Fintan O’Toole: Ireland would not be viable without 10 big US corporations

A couple of years ago, I was in a small Danish town called Tønder, which is about the size of Youghal or Thurles. It's a pretty Hanseatic settlement in the flat marshlands that stretch towards the horizon far across the border with Germany.

It's also a kind of company town. I was there because my son was working for the Danish shoe manufacturer Ecco.

Ecco is a global brand, but Tønder is very much its homeplace. The manufacturer was founded up the road in an even smaller town, Bredebro. And it is still a family enterprise, owned and run by the descendants of its creator, Karl Toosbuy. It is very, very Danish.

To get to Tønder, we took a Ryanair flight to Billund. Why does Ryanair fly to Billund? Because it is the home of Legoland.

Fintan O’Toole: Ireland is now demonstrably less politically corrupt than England

---

Fintan O’Toole: If 2022 is to be different, we need to act sooner on predictable events

---

Fintan O’Toole: It’s the first birthday of the Brexit hole and they have to keep digging

---

Fintan O’Toole: 2021 – a year of miracles and disappointments in a new Age of Reason

---

There is a price to be paid. It is in a growing disconnection between citizenship and taxation

Billund is another company town. It was nothing more than a small hamlet when Ole Kirk Kristiansen set up a carpentry shop there. He created Lego and his family still owns it. It's one of the world's most brilliant brands, always changing but always the same. But it's also the local business.

In 2020, Lego sold €5.9 billion worth of toys. But it is still rooted in Billund, a town roughly the size of Ennis in Co Clare. The town – and the airport and the hotels and restaurants that service visitors to Legoland – essentially exists because of little plastic bricks in primary colours.

Pretty much everybody in Billund works either directly or indirectly for Lego. They might as well have bright yellow skin and big helmets of shiny black hair.

In Copenhagen, you can see immediately that the port is dominated by another indigenous company, Maersk, which also happens to be the largest container shipping line in the world.

Recognisable economy

Wherever you look in Denmark, from small rural towns to the cool capital, you are struck by the fact that there is an immediately recognisable Danish economy. Wealth has been generated by ideas and processes and designs and brands created by the Danes themselves.

What you don’t see is a great divide, with multinationals on one side and national, local and even family enterprises on the other. Domestic and global don’t function as separate spheres there. Capital – and capitalism – has deep roots in locality, in family, in society.

Or maybe you only see that so clearly if you’re Irish – because it is in such stark contrast to the way the Republic is. We like economies so much that we have two of them, an indigenous one and a multinational one. And when it comes to its own health – one might even say its own survival – the State is increasingly dependent on the latter.

I don’t know if there has ever been a state anywhere in the world that rests so heavily on such a small number of corporations that are not indigenous to it. Or a society that has become so rich on the back of technologies and processes and ideas and brands that are not its own.

The great paradox of the State is that it is stabilised only by what used to be thought of as footloose international capital.

Twice now in less than 15 years, the State has been saved by the multinationals. In the great banking and property crash of 2008, when the domestic economy imploded, the foreign-owned corporations flew nonchalantly onwards. One engine had failed but the other kept going and provided enough thrust to prevent Ireland from ditching into the Atlantic.

And now, again, the multinationals are coming to the rescue. The vast cost of dealing with the pandemic has been largely balanced by the phenomenal surge in corporation tax receipts: €11.8 billion in 2020, €15.3 billion in 2021 – the latter almost double the take just four years previously.

This is fabulous and I am not complaining about it. But it all rests on just 10 big corporations, each based in the US. Effectively, those 10 American multinationals are, simply by the amounts of tax they are paying and generating here, shaping the way the Irish State works.

Radically different choices

This is not just about corporation tax. Foreign-owned multinationals accounted in 2019 for 49 per cent of all income tax, USC and PRSI paid by companies here, amounting to €10.4 billion. They also contributed 42 per cent of VAT paid by companies that year – another €4 billion.

Without that revenue, Irish politics would look very different. Radically different choices would have to be made – about how the Government could raise money but also, more subtly, about how it thinks about the economy, society and even nationhood.

This is, at heart, an issue of citizenship. There’s an assumption that underlies the modern democratic nation state – that taxation is what creates and sustains an Us, a common belonging.

We get to have a state because we can pay for it ourselves. And because we pay for it ourselves, it belongs to us.

There's a reason why the power to run your own taxation system is a pretty good rough definition of independent nationhood. It's why the Republic is a state and Northern Ireland isn't.

But if you stripped out the tax contributions of foreign-owned multinationals, the Republic as a functioning fiscal entity would shrink so drastically that it would not be viable.

This dependency has, so far as I can see, been deepened by the pandemic. The best measure of productivity in the economy is what’s called gross value added (GVA).

Between 2019 and 2020, GVA in the indigenous sectors shrank by 8.7 per cent, presumably because of Covid. In the other Irish economy, the one dominated by the multinationals, it grew by 23.1 per cent.

The problem is not that we’re getting all the lovely money that those thriving IT, pharma and medical technology behemoths generate for us. It’s that the vast majority of Irish businesses – the ones in which most of us work – are not big multinationals.

State of play

At the last count, there were 272,531 enterprises in Ireland. Only 6,137 of these were foreign-owned multinationals. That’s a small percentage of all the businesses operating here.

It is no exaggeration to say that the sustainability of the State, and therefore of the whole way Irish society is currently organised, relies on that small percentage of enterprises. And that the current trend is that this dependency is rapidly increasing.

So what? The money is flooding in. Much of it comes from intangibles such as intellectual property and the value of brands and some of it from creative accounting. Yet everyone can see that there are also real, well-paid jobs.

But there is a price to be paid. It is in a growing disconnection between citizenship and taxation. It is in the inherent inequality between those who work in a booming economy and those who draw their livelihoods from the other, struggling one. It is in the strange doubleness of a place that exists simultaneously in parallel universes.

And it is in the restless, gnawing feeling of vulnerability that comes from knowing that if a handful of companies for some reason pulled out of Ireland, the shock would make the State, if not fall, then certainly stumble. We don’t have a Lego to stand on.