Why bother investing in Ireland?

I have been disappointed but not surprised by the lack of comment on Edgar Morgenroth’s  blog about the threat to introduce a low rate of corporation tax in Northern Ireland.

We are all well used to IDA shibboleths about the Republic of Ireland’s advantages other than the low Corporate Tax rate.  We are told about the modern infrastructure, the well educated labour force (sic), EU membership and the fact that the Republic of Ireland is English- speaking.  Northern Ireland has all of these as well as a dramatically lower cost base: we’ve even stopped killing each other in large numbers. 

The UK already has generous R&D incentives and intellectual property incentives are already trumped by other European countries such as the Netherlands. The Republic’s only remaining advantages may be its sovereign ability to skate close to the wind of tax haven status: relaxed rules on transfer pricing, absence of controlled foreign company laws, limited rules on thin capitalisation and its skill at negotiating double tax treaties.

Is that all the Republic has?  Surely, I’ve missed something!

108 replies on “Why bother investing in Ireland?”

And wasn’t Ireland’s favourable tax treatment of royalty income removed in the recently approved budget?

Poor Norn Irn has some handicaps. “The Troubles” led to a decline in economic activity so while people in the South were working lots of people in the north weren’t. There is also the issue of political stability. I mean there are no differences whatsoever between FF and FG.

Absolutely right. If the NI Assembly also gets the freedom to negotiate tax treaties etc. (very doubtful) and the political scene remains peaceful NI will have competitive advantage over RoI because of better infrastucture (eg broadband) and lower cost base.
NI needs a huge increase in its private secror to become a viable economic entity and this change on Corp. Tax would be a massive step forward.

“We’ve even stopped killing each other in large numbers”

I realise that was meant as a sarcastic aside, but the Troubles and the more recent bubbling up of dissident activity has an effect on how people view Northern Ireland. As much as you try to ignore it, it’s hard for people to move to the North from abroad when the news from the region seems to oscillate between shootings and bomb-scares.

The IDA may not like to mention it, but the South has a clear advantage when it comes to attracting foreign talent.

The economics of the challenge is simple: we both need a global boom and then compete for a lot of projects.

RoI employment in the FDI and indigenous internationally tradeable goods and services sectors is back to 1997 levels while the workforce has grown 25% in the interval.

Big US firms are increasingly reliant on exports to emerging economies.

There are still medium size firms seeking to establish bases in Europe, but the number of jobs per project tends to be low.

NI may be more attractive to BRIC country investors if the UK as a sales market is important to them.

The tax move is not good news but peace comes at a price.

The Republic is in the Euro, so less currency risk

Its probably easier to attract foreign staff to Dublin than Belfast (many of Google’s staff, especially with language skills, are not Irish)

Political stability/social cohesion

IDA expertise (the Northern Assembly should really consider making that a cross-border thingy)

Have we similar educational attainment?

I’d like to say the Republic has a self reliant economy, in that we are not reliant on a block grant. The North has been reliant on that since the 1920s. But I think the Republics economy will be self reliant again in 5-10 years.

Overall though, I don’t deny that the North has plenty of its own advantages.

@ Peter
So what? FX trading costs are negligible. For example, the bid-ask spread in dollar-euro is lttle more than 1 basis point: for dollar-sterling and euro-sterling a little more. Corporates now have access to inter-dealer spreads through customer platforms such as OANDA and others….

UK with the pound seemingly on a downward trajectory might be better as the costs of ‘spillovers’ (taxes & spending by workers) from exporting industries to the local economy will be less and less (in hard currency terms) due to the reduction in value of the pound.

Might be easier to get skilled workers if the payment is in a currency that seem likely to hold its value. The euro seem to be better than the pound in that regard.

The Republic has over 50 years of consistent pro business policies by various administrations and has built up track record and critical mass in its target sectors.

@ Michael Moore

i work for a bank, and trust me, banks still make an awful lot of money off FX. Only the really really big MNC’s typcially get anything close to a sub 5bps bid-offer on EUR/USD, and some MNC’s ignore the FX issue more than they probably should or could, and get wide pricing as a result. For practical purposes, platforms like OANDA etc still don’t offer the same level of service as a proper bank can.

“The Troubles” may be over because the IRA and the Loyalist Extremists are sharing power but believe me NI is more sectarian than ever (that is why the IRA and the LE are in power).

It must really come as a culture shock to any MNC employer to find itself in the middle of a quagmire of hate, mistrust, bigotry and discrimination. And as for raising kids there, no thanks!

BTW the road from Dublin to Belfast used to score as follows: North of the Border 6 outa 10, South 1 outa 10. The North has maybe edged up to 7 but the South is defo a perfect 10.

Infrastructure in NI isn’t great. The motorways were built as far out of Belfast as there were sizeable populations of Protestants and no further.

There is also the issue of a deprived Protestant working class community that has university access rates half that of the Catholic equivalent.

Plus the fact that so much in NI still goes through the prism of religion.

I contend that when It comes to attracting foreign talent, Dublin still has the edge over Belfast.

In my experience, People partly base their decision to move to other cities on social/cultural reasons (night life and stuff to do in other words).

Dublin is perceived to fare well in this respect. Belfast, good but as well.

@Michael Moore

But exchange rate risk is not negligible. Part of the reason NI has lower costs is due to the decline of sterling. That can go the other way too.

