Benefits of globalisation must be harnessed for greater good ... or else
GLOBALISATION may not be as old as the hills but it may be as old as Newgrange. Wholesale cultural exchange has been going on for millennia. Peter Frankopan’s new book, The Silk Roads, makes this point as it reframes our history in the context of dynamic interchange between East and West.
One of my favourite stories is that of the Roman Emperor Diocletian in 300 AD who was short of cash and desperate to squeeze every cent of tax out of every corner of his Empire. He attempted to set prices for staple goods across his realm and in Bodrum, Turkey, he counted 26 types of women’s footwear, including gilded sandals and “purple low-rise Babylonian style” shoes.
He attempted to set prices for staple goods across his realm and in Bodrum, Turkey, he counted 26 types of women’s footwear, including gilded sandals and “purple low-rise Babylonian style” shoes.
Can’t you just see the ladies sashaying down the catwalk and lifting their togas to show off their must-have “Babylonian low-rises”?
We could have stayed in our caves but we didn’t. We got out and traded. Trading is part of what makes us civilised human beings. Its necessity developed our languages and informed our culture.
But there has been no awareness whatsoever of the cultural value of trade in the media debate since the Apple judgement last week. Left and Right have divided on depressingly predictable lines and burrowed into their bunkers.
For both sides, the presence of multinational companies in our cities is about one thing only: jobs. For some on the Right, the multinationals should be allowed as little tax liability as they can get away with. For some on the Left, the multinationals should be punished for being profitable and pursued for every last cent they have until they run screaming from our shores.
But can you imagine our cities without the multinationals? If you’re middle-aged like me you can remember them. I used to cycle through the docklands area of Dublin on my way to college every day. It was a post-industrial wasteland. The transformation of this part of the city has been astonishing.
I used to cycle through the docklands area of Dublin on my way to college every day. It was a post-industrial wasteland. The transformation of this part of the city has been astonishing.
It’s not all big, shiny buildings, either. Looking for an early coffee during my daughter’s Gaelic football match on the South Lotts Road the other morning I wandered through the first open door I could see and found myself in a small restaurant/shop called Food Game where amazing bread was being made by artisan bakers.
I wrote in this newspaper in support of Galway’s successful bid to be Cultural Capital of Europe in 2020 that it was “a city made by art” and it is a fact that culture helped bring the multinational biomedical companies to the city. But the other part of the story is this: the presence of the multinationals helped build
But the other part of the story is this: the presence of the multinationals helped build culture in the city. The relationship between the multinationals and the city’s culture is, to quote NUIG geographer Patrick Collins, “circular”.
Those thousands of highly skilled, highly educated workers from all over the world impact on our cities in thousands of ways, of which their pay cheque is just one. There may have been a market on the site of Cork’s English Market since 1788 but does anyone think it would be the multi-cultural hub it is today were it not for the presence of the employees of Apple and their off-shoots?
It’s not all about bread and cheese, either. The debate has gone back and forth as to whether the presence of multinationals builds indigenous business creativity, but there seems to be strong evidence that it does.
Majella Giblin and Paul Ryan of NUIG’s Business and Economics Department have written about the creation of business “clusters” around leading multinationals.
And NUIG itself has a dynamic relationship with multinational companies which leads to more economic development: its National Centre of Biomedical Engineering Science is a partnership between the university and the bio-medical industry.
This partnership with industry is one of the reasons that NUI Galway this week moved up the international university rankings when all other Irish universities moved down.
Faced with a choice between Galway and Doncaster, I know which I’d choose. “Global cities” are exciting. I would find it depressing to live in any city which was not “global” despite the problems which they create: the widening of the gap between the more and less educated, the on-going concentration of economic activity in cities at the expense of rural communities and the massive environmental cost of global travel.
The presence of thousands of young, educated people from all over the world working in Dublin and Cork and Galway is transforming and enriching the culture of these cities. To prove the point you only have to think back to the lesson in the prayerful vigil of Hindu Praveen Halappanavar as his wife Savita paid with her life for the tragic inadequacies of our health system and Galway University Hospital in particular.
Ireland can’t hold back the tide of globalisation but even we could I don’t believe we should try.
Instead I think we should make globalisation work for people and with the environment. To do this we have to get stop companies globalising to avoid paying tax.
We all have our issues with the European Commission’s judgement against Apple. I wonder how easily its “special” tax arrangement — as well as that of six other companies under scrutiny — can be so easily distinguished from targeted incentives dished out by the IDA down the years .
The EU prohibits state aid to companies “unless it is justified by reasons of general economic development” — which it could be argued could apply to Apple in Ireland in the early 1990s.
I believe competition rules are being invoked here because there are still no good international mechanisms to outlaw multinationals using their globalised status to avoid tax.
The OECD was jumping up and down about this a couple of years ago with its “Action Plan on Base Erosion and Profit Shifting” in which it promised to regulate shenanigans like failing to locate an economic activity where it actually takes place and locating it somewhere it goes untaxed.
If the Emperor Diocletian could tax every last Babylonian low-rise heel in Bodrum in 300 AD you would think we could come up with an agreement which would force the payment of tax where the economic activity takes place.
We do not have a global empire but we have international trading partnerships in the developed world such as the G20, the OECD and indeed the EU which could regulate the tax affairs of multinationals if they tried.
The alternative is too horrible to contemplate: a continued widening of the gap between the rich and poor leading to widespread political unrest and a retreat to dark ages of primitive nationalism.
