— Virgin Media One (@VirginMedia_One) August 30, 2018
…starring Terry Prone.
Economist David McWilliams’ new documentary on Ireland’s economy.
TV3 Virgin Media One at 10pm.
Previously: Terry Prone on Broadsheet
— Virgin Media One (@VirginMedia_One) August 30, 2018
…starring Terry Prone.
Economist David McWilliams’ new documentary on Ireland’s economy.
TV3 Virgin Media One at 10pm.
Previously: Terry Prone on Broadsheet
From top: David Mcwilliams in Saturday’s Irish Times; Eamonn Kelly
Eamonn Kelly writes;
David McWilliams’ article in Saturday’s Irish Times about how people who give out about the multi-nationals are a bit backward, a bit “old Ireland” in their outlook.
But what he failed to see is that people who criticise all the breaks the multi-nationals get are really critiquing in a deflected manner all the breaks that the Irish people don’t get when they want to start a business.
Implicit in the multi-national deals and the manner in which successive sycophantic governments clamour to please corporate America is the idea that the Irish people in and of themselves are clueless about business and dependent on someone else making jobs for us.
This despite the fact that the boast of our superior educated workforce is what the IDA always leads with as a selling point to multi-nationals.
But if you’re an Irish person wanting to start a business it is awkward to the point of being punitive in setting it up and running it. And should the business fail the system is designed to whip away the safety net of welfare at the very time you might need it.
It seems then that everyone and everything is invested in and given breaks except the Irish people. Public monies ear-marked for retraining the workforce, for instance, were handed out in the millions to two British companies who provided no retraining for the investment but only a kind of policing of unemployed people.
The message is clear from the top. The Irish people are not worth investing in but are only useful as drones for corporate America who get all the breaks to use us, basically.
I’m not suggesting that we fling out the multi-nationals. That would be stupid. But this is the kind of “stupidity” that McWilliams was suggesting lay behind critiquing the multi-national deal.
What I am suggesting is that we invest in Irish would-be entrepreneurs and local businesses with the same confidence and generosity as we have been affording to multi-nationals.
By not investing in the Irish people you create a self-fulfilling prophecy that local entrepreneurs are unable to create employment. This reinforces the old national inferiority complex that informs the present system of attracting multi-national investment.
So contrary to McWilliams’ view that people who criticise the multi-nationals are somehow “backward”, the truth is that the system engineered by Lemass for a different Irish population made up of mainly farmers and labourers, is still being run as if the people haven’t changed.
A system based on an acknowledgment of a national inferiority complex, a need for creating employment for a workforce of mainly uneducated and unskilled labour and the luring of friends in America to make jobs for us.
Everything about it is dependent. But that’s not us any more. It’s the system is backward, not the people, as McWilliams implies.
The irony of this is that David McWilliams who presents himself as the progressive face of economics appears to be arguing that we return to the “innocence” of the Lemass era and show gratitude towards the multi-nationals.
If that’s not a big-red-flag clue to a post-colonial authoritarian issue I don’t know what is.
Eamonn Kelly is a freelance writer
From top: Kilkenomics founder David McWilliams; Pitchenomics
David McWilliams’ Kilkenomics, the world’s only economics festival to bring together some of the world’s leading economists, financial analysts and media commentators with the funniest stand-up comedians, returns to Kilkenny in November.
Sarah Corkery writes:
Returning this year are firm favourites Yanis Varoufakis, economist and former Greek Finance Minister; Gillian Tett, US Managing Editor of the Financial Times; Martín Lousteau, former Argentine Ambassador to the US and former finance minister; Mehreen Khan and Robert Shrimsley of the FT.
Rory Sutherland of Ogilvy Advertising; and Pippa Malmgren, former economic adviser to George W Bush. 2017’s new contributors joining the festival party are Patrick Honohan, former governor of the Central Bank of Ireland; Gideon Rachman, chief foreign affairs commentator of the Financial Times; Harald Malmgren, senior aide to four US Presidents and two Senators; Kate Raworth, author of Doughnut Economics; Katie Martin of the Financial Times; Marie Hicks, author of Programmed Inequality; Marla Dukharan, chief economist of Bitt Inc. and Caribbean economic expert; Mihir Desai, professor of finance at Harvard Business School, Steve Moore of think tank, Volteface; and Rafael Behr, political economist with the Guardian
Fuelling the funny and confirmed thus far for 2017 are comedians Andrew Maxwell, Ardal O’Hanlon, Gerry Stembridge, Colm O’ Regan and Karl Spain and our regular and much loved contributors returning again this year include Bill Black, US bank regulator, Cormac Lucey, Steve Keen, Pinchas Landau, Dearbhail McDonald, group business editor of Independent News and Media; author Joris Luyendijk, Liam Halligan, Linda Yueh, Peter Antonioni, Simon Kuper and Sinead Ryan.
