Comments on: PAUL KRUGMAN AND THE IRISH ECONOMY http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/ It's a group blog. What more do you need to know? Wed, 23 May 2012 12:07:09 +0000 http://wordpress.org/?v=2.2.1 By: AUSTIN http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/#comment-70975 AUSTIN Mon, 28 Sep 2009 23:36:34 +0000 http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/#comment-70975 I don’t profess to any kind of an authority on the current crisis in the Irish economy but there is one truth of which i do know, the greatest collapse is yet to come and it is a worldwide currency collapse, first it will be the Dollar and soon after the Euro and if anybody thinks they have seen bad so far, just wait for the Currancy crisis. This government consigned Ireland to the scrapheap last year when they put our heads on the block to the tune of 500 billion by guaranteeing the banks and there’s no changing that now, every single Minister in this government will be remembered as the government of cronies who brought Ireland to it’s knees and we don’t live in a democracy anymore, the proof of this is the commitment the government has given to Nama and to fund to the tune of another 54 billion, the Irish people have a right to choose whether this goes ahead or not but this government will not allow that right because they know that every ordinary decent citizen of this country will not consign the future of our children and grandchildren to a life of debt to bail out banks which are broken and ruined businesses, let them go they are DEAD and should be buried. I know that lots of so called experts and economists will vehemently disagree with me but I am one of the 99% of other ordinary, law abiding, taxpaying citizens of this country and we are the country, we are the people and if we are wrong or we decide by voting wrong then so be it and we can’t argue with it but we have the God given right to vote on issues like this and we demand it! ORDINARY JOE SOAP I don’t profess to any kind of an authority on the current crisis in the Irish economy but there is one truth of which i do know, the greatest collapse is yet to come and it is a worldwide currency collapse, first it will be the Dollar and soon after the Euro and if anybody thinks they have seen bad so far, just wait for the Currancy crisis. This government consigned Ireland to the scrapheap last year when they put our heads on the block to the tune of 500 billion by guaranteeing the banks and there’s no changing that now, every single Minister in this government will be remembered as the government of cronies who brought Ireland to it’s knees and we don’t live in a democracy anymore, the proof of this is the commitment the government has given to Nama and to fund to the tune of another 54 billion, the Irish people have a right to choose whether this goes ahead or not but this government will not allow that right because they know that every ordinary decent citizen of this country will not consign the future of our children and grandchildren to a life of debt to bail out banks which are broken and ruined businesses, let them go they are DEAD and should be buried. I know that lots of so called experts and economists will vehemently disagree with me but I am one of the 99% of other ordinary, law abiding, taxpaying citizens of this country and we are the country, we are the people and if we are wrong or we decide by voting wrong then so be it and we can’t argue with it but we have the God given right to vote on issues like this and we demand it!
ORDINARY JOE SOAP

