Irish Ambassador condemns ‘leprechaun economics’ term as derogatory

Phrase printed in New York Times by Paul Krugman is an ‘unacceptable slur’

Irish Ambassador to the United States Daniel Mulhall has described the use of the word "leprechaun" by a Nobel Prize-winning economist as an "unacceptable slur".

Mr Mulhall was responding to a column in the New York Times by Paul Krugman who coined the phrase "leprechaun economics" to describe Ireland's tax policies relating to multinationals.

Mr Krugman originally referred to the term in 2016 when Central Statistics Office figures showed a 26.3 per cent rise in Irish gross domestic product (GDP) in 2015.

The phrase, which is now generally used to describe how transfer pricing can distort national accounts, has stuck.


Returning to the theme in his New York Times column this week, Mr Krugman suggested the distortion in Ireland's GDP may have been caused by Apple booking its profits in Ireland.

“For tax purposes, however, Apple needs to report its profits somewhere. Right now that means that it’s basically up to Apple to declare where it makes its money – and what it does, naturally, is claim that its profits accrue to subsidiaries in countries with low tax rates on those profits, Ireland in particular,” he wrote.

"In fact, until 2014 it went even further than that: a large share of its global profits was assigned to Apple Sales International, which was registered in Ireland but for tax purposes was located nowhere at all. In 2015, however, some combination of pressure from the European Commission and changes in Irish tax laws induced Apple to reassign many of its intangible assets to its regular Irish subsidiary.

“How big a deal was this? On paper, Ireland’s gross domestic product suddenly jumped 25 per cent, even though nothing real had changed – a phenomenon I dubbed ‘leprechaun economics’, a term that has stuck. (Fortunately, the Irish have a sense of humour.)”


However, Mr Mulhall responded with a letter to the New York Times, saying: “I do not go along with Mr Krugman’s disingenuous excuse that ‘the Irish have a sense of humour’ about his attacks on us. While I am always happy to engage in serious debate about Ireland’s economic performance, derogatory references in a leading newspaper like yours are no laughing matter.

“Ireland has been fully engaged since 2013 in the international discussions about corporate tax reform, and we have proactively and diligently reformed our tax code in line with the new international norms agreed to thus far. Further agreement in this area cannot be arrived at through name-calling and national stereotyping,” he wrote.

In a series of tweets, Mr Mulhall has elaborated further on why he objected to the comments.

“ I got tired of Paul Krugman’s repeated leprechaun gibes, with the implication that the interests of small countries can be casually dismissed. Was also put off by his lame excuse that ‘the Irish have a sense of humour’ about this name-calling. I don’t.

“More broadly, I dislike (his) shallow assumption that Ireland’s economic transformation has a one-dimensional explanation. I put it down mainly to 50+ years of investment in education. I started secondary school in the 1st year of free education.

“And I was the first member of my family ever to go to university thanks to our Government’s investment in education starting in the 1960s. If you ask me, that’s the main reason why Ireland has been ‘transformed utterly’ in recent decades.”

Ronan McGreevy

Ronan McGreevy

Ronan McGreevy is a news reporter with The Irish Times