For businesses looking for a ‘life- changing’ opportunity Pitchenomics @Kilkenny is a new proposition for 2017 that gives Irish start-ups/SMEs a chance to fast-track their business development through investments of up to €100,000 and access to a network of investors, mentors and customers.
Fergus McCormack writes:
In Brexit, Trump and Us economist David McWilliams visits France where Marine Le Pen’s 34% showing in their recent presidential election marks the level of anti-establishment and anti-European sentiment…
…and England where the upcoming general election is regarded as yet another measure of the depth of nationalist feeling.
Meanwhile, a poll conducted as part of the documentary found 71% agreeing that Ireland should stay in the EU, even if the outcome of the Brexit negotiations are bad for the country.
Brexit, Trump and Us on RTÉ One at 9:35pm
From top: David McWilliams interviewing CEO of Clear Ink Margaret Ward; economist Jeffrey Sachs on TV3’s Agenda; Barack Obama and Hillary Clinton
On Sunday morning.
On TV3’s Agenda, hosted by David McWilliams.
Mr McWilliams first interviewed Margaret Ward, CEO of Clear Ink, a communications agency, founder of Women on Air, and member of the RTE Board, before interviewing economist Jeffrey Sachs, who was also presidential candidate Bernie Sanders’ foreign policy adviser during his bid to get on the Democratic ticket.
From the interviews…
David McWilliams: “Hillary Clinton was meant to be home and dry by now but the FBI announcement that on Friday that they would be launching a new investigation into her use of a private email server has turned this election, yet again. Joining me to discuss what this means for the election which was always tight, and now looks to be tighter still, is journalist Margaret E Ward who also sits on the RTE board. Now Margaret, looking at the headlines – Sunday Times: Hillary at war with the FBI. The Indo here: Clinton’s campaign in chaos. What does it all mean?”
Margaret Ward: Well, it’s almost unprecedented, actually, what’s happened. So 11 days before the election, the FBI director [James] Comey came out and said that they’ve discovered some new emails, even though the Hillary Clinton email scandal investigation had been closed and although she was found to be extremely careless, that she was not found to have done anything wrong. So, he did this against his superiors in the Department of Justice who said it is tradition that we do not interfere and make any announcements 60 days before an American election because it might be seen as political interference…11 days, and now it’s 11 days. So, he’s kind of gone rogue here a little bit, we have to question why, especially because the FBI doesn’t even have a warrant for the contents of the email. He doesn’t even know what’s in it?”
McWilliams: “So, are you seeing a Trump-esque conspiracy? Cause normally, it’s Trump who talks about conspiracies.”
Ward: “It’s very strange because he was asked, you know, ‘why are you doing this now?’ and he said, ‘well, I’m afraid that something would leak’. But I mean all we know is that Anthony Weiner who was married to Hillary Clinton’s advisor Huma Adedin. These were emails found on his email server, on his email account, that’s all we know. We don’t know what’s in them so it’s very, very strange – you have to question what’s going on.”
McWilliams: “So, in terms of the next 11 days, what does it mean. I mean the papers are saying Clinton, not in freefall, but her lead was 7%, it’s now 2% and that’s before this.”
Ward: “Well I mean it’s scary. Any scenario that shows Trump ending up in the White House is terrifying frankly, you know, I mean there’s just for so many reasons, both domestically and internationally, we’re all in big trouble if somebody like Donald Trump goes into the White House.”
McWilliams: “Trump has been exposed and exposed and exposed and exposed, you know, we all know that. But, to a degree, Clinton has maybe given a slightly easier ride? Would you think? Because people are so against Trump.”
Ward: “An easier ride? She’s been attacked by the Republican party for the past 20 to 30 years. I mean this has been a concerted attack, talking about her emails, talking about her Benghazi, talking about Libya, everything that’s been shown to have no basis in fact whatsoever. She’s probably been the most investigated candidate in American history, as well as being the most highly qualified to be president. So you really have to wonder what’s going on here.”
Following on from his interview with Ms Ward, Mr McWilliams broadcast a pre-recorded interview he conducted with economist Jeffrey Sachs.
While introducing the interview, Mr McWilliams outlined the following:
“Because the media, in general, has been so anti-Trump, the darker side of Hillary Clinton has not been aired as would be typical in a presidential campaign. Until this weekend’s revelations, she has got a pretty easy ride. The Trump campaign has repeatedly tried to paint her as a career politician who is not only corrupt but far too close to Wall Street. And, indeed, these ties run deep. In 2013, she was paid $675,000 to make just three speeches for Goldman Sachs – the contents of which were revealed by Wikileaks, including an admission by Clinton that ‘you’, and I quote here, ‘need to have a public and private position on policy‘ and, this year, her top three donors in her campaign were all incredibly rich hedge funds.”