]]> By: Donagh http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/#comment-70024 Donagh Wed, 22 Apr 2009 15:37:15 +0000 http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/#comment-70024 I was going to mention, looking at the increases in the services sector than Conor mentioned above, Patrick Honohan’s ERSI article that I linked to before. He states that while the IFSC in the main is responsible for the huge increase in financial service export growth, that it still has not been the driver of the economy in the way it was imagined. Basically IFSC is a glorified tax shelter for banks and financial services. I was going to say that, but then I got a call from someone, and in the course of the conversation he told me that the jobs being lost at Xilinx in the Citywest are going to Singapore where there is a zero percent tax regime. However, there is also a program there that means that everything produced in Dublin is shipped to Singapore so that it can be declared that it was produced in Singapore so as to avoid tax on the profits. Now how are you going to compete against that! Here’s the Honohan piece about Financial exports etc: <blockquote>Taking account of the IFSC and more generally of Ireland’s export business in financial services is not quite straightforward. (How, to take one case, are we to deal for statistical purposes with the largest Irish-licensed bank by total assets, namely Depfa Bank, once owned by the German government (under the name Deutsche Pfandbriefe Bank) and still doing comparatively little business with Irish customers?)5 Even for long-established Irish banks, participation in global finance has been an important contributor to their activities and profitability. For example, participation in globally syndicated loans has been a profitable activity for them given the tax advantages of operating with the low Irish corporate tax rates previously within the IFSC, and now generally applicable. […] Has the IFSC been the making of the Celtic Tiger, then? Of course, the contribution of finance as an export sector is not what the literature on finance and growth is talking about. Nevertheless, this dimension is very important in some countries, especially a handful of small offshore islands and also, of course, in Luxembourg. I do not want to minimise the commercial success of the IFSC, which is envied around the world by other would-be offshore centres, both in rich and in poor countries, and remains, no doubt, a bugbear of some national tax administrations abroad. But the degree to which it has been a driver of the wider economy’s huge growth success does have to be kept in perspective. Thus, although overall, IFSC employment at end-2005 amounted to around 20,000, or almost 40 per cent of employment in financial services in Ireland, this still amounted to barely one per cent of total employment in the economy as a whole. The tax dimension is more impressive: corporation tax yield from the IFSC in 2005 was €755 million, or 14 per cent of total corporate tax revenue. This is an appreciable sum, but still less than 2 per cent of total tax revenue. It is evident from Figure 4 that it IFSC tax revenue had nothing to do with the consolidation of the public finances and has only played a supporting role in keeping those accounts healthy. Of course there are additional spin-offs from the IFSC – important ones, considering the high-end legal and accounting services, for example, which are provided by Irish law firms and not all of which, I think, are counted in the above data. The fiscal privileges previously enjoyed by the IFSC (relative to domestic financial services provision) have expired since the start of 2006, but the lowering of the general corporation tax rate has meant that the sector remains tax-competitive.</blockquote> I was going to mention, looking at the increases in the services sector than Conor mentioned above, Patrick Honohan’s ERSI article that I linked to before. He states that while the IFSC in the main is responsible for the huge increase in financial service export growth, that it still has not been the driver of the economy in the way it was imagined. Basically IFSC is a glorified tax shelter for banks and financial services.

I was going to say that, but then I got a call from someone, and in the course of the conversation he told me that the jobs being lost at Xilinx in the Citywest are going to Singapore where there is a zero percent tax regime. However, there is also a program there that means that everything produced in Dublin is shipped to Singapore so that it can be declared that it was produced in Singapore so as to avoid tax on the profits. Now how are you going to compete against that!

Here’s the Honohan piece about Financial exports etc:

Taking account of the IFSC and more generally of Ireland’s export business in financial services is not quite straightforward. (How, to take one case, are we to deal for statistical purposes with the largest Irish-licensed bank by total assets, namely Depfa Bank, once owned by the German government (under the name Deutsche Pfandbriefe Bank) and still doing comparatively little business with Irish customers?)5 Even for long-established Irish banks, participation in global finance has been an important contributor to their activities and profitability. For example, participation in globally syndicated loans has been a profitable activity for them given the tax advantages of operating with the low Irish corporate tax rates previously within the IFSC, and now generally applicable.

[…]

Has the IFSC been the making of the Celtic Tiger, then? Of course, the contribution of finance as an export sector is not what the literature on finance and growth is talking about. Nevertheless, this dimension is very important in some countries, especially a handful of small offshore islands and also, of course, in Luxembourg.

I do not want to minimise the commercial success of the IFSC, which is envied around the world by other would-be offshore centres, both in rich and in poor countries, and remains, no doubt, a bugbear of some national tax administrations abroad. But the degree to which it has been a driver of the wider economy’s huge growth success does have to be kept in perspective. Thus, although overall, IFSC employment at end-2005 amounted to around 20,000, or almost 40 per cent of employment in financial services in Ireland, this still amounted to barely one per cent of total employment in the economy as a whole. The tax dimension is more impressive: corporation tax yield from the IFSC in 2005 was €755 million, or 14 per cent of total corporate tax revenue. This is an appreciable sum, but still less than 2 per cent of total tax revenue. It is evident from Figure 4 that it IFSC tax revenue had nothing to do with the consolidation of the public finances and has only played a supporting role in keeping those accounts healthy. Of course there are additional spin-offs from the IFSC – important ones, considering the high-end legal and accounting services, for example, which are provided by Irish law firms and not all of which, I think, are counted in the above data. The fiscal privileges previously enjoyed by the IFSC (relative to domestic financial services provision) have expired since the start of 2006, but the lowering of the general corporation tax rate has meant that the sector remains tax-competitive.

