Independent Ireland in Comparative Perspective WP

It’s been a while since I posted the links to my NUIG 1916 lecture, so I thought I’d post a link to the paper version separately.

14 replies on “Independent Ireland in Comparative Perspective WP”

A nod should be given to the very, very low rate of female labour force participation in Ireland until the 1990s.

This had little enough to do with fiscal or trade policy, and was probably more reflective of prevailing cultural attitudes.

In 1961 a mere 33% of adult Irish women were in or seeking employment, by 1986 this had not even reached 40%. (By then it was 58% in France and 64% in the UK). The period 1990 – 2000 saw a fourteen percentage point increase in the rate in Ireland.

Other OECD countries saw equivalent rises, but in most cases they took place in the 1960s and 1970s. The very delayed entry of Irish women into the workforce in big numbers is a big reason for why living standards stayed so low for so long.

Informative: So our particularism correlates highly with the universal flow of economic history ….

Worth revisiting 1962 … with Irish independence tightly tied to UK … and comparing to today and Brexit …

Walter Hallstein (17 November 1901 – 29 March 1982) was a German politician and professor.

He was one of the key figures of European integration after World War II, becoming the first President of the Commission of the European Economic Community, serving from 1958 to 1967. He famously defined his position as “a kind of Prime Minister of Europe”.[1] His name is associated with the Hallstein Doctrine, a key doctrine in West German foreign policy during the Cold War.

On 7 January 1958 Hallstein was appointed first president of the Commission of the European Economic Community (now the European Commission) in Brussels, a post he was to retain until 1967.[2] In 1961 he was awarded the Charlemagne prize (Karlspreis) by the City of Aachen for his efforts in the cause of European federation.[2]

In 1962, when the United Kingdom and Ireland were applying to join the European Economic Community, he startled an Irish journalist by saying that he had not thought it necessary even to open, let alone read Ireland’s application. He then memorably summed up Ireland’s dilemma “If the UK goes in, you go also; if not you too will stay out. Britain can possibly come in without Ireland but Ireland cannot come in without Britain ” He was proved entirely right: the French veto on the United Kingdom made it effectively impossible for Ireland to join until the removal of the French veto made it possible for both to join in 1972.[3]

@ Peadar Coleman

I too would love to see informed posts on the Apple issue but the problem on this site is that 99% of comments are mere moralising (“Must stop international tax avoidance”, “Govt. could use money to end homelessness”, etc.). I only want to read posts from informed tax experts, legal experts or accounting experts giving their views on the Commission’s case (strengths and weaknesses) and similarly on the Government’s approach.

“I only want to read posts from informed tax experts, legal experts or accounting experts giving their views on the Commission’s case (strengths and weaknesses) and similarly on the Government’s approach.”
Dont ask economists so. Ask, oh, tax lawyers, or international accountants. thirty seconds googling gives REAMS of analysis. The sooner economics and economists stop thinking they have a lock on commentary on every thing the better for all. Lets stick to the things we know.

I would suggest that the issue of the taxation of multinational corporations is first and foremost a matter of politics. Off topic, but in the spirit of Christmas, a topical link with useful embedded links.

The central issue is; who decides? The resurrected proposal is still based on Article 115 TFEU. The answer is that ALL must agree. I would not hold my breath, especially against the electoral background in Europe during the coming year. Not to mention Brexit.

This is certainly a formidable publication, but does it let Ireland and its policy makers too easily off the hook?
A few points.

While Ireland stopped falling behind France in 1973 (Figure 10), it was not until 1993 that Ireland started to catch up with France. That was a period of 20 years of EC membership, struggling, while assisted by regional and CAP funds. Yes, Ireland had a very young dependent population at the time but it was hardly a fiche bliain go maith era.

The argument that Ireland has been a “hyper-globalised” (p 25) economy needs a little elaboration, particularly in the context of Brexit. Ireland, as a member of the EU, currently trades within a free market of 500 million people, but that market operates behind substantial trade barriers, particularly in the area of food and agricultural products. The full negative impact of the UK possibly removing itself outside of those customs barriers is not immediately apparent from Figure 15, where ‘industrial’ products dwarf all else. [Albeit the commentary does the make the point well].
[A very interesting article from Elaine Byrne in the last Sundays SBP “We’re all sleepwalking into am agricultural collapse”, is worth a read.]
That the EU has clearly clung tenaciously to its tariffs in a globalised world is not as fully acknowledged in the article or in general commentary as it might be,

On a more general note, I have a marked reluctance to regard the UK economy as ‘under-performing’ during most of my lifetime. This reluctance derives from the fact that I have found work in the UK on several occasions when Ireland had nothing to offer, except to those in the sheltered sectors. This was true in the 1940s, the 1950s and 1960s (all before my time) but also in 1970s, the ‘Ryanair generation’ of the 1980s and even in 1990s. The UK figures may say different, but it certainly did not feel that way until more recent years.