He then played the interview:
Jeffrey Sachs: “There are a lot of worries. The Clintons relationship with Wall Street is well known and a matter of big concern. The Clintons support, over the years, for the various wards that have been disastrous for the United States and for the world – in Iraq and Syria, in Libya. Big concern. And so, while right now there is a kind of feeling among the democrats, that don’t talk about any of these issues really, I know, as a fact and for good reason, that the day after the election, politics is really going to start. Because are we going to have a progressive administration, which I think we urgently need in the United States that Bernie Sanders represented or will we have what, you know, the very wealthy people around Hillary want – which is a kind of continuation of the status quo that is so unequal right now, that it gave birth, in essence, to Donald Trump. Everybody has put aside the debates on Hillary, say Bernie Sanders campaigning for Hillary Clinton everyday right now but what is he saying: he’s saying ‘I’m campaigning because we must defeat Donald Trump’.”
McWilliams: “And then?”
Sachs: “And then, as soon as the election is over, I think we’re really going to go after politics. Now, it’s always possible, I would be absolutely thrilled to be surprised and to be pleasantly surprised that Hillary Clinton surrounds herself with the progressive thinkers who want change who want to try and bring change about but I know people around her and they’re not supporting her, the powerful voices, many of them are not supporting her on that basis – they’re supporting her on the basis of…”
McWilliams: “On keeping…”
Sachs: “This would be a status quo government or, on foreign policy, even a more hawkish…”
McWilliams: “I’m going to go to foreign policy in a minute but I think it’s very important that we elucidate this Clinton/Wall Street connection.”
Sachs: “Absolutely. Bill Clinton made an alliance with Wall Street and it’s even personified by Robert Rubin.”
McWilliams: “Whose Treasury secretary..”
Sachs: “Robert Rubin, of course, Treasury secretary, under Clinton, but before that, he came straight from Goldman Sachs – not my side, part of the family – but came from this major investment bank. Bill Clinton brought the investment banking world, this rich and not very honest world, into the Democratic party, into power. And in 1998 and 1999, engineered the deregulation of the financial markets – especially the end of Glass-Steagall…”
McWilliams: “That was almost payback time. Wall Street expects something. If you go to bed with them, you have deliver something..”
Sachs: “And I think, by then, the schmooze factor was so strong that it wasn’t a reluctance on Clinton’s part, it was this is the natural bonne amie – these are our friends. Our friends are Wall Street. And the Walls Street/Democratic party connection became very powerful. I remember when President Obama was a candidate, Obama, in 2008. And I got a call from a senior campaign official after the Lehman Brothers bankruptcy, and the explosion and crisis, I said ‘don’t sit down with Wall Street right now’. And the next day, there was Obama, candidate, with Robert Rubin – because that was an alliance and when you look at who populated the Obama White House, almost everybody was an acolyte of Robert Rubin or an associate of Robert Rubin. So, where does Hillary Clinton stand? I think by family tradition, by campaign financing, she’s exactly in the Bill Clinton line. Inequality has risen so much in the United States. Wall Street played so many games – they have paid tens of billions of dollars in fines. Of course, for them, it’s a little slap on the wrist, it’s not even the money of these big honchos around them, it’s the shareholders’ money, it’s not even the CEO funding. And that’s her crowd. Her crowd is, by nature, that alliance with Wall Street but it can’t go on this way. If it does, she will break the party as soon as she becomes president – there will be…”
McWilliams: “And there will be a left coming up, under a Sanders-type?”
Sachs: “There will be with Elizabeth Warren, with Bernie Sanders and with many, many democrats. Either a faction that is overt opposition to a president Hillary Clinton or even the emergence of a new party which I think is absolutely possible now as well.”
McWilliams: “In foreign policy, are you worried about Hillary Clinton?”
