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An Irish sovereign wealth fund?

Another scam to rob the workers

18 May 2023

Minister for Finance Michael McGrath and Minister for
Public Expenditure Paschal Donohoe.

The Irish state is poised to take in over €27 billion in corporation tax from the multinational sector by 2026. This enormous windfall has been announced after a series of crises arose around the government's housing policy, many evictions of poor families and scandals around housing corruption, alongside many other failures in social provision.

The obvious conclusion is that, with these tax windfalls, the state would now move to provide public housing and solve the crisis.  Instead, ministers are mumbling about the need for prudence and the requirement to save the bounty for a rainy day - a case weakened by the fact that tax windfalls have been building up for a number of years.

There is no intention of resolving the housing crisis. The rake-off from transnational profit, the billions aimed towards private corporations in property development, are all part of a single system that enriches the elite while leaving the working class in despair.

A Latin American migrant expressed it well when writing to a London paper. She had seen Britain as a rich country, but when she arrived, she found a poor country with lots of rich people.

The situation in the Irish state is much more extreme. The latest local headline is about poor families being evicted en masse at the whim of landlords. At the same time the official statistics paint Ireland not just as one of the richest countries in Europe, but in the entire world.

So, what's really happening? Ireland isn't run in the interests of its population, but in the interests of transnational capitalism. The ruling elite oversee the system and become fabulously wealthy themselves. The majority of the population live lives of quiet desperation and workers wages decline in both relative and absolute terms. The whole system is held up by a general recognition of the country's dependent status and this recognition is made concrete by a system of partnership that ties trade union leaders in common cause with Irish capitalism.

But let's forget where the windfall came from. It’s here now. Why can't it be used to alleviate the plight of the workers?

The truth is a low tax economy is also a low spend economy. Ireland keeps corporation tax low by skimping on welfare, public services and workers’ rights. In fact, by constant privatisation it rewards big capital by opening up further revenue streams. For example, the government's "Housing for All" policy guarantees vulture capitalists a return on property double that in most European countries.

The central element of Irish economic policy is bending local law and redesigning social and physical infrastructure in the interests of transnational capital. The centre piece is a corporation tax rate of 12.5%, held above all other issues. The US has now demanded a global minimum of 15%. Ireland has reluctantly conceded, with a number of concessions and exemptions. The implementation of the scheme has now been delayed and large capital funds have moved from open tax havens to the somewhat more respectable Irish economy on the basis that they have a physical presence more substantial than just an address, causing the current glut of tax receipts and leading to a fear that the working class might expect some relief from constant exploitation.

The answer to this is a sovereign wealth fund. Invest the money, reinvest the interest and use it to meet the health and pension needs of an aging population in years to come.

These funds are just further elements in an offensive against workers. By locking the money away you prevent it being used to meet social needs. Ireland has tried this before. The pension reserve fund of 2001 was swallowed up by the credit crunch of 2008. The national reserve fund of 2019 was drained by the extra expenditure on Covid.  Finance minister Michael McGrath plans a bigger scheme, pouring in €12 billion a year until at least 2030.

This is late capitalism with a vengeance. The Irish banks fill up with money transferred from other tax havens. The tax take comes from utterly unproductive capital and the best that the capitalists can think of is to lock the money away and then reinvest it in the global casino along with other unproductive capital. At some stage real value has to enter the picture and it does so by superexploitation of workers in the global south and an ever-tightening squeeze on those at home.

There is an alternative. Why not invest in public companies to create real value ourselves? Why not build a real Irish economy meeting the needs of its citizens rather than draw in floods of vulture capital designed to impoverish us?

The thing is, a lot of money has flowed into Ireland on both sides of the border in support of the peace process from both Europe and the US.  Not one penny has ever gone to public industrial investment.  It goes to support private industry, to help develop infrastructure and into communities as a sort of pacification mechanism. Competing with capitalism is utterly forbidden. In the case of windfall taxes, they are collected from the global flow of finance capital. The proposal is to reinvest them there and, by the time the fund matures, there will be so little public service that they will go to private companies running services and yet again return to the pool of global capital.

The major problem is that there is little in the way of public opposition. People remember the collapse of the 80s. Ireland's bankruptcy following the 2008 credit crunch produced widespread terror. Capitulation to finance capital is seen as the only viable option.

When Ireland was charged with conspiring with Apple to avoid European taxes on hundreds of millions in profit, they retained the support of a majority in the polls. In the recent scandal of forced evictions somewhat under half those polled accepted the necessity for the measure.

But by far the greatest weapon in the hands of the Dublin government is the mechanism of social partnership involving the Trade Union Leadership. This began as a national wage agreement in 1987 and then quickly morphed into a full-scale collaboration between Government, employers and unions. It proved its worth in 2008 when the unions accepted the government guarantee to bondholders that bankrupted the country and then in 2011 when they accepted the Troika budget that cut services alongside public sector wages and pensions. The result was a savage drop in living standards and a growing concentration of wealth in the hands of the Irish elites.

In the period since the credit crunch the system of partnership has become formalised. Wage agreements are backed up by stability mechanisms staffed by former union bureaucrats who police wage settlements.  The grounds of partnership have expanded. The unions are put in their place by being buried in a national economic dialogue with all the other social forces. NGOs are given a greater and greater say, and partnership now extends to social engineering, with many of the NGOs to the fore in pushing transgender ideology, ensuring its legal status and leading the charge in supporting new hate speech laws that will criminalise dissent.

The case study was 2023. Unions protested the savage rise in the cost of living and threatened to bring in emergency measures to change the national pay agreement.  Private discussion led to a 10% pay offer over 2 years, sweetened by one off payments to offset energy costs. The package was adopted by the national economic dialogue meeting, which appeared to assert the democratic will and cast the unions as one among many competing interests, although the workers who bore the cost of inflation make up the vast majority of the population.

So, the Irish government, having robbed the workers on behalf of finance capital, now proposes to take their winnings and cast them back into the casino. They can block the protests arising from the massive social crisis in housing because they are insulated by social partnership.

But things are getting much worse.  The end of quantitative easing by the global banking system means interest rate rises and yet another drive to push down living standards. The Irish government protects the interests of big business and has thrown itself enthusiastically into the drive towards open war with Russia and organising future war with China. Ireland participates in the European war drive, in the oppression of refugees at sea and has agreed to double its military budget.

Many had placed their hope in a left government led by Sinn Fein, but that party is focused on supporting capitalism, endorses non-jury courts, bows the knee to the British monarchy and its claim to rule the North and has indicated that it will support NATO and European military alliances. The small left groups are buried in the Dáil and think that parliamentary questions are an effective form of resistance.

When the left does nothing, the right stands forward.  That's happening now with a wave of racism in which the Gardaí are complicit and which the major parties label as "justified fears".

There are movements in opposition: against wage cuts, for public housing and public services, against the pro-war hysteria, against the restrictions on free speech, and movements against racism who reject the liberal bilge of virtue signalling and propose unity of all the workers as a necessary weapon of defence.

Our best hope lies with these movements but they must all be tied together - tied by the reassertion of the revolutionary tradition in Ireland - for a workers’ republic and workers unity in Europe and across the World.

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