With­out the in­vest­ment from multi­na­tion­als, Ire­land would be Al­ba­nia with bru­tal weather

Irish Independent - - NEWS - David McWil­liams

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!

Paul O’Flynn lift­ing Sam­lastyear

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