Sachs: “Hillary Clinton voted for the Iraq War and when she was Secretary of State, under Obama, she was constantly a voice for military approaches. She was a, the voice which convinced a reluctant president and an absolutely opposed Secretary of Defence that the US should go into the Libya misadventure, basically to topple Muammar Gaddafi and it left a disaster which has contributed to Europe’s refugee crisis, and a lot more. She was a major voice in Syria, for scaling up, for no fly-zones. Her rhetoric is, she’s been a major voice I should add in one more important thing that’s also poorly understood and that is that one of the tripwires that regenerated the Cold War with Russia was a 2008 invitation by Nato to Ukraine and Georgia – that they should apply for membership. Anybody that knows Russian history should have known, ‘don’t go there’. To say that Nato would go smack up against the Russian border – and not only in Ukraine which was, for Russia, the way of invasion of forces constantly in Russia’s history, but also through the Caucasus, through Georgia, should have told people, ‘don’t do that, a little self control, please, so that we don’t provoke a reaction’. Now my view is that is is a lot of what then transpired with Putin saying, ‘I’m not going to let Sevastopol – our naval base – flip over to a Nato naval base, are you kidding? We’re not gonna lose the Black Sea’ and I think that this is a lot of what stirred the Ukraine crisis. Where was Hillary Clinton on this? Always pushing for Nato expansion and very enthusiastic about showing how strong we are and how tough we are and the rhetoric during this campaign has been, by her, has been very anti-Russia, Putin is the great evil and taunting Trump as Putin’s puppet which is absurd because Trump is just a jerk, who has a lot of money and was able to wangle the unhappiness into where he is. He’s not Putin’s puppet in this but this anti-Russian, stirring of the pot, is it a political game or is it something we’re gonna see the day after. And when you look, where are all those neo-cons that pushed us into Iraq, they’re in Hillary’s corner right now. Doesn’t mean she’s with them but they’re with her. And they’re all saying: we support Hillary, we can’t support Trump and we don’t know where this is gonna come down.”
Watch back in full here
Why in God’s name should a politician elected by Germans dictate the nature of the border between Dunndalk and Newry?
— David McWilliams (@davidmcw) July 13, 2016
From top: Enda Kenny and Angela Merkel in Berlin yesterday; Economist David McWilliams and his tweet this morning
This morning, economist David McWilliams spoke to Seán O’Rourke on RTÉ Radio One.
They discussed Taoiseach Enda Kenny’s visit to Berlin, to meet German Chancellor Angela Merkel and their talks on the implications of Brexit on the Common Travel Area (CTA) between Ireland and the UK.
Mr Williams explained that while other EU countries should have an interest in Ireland and Britain’s CTA arrangements, they should not have a ‘commanding or a deterministic position on it’ and that Ireland should confidently assert this position.
To make his point he recalled the Dublin Regulation, which was signed in Dublin Castle in 1990, and essentially meant any asylum seeker who arrived from outside the EU had to apply for asylum in the first EU country they reached – placing the biggest burden on Italy and Greece.
Mr Williams suggested that this regulation, in a way, allowed the EU to avoid collective responsibility when it comes to responding to asylum seekers.
The interview opened with Mr O’Rourke asking Mr McWilliams about the tweet he posted this morning (above) concerning Mr Kenny’s meeting with German chancellor Angela Merkel.
Seán O’Rourke: “What prompted you to ask that question?”
David McWilliams: “Well because it struck me, it has struck me over the last six or seven years, Seán that, you know, the whole deal with the European Union that there will be a more European Germany, that’s the essence of the EU, going back to 1957. That Germany would be disciplined and would become a more European country. And, since the crisis of six or seven years ago, what we’re seeing really is what could be described as a German Europe, rather than a European Germany.
And it strikes me as kind of unusual, and a little bit undemocratic that a border between Ireland and Britain, we would have to go over to Germany to seek permission really, in a way as to which way we are going to negotiate. Now I know, the facts on the ground Seán, and we have signed Treaties and this is the implication of that. But it does seem to me a little bit odd that our leader has to go to Germany to seek permission, it seems, or to be given the green light, to have a discussion with Britain on a border between Ireland and Britain in a free labour movement area that has been free, not since 1920 Seán, since about 1420.”
Talk over each other
McWilliams: “I remember, even as a kid in the 1980s, at the height of the Troubles, going to the UK and yes, we had to show passports at Hollyhead but there was always a sense that Irish people could vote in Britain, if we lived there for a while, and this sense that somebody else is going to come in and, in a way, set the terms or conditions, particularly somebody who’s voted by a different electorate seems to me a little bit…”
Sean O’Rourke: “Yeah but here’s the point, David. I mean maybe you’re not being entirely fair to the Taoiseach. Because it’s not about looking for permission, it’s looking to build alliances. I mean he has President Hollande coming here next week and, you know perfectly well that under EU rules, we’re not in a position to now to do separate trade deals with the UK, it has to be done by the European Union, of which we are a part. And surely it makes sense, as you would in any political situation, to try to get people on your side?”
McWilliams: “Of course it makes sense to get people on your side but it would seem to me rather illogical and rather apolitical with a capital P, to have a situation where the border between two parts of Ireland needs to be mediated by people in France? I really don’t think this is actually a particularly logical way to go. And nor is it good for the people either on the south side of the border, or the north side of the border.”