“Why bother investing in Ireland?” I wonder how many bondholders are asking the same question

@Bond.Eoin Bond
We’re talking about MNC’s Eoin. I gave the example of OANDA because it is accessible even to households. There are more relevant ones for MNC’s : FXALL, FXCONNECT.
It is true that banks substantial profits from FX: but that is because of volume not spread.
Hedging is effortless in FX. The swaps and outright forwards markets are deep across the dollar/euro//sterling triangle
@Dave @Rory OFarrell
“Attracting foreign talent” Are you serious? Migrants are returning in droves to their home countries
You’re making my point for me. Without the low corporate tax rate, one has to scrape the bottom of the barrel to find a unique selling point for Ireland as an investment location

1: English speaking population with a track record of hard work
2: Membership of the Euro
3: Low corporation tax (which could be lower)
4: Excellent road network
5: Ease of access to Europe
6: Culturally close to the US
7: Political and social stability
8: Not prone to natural disasters
9: Low crime rate
10: A good place to bring up kids
11: A stable climate
12: Best economic blogs in the world

@Michael Moore – “I have been disappointed but not surprised by the lack of comment on Edgar Morgenroth’s blog about the threat to introduce a low rate of corporation tax in Northern Ireland.” – I had also expected a bit more.

Firstly, the fact that the UK is dropping its CT rate is significant – without doubt this is going to annoy France and Germany, and it also means that a big EU country is going to stand up to them. I would have thought that is worth discussing.

Secondly, the possible CT harmonisation on the island is certainly worth some discussion. Is is actually feasible for NI to do this? What is the likely impact on investment and would it attract investment that would otherwise have gone south of the border?

Thirdly, is it as simple as dropping the CT rate to become a booming economy? I don’t think so. The question then is does NI have what it takes to profit from the rate change (this relates to the feasibility)?

Fourthly, and very importantly for us, if CT alone is not enough what do we need to do to get the economy going again (I admit that is worthy of a separate thred).

Regarding FX – while volatility is not good for trade this tends to have only a short run impact. Indeed one can argue about the impact of the Euro on total trade volumes (again that might be worthy of a separate thread).

Why invest in Irland – there are lots of firms out there that are still making money – why should they go somewhere else unless they can make more money there?

The Republic of Ireland has one massive advantage over the UK and indeed most other European States. When it comes to corporations and wealthy individuals, the rule of law here is extremely weak.

This gives corporations and management the best of both worlds. Their property is protected from pettier theft and harm by the state, but simultaneously the state effectively grants them carte blanche to act within their own interests at all times. Witness the wholesale plundering of company funds by bankers and developers; with absolute impunity. Witness also the toothless censures issued by a succession of impotent tribunals. Note also the weak and complicit private media outlets, long acknowledged as personal demesnes of wealthy tycoons.

The kind of legal and social environment which exists in Ireland is important to the multi-national corporations that this country is seeking to attract. A weak and indeed accommodating government and legal system confers an advantage to any company whose competitors must operate to stricter standards. In this way, Ireland can be though of as the regulatory analogue of a “low wage country”.

Certainly, Ireland is ideal for high tech companies like Google, which command vast quantities of questionable data and the methods to exploit them. They benefit from the lack of laws and even willingness to implement laws governing the digital economy. But even more traditional companies can benefit from the almost total lack of regulation here, moving goods, equipment, funds and indeed personnel as they please though out ports. Less mainstream businesses such as drug-barons are in fact quite famous for using Ireland as a stepping stone to elsewhere, and even the the US military was quite cavalier in its transport of suspects to Guantanamo Bay vis Shannon Airport.

I’m sure some—perhaps older and/or professional—posters may disagree with this assessment, but I think the record speaks for itself. Ireland does not do accountability; and that’s important for people and organisations who don’t want to be held accountable, which includes any and every multinational and private corporation of any note.

Michael, you’re ignoring the fact that employees and many inputs would have to be paid in sterling. Exchange rate risk is not limited to end-of-day cash reserves. Long NI and short ROI is a long-term bet on sterling-euro.

Michael, you missed my point a litte. Migrants are leaving because jobs are not here. But in terms of recruitment (i.e. a job in Ireland that requires someone from abroad to fill it), the more peaceful situation in the South comes into play. For example, if a multi-national needs a high-value position in Ireland filled, will they attract the best candidates if they are situated in the North or South.

The sectarian issues in the North do not make it an attractive place to live and work in.

It is more likely that the North would take investment off the rest of the UK rather than the Republic. We have developed a real obsession with headline corporation tax rates in this Country.

@ Michael Moore

for an MNC to get a 2bps bid/offer in EUR/USD, they’ll have to have enormous volume and pricing power, and be very aggressive in their treasury policy. Most are probably getting more like 8-10bps. I’m not guessing, i know for a fact. It’s not a massive cost, but its still a cost, and it still requires someone to look after the risks which is an additional sunk cost in itself. And as you move away from large MNC’s and go to mid sized companies (not everyone locating here is Intel or IBM), the spreads will get wider again. You’d be surprised at some large companies having absolutely no real policy around FX pricing.

@Michael Moore

I’m very serious about attracting foreign talent. When jobs are available people are relatively happy to live here. When jobs are not available people leave.

I gave Google as an example. The majority of Google’s staff are fluent in two or more languages. As we don’t really excel in that area Google had to import the staff. Ireland is a more attractive location for many migrants than say Belgium or Denmark. Ireland is attractive because

1) We speak English
2) We’ve a young population (and the migrants are generally young too)
3) Plenty of activities for such young people (eg pubs)
4) A reputation for a welcoming friendly culture

Now imagine trying to migrate to somewhere like Italy. They have their advantages (food, weather). But if you don’t speak Italian it will be difficult to live there, get an internet connection, argue with landlady, deal with bureaucracy. But as plenty of skilled migrants speak English anyway, that’s one less hurdle for them.

This is an advantage shared with the UK, Canada etc., and they too are successful at attracting migrants. Ireland has the advantage over Canada & Australia in that we are closer to European migrants home countries so they can fly home for a weekend if they want to for a low fare.
Old Blighty has that advantage too. Ask a skilled worker would they rather live in Ireland or Britain, and you’d get a mixture of responses due to people’s different preferences. Try attract someone to Belfast and the first image to enter their mind will probably be bombings. Its an image problem. France and Belgium are probably better at attracting migrants from North and West Africa, because these migrants often have an grasp of French. But English is the dominant language (even French academics usually publish in English, or face having their research ignored) and highly skilled workers are more likely to have English as a second language than any other.

