The Legacy of the Celtic Tiger
'After the Ball': Fintan O'Toole, TASC at New Island, Dublin 2003, pp179.
Review by Joe Craig
19th April 2004
This short book sets out to answer the question - what is the legacy of the Celtic Tiger? Why has the unprecedented economic boom been so unsatisfying and why has it left a legacy of such enormous inequality and poverty of public service provision.
It is written by the well known 'Irish Times' journalist Fintan O'Toole, whose weekly columns in that paper regularly excoriate the Southern political system and fulminate against the gross corruption and hypocrisy that pervades Southern society. Those familiar with these writings will expect the book to have a certain subject matter and indeed its content will not surprise them.
From a socialist perspective it would be beautifully symmetrical (but wrong) to say that O'Toole tends to be right on all the issues and wrong on all the struggles. As a liberal he clamours for the good society but, devoid of an agent of change to achieve it, he bitterly opposes those who engage in the sort of struggles that could bring it about. One thinks for example of his opposition to the teachers' strikes on the grounds that they threatened examinations, which apparently are one of the few areas of meritocracy in Southern society and an avenue of advancement for the children of the poor. There is also of course his opposition to struggle against imperialism in the North, which like many, disguises defence of a very illiberal and repressive state through repeated condemnation of the militarist practices of republicans who once fought against it.
Much of the book thus reprises themes that will be familiar; in particular the inequality and corruption of Southern society despite the unprecedented, and not to be repeated boom. Such has been the extent of the villainy and hypocrisy however that his recounting of events one has forgotten still has the power to shock and anger.
Corruption, Hypocrisy and Inequality
O'Toole retells the story of Irish haemophiliacs who had contracted HIV from blood products supplied by the state. Charlie Haughey, when Taoiseach, had just returned from a visit to Japan when he faced a motion in the Dail calling on his Fianna Fail government to pay £400,000 to form a trust fund that would help the victims of the state's actions.
Haughey viciously opposed the motion saying that public spending had to be cut back. He lost the vote but took it so that badly he called a general election. That same week Haughey's bag-man, Des Traynor, approached Noel Fox, the accountant of Irish businessman Ben Dunne, and asked for a further gift to Haughey of UK£150,000 to add to previous gifts amounting to UK£600,000. 'By a coincidence so gruesome that it would be unacceptable in a work of fiction, the chairman of the Blood Transfusion Board, the agency that supplied the haemophiliacs with the infected blood products, was the same Noel Fox.' (p46)
The following week Haughey called the Chief Executive of the state's health insurance agency to demand that it cough up IR£57,000 for Haughey's fellow minister Brian Lenihan , who required an operation. In two months Fianna Fail collected a further IR£200,000 from Ireland's capitalists for the same purpose. At around the same time party colleagues Ray Burke lodged IR£107,000 and Padraig Flynn received IR£50,000 from property developer Tom Gilmartin, currently the source of entertainment in the Mahon Tribunal. 'Between them, Haughey, Burke and Flynn received more money than the trust fund voted for by the Dail would have given the haemophiliacs.' (p47)
In the following chapter O'Toole outlines the huge inequality that exists in the Irish State and which, like many other countries, has been rising since the mid '70s. In July 2003 Bertie Ahern had the pleasure of launching the UN's Human Development Report 2003 which showed that the Irish State ranked second lowest (i.e. second worst) in the western world for poverty and inequality.
What this means in terms of public provision is frightening: 'less than one-third of the 12,000 patients who require radiotherapy in the Republic each year receive it . . . 50 per cent of patients with lung cancer received no cancer-specific treatment and 57 per cent of those with leukaemia were not offered chemotherapy. Two thirds of patients .. with last-stage stomach cancer received no cancer-specific treatment.' (p80)
Despite repeated claims that the state's education policy has been responsible for the influx of foreign investment O'Toole presents a long list that graphically records the crumbling nature of the State's educational infrastructure. He records schools that have had temporary prefabs for 30 years! Schools where the roof has fallen in on a teacher but which is still waiting on a new one. Schools were children have not been able to drink the water for the past 10-15 years because it is contaminated; water is thus supplied by Ballygowan - a tiny example of how cheaper public provision is sacrificed to private profit.
