In his account of life on the Aran Islands at the end of the 19th century, John Millington Synge wrote that “Nearly all the families have relations who have had to cross the Atlantic, and all eat of the flour and bacon that is brought from the United States, so they have a vague fear that ‘if anything happened to America’, their own island would cease to be habitable.”
How little changes. We still wonder whether, if anything happened to America, our own island would cease to be habitable.
In a way, our “vague fear” is less vague than theirs. It is not so much “if anything happened to America” but “if anything happened to a handful of American corporations”. It’s an anxiety that haunts a dark corner of the official imagination. It’s part of what makes Ireland a strange place in which we are forced to fret even about our good fortune.
For a very long time, many Irish families used to received envelopes full of dollar bills from their emigrant relatives, money that might make the difference between merely surviving and having a bit of ease or pleasure.
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The strange twist of history is that we’ve kind of ended up back there. We now depend on remittances from our American cousins, not for survival, but for pretty much all of the discretionary expenditure of the State.
A transatlantic bounty kept us afloat after the banking crash, got us through the Covid pandemic, and now provides the Government with the money to deal with the energy crisis. Our rainy-day money comes from a golden shower of American plenty.
The ‘luck of the Irish’ used to be a bitterly ironic phrase. But it now has real substance. Fiscal good fortune has come out of the blue
US investment in Ireland is a result of long-term policy changes, dating back to 1958. But what’s happened recently is not like that. It’s more like winning the Lotto. You do have to buy the ticket, but after that it’s down to dumb luck.
The “luck of the Irish” used to be a bitterly ironic phrase. But it now has real substance. Fiscal good fortune has come out of the blue.
Over the past decade, Ireland’s take from corporation tax has increased phenomenally. It is almost five times greater than it was 10 years ago. This year’s figure so far is €16.2 billion for January-October. Total tax revenue for the year is expected to exceed €80 billion for the first time.
Most of this undreamt-of corporation tax bonus comes from American firms. We can also add in another €15.3 billion in income tax revenue harvested from their direct employees in 2020. (The annual figure is almost certainly higher now.)
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This is a great boon and only a fool would wish it away. But it’s also a staggering level of exposure: 10 per cent of all tax revenue in Ireland is now coming from just 10 American corporations.
It’s possible to have an educated guess at their identity. Eoin Burke-Kennedy has listed them in The Irish Times as (probably) Apple, Microsoft, Google, Pfizer, Merck (MSD), Johnson & Johnson, Facebook, Intel, Medtronic and Coca-Cola. All, of course, American.
It is not literally true that Ireland would “cease to be habitable” without them and the other 890 US companies based here. But it would be uninhabitable for some: we know from our history that mass migration is the Irish alternative to economic prosperity.
This is the paradox: American investment, which once seemed terrifyingly mobile, now underpins the stability of the State and of its citizens. Without it, the public finances would go into meltdown and much of the young population would head for the airport.
The mandarins may be thinking of the top of a pint, though it would raise the question of whether it’s the substantial head on a Guinness or the evanescent scum on the top of a Budweiser
Without it, governments would have to make very hard, and bitterly contested, decisions about tax and spending. Political consensus, such as it is, would evaporate.
There is another paradox. For even though this investment increasingly defines Ireland, it is itself curiously ill-defined. Much of it hovers on the edge of our collective comprehension.
It constitutes a crucial part of Irish social, economic, fiscal and political reality, yet we do not quite know how real it is. Much of it — particularly the tax bonanza it has generated — has a spectral quality. It is the benign ghost in the machinery of the State.
The weird thing is that we can put some figures on this apparition. But the numbers provide a false sense of reassurance.
The Irish Fiscal Advisory Council (IFAC) estimates that “since 2014, the Government has collected some €22 billion of corporation taxes beyond what can be explained by the domestic economy”. In other words we have a €22 billion gap between what the official analysts can explain and what the State has actually received. If the Irish economy is a cake, it has this rich but mysterious layer of delicious icing all over it.
But even this effort to pin down the phantom turns out to be appropriately hazy. If you dig down into the IFAC estimate, it turns out to be roughly the midpoint between two possible limits: €14 billion and €31 billion.
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That’s a hell of a range. It’s a known unknown of €17 billion, which happens to be the entire annual budget of one of our fellow EU members, Estonia.
Because of this deep uncertainty, a word has entered the official parlance of the State’s technocrats that, in a normal society, would have no business being there. The word the Department of Finance (and hence all the policy wonks) has taken to using for this heavenly manna money is “froth”.
It’s an interesting choice of term. The mandarins may be thinking of the top of a pint, though even that image would raise the question of whether it’s the substantial (and eminently consumable) head on a Guinness or the evanescent scum on the top of a Budweiser.
To be fair, their thoughts are probably more elevated and tend towards Shakespeare’s “froth of fleeting joy”. Or even to the old preachers who warned of “the froth and enticements of sin”.
Either way, it feels more like a shrug of shoulders: we don’t know ourselves. Nobody knows whether the new money flooding into the State’s accounts is a fleeting joy, an enticement to sin or — strangest of all — a new normal.
For almost as disconcerting as the thought that a lot of this money might be a temporary sugar rush is the possibility that it might actually be our staple diet. Maybe this is not a windfall but a regular crop. Maybe, after Brexit, Ireland will be for the foreseeable future the best place for US multinationals to pay their taxes.
We just don’t know whether the onshoring to Ireland by these giant multinationals of intangible assets like patents and brands is a long-term decision or a temporary expedient. Maybe they don’t really know themselves.
We’re living an American dream. But the thesaurus gives me synonyms for dream: hallucination, delusion, trance. Take your pick of meanings.