I don’t understand why you want a unique selling point, businesses don’t have lexicographic preferences. But if you want something that can not be easily replicated, I suppose a generally friendly culture is very relevant for firms that will be hiring from across the EU.

We should look at outsourcing a number of public sector functions to NI.

A bit of Belfast Efficiency (TM) is what you Dublin boyos need!

@Michael Moore – “I have been disappointed but not surprised by the lack of comment on Edgar Morgenroth’s blog about the threat to introduce a low rate of corporation tax in Northern Ireland.” – I had also expected a bit more.

JTO again:

I can see your point. Most posters on here think that Northern Ireland (or NornIron, as Lucey calls it) is a foreign country. They were very shocked when Tyrone turned up at Croke Park and won 3 All-Irelands, as they didn’t realise Gaelic football was so popular in Britain.

I don’t share these views and I have frequently posted on and welcomed the prospect of CT harmonisation north and south of the artificial border. In fact, I think I put up a link to the breaking news that it it was going to occur on one of the other threads on Wednesday. However, yesterday was a very busy day on the site, with the GDP and BOP figures coming out, so I didn’t get time to post on the CT thread.

I am totally in favour of CT harmonisation north and south. But, I see the main significance as political more than economic. It is the start of the process of re-integrating the southern and northern economies into a single economy, which will inevitably also lead to political integration. The CT harmonisation should be followed by other tax harmonisation across the board, and the setting up of single bodies to handle functions such as inward investment, tourism, waste, environment etc on an all-island basis.

Regarding the claim of a ‘dramatically lower cost base’ in the north, this is greatly exaggerated. It may be noticed that cross-border shopping has trailed off to virtually nothing. Inflation since 2007 in the north is 15%, v negative inflation in the south, which has more or less wiped out the competitive gain from the devaluation of sterling. A recent report put the average cost of land in the north at 11,000 euros per acre v 8,700 in the south. Housing is now about the same north and south, but it is cheaper in the south outside Dublin than in the north. Likwise with commercial property. It is more expensive in Dublin than in Belfast, but no more expensive in other cities in the south outside Dublin than in Belfast. We need to stop thinking of ‘north’ and ‘south’. We need to think of Dublin, Belfast, and the all the rural areas outside of these. Dublin has a higher cost base than Belfast, but the rural areas in both have a lower cost base still, and pretty similar either side of the border.

Regarding infrastructure. Thanks to the great Bertie Ahern, roads are definitely better now in the south. Not just the inter-city motorways. The roads in Donegal are far better than those in Tyrone and Fermanagh. Regarding broadband, I’m no expert. But, I use computers a lot both north and south and notice no difference in speeds etc.

Regarding sectarianism, I think this is being exaggerated. It is still bad in the inner parts of the big cities and towns in the north, but it is on the decline in the suburbs of those big cities and towns and in many rural areas. Mixed marriages are on the increase even in areas where they would have been unheard of years ago. In fact, I will be going to one in a few weeks when my niece gets married to one from the ‘other side’. This is very common now.

Both north and south are currently being very successful in attracting FDI. And I expect this to continue. New announcements are being made every day. There were a few hundred for Antrim and Belfast earlier in the week, and this morning a few hundred for Shannon. What we should really have, once CT is harmonised, is a single body to handle inward investment for the whole island.

@ JohnTheOptimist

Regarding sectarianism, I never lived in the North so I don’t know the reality. However, I expect the perception is more a problem. I’m sure many foreign investors put Belfast in the same mental bracket as Sarajevo or Beirut. I don’t know the realities in those places either, but they have an image problem.

Regarding CT harmonisation, I think we need a 32 county tax base for that.

But the biggest boon for 32 county economies of scale would prob be a single currency.

@ JtO

I have enjoyed coming to and working in Belfast on a number of occasions. I too look forward to closer integration.

As for your comment, “We need to think of Dublin, Belfast, and the all the rural areas outside of these.” the good people of Cork will not be impressed. They inhabit the real capital of Ireland.

If you invest in ‘The North of Ireland’/’Northern Ireland’/’The 6 counties’, then you are investing in Ireland.

@ JtO

I think I hail from the other side of the sectarian divide, all I know is that nearly every little gripe is put down to some perceived sectarian grievance “oh I never got on in there coz I’m a Taig” maybe the other side are not so obsessed but somehow I think they are. Worse than ever IMHO. In 1972 when I was at QUB it would have been unthinkable that the IRA would have elected reps. Goddammit they are now Deputy First Minister.

NI is not in Britain. Neither is Scotland. England and Wales yes, not sure about the IoM etc.


I agree. It should be our national policy that there be a thriving economy in all 32 counties.

@All – Now that this discussion got going a bit here is a link to the latest issue of the Journal of Cross Border Studies in Ireland (this is not a technical journal so don’t be afraid to have a look through it)


It contains an interesting article by John Bradley (formerly ESRI) and Michael Best (emeritus prof at University of Massachusetts) on the “Post Belfast Agreement Border Region Economy”. There is also a paper by myself on the Dublin-Belfast rail service.


I don’t view this move as a threat – I view it as an opportunity.

I prefer all-irelands: as in Rugby, in Cricket (test status now pls – why was this not included in both budgets – look at the tourist boom), in GAA, in Golf, in economics, in politics, in political economy, etc ….

I think that the correct way of looking at our GNP per capita when compared to Germany is to accept that rather than having too much GNP we have too few people to share it among.

The country actually needs more people and can afford them too.