He presents other examples of outside toilets, windows that don't open or close, scaffolding ever present to prevent stones falling on children, schools condemned and with no fire escapes and schools where children requiring resource teaching are taught in the corridors. No wonder there was anger when before the last election the Fianna Fail minister visited schools giving the impression that new schools and upgrading was to take place only for this to be 'reversed' after the election was over.
O'Toole demonstrates and criticises the disadvantage of women, gays and lesbians and of ethnic minorities and immigrants plus the appalling treatment of travellers. He also details the neglect and inappropriate treatment of people with disabilities, even as the Irish State hosted the Special Olympics last year. He notes that in 2001 677 people with intellectual disabilities were kept in psychiatric hospitals while many others receive no state help or assistance at all, nor are they on any waiting list.
The reason for all this is the very low level of social provision in the Irish State, itself a reflection of the very low tax take. He quotes figures from the CORI (Conference of Religious of Ireland - Catholic Church congregations and orders) that the tax take is the lowest in Europe, just 27.7% of GDP in 2003. 'Worldwide only three other OECD countries collect less tax than Ireland: these are Korea, Japan and Mexico.' (p61)
Part of the reason for this is set out in Chapter 6 entitled 'Why only the little people pay taxes.' Here a second theme of the book and much of O'Toole's other writing is set forth. He reviews the examples of blatant tax evasion by the rich both illegal, for example through offshore accounts, and legally through the long list of tax exemptions and incentives.
He gives as one example of the latter the refurbishment of 'the ultimate symbol of vulgar wealth, a sleek, 325-foot shimmering-white luxury yacht' once owned by Aristotle Onassis which played guest to such luminaries as Winston Churchill, Princess Grace, Marilyn Monroe and Frank Sinatra. It had been furnished with whale's foreskin and teeth but then replaced by fine leather.
The refurbishment in 1998 included a new massage room and beauty salon, sports lounge, elevators, swimming pools, library, suites, helipad and so on. It is of interest to the Irish tax-payer because they paid for it. The cost of all this was set off against income, so reducing tax, by the Irish capitalists involved. It is estimated that it cost the Irish taxpayer €25 million.
He gives another example: 'A last-minute finance Bill change in 1994, section 19, gave retrospective tax relief in relation to leased art works in stately homes, which benefited just one taxpayer, Ken Rohan, and let him off a large pending tax bill.'' (p128) These reliefs not only have staggering implications for particular individuals but also broader social significance. 'In 1999, the last year for which we have figures, twice as much public money went on tax relief for pension saving than on social welfare pensions.' (p130)
While many of the numerous examples of inequality and corruption O'Toole enumerates still have capacity to surprise and enrage, example upon example eventually becomes a little tiresome; especially after reading the introductory chapters which set out O'Toole's explanation of the origin and cause of the Celtic Tiger phenomenon.
After a while one feels as if one is reading a particularly long version of a particularly revealing edition of the 'Irish Times.' If we take almost any edition of that establishment paper of record we will come across examples of the rottenness of Southern capitalist society.
Let's take, for example, just the front page of that paper from Saturday 31st January this year. There are three stories. The headline one reveals that the Revenue Commissioners have allowed people who made false declarations when availing of the 1993 tax amnesty to privately settle their tax affairs instead of being prosecuted. This despite it being an offence carrying a penalty of up to eight years jail and being presented as a 'last chance' for tax cheats. Bertie Ahern, who was minister of Finance, said at the time that 'it is time we started jailing people, and, quite frankly, I look forward to that day.'
The second story reported that the Minister for Education was to respond to demands for his department to have responsibility for the Commission to Inquire into Child Abuse taken away from it. Justice Laffoy had just resigned because she believed the government was frustrating her in her job at getting after the truth of Catholic Church abuse, and opposition spokespersons had charged that her report put on record 'the shocking catalogue of delay and obstruction' from the government. Not only had governments presided over truly massive abuse, bailed out those responsible with the tax-payers money, but it was now being accused of trying to cover up the truth by frustrating those seeking it.
