be called the gombeen effect.
According to Prof Diarmaid Ferriter, Arthur Griffith who would found the original Sinn FĂ©in in 1907, in 1903 warned of the danger of “ a cocky disparagement” of those who were seeking to give serious thought to solutions to serious problems; he saw it as “characteristic of the shoddy side” of Irish nationalism.
The late University College Cork (UCC) sociologist Dr Paddy O’Carroll published a paper in 1987 titled ‘Strokes, cute hoors, and sneaking regarders: The influence of local culture on Irish political style.’
Dr O'Carroll questioned if Ireland was a true democracy as the local community was paramount which often closed real political debate or choice.
Multi-seat constituencies encourage clientelism.
Tony Killeen, a member of Dáil Éireann for Clare, in 2007 announced that his constituency office mailed more than 14,000 letters annually. His office had made representations to the Department of Justice, on behalf of an imprisoned murderer.
In that year's general election he was elected on the seventh count with 14,083 votes. The constituency had 4 seats.
In 2017 Prof Ferriter commented in relation to controversial residential water charges "Fianna Fáil changed its 'principle' for electoral reasons and because it is far more concerned with looking over its shoulder to see what Sinn Féin is doing and what ground it might be making. But Sinn Féin, of course, does not do irony; its embrace of the water charges protest movement arose because Paul Murphy was elected a TD in the Dublin South-West by-election in 2014, defeating the Sinn Féin candidate, Cathal King. Not a whiff of connivance or cute hoorism in all that."
1) The Irish Land Commission was set up by the British government in 1881. It passed to the Irish Free State in 1922 and was abolished in 1999.
Since its abolition governments have refused to release the archives. It seems they are afraid of claims on seizures of land that were doled out to party supporters.
According to Prof Terence Dooley of Maynooth University, in the mid-1930s the Commission employed about 1,350 full-time civil servants and its secretariat received around 400,000 pieces of correspondence per annum. From 1923 it had acquired and redistributed over 1.5m acres of land in this country, to the benefit of 248,000 families.
Dooley says that land redistribution was used to reward political supporters, particularly by Fianna Fáil after 1932. The best chance of getting land was to set up or join a Fianna Fáil cumann (branch).
A farm of 60 acres was regarded as big and liable to be seized.
The supporters that got prime land in counties Dublin and Meath typically were existing farmers in the West of Ireland.
2) Éamon de Valera, leader of Fianna Fáil and 35 years as taoiseach and president, fraudulently gave his family control of the Irish Press from 1931:
3) The Local Government (Planning and Development) Act, 1963, did not have a reference to "rezoning" land but it gave elected councillors an opportunity to demand bribes from developers.
Garda investigations were hobbled because 1) they could not guarantee immunity to those making allegations of corruption and 2) no legislation had been enacted in this area since the foundation of the State.
The Tribunal of Inquiry into Certain Planning Matters and Payments was established in 1997 to investigate a number of zoning decisions in the Dublin area going back to the mid-1980s. It concluded in 2012 after 14 years.
4) Charles Haughey was first elected to Dáil Éireann in 1957. He was a partner in an accountancy firm Haughey Boland with Harry Boland, who had an uncle, also named Harry, who was shot during the Civil War as an insurgent. His father, Gerald Boland, served as a hardline minister for justice under de Valera, and his brother, Kevin, was a Fianna Fáil minister who resigned from the Cabinet, and later the party, in the fallout from the 1970 arms crisis.
Haughey Boland wasn't a big firm and Haughey formally left in 1966 when he was Minister of Agriculture.
Haughey made a bizarre agreement with Matt Gallagher, a property developer, who persuaded him to buy a house with land in Raheny in North Dublin in 1957 for £13,000. Gallagher gave an assurance that he would buy the land once the country began to lift itself out of the existing economic recession. The developer purchased the property from Haughey 12 years later for £204,000 while Haughey bought a house and 250 acres in North County Dublin that had been designed by James Gandon, an English architect who worked in Ireland during the late 18th century and early 19th century.