The fact, highlighted, that much of our trade is still through the UK, rather than direct to the continent, is a point worth pursuing as it points to the sheer inertia of policy making in relation to Ireland’s strategic interests in continental access, whether via sea or air. Such policy making requires a freeing of national policy making from the stranglehold of the Dublin-centric IFSC -and other tax dodging fund and investor type industries that have skewed state policy making in the past decade.
The development of refrigerated transport in the past decades should make Ireland’s task in protecting its food and agricultural markets a little easier, but that it requires a sense of truly national policy making that seems to have been abandoned in recent years.

A very readable and generally persuasive paper apart from a few points such as that made above with regard to female participation in the workforce. Another is that made with regard to many being forced to emigrate during periods of economic downturn, the result of poor economic management. That other countries were equally bad is not much of a consolation. The country has the opportunity now to emulate the more successful Scandinavian economies, for whom forced emigration is an historic memory, and is, once again, failing to grasp it.

The legacy of Cromwell, the Famine, and much more has made it difficult to acknowledge some of the positive things inherited from the English including English later when we were seeking FDI.

The Irish Free State began with little debt and even after the Civil War, it was in much better shape than Greece which had disastrously invaded Asia Minor in 1919 and by 1922, the population of Greece which was around 6m, included 20% of people who were refugees. The drachma had lost about 95% of its pre-1914 war value by December 1926.

This is what the OECD has said about Finland, which had resisted an invasion by its former colonial master in 1940: “For a nation with a population of less than 4m, the cost of the war was devastating: 90,000 dead; 60,000 permanently injured and 50,000 children orphaned. Additionally, as part of the 1944 peace treaty with the Soviet Union, Finland was forced to cede 12% of its land, requiring the relocation of 450,000 Finnish citizens. A Soviet military base was established on a peninsula near Helsinki, and the communist party was granted legal status.”

Finland also had to pay war reparations of $300m, 7% of national income to the Soviet Union in the form of goods.

The United Nations’ Commission for Europe in 1949 estimated (mainly based on national data) that Irish income per capita in 1938 was 9th in Europe at $252, ahead of France’s, double Italy’s and treble the Greek level. In 1948 Ireland had a sixth ranking in Europe — in 2015, Irish actual individual consumption per capita (AIC) was below the EU28 average and 14th among 31 countries.,_consumption_per_capita_and_price_level_indices

The Free State began with one-third of industrial output on the island and in the early years Thomas McLaughlin, a young Irish engineer still in his 20s working at Siemens in Berlin, presented a plan to the Government to build a hydroelectric project on the Shannon that would cost about 20% of the annual budget, and it was a huge success despite all the vested interests that opposed it.

Thomas McLaughlin, the first MD of the ESB, was an Irish hero but without firing a gun.

With the onset of the Great Depression the big Irish exporters began adjusting strategies. A decade before in 1922 W & R Jacob’s Liverpool biscuit subsidiary was established as an independent company — 3 different companies now sell Jacob’s branded biscuits across the globe.

Guinness became British in 1932 and it decided to build a brewery in West London; Henry Ford & Sons which had over 6,000 employed in Cork at its tractor plant in 1930, moved most of its operation to Dagenham, Essex, while in 1933,the once dominant Irish whiskey industry was woefully unprepared to recapture its market share in the US following the ending of Prohibition.

People like Joe Lee, Raymond Crotty and Tom Garvin have commented on various factors that inhibited post-war development.
Colonial capitalism, social snobbery that gave precedence to medicine & law while down the pyramid a job in the civil service or a foreign missionary were alternatives to becoming a navvy in London.

Seán Lemass gets a lot of credit for the key policy change in the late 1950s but it was Patrick McGilligan in the 1920s who as industry and commerce pushed for the Shannon project, when the Dept of Finance was lukewarm at best.

The Protestant families that controlled many of the businesses also lacked confidence and in many including Guinness, Catholics were mainly excluded from executive ranks for many decades.

@ Apple and tax

I expect Ireland to lose the Apple appeal case despite the arguments about law.

A key issue here is that this isn’t about Ireland facilitating US companies with onshore companies to engage in tax avoidance such as Google, Microsoft and Facebook, through using non-resident Irish companies domiciled in Bermuda and the Cayman Islands.

This is about the Irish authorities agreeing a profit split involving non-resident companies with addresses in Cork, which for example facilitated Apple to avoid taxes in over 30 countries as the sales contracts were with artificial entities in Cork.

In 2012 Apple itself declared 65% of its earnings or $36.8bn as foreign sourced, and its tax rate was 1.9% despite headline rates of 20%+ in most jurisdictions where it operated.

Besides, Apple’s secret designation of the Irish companies as stateless (not liable to tax anywhere) may have broken Irish law, and in the real world only a powerful company could get away with that contempt for the rule of law.

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