A promotional piece published by Bloomberg last week provides an interesting insight into how Ireland wished to be perceived internationally, and the manner in which Ireland is being sold to potential investors by those tasked with attracting more foreign direct investment (FDI).
The article, sponsored by the IDA, also provides some food for thought with regards to the nature of the Irish state and economy’s relationship to the world.
It stresses the fact that “Ireland is a thriving hub for some of the world’s biggest companies,” and that this is expected to deliver a growth in GDP of 4% in 2023. All of this powered by our “strategic location” and “highly skilled labor force”, we are told.
Kieran Donoghue of the ID) is quick to connect to the success of Ireland in terns of DEI, or Diversity, Equity and Inclusion, as it becomes a “global village.”
An equal if not greater attraction is of course the generous Irish corporation tax rate which is among the lowest outside of developing countries. As will we see, that is not the only thing that the Irish state has in common with developing countries, although most of them have far lower living standards.
While the attractive corporation tax currently brings in a significant part of the state’s revenue – with some €12 billion of a total of €22.6 billion in 2022 coming from multinationals – it is by no means certain to continue for ever as it has been criticised both within the United States where most of the beneficiaries are based, and by the European Union.
Officials within the United States were examining ways of forcing the corporations to pay more tax in the US, but Apple shifted their intellectual property assets to Ireland in 2015 and other companies have established head offices here.
While that might appear to be unmitigated good news, and is clearly by far the main component of increased GDP for Ireland, it paints a rather distorted picture of the actual nature of the Irish economy, and where the fruits of the massive growth in corporate profits, even after they pay tax, actually go.
The most staggering figure in relation to where the Irish Republic stands globally is the net factor income.
That measures the amount of GDP which is basically exported in the form of profits to the countries in which the actual owners and shareholders and creditors of the corporations reside. So while Apple and the other tech giants might pay their tax here, their profits leave.
Those profits left to the tune of $121,588,593,000 in 2021 – a mind-boggling figure can be abbreviated to $121.6 billion.
According to the Central Statistics Office, the net factor income in 2009 was €29.4 billion, which means that, adjusted for exchange rates, the amount of corporate profits repatriated from Ireland has increased by around 400%. The following table illustrates where that money comes from.
GDP for the state in 2021 was $504 billion. So in effect, a quarter of the economy is basically exported, and GDP is a pretty meaningless metric.
Gross National Income for 2021 was $383 billion which accounts for the missing corporate profits winging their way into overseas bank accounts. The following figure demonstrates that the factor most closely related to economic growth is the growth in corporate profits – which is one explanation for why many people are not experiencing as they think they ought, the benefits of that growth.
The only country with a higher net factor income than Ireland in the entire world is China. China had a net factor income of $161.7 billion in 2021 which also reflects, despite the image we have of China as a world economic power, the large part that international capital plays in the Chinese economy.
It is also of course worth noting the obvious fact that per capita figures for China are far lower than Ireland. So we can safely say that Ireland has by far the largest per capita net factor income on the planet.
It is also interesting to see in what company that places us in relation to the rest of the world. As the following statistics from the World Bank illustrate, Ireland far outstrips all other countries in the Euro zone when it comes to the preponderant place of overseas capital. Germany and France, and even Italy, with their strong indigenous sectors are almost mirror opposites of Ireland. Much of their economic solidity comes from the fact that many leading global corporations are based in those countries.
Tiny Luxembourg had a net factor income of more than $25 billion and that too is due to the fact that many American corporations formally have their headquarters in Luxembourg in order to avail of the tax system there.
Both Ireland and Luxembourg belong in terms of expatriated profits to a group almost exclusively comprised of under-developed former colonial countries – what were once known as the ‘Third World.”
Among them are Brazil, India, Kazakhstan, Vietnam, and Nigeria. Of course it will be claimed that Ireland enjoys far higher living standards than those countries which is true, but if you were to employ a descriptive of the nature of all of their economies it would be one that embodies an overwhelming dependence on foreign capital. Neo-colonialism is the term favoured by some economists.
Of course, it will also be argued that where Ireland differs from Luxembourg is that a large number of people here are employed directly by overseas companies, and that a large number are employed in domestic companies that are dependent in one way or another on those multi nationals.
The number directly employed is just over 300,000 in around 1,800 separate companies whose exports are valued at around €30 billion. Taken along with the tax revenue, you might be inclined to regard this as a positive relationship from an Irish perspective.
What also has to be considered is the overall impact this dependence is having not just economically, with the possibility that the tax revenue might one day dissipate given the lack of ties of the companies concerned to Ireland, but also the radical impact it is having on Irish society as a whole, particularly in regard to changing demographics.
Not only are the major corporations not based here, or are only formally so for tax purposes, but increasingly their work forces are comprised of overseas employees.
In the last ten years people coming to work here from outside of the EU have been granted 103,410 work permits. Around a third of these are in high tech.
Many other workers have come from within the EU to the extent where it most of the new tech jobs and other new jobs created here are going to people who come here from overseas. Another illustration of this can be found in the statistics on Personal Public Service (PPS) numbers.
There have been 1,784,620 new PPS numbers issued between the beginning of 2014 and the end of March this year. Of those, 1,126,125 were issued to persons of non-Irish nationality. That amounts to 63% of the total, and that proportion is steadily increasing, with it having reached 77% in 2022.
And, of course, many young qualified Irish people continue to leave. In a snapshot of the period between 2014 and 2019, an estimated 252,700 Irish people left the country. In that period there were 327,800 immigrants, and that figure is constantly rising year on year. And as it does so, an increasing proportion of immigrants are not coming here to work, and in many cases are probably incapable of working.
And yet, as we saw with the Migration Pact, the political establishment here has no notion of controlling any of this. As far as they are concerned, Ireland is no more than a convenience for international capital and its demand for labour, low tax and a quiescent population that does not mind its society being turned into some DEI facsimile of the workforce of Twitter or Google or Apple.
If that is what people want, then so be it. There are plenty of “choices” as to which party you think best fit to oversee this transformation that will outlive and surpass even the imaginations of the William Pettys and Edmund Spensers. An Ireland that is no more than a factor in the supply line of the Empire.
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