May Exchequer Returns

[irishpeoplearewhingers]

The economy is not ************************************ and we are not heading for disaster.....yet. We still export more than we import and all the major indicators point to continued expansion, albeit at a slower pace. Have some sense of proportion.
However, the fact remains that we are in need of economic restructuring- our available pool of skills does not match the needs of the labour market, as can be seen from the massive number of IT vacancies. What is needed right now is clear thinking, not politically motivated panic.

Have you ever heard of transfer pricing?
Many irish economists (including David McWilliams) will proudly claim that Irish multinationals make more profits in Ireland than anywhere else in the world. They will also claim that the Irish people have the highest productivity growth in Europe. These aren't because we're working so much harder (although working hours have increased and we are undoubtedly increasing our output). These economic statistics only tell the story of Global corporate tax avoidance.

We export more than we import because MNCs pay below true cost for imports to their own subsidiaries, and then export components at an exaggerated price thereby allowing more of their profits to arise in Ireland's low tax environment.

In 2004 Microsoft alone declared 3.8 billion in profits from their Irish operations. Last year they changed two of their Irish companies to unlimited companies in order to avoid having to file public accounts so they can continue or increase their transfer pricing arrangements in the face of changing U.S. regulations. It is likely that the tax avoidance (legal but immoral) is shifting towards tax evasion (illegal) and if the regulations start to be applied, then Ireland might very suddenly experience a very sudden balance of trade deficit and a huge drop in Corporate tax receipts

Last November, The Wall Street Journal wrote that "a law firm's office on a quiet downtown street [in Dublin, Ireland ] houses an obscure subsidiary of Microsoft Corp. that helps the computer giant shave at least $500 million from its annual tax bill. The four-year-old subsidiary, Round Island One Ltd., has a thin roster of employees but controls more than $16 billion in Microsoft assets. Virtually unknown in Ireland, on paper it has quickly become one of the country's biggest companies, with gross profits of nearly $9 billion in 2004."

http://www.finfacts.com/irelandbusiness ... 5150.shtml

I am aware of transfer pricing...so what? It has worked thus far....I went on to say that we need to restructure.

[irishpeoplearewhingers]

The economy is not ************************************ and we are not heading for disaster.....yet. We still export more than we import and all the major indicators point to continued expansion, albeit at a slower pace. Have some sense of proportion.
However, the fact remains that we are in need of economic restructuring- our available pool of skills does not match the needs of the labour market, as can be seen from the massive number of IT vacancies. [color=red]What is needed right now is clear thinking, not politically motivated panic.[/[/color]quote]

What sort of useless statement is this?
Just a soundbite like "let's all roll up the sleeves and stop complaining".

It is a far from useless statement. A sober assessment of where we stand and how we should conduct our economic policy is far more useful than the usual ************************e about how we are all in deep ************************- I have been hearing this since 1997.
Specifically, we need to balance our FDI regime with measures to help domestic companies grow, specifically in the knowledge intensive end of things. In recent years, we have seen some signs of progress in this field- there is an irish firm involved in generating wave energy for San Diego, some crowd from cork are working on the Eurosat project, at least 2 firms have signed licencing deals for renewaqble energy technology in China, Airtricity have entered China and India, several research Institutes on bio-tech and IT have been established, and many of our universities have decent business incubation centers. These kind of success and initiatives represent a much more informed and dynamic response than simply pointing to a problem in an attempt to secure political points. We need more investment in R&D, more support for infant industries and a more open regime that can attract global research/professional talent. Wr can't help our currency situation but note that this has not hurt Germany, whose highly specialized and knowledge-intensive exports continue to surge ahead. Competitive advantage, as Porter has pointed out, is a marathon rather than a sprint- we need to take a long term view on developing our own firms and our own competitive capacity, while trying to pursue prudent fiscal policies in the short-term. In this context, calling for clear thinking and not politically motivated panic makes sense. The world does not owe us a living, and our success is never assured, but this does not justify throwing up our hands in anguish- it is an argument for greater efforts and a tougher more determined approach to building a competitive economy. Given the scale of the tasks we face, worrying about what might happen in the next quarter or trying to score political points is silly- only those who bravely propose solutions deserve to be taken seriously.

