A New Model of Economic Development

The Irish economy will be the hardest hit by Brexit as it threatens to undermine its central dynamic. The Southern elite have turned the country into a tax haven to attract multi-nationals but also one that lacks internally generated substantial economic development. This means that indigenous capitalists are still dependent on exporting to Britain.

Here are some salient facts

  • Traditional manufacturers (i.e. textiles, clothing, leather, wood and paper products) rely on the UK for almost 36 percent of all exports. They also rely on Britain for many intermediate goods used in the production process.
  • 44% of the exports of indigenous Irish capitalism go to Britain.
  • The Southern economy is heavily reliant on tourism, which accounts for 150,000 jobs. Many of the visitors come from Britain and numbers will reduce if there is a decline in sterling.
  • Ireland’s agri-business is highly reliant on exporting to Britain – 23% of its exports go there.

A model that combines developing a tax haven economy alongside the acceptance of a weak form of Irish capitalism that is still – despite recent changes – dependent on a British market is now under threat.

A host of EU rules will challenge this model. If there is no deal, for example and both Britain and the EU were to apply WTO tariffs there could be a 20% levy on Irish food exports to Britain.

Under ‘country of origin rules’ there will be a major challenge from the EU to the use of intermediary goods sourced in Britain for production.

Above all, the tax haven form of Irish capitalism will be challenged. Britain itself – in a new alliance with Trump’s USA – will cut corporations taxes. Meanwhile, the Irish elite will lose a major ally inside the EU to defend their role as a tax haven.

All of this can mean a substantial loss of jobs and a major dislocation of the Irish economy. It means that a new model of economic development is required.

The tax dodging model is under pressure and failing the majority. Instead of closely aligning with the EU and British elites, People Before Profit would move Ireland in a fundamentally different direction. In place of tax dodging we would take the €18 billion from Apple and add it to the €23 billion identified by People Before Profit in the Alternative Budget 2018.

This war chest of more than €40 billion would be enough to kick start an entirely new economic model based on indigenous industrial development and the creation of strategic companies in a number of sectors.

At the same time we would redistribute wealth and income in the country away from the rich, towards the majority. This is the best insurance we now have against the bigger powers using Brexit for their own interests. Below we summarise our main ideas

  • A major re-distribution of wealth through new taxes on the rich to provide resources for state led development.
  • We need to create jobs by a major programme of house building and insulation. A state construction can do this and avoid the blackmail from private developers who are holding back building until prices rise even more.
  • We need state led banking to funnel resources to domestic industry
  • We need a switch to manufacturing in such areas as generic pharmaceuticals and products for a green economy.
  • We need public control of natural resources used to diversify towards a green economy that is not reliant on fossil fuels.
  • We need to break the grip that the beef barons have over Irish agriculture and re-orientate to more tillage and locally produced food.