Haughey, then finance minister, also had a surplus to buy a stud in County Meath.
5) Desmond Traynor who had worked with Charles Haughey as an accountant in Haughey Boland, ran a tax evasion scheme for about 200 wealthy Irish citizens for about two decades. In 1969 Guinness & Mahon (Ireland) Limited formed a small investment company in the Cayman Islands and Traynor was responsible for setting up this company. In 1974 he became chairman of the Cayman Bank and remained in this position until his death in 1994.
According to the McCracken Tribunal in 1997, while Charles Haughey was back as taoiseach (prime minister) he had a personal cash crunch in 1987/88. Traynor through an intermediary advised Ben Dunne of the Dunne's Stores retail group, that Haughey had a business problem and he hoped to get up to a half dozen people to each contribute Irish punts £150,000.
Ben Dunne said, "I think Haughey is making a huge mistake trying to get six or seven people together .... Christ picked twelve apostles and one of them crucified him." He then agreed to pay the entire amount.
McCracken Tribunal Report and Ansbacher Names (besides Haughey, politicians included the late Fine Gael TD Hugh Coveney.)
Pay-As-You-Earn (PAYE) workers in the 1970s paid 90% of income tax. Farmers paid no income tax and in the 1979 budget, the Fianna Fáil government proposed a levy of 2% on land sales. The Irish Farmers Association forced a U-turn which prompted a protest by trade unions in Dublin of about 150,000 workers. A year later there were massive tax protests across the country and tax concessions were made to PAYE workers.
Farm income taxation was introduced in 1985.
6) The Irish Times newspaper company was converted to a non-charitable trust before a new capital gains tax regime began on 6 April 1974, avoiding a tax of 26%. The trust as a "charity" also avoided taxes on the loan repayments to be received by the Bank of Ireland and the 5 former ordinary shareholders.
Echoes of de Valera's sleight of hand almost 40 years before!
The 5 got £325,000 each with £249,000 in cash. At a euro value of €412,500 tax-free converts to €3.9m today. However, the individual benefit would have bought about 30 new houses each in Dublin at the then 1974 average price.
Major Thomas McDowell remained as chief executive/ and president for life of the trust, with a high salary and he bought a Georgian Mansion in Rathfarnham on 15 acres. He died in 2009 and left over €13m in his will.
In 1975 Ireland's annual consumer inflation rate jumped to 22%. Advertising slumped at the Times and by 1977 the firm was technically insolvent. The editor was fired.
7) Esat Digifone's winning spectrum bid for a second mobile service 1995
The founder of Esat Telecom said the Moriarity Tribunal Report was based on “opinions” with no basis in evidence, fact and law. Denis O'Brien has also said he had never made any payment to Michael Lowry TD, the former Fine Gael Minister of Communications “in his capacity as a government minister, as a public representative or as a private citizen.”
The Dáil Committee of Public Accounts outlined in a 2011 report what fees were paid to lawyers in 1997-2010 who were investigating allegations of corruption. Two lawyers earned more than €9m each, including VAT.
When a clerical officer in the Department of the Taoiseach made a typing error on the daily rate, the Attorney General advised that the incorrect higher rate should be paid!!
The Committee said that because of the error an extra €1m had been paid to counsel, where counsel had been paid a per diem rate of €2,500 instead of €2,250 and where the matter was allowed continue without rectification.
8) Land acquisition accounted for 23% of the cost of the national road-building projects in Ireland from 2001, but just 12% in England, 10% in Denmark, 9.4% in Greece and 1% in Iceland. A further 2% of the €18.5bn provided in the Government's Transport 21 for road building over a decade was for archaeologists.
Tom Parlon, the leader of the Irish Farmers Association, who rolled over the Government, became a government minister a year later.
Adjacent farmers that did not have to surrender land were given "disturbance money" ─ all the farmers were receiving public welfare as part of the EU's Common Agricultural Policy (CAP).