Encouraging inward migration will lead to:
1: Stabilization of property prices
2: Infusion of some much needed pragmatism
3: Increased entrepreneurship.

Maybe we already have business visas for people willing to set up companies here but if we don’t we should.

Ireland is actually a good place to live. If you saw the way the Canadians push their “communities” in the middle of the tundra you would see just how it can be done.

@ Michael

Thanks so much for that link.

I appreciate the point is general, however it is oddly the case that I am concerned with living opera right now in Ireland. I was meeting the head of music in RTE, with Raymond Deane, one of our great composers, on the subject of presenting new Irish works only this week.

We have a particular problem in that Martin Cullen (DAST) was looking to create a National Opera, which he attempted to do, in effect, by cutting back on current opera funding with a view to creating a new structure later. As he then left (bad back), the new structure was never put in place while the old structures went. This has left opera in Ireland in limbo.

Vested interest note: Myself and Raymond have written an opera, an excerpt of which was broadcast on RTE lyric a while back.

Ten years ago I was invited by a friend of mine to take a trip. It was a day or two before Patrick’s day. At the time, he was working in a US college which was ranked 5th or 6th in the top ten for MBAs and Entrepreneurship. I joined a party of MBA students and their faculty head plus my friend and visited several MNCs over teh course of the day. I won’t break any confidences but during one presentation, after the speaker had run down through the Rosy O’Grady reasons for coming to Ireland that the IDA liked to spin, he turned to a new slide and said something similar to: ‘You can forget about that stuff, that;s the official line. We’re here for the financial incentives and if they change we can be out of here in 24 hours.’ Me being the only Irish citizen in the room, the speaker responded like someone post-electrocution when I asked him to expand on this line.

Regarding the NI, one has got to take one’s hat off to the success of First Derivatives – a shoe string startup that now serves the global market.

In contrast, was it two years ago that the government (presumably via Science Foundation Ireland) kicked off a collaborative research project including academics and some worthies from the IFSC, some melding of mathematics and hedging, which cost around €8 million? I don’t recall reading at the time that the industry partners were putting a huge amount of cash into the project but may be I am wrong and can stand correction.

@the DUP

I welcome the amendment re the upcoming Test Series vs England; yes, we are agreeable – bowl in Clontarf and bat in Stormont.

@MIchael Moore
Wasn’t the lack of responses on the other thread driven by the apparently unargued conclusion that NI couldn’t reduce corp tax to 12.5% without losing the (vastly more important) block grant?

Besides, whatever about the long term or short term trade off, NI’s politicians get to spend the block grant. They’re in charge of the money, no? They wouldn’t be unarguably in charge of the money if it belonged to employees and companies. NI’s politicians have no incentive to give up the block grant so I’d expect lots of noise and no movement.

@Michal Hennigan, Gavin Kostick

Opera is very popular in Belfast. There is a very famous opera in Belfast called the Grand Opera House. I was at a Dolly Parton performance in it a few years ago.

“In contrast, was it two years ago that the government (presumably via Science Foundation Ireland) kicked off a collaborative research project including academics and some worthies from the IFSC, some melding of mathematics and hedging, which cost around €8 million? I don’t recall reading at the time that the industry partners were putting a huge amount of cash into the project but may be I am wrong and can stand correction.”
yes http://www.fmc-cluster.org/
7.whatever million.

@Brian Woods II

Worse than ever IMHO. In 1972 when I was at QUB it would have been unthinkable that the IRA would have elected reps. Goddammit they are now Deputy First Minister.

JTO again:

The fact that said former IRA man and now Deputy First Minister has just been to the White House along with the leader of the DUP shows how far things have progressed since 1972.

What you say about it being unthinkable in 1972 that the IRA would have elected represenatives is probably true. Militant republicanism was at a very low ebb in the 1960s and on in to the beginning of The Troubles in the early 1970s. It was resurrected after that by various events that we need not go into on this site. However, back in the mid-1950s, an IRA man (Tom Mitchell) was elected Westminster MP for Mid-Ulster while in prison for an IRA attack on Omagh military barracks. I was too young, but some of my uncles campaigned for him. The House of Commons voted to unseat him as he was a convicted felon. A bye-election was held. He won the bye-election with an increased majority. The House of Commons voted to unseat him again. He lost the second bye-election. So, it isn’t as unusual as you think. He actually came from Dublin. Of course, that was in the days before Dublin rejoined the Empire.


Sophisticated multinational FDI does not tend to go to countries with poor institutional, including the rule of law. An absence of a good rule of law is a disadvantage in attracting multinationals, not an advantage.

If the absence of the rule of law was really an advantage in attracting multinationals then we should observe Google Europe, Intel etc being based in Bulgaria, Romania, Italy, or Greece etc. Common law countries including Ireland tend to score higher, on average, on any measures of the quality of the “rule of law.”

@Edgar Morgenroth

That is an excellent report you have done on the Belfast-Dublin railway link. Congratulations. However, one of the problems with that link is that the terminus station in Belfast is Belfast Central, which should really be called Belfast Uncentral, as it is in the middle of nowhere, far from the city centre, and the area around it has no amenities and is usually deserted. Plus, its right on the edge of East Belfast, from where disproportionately fewer are likely to want to travel to Dublin, and to where, even today, people from West Belfast are still a bit wary about going, especially at night or during the marching season. Even in today’s more peaceful atmosphere, you’d need to be careful about arriving back at Belfast Central at 10pm on a Sunday night, displaying your GAA colours, if you were coming back from a match at Croke Park. A far better location would be Great Victoria Street, where it used to be, and which has the bus station right beside it, and lots of facilities and hotels, and is close to West Belfast, from where disproportionately more are likely to want to travel to Dublin.