The third story was about a report from the Dail Public Accounts Committee which criticised the Department of Finance for failing to ensure that a €14.8 million grant to Punchestown Agricultural Event Centre was properly evaluated under its own guidelines. This story brings to mind the sorry state of many schools and contrasts their situation with the treatment of facilities of the Finance Ministers favourite sport (in the minister's own constituency) at a time when he was making deeply unpopular public spending cuts and waxing lyrical about measures needed to ensure proper evaluation of public spending in order to ensure value for money.
The question is therefore raised: what is the point of this book? Perhaps, however this is partly unfair - because of the way I have presented the contents. As I have said the book begins with an explanation of the Celtic Tiger and it ends with some more general thoughts on models of an alternative society. It is to these we will turn in the second part of the review.
As we noted in the first part of our review, Fintan O’Toole’s short book reviews the inequality and poverty of social provision in Irish society. The latter he explains is a result of a low tax take, among the lowest in the developed world. At least part of the explanation is that only little people pay taxes and although the chapter on this subject promises to explain ‘why’, it only partially succeeds in describing how.
Taxation and Public Expenditure
The facts are well known; tax revenue was 28 per cent of Gross Domestic Product (GDP) in 2002 compared to an EU average of 40.5 per cent. (Irish Times 23/10/03) Before the last budget the trade union leadership of ICTU had called on the government to overhaul the tax system. In the true spirit of social partnership they were ignored. At the same time a debate between an economist and representative of CORI over taxation and public expenditure took place in the ‘Irish Times’ (01/12/03). It was revealing, not in the sense that it threw light on the issues, but for the light it shone on the reactionary political consensus that reigns in the Southern establishment and which O’Toole often criticizes.
The economist Donal de Buitleir gave a good example of why economics is called the dismal science and a very good example of Ideology – the defense of partial social and class interest masquerading as global, objective scientific explanation.
De Buitleir’s analysis concludes that the Irish State’s adjusted tax take is not 28 per cent but 41.9 per cent, higher than the EU average of 40.5 per cent. Instead of explaining the low tax take, his ideological argument sets out to explain it away:
De Buitleir argues that because GDP is inflated by multinational profits it would be better to use the GNP measure. This excludes multinational profits and comes out at 80% of GDP. Using the lower figure automatically inflates the percentage figure for tax without actually having any effect on the amount of money.
But why should it be accepted without question that multinational profits should not be counted and not be taxed? Does this not explain why taxation, and thus public spending, is so low, rather than provide an excuse for it? Instead of explaining we get explaining away. If public services are relatively bigger how come they are still so absolutely inadequate?
Then he says that because debt servicing costs and defence spending are lower in the Irish State we should expect public spending to be lower and thus the tax take lower. But if you or I have to pay less back on a loan do we not have more to spend? If unemployment is lower does this not mean that the tax take on those working will be higher and less of it has to be paid in unemployment benefit and more, say, on the health and education services?
He says that in most countries pension costs are paid by the state but less so in the Irish State. Again, is this a legitimate explanation of lower social provision or just an example of it that is not justified? Instead of explaining why public services are poor De Buitleir gives a further example of how poor they are – they’re poor because they’re poor.
Finally he points to the State’s favourable demographics which mean that those working have fewer dependants to support, i.e. those not working e.g. the old, so we don’t have to incur public expenditure supporting them or raise taxes to pay for it. But once again why does this not mean that the tax take and public spending is higher since there is more people working to take it from? And why then are services not better?
O’Toole’s main strength is that he breaks out of the comfortable consensus that feeds on such guff, but that’s a long way from providing explanations or, most importantly, an alternative.
Nature of the Tiger
O’Toole takes the rhetoric of the right at face value and identifies the capitalist state as a vehicle for progress. The same state that provides tax breaks to the rich and facilitates their tax evasion. The same state that has so disgracefully treated its most vulnerable citizens while standing by (when not actively assisting) the most flagrant corruption. The same state that has just collaborated with the world’s superpower in pulverizing and invading Iraq. No wonder it has been said that liberalism always betrays itself. It relies for the creation of the good society precisely on that force which ensures it will not and cannot take place.
O’Toole paints the legacy of the boom as one of deep inequality, corruption, greed and hypocrisy in which some have done very well while others have suffered, all the more distressingly because there is no longer reason for their disadvantage and privation.