Two weeks later, the Irish Government guaranteed all the deposits and liabilities of six Irish financial institutions. On October 02, 2008, Neary appeared on RTÉ's Prime Time TV programme, and in possibly the most bizarre performance by a public official on Irish television, since the launch in 1961, he said that bad lending by Irish banks had nothing to do with the then-current international crisis, which was all about liquidity. He said the banks had plenty of capital to absorb any losses on property loans and he did not believe that over-exposure to the property market was a weakness of the Irish banking sector.
A confederacy of dunces was responsible for the debacle.
11) In 2015 five years to the month after the Irish Government made a commitment in the 2010 international bailout agreement to introduce legal services reforms, and 25 years after the Fair Trade Commission recommended the ending of the ban on direct access by the public to barristers, the Government endorsed the status quo.
The Bar Council had meetings with Enda Kenny, the taoiseach, and the lawyers won.
The verdict of the State's Competition and Consumer Protection Commission on the sham was damning.
In a submission to the minister, seen by The Irish Times, the CCPC said “the views of the Law Society and the Bar Council have been privileged over those of the consumers of legal services — the clients of the legal profession.”
The scathing submission also said both bodies had been given “a veto over the provisions of the Bill.”
The CCPC's predecessor, the Competition Authority, had done good work over many years highlighting the self-serving system and the CCPC also said in the submission that there had been a “lack of engagement” with it on the Bill and the proposed amendments.
It said this “is in stark contrast to what has clearly been a high level of engagement with the representative bodies of the legal profession, who have a vested interest in retaining the status quo, and with whom there appears to have been an ongoing discussion over a number of years.”
Seneca, a first-century Roman philosopher and public servant' is said to have written: "We are unwilling to be reformed, just because we believe ourselves to be the best of men" (“Ideo mutari nolumus quia nos optimos credimus”).
12) Until the 1990s Ireland had a level of tax evasion comparable with Greece.
Whether one was a plumber, lawyer or medical consultant, cash was king.
The Revenue got new powers and banks had to reveal the details of Irish resident clients that had accounts in foreign subsidiaries.
The Revenue began publishing a quarterly list of settlements that had been made with tax dodgers who were slapped with punitive penalties.
The big professional firms found a new goldmine. Between 1999-2002 American firms in Ireland doubled their profits to become the most profitable affiliates in the world.
Microsoft was advised to set up two Irish shell companies that would be tax resident in Bermuda where there was no corporate tax. Thus was born the "Double Irish" where profits shifted to Ireland would be routed out via the Netherlands to the small island.
Apple just pretended that its Irish companies were not shell companies.
Despite all the protests over the years that Ireland wasn't a tax haven, in April 2021 the United States Treasury Department named Ireland in the group of seven biggest tax havens.
"The seven low-tax jurisdictions that are particularly important in these data are Bermuda, the Caymans, Ireland, Luxembourg, the Netherlands, Singapore, and Switzerland. The haven share is mechanically higher than it would be in some data sources since the data are reported on an after-tax basis."
Ireland is most profitable foreign country for US multinationals
13) Government ministers have 64 "special advisers."
Discussion
In the 20 years, 2000-2220 the average Irish national output per person rose an annual average of just below 0.7% (in a chart below up to 2018 the rate was 0.7% but Modified Gross National Income, GNI*, which strips the most of the main multinational distortions from the data, was lower in 2020 while the population was higher).
It would become a crony capitalist relationship with Ireland being the junior partner.
Ireland became the most profitable location for the foreign companies and by providing offshore Irish shell companies it gave multinationals such as Apple a tremendous opportunity for tax avoidance (smaller companies would risk being charged with tax evasion if they used similar tax devices).
It was a bonanza too for Ireland's big professional firms.
Until 2015 the International Financial Services Centre (IFSC) Clearing House Group which included financial executives, big professional firms, bankers and civil servants, gave business a direct role in public policy. The public-private committee was chaired by the secretary-general of the Department of the Taoiseach.
