“Leprechaun economics” creates fictitious growth

By Aprille Scully

Suspend your sense of disbelief – Ireland’s economy “grew” by a staggering 26.3% in GDP in 2015. This caused even the Financial Times (the unapologetic newspaper of international capitalism) to ask “has the Irish economy become so distorted by its tax regime that nobody knows what is happening on the ground?”

Multinationals skew growth

The rise in GDP was not reflected in jobs as promised, with a meagre rise of 2.6% as Irish society still struggles with unemployment and underemployment. In fact, 18% of adults living in poverty are employed. So where can we see this soaring growth? The answer is, in profits for multinationals due to tax evasion practice.

The biggest contributing factor to this GDP “growth” was an increase of €300bn in Ireland’s stock of productive assets. A large chunk of this is Apple moving its intellectual property assets; that is the copyrights, patents on design and technology from the Silicon Valley. Instead, they are claimed as being ‘invented’ in Ireland for tax purposes. US economist Paul Krugman has labelled this “leprechaun economics”; like our twee national mascot, it is purely fictitious.

A dual task is accomplished here; Apple can minimise the tax it pays on profits while the Irish government can tout Ireland as a ‘open for business’ and use these soaring growth figures provides ‘proof’ that the programme of austerity works.

Cooking the books

This cooking of the books echoes the Goldman Sachs/Greek government deal of 2001 where Goldman Sachs helped the Greek government to mask the true extent of its deficit in order to circumvent the EU Maastricht deficit rules.

Using fictitious market exchange rate Goldman Sachs cross-currency loan of €2.8bn. As a result, 2% of Greece’s debt disappeared from its national accounts. Goldman Sachs received €600m for its services. There is no time here to give justice to the effects of the brutal austerity regime the Greek working class are now enduring over the Greek debt.

Reactions ranging from disbelief to scorn has accompanied the news of the growth figures in Ireland. Earlier this year, Fine Gael had to ditch their “Keep the Recovery Going” tagline of their election campaign such was the backlash against it. Only this week news broke that Irish universities and colleges have fallen in the world rankings again due to funding cuts affecting the quality of education students receive.

The emptiness of the ‘recovery’ and fabricated growth figures is all the capitalist class is capable of giving. They are incapable of addressing the crisis in housing, health and education. Capitalism is incapable of providing a decent standard of living for working class people. A left government is needed that breaks with this system and implement socialist policies that prioritise our needs not multinational greed.