Ireland has raked in billions from tech giants. But what if the golden egg hen flies into the nest? | John Naughton

In 1958, a young Irish civil servant named Kenneth Whitaker surprised his political masters in Dublin with a 250-page document that he and some of his colleagues in the Treasury had been working on in secret for months. Its title, Economic Development, was perhaps deceptively bland, but its message was blindingly clear. The country was an economic mess, and unless drastic action was taken, its very existence as a viable state was in doubt.

Like the writer Fintan O’Toole put it in his memory, Ireland in the 1950s was essentially “a vast cattle ranch with a few towns and many small provincial towns attached”. This ranch had two main exports: live cattle and beef products, mostly for the British market, and young people, who emigrated by the thousands each year because there were no means of subsistence or of the prospect of a fulfilling life at home.

In July 1958, the Irish government accepted Whitaker’s analysis and asked him to draw up a program of economic expansion, which he duly did. A key phrase in the resulting document was that “willingness to welcome foreign capital is a necessary complement to secure foreign participation in industrial development”. In one of those occasional miracles that are the hinges of history, this radical idea escaped the attention of the nation’s reactionaries and became government policy. And a government body called the Industrial Development Authority (IDA), made up of zealous technocrats, set out to make it a reality.

And boy, did they pull it off. Ireland may still export cattle and dairy, but foreign multinationals represent 10.2% employment and 66% of the country’s exports. At first, the entrants were continental companies such as the crane manufacturer Liebherr, large pharmaceutical companies such as Pfizer and computer manufacturers such as Apple and the defunct DEC (Digital Equipment Corporation), but in due course the rush to establish Europe HQs in Dublin included much of the Silicon Valley crowd. A Rapid search reveals 19 major companies, including Google, Facebook, Airbnb, PayPal, Twitter, Microsoft, eBay, LinkedIn, Squarespace, IBM, Seagate, Adobe, Dell, Oracle… The list goes on.

Why do these outfits so want to be on the banks of the Liffey? Although they often talk about the young, educated, English-speaking Irish workforce, there are three main reasons. Ireland is in the EU, its government agencies have bent over backwards to make their lives easier, and the tax regime is, uh, favourable. So favorable, in fact, that when in 2016 the European Commission ruled that Apple had to pay the Irish government €13 billion in underpaid taxes because “Ireland had granted illegal tax benefits to Apple” , not only did Apple appeal the decision, but the Irish government too! (The call was successful.)

So far, realizing Whitaker’s vision for the development of his country has looked like a win-win outcome. This explains why the government of the republic currently has money coming out of its ears, to the point that the Minister of Finance, Paschal Donohoe, had to warn that high corporate tax revenues create an artificially positive image of public finances. Corporate tax generated 16.6 billion euros for the 10 months to the end of October, or 69% more than the same period last year. And Donohoe hears predictions that overall tax revenue for the year could reach 80 billion euros. No other European government is in such good fiscal health.

Trebles all round then? Not enough. This torrent of tax revenue is happening because big business — especially tech companies — have thrived mightily during the pandemic. But there is a downturn ahead for everyone (except maybe the energy companies). Of greater concern, however, is what this latest display of Irish luck reveals about the state’s reliance on the prosperity of these newcomers who received the traditional hundred thousand welcome by IDA wizards. Because it turns out, says O’Toole, that “10% of all tax revenue in Ireland now comes from just 10 American companies”, identified by one of his irish time colleagues as probably Apple, Microsoft, Google, Pfizer, Merck, Johnson & Johnson, Facebook, Intel, Medtronic and Coca-Cola. Five of them are tech giants.

Just to underscore this point, as Donohoe began counting its billions, news came that several of the aforementioned giants were downsizing. Twitter’s office in Dublin was abruptly closed last week, for example, and the IDA was informing the government on the “risk to jobs in the Irish tech sector following the Twitter move”. And there are indications that Meta is about to lay off about 350 people.

And the moral? If you are lucky enough to receive golden eggs, don’t put them all in one basket.

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