The Irish government should give attention to dirty money that is routed through IFSC firms.
Ireland made a Faustian Bargain and 11.5% (exporting firms) of the total workforce with high earnings, cannot be ignored.
Big Tech's centralisation of European sales support and administration in Dublin has contributed to the housing crisis. FDI (foreign direct investment) employment has risen in the Dublin area by 86% in the past decade. There are about 45,000 foreign workers in ICT.
In September 2021 the Financial Times reported "Ireland is failing to apply the EU’s privacy laws to US Big Tech companies, with 98% of 164 significant complaints about privacy abuses still unresolved by its regulator ...Ulrich Kelber, Germany’s chief data protection watchdog, wrote to members of the European Parliament to complain that Germany alone had “sent more than 50 complaints about WhatsApp” to the Irish authorities, 'none of which had been closed to date.'"
The estimated Irish business expenditure on R&D was €3.4bn in 2020 and the foreign firms accounted for over 70% of the total.
Of the €978m expenditure by Irish owned firms, Kerry Group spent about €308m (some of that spend may have been made abroad); AIB Bank €252m; Bank of Ireland 223m and the next biggest was Glanbia at €36m.
The Central Statistics Office (CSO) confirmed to me that Irish ownership includes mainly American redomiciled firms!
We so easily fool ourselves.
In a 2021 paper, 'The Irish economy during the century after partition,' economists Cormac Ă“ Gráda and Kevin Hjortshøj O’Rourke write that "When measured by GNI*(gross national income that strips out most of the important multinational distortions in the Irish national accounts), rather than GDP, cumulative Irish growth in the first two decades of the twenty-first century was just 0.7%. Of the countries in table 4, only Greece and Italy fared worse."
In 2000-2018 through boom, bust and recovery national income fell for five consecutive years from 2007 to 2012 the cumulative decline amounted to 18.4%. The average annual growth in national output per person was 0.7%.
Using a proxy for standard of living per capita, Ireland is currently at 19th among advanced countries.
In 2020 according to Eurostat, Denmark's consumer prices were 41% above the EU27 average followed by Ireland at 36%; the Netherlands was at 16% and Germany was at 8%.
Eurostat this year also reported that the highest housing costs in 2019 compared to the EU average were found in Ireland (77% above the EU average), Luxembourg (70% above), Denmark (63% above) and Finland (42% above). The lowest, on the other hand, were observed in Bulgaria (64% below the EU average), Poland (60 below) and Romania (57% below). "Looking at the evolution between 2010 and 2019, house price levels compared to the EU average have increased in 17 Member States and decreased in 10. The largest increases were observed in Ireland (from 17 % above to 77 % above the EU average), Slovakia (from 44 % below to 23 % below) and the Netherlands (from 22 % above to 37 % above), and the largest decreases in Greece (from 8 % below to 35 % below the EU average) and Cyprus (from 8 % below to 25 % below)."
The official attention given to the foreign-owned firms has been at the expense of the indigenous exporting sector.
Employer SME firms have one of the lowest export rates in Europe.
There are few big firms and employer startups are at the lowest with Belgium among 29 OECD countries.
Ireland is at the proverbial crossroads. Housing, health, climate change and education will require a lot of public spending in coming years while it's not known how corporation tax receipts will be affected by the new international tax regime.
The phantom citing of intellectual property (IP) in Ireland in 2015 by companies such as Apple, resulted in about €20bn in windfalls by 2020 while there was a combined budget surplus of only €1.5bn — the first surpluses since 2007.
The foreign firms will be needed by Ireland for years to come but Ireland will lose its most attractive trait for American firms — the main tax haven.
Dublin's financial centre has a 41st ranking in 2021, is the second tax haven. It is just ahead of Oslo.
Dublin had a 13th ranking in March 2008 and it was ahead of Paris. The Paris bourse is now at the 10th rank.
Related
Irish digital economy firms account for 1.4% of employment
Tax reforms and challenges for the Irish economy in 2022 and beyond