“Opera is very popular in Belfast. There is a very famous opera in Belfast called the Grand Opera House. I was at a Dolly Parton performance in it a few years ago.”

I wonder if Dolly Parton would perform at La Scala 😀


DenisO’B bought the blog on monday! and da sindo, and d’examner, and detimes, and dinde’pendent, dasun damale and dastar, and tvee3, and rrrrteeE … shur it’s da talk a hartigans at the mo …. think he bought hartigans as well, an he bought thurles, at which time d’esmund the magnificent bought all the rest, including all the bondholders. Happy Days in Governance Land.

@JTO – “the terminus station in Belfast is Belfast Central, which should really be called Belfast Uncentral, as it is in the middle of nowhere” – spot on. I don’t know if there are signs up these days but the first time I arrived (a long time ago now) there I was a bit puzzled as to which direction to go – easy enoguh to end up in the Short Strand which was not necessarily the best during the troubles. My understanding is that Victoria that is being considered as the terminus.


”But even more traditional companies can benefit from the almost total lack of regulation here, moving goods, equipment, funds and indeed personnel as they please though out ports. Less mainstream businesses such as drug-barons are in fact quite famous for using Ireland as a stepping stone to elsewhere, and even the the US military was quite cavalier in its transport of suspects to Guantanamo Bay vis Shannon Airport”

Multinational companies absolutely need strong rule of law and regulation. In my experience with dealing in the environmental and health&safety field with pharm companies their requirements go far beyond national legislation. For example they carry out extensive auditing of facilities they send waste to or source ingredients. In this way they drive up the standards with regard quality control, environmental & health and safety mgt.
Nobody with any industry experience would suggest the oppose as you have above.


‘I’m sure some—perhaps older and/or professional—posters may disagree with this assessment, but I think the record speaks for itself. Ireland does not do accountability’

+ 1 .I am one of those older professional posters. Many of my colleagues recognise the truth of what you say, and we have sympathy with those who have to take up the burden in future years. It is shameful that well placed professionals have been so willing to lower standards, or look the other way, in return for a bigger slice of the pie.

@ Donald Byrd rightly points out that investors want to put their money in a place where property rights are solidly defended. Our constitution is rock solid on that score, but property rights are just one sort of right. There are many others.

We have failed to defend our society from the negative externalities which accrue from the exercise of property rights. We have valued them blindly excessively, and thus incentivised our legal and related professions in the most perverse fashion.

There are a number of bad outcomes, but two stand out for me Firstly, many ‘people of no property’ don’t bother to vote, let alone take an active part in politics. No wonder our slums are violent and drug-ridden.

Secondly, our state has been spectacularly hijacked by private interests via the sovereign guarantee. I do not minimise the public sector pay and welfare issues, or to pretend that other countries are all well run, but the handling of the banking debacle is a real sickener. As you rightly say, we don’t do accountability.

@ JtO

Sometine I think you are ‘not wise’ but on this thread you are ‘one hundred’, as they say in Tir Eoghain.

@ sam

It is perfectly possible to be committed to driving up technical and regulatory standards in the real economy, while engaging in vigorous regulatory arbitrage on the finance and taxation side. They don’t call it financial engineering for nothing…….

@ DO’D

That’d be funny if he didn’t already own the Irish Independent. That newspaper group really is building up a track record in oligarch owners – first “eircom” O’Reilly, now “Esat” O’Brien. Let’s hope that they don’t start sponsoring economists to write puff-pieces for the financial benefit of the owners…?

@The Minister

The lesson of history is clear, argues Barry Eichengreen, an economist and an expert on the euro and its origins: Sustained austerity that is not supplemented by some form of debt reduction in which the holders of bank or government debt are forced to take a loss is not just unworkable but unfair as well.

“When you reduce the incomes of the people who service the debt but you don’t reduce the incomes of the bondholders, you won’t reduce the level of debt,” he said. “Some might call it shared sacrifice, but some people are not sharing.”
The argument against restructuring has been that the risks of contagion are too high, but it is becoming increasingly clear that the deeper reason behind Europe’s reluctance to accept losses on Greek, Irish and Portuguese debt is that the cost to European banks would be staggering.



Wanna bet?


“Several days after Moriarty came out, and not one post about it on Irish Economy.”

Eh, i didn’t realise it was an economic issue? Or did you get lost along the way to Politics.ie?

@David O;D

“The lesson of history is clear, argues Barry Eichengreen, an economist and an expert on the euro and its origins: Sustained austerity that is not supplemented by some form of debt reduction in which the holders of bank or government debt are forced to take a loss is not just unworkable but unfair as well.”

I’ll buy into this when someone shows me a credible and effective plan for repudiating a % of domestic debt, i.e. mortgages. It seems to me entirely facial, if not insidious, to argue for burden sharing abroad but ignore the needs to burden share at home. The argument from recklessness applies in both domains. Only the scale is different. Again, let me state: default begins at home.

@ Eoin Bond

Eh, i didn’t realise it was an economic issue?

I’d refer you to the justification for nearly every post by one R. Tol that’s appeared here. Surely a matter of “reputational damage” to the counry that what certainly quacks-like-corruption has been aired nationally?

And what are we, the citizens, to make of the apparently inevitable disaster with which privatisation and liberalisation are associated?

@the Alchemist

Distinction is between public debt and private debt.

Private bank debt was socialized by Old Gov: I vehemently disagree with this on grounds too numerous to mention, and main reason I frequent this blog. Its conflation with the public/sovereign has placed Irish public debt into Default, prevented only by further EU debt at the mo … massive reputational damage to Irish citizen, and massive burden on Irish citizen.

Mortgages are private to private arrangements. Of an entirely different order, as distinct from scale.
Private citizen debt resolution mechanisms, & reform of our Dick_een_seean bankruptcy laws have been called for on this blog for many moons ……… default here is also an option …… but a very different story …….. even if both stories are interlinked. I entirely agree with you – default begins at home – you have this option. Blind Biddy has yet another 2nd hand bazooka? U interested for when the sheriff comes knockin?

