Ireland’s Invisible Upper Hand Over Big Tech
Politico Europe reported recently on Ireland’s ability to make or break the privacy agendas of some of the world’s leading tech companies. In its essence, the article exposes how a country of 4.5 million people possesses a privacy regulator with the effective ability to determine policy for the more than 500 million people in the European Union (and billions beyond Europe). Through detailed investigation, Nick Vinocur’s piece argues that Ireland’s legal loopholes and economic reliance on companies like Facebook and Google give American big tech the upper hand over Europe. But it’s Dublin that has the upper hand, if only Ireland could muster up the courage to use it.
Silicon Valley is not buying influence in Ireland, as the piece asserts. It is simply taking advantage of two fundamental flaws in the relationship. The first flaw is the EU’s messy governance model (exacerbated for big tech by GDPR), one that Brussels and other countries in the Union have been unable to fix. The second, somewhat more tragic, is Ireland’s persistent fatalism and unwillingness to believe in its own abilities. Rather than being held captive by American tech companies, Ireland, if anything, is seriously underplaying its hand.
Ireland’s time to shine
In the shambolic European Union of 2019, Ireland is more influential than it has been since it rejected the Lisbon Treaty by popular vote in 2008. It is at the center of the one of the fundamental sticking points in Brexit, which is the desire to avoid a hard border between the Republic of Ireland and UK-controlled Northern Ireland. It is also poised to become the only English-speaking country in the bloc (save for a minority of Maltese) giving it unprecedented power in the anglophone halls of power in the European Commission once the British flee Brussels.
Once the UK is out of the picture, The Republic of Ireland, a country with deep ties to the United States and a unique position between the corporate cultures of America and Europe, is by miles the most attractive place for American companies to bridge their businesses to the European Union and the Eurozone.
Luck of the Irish?
As Vinocur does a good job explaining in his piece, Ireland’s low corporate tax development model was developed in the mid-20th century as the country tried to grow out of the agrarian poverty that Britain’s rule created. It was built on a fundamental strength that still holds true: the strong ties to centers of capital from the UK to America through its storied emigrant population.
But it also betrays a fundamental insecurity, which the country should have outgrown many years ago. This insecurity is the belief that Ireland’s core advantages lie in its ability to be a low-regulation tax haven, rather than its core advantages of strong human capital, excellent connectivity with Europe and the world, its attractive quality of life, and its political stability within the European Union. Today, Ireland has the fourth highest Human Development Index in the world, ten places above the US and the UK, and often ranks as the country that “brings the most good” to the world. Instead, many Irish have been led to believe that they’re lucky to have the money that comes with these investments, instead of feeling confident about their role in creating their thriving economy and society.
This insecurity underpins a fallacious argument that tech companies would pick up and flee if Ireland imposed greater taxation, or would go jurisdiction shopping if it imposed a stricter regulatory framework. Perhaps that would have been true in Big Tech’s infancy (or in a world where Brexit wasn’t happening) but the industry’s lack of other options, combined with the strong human and social capital investments that the companies have made in Ireland, give Ireland a much stronger hand than it is playing. Beyond this, the European Union could stem any capital flight to another member state to reward Ireland for taking stricter regulatory action, and would no doubt welcome the opportunity to create a more robust tech governance and taxation model in the process.
Becoming plucky, not lucky
But first Ireland needs to see a better version of itself when it looks in the mirror. And American tech companies need to be prepared for the consequences.
After America’s President Kennedy was assassinated in 1963, Daniel Patrick Moynihan, a storied New York politician and one of the Irish diaspora’s strongest voices in the world, sighed: “I don’t think there’s any point in being Irish if you don’t know that the world is going to break your heart eventually”.
But Ireland has changed a lot since the 1960s, and Senator Moynahan would likely recognize today that Ireland’s economic fortune is not luck, but the result of fifty years of careful cultivation, planning, and good policy. Once the Irish truly believe this (and begin asking their leaders to act accordingly), American tech giants are going to quickly find out who has the upper hand in the relationship.