One might think therefore that this is the result of a process fundamentally characterized by reactionary forces which, while not unique to Irish society, have had a particularly strong impact. Nothing of the sort. O’Toole wants to claim the poisoned fruits of the Celtic Tiger, not for the right, but for the left!
‘Whatever else the Irish economic model from the late 1980s onwards may have been, it was not free market. It was driven in large measure by precisely the kind of institutions that the right despises: an interventionist government, public servants, the social democrats of the European Union and the trade union movement. Even in strictly economic terms, the role of left-wing movements such as feminism was crucial.’ (p15)
The EU is held up as a fountainhead of progress especially in regard to women’s rights. The implication of this same EU being quite happy to see an anti-abortion protocol inserted into its Treaty is studiously by-passed. The EU as a means to intensify the competition with the USA that drives down social provision is also passed over. We are informed of the ‘international solidarity’ of an EU that is a by-word in the developing world for protectionism which destroys the livelihoods of the poorest farmers. Instead the endorsement of this reactionary institution is crowned with the mantra of the right – there was no alternative (p20-21).
Feminism apparently played its part by giving women more control over their lives which they chose to exercise by postponing childbirth, creating fewer dependents and boosting the supply of labour for inward investing multinationals. Equality of exploitation becomes the watchword of modern Irish feminism.
Of course O’Toole cannot avoid giving credit to the icons of the right – low corporate taxation, wage restraint and fiscal ‘responsibility’ (after all the tax scandals he says this! Does he not appreciate the points he himself makes?). But the argument is that the process ‘owed vastly more than is generally acknowledged to the values of the left.’ (p27)
Most grotesquely, given the enormous shift in wealth from labour to capital, he praises the rotten bureaucracy of the trade union movement for ‘a solid commitment to the old-fashioned socialist value of solidarity.’ Solidarity no doubt such as betraying the nurses strike and the bin charges campaign, solidarity such as endorsement of a low corporate tax regime that undermines social provision not only in Ireland but across Europe.
The stark contradiction, nowhere faced up to, between a supposedly progressive force driven by multinational investment and a legacy of social inequality and disadvantage is mirrored by the schizophrenic attitude towards the state and a confused and incoherent analysis of the market.
At the end of the book he praises the workings of the free market in supplying ‘the vast bulk of products that consumers can choose to buy or not to buy..,’ however he also criticizes it for being given responsibility for providing ‘the things that most of us have little choice about buying..’ (p136) Even in its own terms such an analysis is nonsense. He seems blissfully unaware that nearly everything we buy we have to buy, the things he appears happy to leave to the market – food, clothing, housing, household objects and appliances, transport, cultural activities, leisure and entertainment, sources of information and communication all have to be bought.
As a true liberal his critique of the capitalist system is skin deep and does not penetrate beyond the surface of market phenomena. Only a Marxist analysis, which understands that what is bought and sold first has to be produced and that it is production relations that define the structure of the economy, is capable of explaining the inequality of modern society. This analysis explains inequality as a necessary feature of capitalist society and not the contingent or accidental product of particular circumstances.
O’Toole’s description is based on the particular corruption of Irish society. While capitalist society is always corrupt, it does not need this corruption to produce the most extreme inequalities. Indeed in so far as corruption itself needs explaining, inequality is an important part of such explanation. In other words inequality explains corruption as much as, if not more than, corruption explains inequality.
The Marxist analysis explains inequality as a necessary result of a system where the vast majority can only gain the means to a livelihood from selling their ability to work to that powerful and wealthy minority that has exclusive ownership of the means of creating wealth. Ownership of the means of production allows this class to take ownership of the products of labour and through selling them, appropriate the extra value produced by the worker above that which the worker has been paid. The commodity nature of the workers’ ability to labour, its being bought and sold on the market in competition with others and with the threat of unemployment, means that wages are held down except in boom conditions in which case they sometimes make up for the recessionary periods when they are under pressure.
The concentration of the means of production in the ownership of one class means concentration of the extra wealth produced by the worker in the same class and the use of that surplus to further the accumulation of capital in fewer and fewer hands. Inequality of income is thus an inevitable product of, indeed only the other side of, inequality in ownership of the means of production.