This is an epitome of “investing” in Ireland.

A move back to the UK would be a “cosmetic thing” and wouldn’t require large changes because WPP has kept most of its operations in London, said media analyst Alex DeGroote.

WPP only employed around seven or eight people at the Dublin office in Ely Place where board meetings had to be held following the 2008 move.

– Thomas Molloy

Irish Independent 3/25


And what are we, the citizens, to make of the apparently inevitable disaster with which privatisation and liberalisation are associated?

Life is seldom a tableau of black and white patterns.

What are we to make of an almost century old brutally failed political experiment that is heading for its dénouement in a country of over 20m people, which is surviving on food aid from its former communist neighbour, China?

If we take what is commonly viewed as corruption, it happens in state owned companies as well as in the private sector.

In the US, most forms of corruption have been legalised and you have to be pretty dumb to be caught for bribery.

A year ago, even the Supreme Court threw out a 1947 prohibition on companies directly funding advocacy campaigns during elections.

On the foreign front, the US has set a good example since the 1970’s after a bribery scandal that brought down a Japanese prime minister.

There has been progress in Europe after scandals at Siemens and BAE Systems and in some countries until recent times, bribes were tax deductable.

Even in Sweden, it wasn’t until the late 1980’s that MNCs ended the hosting in Stockholm of slush funds for foreign units.

Big procurement projects are always a risk; the Irish public sector procurement budget is worth about €16bn and the biggest single reform Brendan Howlin could make is to make the process transparent.

If you want to sell to the State, quote a price and know it will be available online – – “Sunlight is said to be the best of disinfectants,” Louis Brandeis said in 1914 – two years before he became a justice of the US Supreme Court and he wasn’t referring to a brand of soap.

@ Michael Hennigan

Just reading ‘Other Pople’s Money’ (1914) by Louis Brandeis. It is amazing what gets forgotten by the polity at large. That was the theme of Galbraith’s most entertaining book on the Great Crash.

Your points well made. Human nature is what it is, and we can only struggle for better forms of governance. I would have said more ‘civilised’ forms, but so many civilisations, including our own, are built on the bones of the conquered.

I had a discussion with a few mature Italian businessmen a few months ago about cultural differences. Berlusconi according to them is the best Prime Minister since Garibaldi the founder of the modern Italian state. The fact that he could have sexual relations with dozens of young women at his age was a positive thing from their perspective. What scandal, there is none according to them just a bunch of feminazis braying about nothing. Now as to Ireland our tolerance for drunken and incompetent politicians who they see as not even getting corruption right looks mighty strange to them. Drinking to excess is an Italian no, no that far exceeds the taboo against sex with underaged females. In Ireland of course as Fintan O’T referred to masturbation ranks high on the no no scale. The Italians of course are not aware of that so we are not a laughing stock.

FF and FG being identical is the cause of our political instability. The inability of FF to take corrective action beginning in 2007 which now continues under FG is destabilizing the country to the point where economic collapse looms large.

Good roads? Travelling in Dublin and its environs is as close to third world chaos as one could get. There was a time in Ireland when all roads were well maintained, that is no longer the case and the rot precedes the fall of the Tiger.


I did some more thinking on this and the decision would depend on a couple of more factors.

Starting with the assumptions:
Pound has fallen in value – > Exports more profitable from NI
UK is printing pounds to finance gov deficit -> Pound looks likely to fall some more in value.

1. No CCCTB, higher CT in NI -> Invest in NI & set up some transfer pricing to avail of the lower CT in Ireland.

2. Same CT in NI & Ireland -> Invest in NI.

3. CCCTB in place, higher CT in NI -> Then I’d need to do some more calculations were my net profit would be the highest.

It seems unlikely that ECB will start the printing press & it seems likely that the lower CT can be introduced in NI so with no CCCTB the likely place to invest (the largest portion) would be in the NI.


One popular argument for default is that foreign lenders to Irish banks were reckless, didn’t do their homework, gambled, threw risk assessment out of the window etc.

My point is that exactly the same argument could be laid against the domestic banks regarding their mortgage lending.

But strangely that argument isn’t made in Ireland. It would frighten the cattle it seems.

Let’s assume burden-sharing is engineered at interbank and bondholder levels. So several Irish banks get a discount on their debt. Fine. Now, why on Earth shouldn’t a discount be engineered for existing mortgage holders?

It would actually be doing something concrete and achievable on the home front. Instead, all the attention is on shaking a stick at the vaguely identifiable outsider, while ignoring the all too readily identifiable insider on the local high street. Yet not one single political group or trade union or chamber of commerce has advanced the cause for default at home. Across the board there is a fundamental lack of will to change and be seen to change. This is Ireland.

Ireland lacks a subversive capitalism. Without it, the country will haunt the EU banqueting halls for yet another generation looking for handouts. Default begins at home – for all kinds of reasons.

@ Michael Hennigan

The Brazilian eucalyptus ad on your site – what’s the recent history of the land? Is it ex rainforest ? I’m reading Collapse by Diamond at the moment and the news from Brazil is very depressing.

@ Michael Hennigan

Saying that “at least we’re not Italy” isn’t much of a consolation. Berlusconi’s latest move, you may have heard, is to try to bring in a law to allow him to personally sue any officer of the legal system who dares cross him. Does this remind you of the behaviour of a certain Irish media tycoon this week?

I’d say what the Tribunal has uncovered speaks for itself, in spades. The sanguine response here mystifies me, particularly given how capitalism has been lauded as being virtuous in these parts.

