Big American companies (like Dell and google) need a stepping stone into the protectionist European Union and they are not going to choose France (too socialist) nor Germany (too expensive) nor Eastern Europe (anything might happen), so they choose Ireland. So Ireland floated themselves on the US technology boom, and it was good while it lasted but there’s been a bit of a letdown recently, no surprise that Ireland has also been let down. But think about this: the investment in training, know-how and technology infrastructure that the US tech giants pushed into Ireland is all still there. Dell might close down factories but those people who assembled Dell laptops last year can rapidly adapt to Toshiba laptops next year.

Ireland was primarily an agricultural economy not long ago, they have gone from a technological backwater to a place where at least some serious engineering happens.

Plus, they now have available infrastructure and knowledge that will be even more attractive to future business and give them a chance at maybe something home grown. Any future business investing in Europe will face the same decisions that Dell and google faced and quite likely come to the same conclusions. I think we have to work off the presumption that future business will happen (once the international banking industry goes back to something moderately stable like a gold standard) because these things always work themselves out… people still want to trade.

Apparently, I’m having difficulty convincing people that we might not be in a steady state growth situation right now.

Do you see a distinction between “in principle, at some time in the future” and “right now”?

Look, everyone can put “rocket fuel” in their economy right now by cutting corporate tax rates to zero. Except it’s obvious that that won’t work, because it relies on attracting existing activity from somewhere else. Zero sum.

And I still can’t understand this “white man’s burden” thing. I know what the term means, but I can’t understand why you’re using it. I’m not being deliberately obtuse here, I’m genuinely mystified.

Whether or not the reduction in company tax rates makes sense, at this particular point of time, there’s a risk that it’ll be seen as a “beggar thy neighbour” policy. We cut to 19%, some other country immediately cuts to 5%, we gain nothing. cf Smoot-Hawley.

Sort of. The types of business that were attracted to Ireland during the bubble departed again once the bubble burst.

As Ireland slides deeper into a recession, its workers are returning to the emigration trail that blighted the nation for 150 years until the Celtic Tiger economic boom of the 1990s. With the Dublin-based Economic and Social Research Institute forecasting that 50,000 people will leave in search of work, the country is facing what former Prime Minister Bertie Ahern calls the dark days of mass exodus again.

The 1980s are on peoples minds, and they dont want to go back there, said Dermot OLeary, chief economist at Dublin- based Goodbody Stockbrokers. Population growth helped drive Irelands economy, so a reversal is going to hurt by reducing the economys productive capacity.

The flight — the biggest in two decades — comes as Irelands economy shrinks the most of any euro-area nation. Gross domestic product may contract by about 10 percent between 2008 and 2010, and the jobless rate may reach 15 percent by the end of next year, a 15-year high, according to Goodbody. Unemployment averaged 4.6 percent in 2007.

Unemployment Lines

Many of those joining unemployment lines and considering emigrating worked in construction, which is shrinking at a record pace after a decade-long boom. Elaine McNamara, who came home from Australia in 2006, plans to return in June with her partner, a carpenter.

My boyfriend could be laid off at any time, the 28-year- old said. The building industry is very bad.

Renewed emigration marks a sharp change of fortune for the island nation, which has a population of 4.4 million. Between 2000 and 2008, a net 400,000 people arrived, drawn by work at building sites, factories and hotels. Thats all changed as Dell Inc., Intel Corp. and Waterford Wedgwood Plc, the Kilbarry, Waterford-based maker of crystal and tableware, cut jobs.

Biggest Exporter

Once Irelands biggest exporter, Dell — based in Round Rock, Texas, and the worlds second-largest personal-computer maker — said last month it will eliminate 1,900 jobs at its factory near Limerick. Santa Clara, California-based Intel, the worlds biggest maker of computer chips, said on Feb. 17 that it is seeking 200 to 300 voluntary job cuts at its plant in Leixlip, west of Dublin, where about 5,000 people work.

Davy, Irelands largest securities firm, this week said it will cut 12 jobs, adding to the 70 it shed last year. Unemployment-benefit claims rose 11 percent to 326,100 in January, the highest since records began in 1967.

The biggest exodus this year will be among the 170,000 workers who arrived during the past four years from Poland and other central and eastern European countries. Locals are starting to join the retreat, threatening smaller communities that often rely on a single industry.

But that’s not unique to Ireland. The same can be observed in India and China, amongst others. It’d be fair to say that the stronger the growth during the bubble’s expansion, the bigger the hit afterward.

The danger at this stage is different. There are things that Australia could do to improve its situation, like currency devaluation, increasing tariffs, or lowering company taxes. You see where this is leading? All of these things work if Australia does them, but the other countries don’t.

I’d also endorse NPOV’s “zero sum” argument above.

Ireland is in a parlous state – in the short term. So what?

Are you saying that the company tax cuts have led to Ireland’s savage recession? If so please set out the argument.

If you do, I’m arguing that Ireland’s tax competition has been a substantial part of driving them from near the bottom of European living standards to near the top (less a bit for the current sharper recession than others in Europe.

Here’s what you said last November.:

Irelands economic acceleration has been supercharged by a company tax rate of 12.5%. Its top personal rate? 42%…

But Id argue that the case for cutting company tax is, if anything, stronger than Henry lets on. Thats because another kind of “alignment” — that between low levels of company tax rates and high levels of economic growth — is one of the few really robust policy implications of cross country studies.

Where’s Ireland now? In the toilet, that’s where.

You’d be aware of the terms “bubble” and “race to the bottom”. It’s not a sustainable strategy, and more importantly, it’s not one that sensible people entertain after the bubble has burst.