O’Toole is incapable of really challenging inequality because he is not opposed to the inequality of ownership that creates and sustains it. He does however say that he is against privatisation. He is opposed to it because it has, for example, produced disasters in the electricity and railway industries in other countries. But this opposition misses the point that private ownership of the production of all the means of life has similar disastrous consequences. These are ignored because of the ideological blinkers he shares with the market’s most fervent supporters.
The production of luxury goods while the basic needs of many have not been met, the duplication and waste involved through many companies making the same goods - leading to goods and the factories that produce them lying idle because too much is produced! The waste of advertising and arms expenditure plus the financial services industry, most of which is wholly unproductive. All these are symptoms of a society that is based on production for profit, whether it is production of the majority of commodities that people buy or the utility services that O’Toole opposes being in private hands.
This is not some theoretical analysis of no immediate interest. It is the only convincing explanation of what has just happened during the Celtic Tiger boom. Only a capitalist system could have produced so much money for so few while failing to meet the real needs of so many. Only a capitalist system could have created such private wealth and public deprivation. These are not the result of some particular corruption of Irish society. Such corruption has only highlighted an abuse of power and privilege that has much deeper structural roots and foundations.
Growing inequality and blatant corruption are not unique to Ireland and while O’Toole starts his book by noting that Ireland is not unique in many respects his whole discussion has the flavour of presenting just such a view. He is blind to the fact that the forces of globalisation that have hit Ireland are the most dynamic elements of a capitalist system which creates and re-creates inequality and uneven development. For him it is a process which Irish society has simply taken advantage of, his only fear is that it may not be able to do so for much longer.
In the final part of our review we will look at the international aspects of the Celtic Tiger process and O’Toole’s views on where Irish society should look to for its future, now that the Celtic Tiger is a creature of history.
O'Toole claims not only that the process of globalisation as it has affected Ireland owes an unrecognised debt to the values of the left but so also does the worldwide process itself. He argues this on the grounds of the collaborative basis on which the breakthroughs in computer technology have been achieved. We will not detain ourselves by reviewing this argument, much of which is correct in the way that it shows the power of cooperation in making scientific advances and the barriers created by private ownership of production and the narrow individual pursuit for profit. The problem is not in his understanding of the origins and development of the computer industry or of genetics but his reduction of the process of globalisation to this discussion.
The worldwide pursuit of low cost and regulation-free labour, open markets and government tax breaks and subsidies, and the effects these have on workers in the more advanced and poorer countries is ignored. Any problems associated with the process of globalisation therefore appear to have been the result of purely local (Irish) problems, despite his insistence at the beginning of the book that the country is by no means unique. This allows him to ignore the rather large debate around the nature and consequences of the globalisation process. This enormous hole in the argument is inexcusable.
Globalisation and Inequality
So if the process of globalisation in Ireland has resulted in increased inequality has it had the same effects elsewhere? If so, this could be the result of the same factors that exist in Ireland which O'Toole appears to consider particularly bad locally - corruption etc, or it could be the nature of the process itself in which case local particularities are definitely of a second order of importance. To answer the questions involved in this would take us way beyond the scope of a limited review. Either way however, if inequality has increased across the world during the recent period of globalisation then it further calls into doubt O'Toole's assertion that the latter is a result of the 'values of the left.' (p.27)
The debate whether or not inequality has increased or reduced is a fiercely contested one because its political implications are all too obvious. The stakes are high. The neo-liberal project has been adopted not only by all the parties of the capitalist class whether liberal, conservative, populist or nationalist but also by social-democracy, Stalinism and the green movement. If the project is seen to fail, sooner or later workers and the poor will seek alternatives and the imperialist system will have found that its hitherto strength - the unanimous endorsement of its favoured policy - will become its weakness.
Lots of effort is going into getting the 'right' answer. In the past few issues of the London 'Economist' the debate has been over how much world poverty has fallen. The economist Sala-i-Martin finds that those living on under $1 a day fell from 13% in 1981 to 7% in 1998 while the World Bank argues it fell from 33% to 18% in 2001, which amounts to 1.1 billion people. The respect which the former figures should command may be established by appreciating that Sala-i-Martin uses Gross Domestic Product per capita, that is the output of the economy divided by its population which means of course that consumption by the government and investment by capitalists are counted as consumption by the whole population, including the poor. Thus money spent on fighter aircraft or machinery on this measure increases the standard of living of the poor.