]]> By: Hugh Green http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/#comment-70022 Hugh Green Wed, 22 Apr 2009 10:05:30 +0000 http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/#comment-70022 I just did a very quick analysis of turnover and employees for 'Computer and related activities' in the Service Sector. I wanted to do R&D and 'Other business activities' too, but the data has been suppressed due to confidentiality or quality concerns. It would appear that turnover per person engaged in Computer and related activities service enterprises (which I presume encompasses a few of the firms mentioned in the finfacts article) with turnover of over €5 million was €702K in 2006, up from a paltry €374K in 2004. Have sent you on the file so you can take a look at the figures. I think they're shocking, but I'm easily shocked. I just did a very quick analysis of turnover and employees for ‘Computer and related activities’ in the Service Sector. I wanted to do R&D and ‘Other business activities’ too, but the data has been suppressed due to confidentiality or quality concerns. It would appear that turnover per person engaged in Computer and related activities service enterprises (which I presume encompasses a few of the firms mentioned in the finfacts article) with turnover of over €5 million was €702K in 2006, up from a paltry €374K in 2004.

Have sent you on the file so you can take a look at the figures. I think they’re shocking, but I’m easily shocked.

]]> By: Conor McCabe http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/#comment-70021 Conor McCabe Wed, 22 Apr 2009 09:34:42 +0000 http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/#comment-70021 Funnily enough, there's a timely article on US companies sheltering profits overseas on finfacts. Just 10 U.S. companies were responsible for sheltering an estimated €58 billion in profits overseas. http://www.finfacts.ie/irishfinancenews/article_1016492.shtml Funnily enough, there’s a timely article on US companies sheltering profits overseas on finfacts. Just 10 U.S. companies were responsible for sheltering an estimated €58 billion in profits overseas.

http://www.finfacts.ie/irishfinancenews/article_1016492.shtml

]]> By: Conor McCabe http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/#comment-70020 Conor McCabe Wed, 22 Apr 2009 09:14:48 +0000 http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/#comment-70020 Cheers Hugh. Most countries in Europe recorded a 20% drop in export value in January 2009 compared to January 2008. Ireland, however, recorded only a 1% drop. Either Ireland has conjured up another economic miracle, or the multinationals are using Ireland as a clearing house for their profits to avail of the low corporation tax. Thrift, the office is actually the back of the Corporation building on Woodquay. I'm far too lazy to venture out as far as Leopardstown. :) Cheers Hugh. Most countries in Europe recorded a 20% drop in export value in January 2009 compared to January 2008. Ireland, however, recorded only a 1% drop. Either Ireland has conjured up another economic miracle, or the multinationals are using Ireland as a clearing house for their profits to avail of the low corporation tax.

Thrift, the office is actually the back of the Corporation building on Woodquay. I’m far too lazy to venture out as far as Leopardstown. :)

]]> By: Hugh Green http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/#comment-70018 Hugh Green Wed, 22 Apr 2009 08:32:44 +0000 http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/#comment-70018 Great stuff Conor. As far as any approach to an 'export-led' recovery can be discerned on the part of the government, it seems to be based on the export of services higher up the value chain, as the lingo has it, with a focus on R&D. But as Peadar Kirby pointed out on Progressive Economy recently, 'much of our research funding ends up as a subsidy by the Irish taxpayer to the research and development capacity of multinationals'. What this means is that multinationals will use the knowledge and practices developed in Ireland as a means of setting up shop somewhere far cheaper. There seems to be an assumption that the fact of a well-educated English-speaking workforce will be a prophylactic against capital flight. That'll come as news to the MNCs investing huge amounts in R&D facilities in China. Great stuff Conor. As far as any approach to an ‘export-led’ recovery can be discerned on the part of the government, it seems to be based on the export of services higher up the value chain, as the lingo has it, with a focus on R&D. But as Peadar Kirby pointed out on Progressive Economy recently, ‘much of our research funding ends up as a subsidy by the Irish taxpayer to the research and development capacity of multinationals’. What this means is that multinationals will use the knowledge and practices developed in Ireland as a means of setting up shop somewhere far cheaper. There seems to be an assumption that the fact of a well-educated English-speaking workforce will be a prophylactic against capital flight. That’ll come as news to the MNCs investing huge amounts in R&D facilities in China.

]]> By: Thriftcriminal http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/#comment-70017 Thriftcriminal Wed, 22 Apr 2009 07:32:48 +0000 http://dublinopinion.com/2009/04/21/paul-krugman-and-the-irish-economy/#comment-70017 Do I recognise my former workplace in Leopardstown? Do I recognise my former workplace in Leopardstown?

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