“So, again, I suppose what this is exposing are these deep fissures in, these kind of chasms within the EU, where the pooling of sovereignty Seán, which is probably a good idea, OK, leads to complications and incompatibilities when specific issues come up which absolutely pertain to certain countries, over and above.”
“And I’ve always said that it would be illogical for the negotiations between Ireland and Britain, which they will be, to be dictated by the concerns of Poland or Lithuania or Latvia or other countries. And I suppose that goes to the essence of the problems of the EU now. Because, as you get bigger, Seán, you cannot mask over the cracks in a way in which you hope to do so. So, as you get bigger you’re always going to have these regional differences so therefore, for example, the relationship between Russia and Lithuania, which is existential to Lithuanians, is probably of no real consequence to us.”
O’Rourke: “Yeah but, again coming back to our border issue. Yes, it is the border between the Republic of Ireland and Northern Ireland but it’s also the border between the EU, or will be, and a non-EU country. Now that’s why the Lithuanians and the Poles and the French have an interest in the…”
McWilliams: “They have an interest, no doubt, but they should not have a commanding or a deterministic position on it. And you and I must agree on that, Seán?”
O’Rourke: “Yes, but I suppose it’s part of a wider, it’s part of a wider EU context in which trade arrangements are made and also regulations about the movement of people. And nobody has yet, maybe you’ve come across it, or maybe you’ve got your own idea, come up with post-Brexit, the solution to the problems?”
McWilliams: “If you look at the Dublin Treaty. The Dublin Treaty was manufactured in Dublin Castle which is a way of stopping…”
O’Rourke: “This is immigrants now?”
McWilliams: “Precisely. But what it was a way of saying was, geographical certainties and geographical facts are as they are and, therefore, one of the ways in which you deal with immigrants is you’ll actually deal with the place where immigrants first arrive. Ok?”
“So that is a great way of the EU fudging collective responsibility for immigrants, putting it on the shoulders of those who have borders. So there’s a very clear precedent, Seán, you and I know this, for arrangements, consensual arrangements, and ideas that actually take into consideration the facts on the ground which are geographically, we have a border with Northern Ireland which happens, very soon, to be a non-EU country.”
“So, this notion that we are in some way handless going into negotiations and there is no precedents or flexibility and you might call them fudges, I might call them flexibilities are what I would say, logical arrangements, seem to me to be a little bit a) ideological for Eurocratic fanatics and b) illogical for people who deal in the real world of politics. ”
O’Rourke: “So is the answer then to, if you like, dilute the influence and the role of the European Union. I mean like..”
McWilliams: “Well absolutely, absolutely, absolutely. The influence and the role of the European Union is going to be so ludicrous as to demand border posts with the UK when both Ireland and the UK suggest not to do so. Well then clearly it must be diluted.”
Listen back in full here
Amid a tragic parade of gloomy Europhile pundits [John Bruton, Pat Cox, Alan Dukes and Noel Whelan to name but four] on Today with Seán O’Rourke on RTE Radio 1 this morning, David McWilliams took a more cheerful stance on the Brexit vote.
Seán O’Rourke: “I want to go now to David McWilliams, on the line, the economist. David you dissent from a widely held view, among economists, that this is very bad for Britain, very bad for Ireland economically. Just looking at one of the headlines on something you wrote in the [Irish] Independent recently. ‘We will do just fine if there’s a Brexit‘ – how so?
David McWilliams: “The most important thing was to get the result right, OK. There’s no point in analysing the wrong result. So I always believed the British would leave and that was an unusual position in Ireland but not an unusual position if you spent any time working or living in England.
So I think what happened, it wasn’t that I dissented, Sean, in actual fact I believe Official Ireland just got this totally wrong – underestimated the feeling, overestimated their use of propaganda when they deployed it. And, ultimately now, have got to pick up the pieces.
I couldn’t understand why Ireland bet so ubiquitously, Official Ireland that is, Sean, on one result in a two-horse race that we knew was going to go down to the line. We have to have a plan B and Official Ireland had no plan B so..”
O’Rourke: [audible sigh] “Well, we’ll see now…”
McWilliams: “But it’s very important to listen to that Sean. And it’s very important that your listeners are told this: That we had a two-horse race. For whatever reason, Cameron decided go for it, he did. When it became apparent that this was going to be 50/50 or close to it.
We should have a much more nuanced approach, rather than trying to scare people into voting one way. Now I’ll come back to the scare, right.
Every single institution, Sean, that has told us this will be economically a catastrophe, it’ll be detrimental, etc, etc..Every single one of those also told us in Ireland it would be a soft landing eight years ago. Ok?
