Without the investment from multinationals, Ireland would be Albania with brutal weather
D ID you know that there is a more than 90pc chance that Dublin will win tomorrow because Fine Gael are in power? Eight of Dublin’s last nine Dublin All-Ireland wins have happened under Fine Gael governments.
Does the sea of blue on the Hill tomorrow signal a subliminal message of urban support for the party of Dublin GAA, Fine Gael? Is Sam Maguire, when Dublin win, a Blueshirt? What do you think?
This is not provocative; it’s a fact.
Going back 40-odd years of Dublin All-Ireland victories, only in 1977, when Fianna Fáil clearly bought the election, have the Dubs triumphed under the Soldiers of Destiny. On every other occasion, there was a Fine Gael Taoiseach in power when a Dublin captain marched up to the sacred podium.
In 1974 and 1976, Heffo’s Dubs won under the austere eye of Liam Cosgrove.
In 1983, the Boys in Blue won under Garret Fitzgerald’s watch.
The renowned footballing aficionado Fitzgerald was the boss in Leinster House. This was a man so steeped in GAA and Irish traditions that in 1982, when he saw a sea of red during the campaign in Cork, he mistook Cork fans for politically engaged anti-communist activists wearing the red of Poland’s opposition Solidarity movement!
Fast-forward 12 barren years to 1995 and that other great Fine Gael GAA champion, John Bruton, was in power when the Dubs lifted Sam. Then, after 16 years in the wilderness, the victories of 2011, 2013, 2015 and 2016 all occurred under another Fine Gael government.
So should Dublin supporters vote Fine Gael to ensure victory?
The superstitious might agree, but others would say any link between Fine Gael and Dublin GAA is just a coincidence.
In the real world, it’s easy to mix up coincidence with causation. When two things look related, many conclude that they must be connected. Often, two apparently linked phenomena can be parcelled up and tied together in order to suit someone’s narrative.
But if we mistake coincidence for causation, we can get things very wrong. This is particularly dangerous in the political theatre, where such spurious connections can lead to extremely poor results. Even though two things are merely coincidence, politicians often try to claim that they are related and in this way both credit and blame are apportioned when neither is warranted.
But before we talk economics, let’s think of other examples in daily life where people misdiagnose coincidences for causation.
When my mother loses her car keys, she prays to St Anthony. The next few minutes play out by the mother walking around the house murmuring invocations to the patron Saint of lost things. Then – miraculously – the keys emerge from under the cushion on the chair in front of the TV or under a few coats in the hall and nothing will persuade her that the prayer to St Anthony didn’t do the trick!
This tendency to see patterns where none exist is part of human make-up. It is just the way we are hardwired. We like to think that there are tangible reasons for things to happen over which we have some control. We are not comfortable with the complexity and serendipity of life. The purveyors of religion twigged this human frailty early on and therefore created all sorts of spurious cause and effect to help maintain the hocus pocus of religion.
Politics is another sort of hocus pocus – at least where politics mixes with the enormous complexity of the economy. As a result, we will hear politicians linking their own tenure in office with an upswing in the economy, when in fact no such connection exits. T HINK about how the business cycle works in general. Economies tend to recover from recessions, then we get decent growth and this creates an effervescence, which makes people too confident about the future, so they invest and spend too much, the economy peaks, goes into a downturn and dips into recession – and off we go again. Normally, this process takes about a decade but because economic time has nothing to do with human time as measured by the Roman calendar, the notion of comparing year on year in economics is ridiculous. But we do it anyway. Now superimpose on this longer-term economic cycle the four-year political cycle and you can see why politicians might take credit for things that are simply coincidence and get blamed for things that are similarly unrelated. So, when you hear politicians saying that under this government unemployment fell, all they are noting is that unemployment troughed when they happened to be in power. However, the real reasons unemployment falls in a small open economy have as much to do with the international business cycle as anything that the government did here. Given that the two main parties have almost identical policies on anything of significance, it is rationally impossible for them to have a material diverging impact on the economy. Like Fine Gael and the Dubs, there is a coincidence – not any correlation or causation.
This is the general rule; however, there are times where there are specific and unambiguous links between government stance and economic outcomes.
One such example happened this week and it involves the land grab from the EU on taxing multinationals.
The EU wants to change the way multinationals pay tax so that companies like Google pay tax where they generate sales, not where they register profits.
This would have a profound and immediate impact on where multinationals locate. It is a direct threat to Ireland because multinationals based here generate their sales in the EU, but their profits are registered in Ireland, where they are legally based. This is the model of every city-state and successful small country throughout history.
Centuries ago, the Dutch figured out that in a globalised economy the big money accrues not to those who produce but those who broker, facilitate and trade.
Our political class – and that includes the civil servants who negotiate for us – must say no to the EU’s ambitions to change the rules on the way corporations are taxed. In the same way as Germany would baulk at the notion that VW profits should not be repatriated to Germany, where they are taxed, we should do the same.
VW is a German company legally, even if it produces all around the world and its corporation tax is paid to the German government. The same should apply to companies legally based in Ireland.
Unlike taking credit for the economic cycle, where the connection between governments and the slow grind of the business cycle is at best coincidental, the issue of taxation of multinationals would have a direct and deleterious effect on Ireland. Put simply, our capital base is American. Without these companies, Ireland would be Albania with brutal weather.
Therefore our politicians need to make a stand now against the French/German move to further integration because this is what they are there for. The connection between foreign investment and Irish prosperity is not spurious; it is real.
As for the Dubs and Fine Gael, eight out of 10 Cats would bet on the Blueshirts tomorrow!