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The Luck of the Irish Runs Out
theodp writes "Looks like threatening to take their ball and leave paid off for US tech firms. The Irish government announced plans this week to tap the welfare state and working class for much of the $20B in savings they've pledged to find over the next four years, but the austerity measures will not touch large businesses like Microsoft, Intel, Google, HP, Facebook, LinkedIn, and Pfizer, which created jobs and fueled exports in Ireland after being lured by low corporate tax rates. More than 100,000 Dubliners took to the streets to protest the bailout plan, calling for the Irish government to default on the country's debts, and demanding an immediate election. 'We should default,' said a retired union worker, 'the idea that the workers of this country should pay for the gambling of the billionaires is disgusting.'"
It's the private bank's debts.
For some unknown reason the Irish government decided to guarantee all debts by banks in Ireland including banks that are owned and run by people who are not Irish or based in Ireland. These debts were not sovereign debts until the Irish government decided to unilaterally back them without any good cause. They did this back in 2008 and it's only now that they massive amount that they've basically handed over to private investors is becoming apparent.
It's pretty nuts that private investors had hoped to make money by investing in Irish banks - but now that they're actually facing losses the people of Ireland are going to step up and cover all these debts. So for the private investors it's a case of head I win, tails you lose - where there is no risk of the private investors losing any money - and no chance for the public to get a share of the profits that banks were making in the good times.
"Free software as in beer, copy protection as in racket" - Telsa Gwynne
These companies provide our jobs.
If all the jobs in your country, or even a significant majority of them, are provided by international megacorporations and conglomerates that can and will move them elsewhere if it benefits them, and use them as blackmail material to get the laws they want, then you've got bigger problems than whether to lower taxes or not.
As usual, many people are quick to defend these pricks, saying that if it weren't for them, everyone would be out of a job. Yes, the economy is in their power. Calling that a mutually beneficial relationship sounds like Stockholm syndrome.
If your very survival depends on receiving a living wage from a corporation that can simply choose to go away if it is asked to pay for the infrastructure it also uses, then you are not living a "dream" generously provided by altruistic corporations, but in slavery to organizations who can let you starve if they wanted to. Not only workers, even governments are forced to debase themselves before these corporations, lowering their living standard, their wage expectations, cutting their social system and their taxes bit by bit to compete with other countries that are forced to do the same.
Ireland, and the entire European Union at that, should make a stand against this and play hardball. The fact is that while corporations can move their production elsewhere, they do have to sell something eventually. A high-tech market requires a high-tech industry to flourish: If corporations leave the country, the economy goes to shit and nobody can afford the flashy gizmos these corporations are selling. Standardize the tax hike over all EU states, accompany it with an import tariff on technology not produced inside the country, and suddenly paying a little more corporate tax will seem like a much better alternative. The workers are not only their slaves, but also their customers.
According to whom?
Surely it's not the workers, because when Big'n'Big Co pulls up their tent pegs and moves shop, all the workers are suddenly unemployed.
It's probably not the consumer, because when Big'n'Big Co finds a way to half their cost of production, it's not guaranteed to drive prices down. Why bother cutting prices and taking a bigger market share when you can just shovel up a pile of cash big enough to buy your competitors (or a controlling interest in their stock)? Hell, why not just collude with your competitors to keep prices artificially inflated - then everyone's happy!
Surely then, it is the desperate - those poor starving people in $Third_World_Nation who desperately need employment of any sort. Except that, after their standard of living starts to rise, Big'n'Big Co just moves on to the next shithole and leaves the desperate unemployed too.
Well fuck, if it's not the middle class or the lower class, who the hell is left? :P
Oh, right, the bourgeois. Well, as long as they're doing all right, everything is just peachy! Hurray for Capitalism!
The problem isn't the multinationals that provide jobs - they will stay. Intel can't move a FAB overnight. The issue is with the shells like Microsoft Licensing - that employ 5 lawyers, 5 accountants and a janitor - and that do nothing but funnel profits. THESE companies will up and leave in a heartbeat, because an extra 2% on $62BN is ENORMOUS. At the moment the corp tax income on these companies is E110bn - and the IMF money is nowhere near that. Raising the corp tax rate might mean losing 50-100 jobs, mostly accountants and lawyers (not exactly going to get a sympathy vote from most people), but could leave the country more than E50bn a year down - not really an option right now.