The IMF, the European Commission, all these institutions that were so confident in the forecast about Brexit got everything wrong on the financial crisis.
So, let’s just stand back a bit. Nobody really knows what is going to happen economically.However, what we do know is that, during this period of uncertainty, some direct foreign investment will be diverted away from Britain because companies might think, ‘well, hold on a second, we’re not going to put, invest there, just in case, we don’t know really what the end result is going to be’.
Now where Sean will that DFI be diverted to? Americans will not stop investing in Europe, via the two English-speaking countries in Europe, just because Britain has said politically ‘we’re out of the EU’. So I suspect we could have a huge opportunity here, actually garner a percentage of that diverted capital and income to Ireland. So rather than assume that the world is going to end, what we know Sean, is that change is the only thing that is constant in life.”
O’Rourke: [faintly audible sigh] “Ok, I’ll come back to you on that..”
McWilliams: “And we’ve got to deal with it…”
O’Rourke: “In a few moments…”
Listen back here
Previously: ‘You Came Out Pretty Aggressive There, Dan’
From top: David McWilliams; Fintan O’Toole; Julien Mercille
Budget 2016 either betrayed the coalition’s ignorance or its cunning.
Only you can decide.
Dr Julien Mercille writes:
Fintan O’Toole is associated with the left and David McWilliams likes the market. Both have made important contributions to our understanding of Irish politics and economics. They each have their cohort of fans, while driving some of their opponents nuts.
They both wrote on Budget 2016 and I want to highlight one important issue in this respect on which I think O’Toole is incorrect, whereas McWilliams is more on target.
Fintan O’Toole seems to think that the government is rather incompetent, irrational, and has no clue what it’s doing.
For example, last week, he wrote a piece entitled “The Minister for Finance and his know-nothing Budget”. He argued that “one of the things the system chooses not to know is how the budget really works”. Michael Noonan, the Minister for Finance, “is like a plumber turning on a stop cock without knowing where the pipes are”, because he will not produce an analysis showing if the Budget is progressive or regressive. In other words, “this is government by willful ignorance”.
This interpretation sometimes reappears in O’Toole’s writings, for instance, in his book “Ship of Fools”, whose title reiterates the idea.
This type of commentary is also often heard in the media and in conversations. In fact, it’s the mainstream criticism of government: politicians are ignorant, incapable and ridiculous.
However, it’s time to stop taking politicians for irrational idiots. Politicians are rational and usually quite competent. The thing to understand is that they govern following the interests of elites, and the policies they enact reflect those interests (we can debate whether such policies are good or bad, but that’s a separate issue).
The report shows the following about Budget 2016:
– It is the fifth regressive budget in a row, meaning that they have favoured the better off more than the poor.
– It widens the rich-poor gap by €506 a year.
– While single unemployed people gain €95 a year, single people earning €75,000 gain almost ten times as much, or €902.
– It is “extremely generous” toward multinational companies. The “Knowledge Development Box” plan means that such companies will now be able to avail of an even lower tax rate of 6.25% (as opposed to the regular 12.5% tax rate) for part of their operations.
– In general, the Budget’s tax changes favour those who earn more.
– It fails to deliver any significant increase in social welfare payments.
The question to ask is: does this reveal a government that doesn’t know what it’s doing, throwing darts in the dark? If policy was so foolish and the government so irrational, one would expect a relatively even distribution of the tax and spending benefits, but this isn’t what we see.
And for those on the right who think that’s just another left-wing conspiracy, no, you don’t need to be on the left to say something like that—you just need to understand how the system works.
For example, David McWilliams writes that this is a budget “aimed at convincing the middle classes that this is the government you can trust”. In particular, the Capital Gains Tax is reduced from 33% to 20% and this means that “the State is siding with those people who own capital. These are mainly the already rich”. To reiterate, “it’s clear that the big winners are the already rich”.
And the important point is this: “This is not the unintended consequence of policy. It is policy”.
This strikes me as a more accurate description of how the system works.
Picturing politicians as clownish and irrational leads to the following natural solution: if we could only find better ones, things would be fine.
However, in fact, to make things better, it is the system as a whole that needs to be modified so as to make it more egalitarian.
Julien Mercille is a lecturer at UCD. His book Deepening Neoliberalism, Austerity, and Crisis: Europe’s Treasure Ireland is out. Twitter: @JulienMercille
From top: David McWilliams; Dan O’Brien, columnist at the Irish Independent
You may recall David McWilliams’ documentary, Ireland’s Great Wealth Divide, on RTÉ One on Monday night.
Dan O’Brien, former Irish Times economics editor, chief economist at the Institute of International and European Affairs and Irish Independent columnist, has taken issue with the source of Mr McWilliams’ data and his following conclusions.