Btw, from listening to the radio this morning it sounds like there’s organised spamming of phone lines going on in favour of O’Brien (I haven’t heard a single person all week speak of O’Brien and Lowry in positive terms).

@ Mickey Hickey

FG are no different. I think Fintan O’Toole put it well a few months ago

“Let’s think about what remains, collectively, within our own control: our political culture and system; our public ethics and values; our health, education and pension systems; our legal impunity for white-collar criminals; our lack of civic pride; the very passivity that makes us powerless”

What is FG going to do about white collar crime ?

However I don’t think things are significantly better elsewhere. I get all the Swiss election literature and all the parties with perhaps the exception of the Greens are chained to permagrowth. Maybe some countries are less blatantly corrupt but there is no alternative to the belief that resources are infinite and the “free market” is the only choice.

Up north the DUP have the same economic policies as the Tories, UK Labour, Irish Labour,FG, FF, the Swiss SVP, the French UMP, the US Reps/Dems and so on.

@ The Alchemist
As far as I know the money owed by mortgagees to Irish banks slightly exceeds the money owed by Irish banks to their lenders.
If this is true then a solution would be for the Irish State to pay off the bank creditors at a discount and take over those mortgages.
This would mean that the state would be in control of mortgages. Would love to know if there is any logic to this idea


I’m still genuinely confused as to why you think an economics blog has a duty to talk about the outcome of the Moriarty Tribunal? It’s been going on for what, 14 years? It had nothing to do with capitalism or economics, and is purely about croneyism and corruption. Decent chance fatigue and boredom has set in to be perfectly honest. As i said before, plenty of space on politics.ie for you to have a bit of banter about it if you want.

It had nothing to do with capitalism

Really? I find that one of the more extraordinary statements I’ve heard this week.


well explain how it had a lot to do with capitalism then please? Remember, the Moriarty Tribunal is not about whether state assets/resources should or shouldn’t be sold off, although i’m sure you think it probably is at some level.

Ireland is a great country but Europe is becoming unstable.
If scenes from London are replicated on the continent it will drive the European electorate to populist, nationalist extremes. If Angela loses in Germany it will be a further destabilizer.
The EFSF has distorted the picture meaning that default is more,not less, likely.
The future of the Euro is not that certain.

@ seafóid

Greenwood is a Danish company and it utilises sites that have been left infertile by historic slash and burn farming techniques. The soil is like sand and without the right corrections will not sustain life at all. The company says once it’s upgraded, 20% of the land is set aside as a native reserve on each site.

It says: “All sites are under 1,000 hectares and this unlike larger sites has a positive social and environmental benefit. The problem has been in the past that native forestry in the Cerrado regions have been cleared to make way for farming or used as charcoal and firewood; this is not our model both economically or morally.

The fact that the Brazilian government feels so strongly about the destruction of native Cerrado has led to new initiatives and laws being introduced one of these laws states that the steel industry must now only buy charcoal [for the blast furnaces] from identified exotic species [ie eucalyptus] This is because at the current rate of consumption native forest will not survive even if they are managed whereas eucalyptus grows at 10 times the rate that native Cerrado will and therefore preserves 9 hectares of native habitat for every 1 hectare of eucalyptus grown.”

I read Collapse in early 2005; Diamond quotes Percy Bysshe Shelley’s Ozymandias – – in Syria a statue of the brutal dictator father of the current president was destryoyed in a southern town; life both changes and doesn’t.


Sri Lanka overcome England at a stroll by 10 wickets. Good night for a party in Colombo.

Finnish & Lithuanian are simply seeking a few tips on the bunga-bunga … the former needs a bit of lightening up pre election time ….

@Eoin Bond
Governance, Corporate Governance & Political Economy are inextricably linked …

@seafoid, EWI

There is NO white collar crime in Ireland – it is not allowed. Crime is only for the lettle peeple ….

@the Alchemist
… any response to blind biddy? ‘subversive capitalism’? Thought we had that already ….: seriously, a big issue.


There are many scandals of different degrees all related to the bucks-stop-nowhere culture and the biggest scandal – – the wrecking of the economy – – was judged by a tribunal on Feb 25th.

The slow-motion system isn’t going to suddenly move into a speedier orbit because of another report.

I’m blue in the face from arguing that there isn’t a big constituency for change/reform in this conservative country — the socialists are as barnacled as the neanderthals.

We need the external enemy to fire up real outrage.

There’s another report due from the other tribunal that was set up in 1997; we knew the land rezoning system was corrupt and over 13 years later, Frank McDonald reported on Friday that NAMA has told a resident of my hometown of Bandon that most existing rezoned land in the country is unfit for building. Councillors are seeking to rezone more land in the town.
It’s the only power these people have and God help the people if they had any more.

As for what could loosely be called culture, what is more illustrative of an unfit system than tribunal lawyers becoming multimillionaires and they have been overpaid €1m as a result of a clerical error, because they did not feel that it was appropriate to refuse/pay back the extra money.

There is also a dispute about three judges involved in the Mahon tribunal claiming more than €500,000 in travel allowances, on which the Irish Times reported last October that the Department of the Environment had refused to pay.

@ Michael Hennigan
It would be really great if you could name one country in the world that does not have problems with corruption.
I’m not excusing our corruption. I’m just saying that we just need to fix it. We don’t need to use it to justify self-loathing diatribes

@ Eureka

Before we fix it, we have to face it as honestly as we can. It’a not going to be a pleasant task, but it’s a very necessary one, I am afraid. This board is remarkably free of diatribes, and long may it remain so.

@Paul Quigley
Legislation and Jail. We need both – quickly.
We also need to set up a system similar to the Congressional Committees in the US.
We’re so inward looking sometimes. Ireland is corrupt. It should be fixed but I have never come across a country that isn’t. There’s too much Catholic guilt in us all!
Just deal with the thing and fix it. And march for the legislation and jail if we have to! But enough of this self-flagellation!