Difficulties of measurement mean some authors argue that 'the empirical evidence on trends in global income inequality remains inadequate and inconclusive.' (1) This author then argues that while inequalities between countries have increased, when we take into account the size of certain countries, inequality has reduced, mainly because certain poor, high population countries have grown faster than the rich countries. Inequality between countries has only grown if we ignore the size of the various countries examined. Thus 'China and India, together accounting for more than a third of the world population, would be sufficient to explain the observed decline in international inequality.' (2) Again the argument would be more persuasive if he had included in his calculations the former Stalinist countries where inequality has clearly increased or had he not already noted that some studies have reported that income inequality within countries has increased, so that while China and India might have grown faster than the richest countries, the distribution of income within them might also have become more unequal.
This is indeed the argument put by some on the left. Michael Yates (3) quotes the following:
In China and India, the world's most populous nations and two of its fastest growing economies, inequality is growing rapidly. In China, once an extremely egalitarian country, income inequality is now barely distinguishable from that in the United States. China has witnessed perhaps the greatest income redistribution in history.He and others argue that the figures used by the World Bank are unsuited for their purpose and that their estimates of poverty and inequality are unreliable.
If over time, prices fall in a poor country, then, other things equal, the number of persons living in poverty will fall. The problem, however, is that when the World Bank speaks of prices in a poor country, it means an index of all prices and not the prices of things very poor people buy. In general, the prices which are relatively lowest and which have declined most in poor countries are those of services unlikely to be consumed by the poor…Two researchers at Colombia University estimated that if corrections were made for the problems in the World Bank's methodology, the number of persons living in absolute poverty would rise by 30 to 40 percent, completely eliminating the alleged decrease in poverty.Yates also notes that the Bank's recommendations to promote export agriculture increases poverty by forcing into the money economy subsistence farmers who were better off where they were even if they now have more than the $1 a day that classifies them as poor.
Yates notes that increasing inequality is a phenomenon of the most advanced nations and cites evidence from the US:
A study by economist Paul Krugman…estimated that perhaps as much as 70 percent of all the income growth in the United States during the 1980s went to the richest 1 percent of all familiesQuoting an article dealing with health and inequality he covers issues taken up prominently by O'Toole in his book:
Interestingly, states with greater inequality of income distribution also spent less per person on education, had fewer books per person in the schools, and had poorer educational performance, including worse reading skills, worse math skills and lower rates of completion of high school. States with greater inequality of income also had a greater proportion of babies born with low birth weight; higher rates of homicide; higher rates of violent crime; a greater proportion of the population unable to work because of disabilities; a higher proportion of the population using tobacco; and a higher proportion of the population being sedentary (inactive).Given that inequality in the Irish State follows closely that of the US it is interesting to note Yates' observation that 'It is no accident that the United States has both the weakest labor movement and the most unequal income of any rich country.' A comment also appropriate to the strength of the 'values of the left' in Ireland and the wonderful trade union movement O'Toole speaks so highly of.
Globalisation not enough?
O'Toole finishes his book by doubting the long term future of a successfully globalising economy because of failure in the past by native capitalism to produce the goods. His solution 'means creating an economy in which Irish-owned enterprises can generate as much wealth and employment as the foreign-owned sector.' Having outlined briefly the weaknesses of native capitalism including its penchant for investing overseas he pledges the future on this same weak and perfidious force.