In the Irish Independent, Mr O’Brien writes:
“Early this year the Central Statistics Office and number crunchers at the Central Bank published the first ever set of figures on how wealth is spread in Ireland. These figures provided a treasure trove of new insights into wealth distribution. Monday’s programme never mentioned these figures or even referred to them, despite the fact that they are the only hard data available on wealth equality. Instead, the programme used guestimates made by investment bankers. Those figures were published last year by Credit Suisse, a Swiss bank, in an annual study it does on wealth around the world.”
“…If the more reliable and more up-to-date figures had been used, the story told on Monday night might have been very different. The actual statistics show that the spread of wealth is more equal in Ireland than the average across the Eurozone. That was certainly not the impression the programme gave.”
“…Those who have great power and wealth should be subject to great scrutiny, and should expect to be subject to great scrutiny. That includes, by the by, the main shareholder in the group which owns this newspaper, Denis O’Brien. But David’s assertions about a “reality” of the “working middle classes being excluded” and that it is now more likely for those in the middle to fall to the bottom than rise to the top were opinions presented as facts. In Ireland, we simply don’t have good evidence on social mobility. As such, David’s claims on this issue on Monday cannot be proven or disproven, but there is very good reason to question them.”
Previously: Good Room Gone Bad
Kevin Nowlan, CEO of Hibernia REIT
Ireland’s Great Wealth Divide was on RTÉ One last night introducing us to some of the colourful characters defending and profiting from Ireland’s unprecedented inequality.
David McWilliams spoke with Kevin Nowlan, CEO Hibernia REIT, a real estate investment trust which has raised over €600million from a variety of investors, including George Soros, by helping them find bargain properties in Ireland.
Kevin Nowlan: “Ireland became an extraordinary place for a moment because virtually everything was for sale. It was a catch 22 in Ireland. If you didn’t have the money, you couldn’t buy the property and if you didn’t have the property, you couldn’t raise the money.”
David McWilliams: “There was no cash in Ireland, no access to cash, so you had to go to where the cash was. When you knocked on the door of Georg Soros’s, what did you say to them?”
Nowlan: “So we basically said that Dublin is a great office market. We said that you can buy office buildings basically in, or below, basement cost.”
McWilliams: “What does that mean?”
Nowlan: “So you can buy them below what they can be built for. What we had to answer was we said we could do off markets.”
McWilliams: “What does that mean?”
Nowlan: “That means, you know, a lot of property ends up in the Irish Times or in the Irish Independent for sale by receivers or whatever. Be basically said we know enough people in Dublin to be able to go and buy the properties, without having to go to auction. Or having to go to the market. And we’ve done 18 deals, and 16 of them we’ve done off market. We’ve bought debt, we’ve, you know, we’ve done quiet deals with people, we’ve done deals with banks, we’ve done them in a variety of different ways. If you buy something in an active vibrant economy, below what it actually costs to replace it, you should be in pretty good shape to make money.”
McWilliams: “Who, just in that case, who pays the outstanding debt then?”
McWilliams: “Not the taxpayer?”
Nowlan: “Well yes, I mean it is being factored in now. You move back three years and it’s factored into the bailout. I mean that…”
McWilliams: “So there is a massive transfer of wealth from the average Joe who pays tax to the incredibly wealthy guy who sees the opportunity.”
Nowlan: “He sees the opportunity and he works, you know, let’s say he bought, you know let’s say they bought those loans for 35c in the euro, or 30c in the euro and they sell them for 40c, they make their 10c and they move on. And it’s basically a bulk business model.”
McWilliams: “But the difference is the 35c in the euro means somebody else has paid the 65c, the 65c – and that’s the taxpayer.”
Nowlan: “The 40 to the 80, unfortunately, ends up on our…”
McWilliams: “On the taxpayer.”
Nowlan: “On our national debt.”
McWilliams: “The taxpayer ends up subsidising or financing or, in some way, underwriting the opportunistic move which is totally legal and totally within their rights of the already wealthy.”
Nolwan: “Yeah. Basically.”
David McWilliams with Professor Richard Murphy, director of Tax Research UK
Mr McWilliams tackled the subject of Ireland’s corporation tax, saying Ireland has made a distinct choice – to tax labour much more than capital. As an example, he spoke about American corporations based here in Ireland. He said US corporations make $970,000 profit per employee per year in Ireland yet, on those profits, they only pay $25,000 tax per employee per year to the Irish exchequer.
Mr McWilliams spoke to to Prof Richard Murphy, director of Tax Research UK and a campaigner for tax fairness. He said we needed to be braver and raise our corporation tax rates in order to narrow the wealth gap in Ireland.