[Akrasia]

So what? Pyramid schemes often 'work thus far' until they collapse due to the properties contained internally within the system. Ireland's low tax formula is being copied by other countries. It can not work for everyone, it only has any merit for the first people who get involved. If other people start copying us (and they already have), two things will happen. First, Ireland will be a less attractive place to invest/hide money in (and we are). And secondly, The big industrial nations in the E.U. and U.S.A. will start to tighten up on the loopholes that allow corporations to pretend they're generating wealth where they're only transferring it. (just like money laundering regulations have been tightened up enormously over the last decade)

It's hardly a solid basis on which to build an economy seeing as the majority of our GNP and billions in tax revenue could conceivably be wiped out with the stroke of a pen in Europe, Ireland or the United States.

You can't say the Irish economy is solid if it's based on a pseudo illegal tax avoidance scheme and then pretend like you're addressing the point by adding that we should think about 'restructuring'

[irishpeoplearewhingers]

So what? Pyramid schemes often 'work thus far' until they collapse due to the properties contained internally within the system. Ireland's low tax formula is being copied by other countries. It can not work for everyone, it only has any merit for the first people who get involved. If other people start copying us (and they already have), two things will happen. First, Ireland will be a less attractive place to invest/hide money in (and we are). And secondly, The big industrial nations in the E.U. and U.S.A. will start to tighten up on the loopholes that allow corporations to pretend they're generating wealth where they're only transferring it. (just like money laundering regulations have been tightened up enormously over the last decade)

It's hardly a solid basis on which to build an economy seeing as the majority of our GNP and billions in tax revenue could conceivably be wiped out with the stroke of a pen in Europe, Ireland or the United States.

You can't say the Irish economy is solid if it's based on a pseudo illegal tax avoidance scheme and then pretend like you're addressing the point by adding that we should think about 'restructuring'

See above.

[Anorakphobia]

The economy is not ************************************ and we are not heading for disaster.....yet. We still export more than we import and all the major indicators point to continued expansion, albeit at a slower pace. Have some sense of proportion.
However, the fact remains that we are in need of economic restructuring- our available pool of skills does not match the needs of the labour market, as can be seen from the massive number of IT vacancies. [color=red]What is needed right now is clear thinking, not politically motivated panic.[/[/color]quote]

What sort of useless statement is this?
Just a soundbite like "let's all roll up the sleeves and stop complaining".

It is a far from useless statement. A sober assessment of where we stand and how we should conduct our economic policy is far more useful than the usual ************************e about how we are all in deep ************************- I have been hearing this since 1997.
Specifically, we need to balance our FDI regime with measures to help domestic companies grow, specifically in the knowledge intensive end of things. In recent years, we have seen some signs of progress in this field- there is an irish firm involved in generating wave energy for San Diego, some crowd from cork are working on the Eurosat project, at least 2 firms have signed licencing deals for renewaqble energy technology in China, Airtricity have entered China and India, several research Institutes on bio-tech and IT have been established, and many of our universities have decent business incubation centers. These kind of success and initiatives represent a much more informed and dynamic response than simply pointing to a problem in an attempt to secure political points. We need more investment in R&D, more support for infant industries and a more open regime that can attract global research/professional talent. Wr can't help our currency situation but note that this has not hurt Germany, whose highly specialized and knowledge-intensive exports continue to surge ahead. Competitive advantage, as Porter has pointed out, is a marathon rather than a sprint- we need to take a long term view on developing our own firms and our own competitive capacity, while trying to pursue prudent fiscal policies in the short-term. In this context, calling for clear thinking and not politically motivated panic makes sense. The world does not owe us a living, and our success is never assured, but this does not justify throwing up our hands in anguish- it is an argument for greater efforts and a tougher more determined approach to building a competitive economy. Given the scale of the tasks we face, worrying about what might happen in the next quarter or trying to score political points is silly- only those who bravely propose solutions deserve to be taken seriously.

