Ireland’s Tax Haven Economy Isn’t Delivering for Its People
The Irish establishment has built one of the world’s most successful tax havens. This economic model has produced spectacular headline figures for GDP growth, but most Irish workers aren’t seeing the benefits in terms of wages and living standards.
A view of a tents outside a closed shop on Henry Street in Dublin city center, May 9, 2021. (Artur Widak / NurPhoto via Getty Images)
In 2015, Ireland posted annual gross domestic product (GDP) growth of 24.5 percent. The claim that a Western European economy could grow by a quarter in one year was clearly outlandish, particularly as Ireland had only just exited a troika bailout program in 2013.
Writing in the New York Times, Paul Krugman coined the term “Leprechaun Economics” to define the wildly inflated growth statistics of the Irish state. The Irish ambassador to the United States immediately complained, but the Irish Statistics Office quietly acknowledged that Krugman was onto something when it created an entirely new measure for the Irish economy known as modified gross national income (GNI*).
In most states, GDP and national income are more or less interchangeable. This is true in most of the Organisation for Economic Co-operation and Development (OECD) countries, for example. In Ireland, on the other hand, the two diverged steadily during the 1990s before parting ways more quickly after 2015.
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