David McWilliams: “In a way, Ireland it taking a massive bet on the very wealthy.”
Professor Richard Murphy: “Oh yes. Ireland’s role in all of this is to increase the wealth of the wealthiest. That is the position it has chosen for itself. By offering a low tax rate to the world’s major corporations which are, of course, owned by the very wealthiest in the world and of course are also staffed at their top levels by some of the wealthiest of all the world then Ireland is betting that that’s going to carry on. That the wealthiest are going to carry on getting wealthy and those who are at the very top of those corporations are going to want to carry on using Ireland as their launchpad into Europe and beyond Europe, particularly if they’re US corporations.”
McWilliams: “We’re in Soho [in London] which is traditionally the red light district of this part of the world so are you saying Ireland is a bit like Soho, you can do stuff here you can’t do at home?”
Murphy: “Absolutely. You can do stuff in Ireland that you can’t do at home which you wouldn’t want home to know about either.”
Murphy: “The 12.5% tax rate, and we actually know of course the real tax rate is less than 12.5%, that is sort of a prop for their insecurity and that is the weakness in the Irish political mentality. That it has to get over this lack of confidence in its own ability to sell the qualities of the Irish people in the international community. If Ireland actually established itself as a better location to exploit its real ability to, and in particular, its people, then Ireland could actually guarantee a tax base which it could tax, not at just 12.5% but at the same rate as the UK and have no problem at all, contribute more to the Irish economy, make a better balance and actually not be seen as the pariah state which, I hate to say it, it is seen as around the world at the moment.”
Danny McCoy, CEO of IBEC
IBEC doesn’t agree with Prof Murphy, as was evident when Mr McWilliams spoke with the CEO of IBEC, Danny McCoy:
McWilliams: “Do you think that it’s sustainable for us to keep a tax policy which many countries seem to think is ‘beggar my neighbour’?”
Danny McCoy: “No, it’s not ‘beggar my neighbour’ because…”
McWilliams: “But many countries seem to think it.”
McCoy: “Of course they do. And in fact, you know, you lose your reason. There’s nothing, as I think it was JP Morgan said, ‘there’s nothing to make you lose your sense of proportion than seeing your neighbour getting rich.’ To see people on the western seaboard of Europe who have been, by generations poor, suddenly have this huge surge in wealth in a 40-year period, people are saying there must be something wrong there, there must be some factor that’s creating this surge in Irish prosperity. Aw – it must be the corporate tax rate.”
McWilliams: “What effective tax do they pay?”
McCoy: “Well, look, the headline rate is 12.5% but legitimately companies go through losses. So effective tax rates can be lower than 12.5% but that’s the official rate. I wouldn’t get hung up on the rate so much as the money…”
McWilliams: “And the revenue is what?”
McCoy: “The revenue is in the order of about €4billion which, again,for a small open economy is a disproportionate amount of, of actual cash to raise from a corporate sector.”
McWilliams: “The income, the Americans, suggest is close to €100billion. The tax revenue that we get is €4billion. They are supposed to pay, let’s say €12billion – does that mean that there’s €8billion potentially not being paid here?”
McCoy: “If we’re after more revenue, to deal with the wealth distribution. For a small, open economy the logic here is get more activity in here. The way to encourage that is to put up a flare that says the tax rates, their trajectory is actually downwards. We’re, you know, 12.5% is going to be the maximum as we move through time, we get more competitive, corporation rates should go down, it doesn’t mean revenue goes down.”
McWilliams: “So we’re in a situation where into perpetuity we have to accept a 4% effective tax rate.”
McCoy: “Well we certainly have to realise that we are 4.6million people in a 7,000 million world. We don’t get to do demands. What we do get to do is leverage our position which is a gateway into the Europe of 500 million and to be tax efficient, not a tax evasion country, a tax efficient country that gives rise to activity, that gives €4billion from corporations to 4.6million people is off the chart.”
Towards the end of his programme, Mr McWilliams proposed his own theory in relation to the Irish psyche and its seemingly inability to be braver.
“My granny had a good room. It was so good, I wasn’t good enough to go into it. It was preserved for people who were better than our family, good-er than our family if you will. The core of the good room psychology is a fear of rejection. It’s a fear that what you are is just not good enough so therefore you pretend to be something that you’re not.
“This good room mentality, I think, permeates a lot of the ways in which the Irish Government, for example, negotiates abroad, for example, this discussion we’re having now about the tax system: rather than say, ‘it would be in our interests to revisit this’, we say, ‘don’t rock the boat. Will the multinationals reject me if I have that conversation about tax? Will, for example, the European Union reject us if we have that conversation about bank debt?’ It’s all of a certain similarity and it’s down to a national insecurity.”
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