As we all know the 1st step in curing an addiction is to admit you have a problem.
There isn't a shred of evidence to suggest the existing Govt (or the alternative for that matter) feel we have a problem.
Quite the opposite in fact.
Our economy (as you readily admit) is currently built on lousy foundations and those foundations are now starting to crumble. The in-coming Government is riddled with arrogance and complacency. They haven't a notion of trying to figure out how we can continue to grow at 4-5% in the light of rising Euro rates, soaring wage inflation, loss of competitive edge on price and expertise to dozens of other countries and the disappearance of the various tax loopholes.
They will just bold as brass profer 5.3% growth estimates, miss it by a mile and then blame factors "outside our control".

Away from the political arena, we as a nation have become arrogant, conceited, greedy beyond belief and lazy (try finding a banker/stockbroker/auctioneer/solicitor.... on a Friday).

[irishpeoplearewhingers]

As we all know the 1st step in curing an addiction is to admit you have a problem.
There isn't a shred of evidence to suggest the existing Govt (or the alternative for that matter) feel we have a problem.
Quite the opposite in fact.
Our economy (as you readily admit) is currently built on lousy foundations and those foundations are now starting to crumble. The in-coming Government is riddled with arrogance and complacency. They haven't a notion of trying to figure out how we can continue to grow at 4-5% in the light of rising Euro rates, soaring wage inflation, loss of competitive edge on price and expertise to dozens of other countries and the disappearance of the various tax loopholes.
They will just bold as brass profer 5.3% growth estimates, miss it by a mile and then blame factors "outside our control".

Away from the political arena, we as a nation have become arrogant, conceited, greedy beyond belief and lazy (try finding a banker/stockbroker/auctioneer/solicitor.... on a Friday).

You are right on many points here- the government (and a large part of the opposition in my opinion) do not have the sense of urgency about the economic question that it deserves. There is no grand public debate about where we go from here and there doesn't seem to be properly articulated policy about how to secure our growth in the years to come. All the fastest growing countries seem to have a kind of blueprint about how to achieve growth, whereas most of our plans seem to assume growth to begin with. It is absolutely correct to say that our growth is not on a firm foundation- it is unbalanced and assumes that what has worked before will work again. However, we should not abandon our low tax model; rather we should refine it and use it in a more calibrated way to incentivize domestic activity that will lead to a more sustainable outcome. The great curse of irish business is that while Irish companies do well initially, they always seem to sell out to the big boys once they reach a certain scale, and we simply are not innovating at the rate that is needed to develop a real competitive edge. Wage costs, interest rates and currency problems are stumbling blocks to be sure, but only in the short term- the Japanese faced all of these problems in one configuration or another over the years but still steadily increased their international position in industries in which they had developed an initial advantage. Real competitive advantage means finding a new basis on which to compete and be relevant- we have yet to develop this in all but a few cases, and when we do, we seem to lack the expertise to take it global. The government should never do work that companies should be doing for themselves but has a hugely important role in signalling the kind of behavior that is likely to produce better results- small grants and tax breaks that reward investment in marketing and R&D, conferences that focus on collaborative ventures on international market entry, policies to attract VC firms to set up,all these kind of things that can give some impetus to the process. It will require long term involvement and a change in attitude on the part of the government. While all that may be true, we should not abandon the FDI route either- it can and does work long term, as we can see from Singapore. Structurally, there also seems to be a lot to do- infrastructural planning (every kind of infrastructure) is a mess. Tourism still remains massively underdeveloped realtive to its potential- we need some decent resorts that get the punters in and get them spending money. I coudl go on.....there is just so much we could be doing and are not.
As for your other observation- we have become arrogant, but it is not the arrogance of a nation prepared to meet the economic challenges ahead; it is the arrogance of the nouveau-riche and the smug.