In 1956, a guy named TK “Ken” Whitaker, an Irish civil servant trained as an economist, was appointed permanent secretary of the Department of Finance in Dublin at the relatively young age of 39. From his vantage point atop his country’s treasury, the vision was bleak. The Irish Republic was in great economic and social difficulty. It had no natural resources, very few industries and was mired in a deep depression. Inflation and unemployment were high. Ireland’s main export was its youth, who fled in their thousands every year, in search of work and a better life elsewhere. The proud dream of Irish independence had produced a poor, priest-dominated state on the brink of failure.
Whitaker immediately assembled a team of young officials who critically analyzed the country’s economic failures and proposed a set of policies to save it. The resulting report, entitled First Economic Expansion Program, was published in November 1958, and after Sean Lemass was elected taoiseach (prime minister) in 1959, it became Ireland’s survival strategy.
At the heart of it were a number of key propositions. Ireland should embrace the idea of free trade, which meant encouraging competition and ending the protectionism that had characterized Irish economic policy under Lemass’s predecessor, Éamon de Valera (whose economic philosophy had once was satirized thus: “Burn everything English except their coal”). But more importantly, the strategy required that Ireland now be welcoming to foreign capital, which essentially meant being nice to multinationals – by giving generous tax breaks, helping them find places to build, and generally going out of their way to take care of their needs.
Whitaker’s strategy was bold, but it worked. (Of course, joining the European Economic Community in 1973 didn’t hurt either.) The republic moved from a deeply troubled socio-economic situation to an apparent paradigm of neoliberal prosperity. Foreign companies (mainly American) flocked. Liebherr, the German crane manufacturer, was one of the first to arrive. Apple followed in 1980. And then came the pharmaceutical companies. (Viagra is unlikely to be manufactured in what was once a holy, Catholic Ireland.) And then, after them, came the tech giants, many of whom now have their European headquarters in Dublin.
If any of these behemoths had any doubts about coming to the Emerald Isle, two things would have reassured them. The first was Brexit: these companies had to be established in the EU. The second was the way in which the government of the republic rushed to the aid of one of its brothers: Apple. When the European Commission concluded in 2016 that Irish authorities had wrongly granted the company a €13 billion tax holiday, not only did Apple successfully appeal the decision in 2020, but also is the government of the republic. Think about that for a moment: a small country refusing to accept a payment of 13 billion euros. (The commission has also appealed the decision, and it appears that Apple still has to pay – plus €1.2 billion in interest – with the money now being held in an escrow fund by the Irish government. )
The subliminal message to business leaders, however, was: “If you have problems with the EU, we have your back. » This message may even have reached Beijing. In any case, it is interesting to learn that – just as the US and EU are considering cracking down on TikTok (whose owner ByteDance, coincidentally, has a base in Dublin) – the Irish government is welcoming Chinese companies such as the popular e-commerce app Temu and Shein, as well as technology company Huawei.
You might have to regret it, but for now, isn’t it a triple? Only up to a certain point. On the one hand, the influx of foreign capital into Ireland has had a transformative effect. Tax revenues from resident tech companies have, on paper, enriched the country. The government has money coming out of its ears: it is predicted a surplus of €65.2 billion by 2027.
On the other hand, Ireland faces difficult problems. Corporate wealth, for example, has done to Dublin what Silicon Valley did to San Francisco: transforming a once livable city into a staggeringly unaffordable metropolis. There is a huge shortage of affordable housing and an associated homeless crisis: almost 12,000 people in emergency accommodation and an average monthly rent of €1,468; plus a creaky public health service (accompanied by brilliant and expensive private health care).
And it is the only country in Europe with a demographic explosion on its hands: current demographic trends suggest that the republic, whose population was 4.7 million in 2016will number around 5.5 million people 6.7 million people by 2051 and that by the end of this century the whole island of Ireland will be home to 10 million people.
So here is the paradox. Whitaker’s strategy produced a society seemingly richer than his wildest dreams, with tax revenues large enough to build all the affordable housing the country needs, fund a world-class public health system, build a network of public transport that frees its capital from traffic jams, electrify everything – and much more. And yet it is governed by a coalition that seems incapable of seeing beyond the next elections. Perhaps it is true that we have the governments we deserve.
What I read
Border games
A wonderful essay by Bruce Schneier is How the “frontier” became the slogan of uncontrolled AI.
Subject of discussion
The Salve, Vol 5 presents a transcript of a fascinating interview with Gavin Jacobson from New Statesman with the famous French economist Thomas Piketty.
Head in the cloud
The staggering ecological impacts of computing and the cloud details what anthropologist Steven Gonzalez Monserrate learned working in massive data centers.