Monday, December 08, 2014

Is Maintaining Museums more important than maintaining the corporation tax rate

It is often said that the only reason foreign companies are in Ireland is because of the 12.5% corporation tax rate. That if we increased this rate these companies would go and never return. You may be surprised to learn the 12.5% rate wasn’t something concocted by Sean Lemass in the 60s or something created in the depths of the depression of the 80s to save the good ship LE Ireland from doom. No. In fact the 12.5% corporation tax rate was introduced by Charlie McCreevy in 2003 during the height of the boom.

The belief that this rate and this rate alone is why the companies are here doesn’t stack up to much consideration. If it is all about the corporation tax rate why are all Facebook’s software engineers not just based in the Caymen Islands or the Isle of Mann? In 2013 Facebook paid €2.3 million euro in tax on profits of around €7 million in Ireland. Going by the logic that corporation tax is the be all and end all, a doubling  of the corporation tax rate in Ireland and thus a bill of an extra €2.3 million would cause them to leave. So that then poses the question. If €2.3 million extra is enough to get them to leave Ireland, how come €10.49 million yearly rent is not enough to get them to leave the city center of Dublin for say the cheaper office space of Longford?

The profits that Facebook made in 2013 were on the back of revenues of €2.9 billion so an astute observer might point out. What the relevant aspect of the Irish taxation system is not the 12.5% rate but the double Dutch Irish sandwich and that is why these companies are here. And indeed it is true,  there are many companies that are based in Ireland for these reasons. Many of them are in the IFSC and consist of no more than a single office and a letter box. So then the question becomes. Why if Facebook etc’s purpose here is purely for the tax regime, would they go to the expense and bother of hiring 1000s of people and spending millions on rent, when they could achieve the same effect with a small office in the IFSC?

The location of companies are not arbitrary (something politicians and governments seem unable to grasp when they keep promising to get some multinational to move to a provincial town). At the start of the industrial revolution in Britain, factories were formed in very precise places, beside water. They needed streams and rivers to provide the power to run their looms and mills, it was the key resource. Without water their factories didn’t function. Later on in the industrial revolution and with the invention of steam power, companies were no longer tied to rivers, what they were tied to was their most vital resource, coal. And thus the great factories of the Victorian era were built near coal fields, making the towns of Birmingham and Manchester, cities. Today, companies are still restricted to locate near their most valuable resource, however that resource is now talent instead of the water and coal of yesteryear.

Google, Facebook, Twitter all require talented individuals to make them their billions. They need for want of a better word nerds. So how do you get nerds? Well first of all you have to pay them a salary but anyone can do that and not all nerds are motivated purely by money. Want to know where the best paid university academic positions in the world are? Saudi Arabia. Why? Because no nerds want to live in Riyadh where its 52 degrees in the shade and you have a religious police. Neither do they want to live on the Caymen islands and sit on the beach drinking cocktails with umbrellas all day. Nerds want to live in cities preferably English speaking because that is the international language and also if in Europe in the EU to allow ease of movement. But it is not just any cities. Look at America, nerds live in San Francisco, Boston, Seattle, not Detroit, Miami, or Las Vegas. They want cities with character, history and culture. They don’t want sprawling suburbs they want town centers.

They want theatres, coffee shops, cosy pubs, music, restaurants, art galleries, museums. and this is why the recent news about the impending closure of museums in Dublin is so serious. Dublin can attract nerds to live there because it can offer them the type of life they want, It is big but still small enough compared to say a London to retain a community feel to it, it offers restaurants, coffee shops, theatres and other cultural outlets that a small town like Longford (or indeed the Isle of Mann) just can’t compete with. And because it has these things, it attracts and retains nerds. And because it does, it attracts and retains Facebook, Google etc. Once it does this it attracts even more nerds which attracts even more companies chasing the talent already in big companies.

Museums are an integral part of a city's cultural life. If the cultural life of the city is not treated with respect and supported by the government, if Galleries, theatres, museums are shut, Dublin will become a far duller place to live, and the young mobile nerds that Facebook and similar depends on might think twice about living in Dublin. And if they up and leave, well Facebook isn’t going to stay. For Facebook an inability to recruit the best of the best is going to have them out of the country far quicker than an extra €2.3 million in tax will ever have.        