@Michael H

“I’m blue in the face from arguing that there isn’t a big constituency for change/reform in this conservative country — the socialists are as barnacled as the neanderthals.”

You hit the nail of head there.

During the week I read in the IT that Minister Howlin was ordering a review before setting out his stall. It will be an inter-agency all department shindig. Once more aroudn the block. We’ve been here before so often that I felt giddy reading it.

Howlin’s own bailiwick of Wexford would make an interesting study in industrial collapse and threadbare revival.

The agri-manufacturer Pierce was in slow motion free-fall from the late 60s through the early 80s. Some 1200 jobs disappeared in that collapse. Likewise a Renault car assembly plant, Smiths, departed in the same period. To this list could be added a foundry, a car spring manufacturer, a pork processor and several textile companies. I don’t have the stats to hand but I recall reading last year that Wexford was up with Louth and Leitrim in the poverty indices.

The point I am making (by the way, nothing to do with Howlin or any other politician) is that once these skills are gone they are gone almost forever (certainly the ‘forever’ of unemployment). Regrettably the establishment doesn’t value manual trade skills. The only machinists successive governments have courted are generally policy machinists.

The title of the post was about Ireland being a good place to invest.
The hypothesis being proposed is that it is less attractive because it’s corrupt.
My contention is that it is about as corrupt as most western countries. Therefore this is not an impediment to investment.

@Michael H

Will public sector reform make Ireland a more attractive place for investment? What did one of the Bailey brothers respond in an entirely different context?

Well the ‘Smart economy’ gravy train looks set to roll on unchallenged by anyone in government.

Don’t offend nice people might be one take on the outcome.

@Michael Hennigan

‘I’m blue in the face from arguing that there isn’t a big constituency for change/reform in this conservative country — the socialists are as barnacled as the neanderthals.’


But I can only find one socialist! A little more care with the grammatical facts Michael please (-; Don’t forget the Fir Bolg – they haven’t gone away u know!

Spose there’s little hope for heterodox radicals then? Domage …

I wish I could agree with you. At a very early age I had first hand experience with Irish political palm greasing. For longer than I care to remember Irish politics was rotten to the core at the town, county and national level. All that has changed is the amounts transacted have increased enormously as the favours that could be bought increased in value. All the underhanded behaviour is seen as perfectly natural (campaign contributions) by the public at large and it would never occur to anyone that it was illegal. Corruption is deeply ingrained in the culture and it would take a revolution to root it out. This is not going to happen so rest easy and carry on with business as usual.

Empirics from the DinnyO’B Press

A NEW government TD has hired his wife as an assistant in Leinster House after he was thwarted in his efforts to get her elected to his vacant council seat.
Fine Gael’s Alan Farrell has hired Emma Doyle as his parliamentary assistant in the Dail just two weeks after she was rejected by Mr Farrell’s Dublin North FG branch as his replacement on Fingal County Council.


FDI agglomeration effects. We got them. NI doesn’t, except to the extent that it can free ride on ours.

@Mickey Hickey
I have to agree with you. That so many people at so many different levels don’t see anything wrong with a businessman (or anyone else really) being able to pick up a phone and get a minister on the end of the line is disheartening.

What was a listen more heartening was that the majority of the rabid and the unthinking on Liveline believed Mr. Moriarty and not Mr. Dunne, Mr. Lowry or Mr. O’Brien. I believe it comes down to feeling that the close contacts are wrong, even if there is no smoking gun. It is a pity it doesn’t extend further to the rest of the “government must do something about it” attitude.

NATO bombs Libya – does nothing anywhere else. Nothing to do with BP influencing things, or ELF having designs on a few oil fields there!
Merkel extended the life of nuclear plants only to shut them down when Japan suffered its tsunami – nothing to do with lobbying from the nuclear lobby there!
Look at how France handled its own Anglo (Credit Lyonnais).
They are all corrupt – not just us. Sure it’s wrong but it happens.
Europe is looking for moral defects in us so as to justify it’s harsh approach. Trust us to do that job for them

@Eureka, hoganmahew, mickey hickey, michael hennigan et al

Not a bother ….

The same ‘old guard’ (upper_echelon) still run the banks



Corp Gov in Banks pre-crash = Corp Gov in Banks post-crash
No real change: stat sig***

Upper-echelon continuity: stat sig***************************

Blind Biddy has a spare bazooka that she would like to present to Mr M. Elderfield – gratis!

@ David O’Donnell
They will be fired. But it would be much better for our psyche if an Irishman did the firing.
Here’s hoping Shatter steps up to the plate and showboats a little on this.
Growing up means taking action – not moaning and waiting for your parents to sort it out.
And re corporate corruption – just a germ of an idea but make companies declare annually what contacts they have had with politicians. Just like annual returns. Penalty for lying is being struck off. A neat little piece of legislation should suffice.


Becha we’ll be burned before dere fired! They used to bring over ol Pierrepoint when a poor sod was to be hanged!

Watching the week in politics tonite …

Lovely touch by Prof Brennan ‘ WE the ordinary people of Ireland’ … Now Now Niamh – Ordinary? Now now Niamh (-; An extraordinary admission …

Nother lovely touch on ‘constructive ambiguity’ in the Dept of Finance 2008 well post_pd_time of course – musta bin chattin to the Cardinal …. what was his again?__escapes me at the mo. Sure someone will remind me …
& Moriarity cropped up – and not a murmur …. not even a hint …. as we all waited with baited breath – for the corks to pop … or a wee bottle to be opened ….. and not a murmur! Constructive Ambiguity ….

“Bond. Eoin Bond Says:
March 25th, 2011 at 11:05 am

@ Michael Moore

i work for a bank, and trust me,”

I stopped reading at this point.

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