That is why I figure the USA will default in 5 years, 10 tops. The only thing really keeping us afloat is the Fed printing money as fast as the presses will run and using it to buy our debt, basically making the money worthless. Then figure in the retiring boomers, huge masses of working poor that are only kept afloat by social programs, and the cost of two endless wars? Yeah I give it a decade tops. Enjoy it while you can folks, because from the looks of it another worldwide great depression will soon be upon us. The only question is whether we will learn from our mistakes and put heavy regulations on the banks like we did during the last one, or if those that believe in the free market fairy will win out. Without control free markets quickly end up corrupted when too much ends up in the hands of too few, just as we have now.
ACs don't waste your time replying, your posts are never seen by me.
Most of that money comes from countries where income tax is well above 50% (or even 72% in Denmark).
Yes even the Danes that don't use the Euro have pledged a substantial guarantee.
In the mean time two of the countries with the highest taxes, Denmark and The Netherlands, have the lowest unemployment of the Union, around or even below 5%.
The implied claim high taxes destroy the economy is yet to be proven.
"The likes of Facebook and WhatsApp are free to those whose privacy is of zero value."
in democracy with deficits allowed you are doomed to wreck your economy, because in order to win the elections you got to promise a shitload of 'freebies' (which are not free at all), otherwise someone else who promises a lot will win. Sanity and economic soundness are not valued by the average voter so it's the race to the bottom.
as Tocqueville said
The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.
moving the capital around has everything with free markets, but exclusive deals, special treatments and subsidies for the chosen do not. Bailouts are such cases. Some failing bank or a car manufacturer gets bailed out, but your favorite bakery at the corner does not. Free market is a fair judge, treats all the same and the winners and losers are decided only by their merits, not by who they know.
The back and forth in this thread really just shows that a "free market" is an illusory concept. It is useful to a limited degree, but you have to keep in mind that it is not possible in real life.
Once you throw government into the mix, you necessarily limit the freedom of the market. But, without a government, you don't have the structure to set up anything resembling a "free market".
The other point that seems to have been missed is that, although you are right in saying that the Irish situation is not due to a real "free market", the term "free market" is what is thrown about to keep the proles in line.
Similar to the upcoming US election results
The back and forth in this thread really just shows that a "free market" is an illusory concept. It is useful to a limited degree, but you have to keep in mind that it is not possible in real life.
It's not a very useful concept when used to argue we should remove trade barriers, which it is used all the time to do so.
That, right there, is the real problem. It's not that corporations can make special deals with governments, there is functionally no way for any country to stop other countries from doing that. There is no way to solve that problem, ergo, that can't really be the problem. If houses you build keep falling down, the problem to investigate is not gravity.
The solvable problem is that they then can continue to operate and sell in the US while not paying any taxes here.
We need to get rid of the idea of 'corporate' taxes where profit can mysteriously move from place to place and they pay taxes somewhere we've never heard of. (And they're way to easy to avoid altogether.)
We should tax them when they pay workers, in the location those workers are. We should tax them when they sell goods, in the location those goods are sold. (Or, easier, when those goods are imported.) We should tax their capital and real estate, in the location that capital and real estate is. We should tax their corporate dividends, in the location that stockholders live.
Fuck asking where the company, an entity that is an artificial creation, 'lives'. Tax the things that physically exist where they actually are and tax the money going in and out where it's actually going in and out.
If corporations are people, aren't stockholders guilty of slavery?
Debt is intrinsically bad when it's gov't debt, because gov't is not supposed to be a business.
That sounds like you've bought into that position as an a priori assumption. While I'd agree that governments aren't businesses, to say that all government borrowing is therefore bad is foolishness. The purpose of good borrowing is so that investment can be made so as to increase income in the future that will repay the debt and ensure more money to do other things with. When applied to a government, the purpose has got to primarily be to invest in steps that will lead to increased total tax take in the future, generally through increasing overall economic activity in some way.
This is all independent of how wisely governments in your locale are spending, taxing or borrowing. If you're going to make an argument, it helps to start out from an intellectually-sound basis, which saying that "government borrowing is bad" is not. Reality just doesn't allow for such simple distinctions, and any sane policy must be at least grounded in reality.
"Little does he know, but there is no 'I' in 'Idiot'!"