Thursday, July 24, 2014

Why is there a Left Right split on Gaza

If one was to judge the scale of the devastation wrought by a present conflict judging by media and social media coverage you would conclude that the current conflict between Israel and Palestine is the most serious conflict currently raging. However you would be wrong. To date the current conflict has taken the lives at the time of writing of around 200 people. To put this into some context, in June 3,298 lives were lost in conflicts in Africa of which 1,176 were in Nigeria. If you read the website of the  Armed Conflict Location & Event Data Project  you can see comprehensive cataloguing of these numbers. This is not an attempt to belittle the suffering in Gaza at the moment, but to ask why is it that this conflict rather than the conflicts that are most costly in lives, exercises ourselves and the media so much?   

Here is a quick question. What is your opinion on minimum wage in Ireland? Would you think A.) It should be increased to a living wage, or B.) It should be abolished as it prices people out of work? On the face of it this question has nothing to do with the Israel –Palestine conflict. But if you dig a bit deeper you can see that is has absolutely nothing to do with the Israeli- Palestine conflict. Yet I would imagine over 95% of those who answered A would be pro-Palestinian and the Bs would be similarly pro-Israeli. Why?  Name one public commentator who is of a left wing persuasion and is pro-Israel? It is not easy. Yet why is that?

The Israeli-Palestine conflict is not a conflict that is based upon a left-right divide. It isn’t hard to articulate a left wing pro-Israeli argument if one wanted to.  Israel is far more liberal on issues of gender equality, sexuality equality, trade unionism etc than most of its neighbours. You could also argue that they are more tolerant of religious minorities than Hamas are. Likewise it isn’t hard to argue for Palestine from a right wing point of view. Israel’s government’s use of the control of utilities in the west bank is the ultimate argument for why utilities shouldn’t be in the hands of governments with their management being more political then services provision. The blockade is a real barrier to free enterprise which is the hope for the future prosperity of Gaza and the entire Israeli state is one massive block on the path to individual freedom for the people of Gaza.  Yet these are arguments that are rarely if ever articulated. Instead we get a polarised debate that is split precisely on ideological grounds that have zero to do with the conflict. Why?

Some on the left would say that they stand on the side of the oppressed and therefore by default would side with the Palestinians. But being on the side of the oppressed was the reason many on the right gave for supporting the invasion of Iraq. And Israel is a country that is surrounded by countries that wish it was annihilated and the Jewish are a race who  were almost annihilated. They are not a people or nation that cannot themselves make some justified claim to the term oppressed.  Rightly or wrongly neither side has a monopoly on the ideal of justifying support on the basis of protecting the oppressed.
On the right, people would claim the high moral ground that the Israelis target terrorist sites and that Hamas target civilians and use this as a justification of who to support. But this idea ignores the simple reality of the situation that Israel has laser guided missiles that can accurately target a few meters. While to suggest that Hamas missiles are technologically sophisticated enough to target is stretching the definition of the word target. Also, while Israel may intend not to kill civilians and Hamas may intend to kill them, at the end of the day Israel is the one that kills the most civilians.

So why then is a conflict that contains no obvious right-left divide so divided in the West on a right-left divide? That is a question I cannot answer but here is a theory to disregard.
The cold war was the last great ideological conflict split on traditional left-right lines. Now as you all know this war was fought via proxies. America armed South Vietnam so Russia armed North Vietnam. Likewise America armed Israel, Russia armed Egypt, Syria and the PLO. Therefore the middle-east conflict while not explicitly a left-right divide gained a left-right divide. One which even after the fall of the Soviet Union it has not shaken off. Political ideologies are very much like political parties. Once you gain one you enter a situation where you have an enemy and the purpose of the exercise is to win. Winning requires a unified front and a consistent ideological front. That encompasses a coherent united message on all topics. Any deviating from the message weakens the collective front, and makes the opposing ideology stronger. Crossing the aisle on any issue feels like betrayal. So few do. It is easier to default to the “party line” than assess every single issue in the world individually. And thus we arrive at the polarised nature of the Palestinian conflict.
Africa however doesn’t really have that same framework, while many of the troubles are derived from the western colonialism. There isn’t really much western influence present on the ground to really hang an ideological hat on. The causes and the divides that exist in these countries are too complicated for us to understand and don’t really affect us. So we don’t bother and simply don’t care as much for the to date (15th of July ) 20,462 lives that have been lost in Africa in conflict in 2014.  

If we were truly concerned about the rights of the oppressed, human rights, rights to individual freedom, the right to live without fear. Africa would garner more debate, more searching for solutions, more protests, then the middle-east. In truth, it seems we are just interested in squabbling amongst ourselves and point scoring. We don’t have a grand vision for a peaceful world, we just fall back on hot topics. As a result Africa is ablaze unnoticed, whilst we cry over the relative, few sparks in Palestine