The think tank that published his book, and which has former trade union boss Des Geraghty as a Director and a number of other union bureaucrats as advisors, hosts a number of discussion papers that debate whether or not to support the continuation of low taxation of multinational companies who invest in Ireland. Frank Barry admits 'we will ultimately probably need to wean ourselves off our current excessive dependence on foreign industry' but confesses that on how to strengthen native industry he does 'not have much wisdom to impart at present.'(4)
Paul Sweeney on the other hand advocates a higher rate of 18 percent because the companies could afford it and because he says they are in Ireland for reasons other than the current rate of 12.5 percent. In any case, he says, the entry of new eastern European countries to the European Union like Estonia will undermine even the Irish State's 12.5 percent, by delivering a rate of 0%! The think tank therefore advocates greater support to native capitalism and giving money to foreign firms in a different way - for research and development carried out in the State.(5)
Such lack of confidence after the unprecedented boom and poverty of policy prescription is testament to the anaemic character of liberalism and reformism in Ireland. So conscious are they of the dependence of reform on the health of imperialism that they cling to a low tax policy that undermines any prospect of real reform, even, as we have seen, after an unprecedented boom which they believe has been wasted. Hence the exasperation of O'Toole at the native elites' rank greed and corruption. Now all that is left is a hope the multinationals will stay anyway, even when the Irish State is not the lowest bidder in tax terms. This, and the repeated hope that the same class that wallowed in the filth of corruption during the boom will somehow take over the driving seat of a dynamic economy if and when the multinationals leave.
Will they? No, nor will native capitalism provide a dynamic economy, we know the answer to that. Will the multinationals leave? Well, why are they here in the first place? A paper published in 'The Economic and Social Review' does not give grounds for optimism.(6) It concludes that 'for most organisations the critical factor positively influencing the final decision in Ireland's favour was its low rate of corporation tax.' It quotes from interviews with top executives of US multinationals who have invested in the Irish State:
Corporation tax was 'Critical…very important in differentiating Ireland from Scotland,' said a Vice President (VP) of Manufacturing.Of course low taxation sometimes kicks in as the decisive factor after others have been considered, such as being in the EU, but the importance of these other factors does not reveal anything more attractive for anyone considering themselves of the left:
'US multinationals look very closely at labour regulation … Ireland … is more employer friendly,' said a VP of Human Resources. Another in charge of taxation stated that 'if Ireland keeps its advantages in other areas, such as labour quality/supply, then it will be OK, if not, then more labour regulation will be a serious problem and a disincentive to locate here for high-tech companies. This is a very unforgiving sector.'So multinationals come to Ireland because of low corporate taxes, low labour rights and no trade unions and a nice pro-capitalist government. What's left of the claim that the Celtic Tiger derived from the 'values of the left?'
The legacy of the Celtic Tiger is indeed one of inequality and poverty of social provision as O'Toole demonstrates but to claim this as fruits of the power of the left is both absurd and grotesque. The way forward now is presented as a combination of reliance on multinationals which are only here on condition that the circumstances that created this inequality remain in place, and a native capitalist class that is a major beneficiary of the unequal division of wealth and outstanding culprit in corruption.
What this betokens is the extreme weakness and dependence of Irish society and politics on the most naked power and greed of an imperialism that is not offering compromise, and the lack of any sure foundation for a nationalistic and reformist solution to the stark problems left behind by the boom. In the last page O'Toole states that in opposition to the legacy of squalor his 'agenda is equally clear,' although it is anything but. It amounts to a mere half sentence :' Without a strong, active, imaginative public sphere in which all citizens have the capacity to participate..' (p169)
All this is put forward by a supposedly 'radical' and 'progressive' think tank headed by past and current trade union leaders. It is evidence that there is no nicer capitalism on offer other than the current capitalist system that cannot deliver even when it has experienced unprecedented success.
(1) 'Global Inequality and international trade,' Ajit K. Ghose, Cambridge Journal of Economics 2004, 28, 228-252, p230
(2) Ibid p. 236
(3) 'Poverty and Inequality in the Global Economy,' Michael Yates, Monthly Review Volume 55, Number 9.
(4) 'Structural weakness in Irish indigenous industry (or why we still need low corporation taxes)' SLANT at www.tascnet.ie.
(5) 'Has anything changed since the tax marches?', Paul Sweeney, 'Low corporation tax - an artificial state aid', Paul Sweeney, 'Submission on Industrial Policy' TASC, all on www.tascnet.ie.
(6) 'Why Ireland? A Qualitative Review of the Factors influencing the location of US multinationals in Ireland with particular reference to the impact of Labour Issues,' Patrrick Gunnigle and David McGuire, 'The Economic and Social Review', Volume 32 No. 1, January 2001, pp.43-67.