As published on irishtimes.com, Sunday 22 March, 2020.
Where will the money come from? The cash being thrown at economies around the world will, in the first instance, be borrowed. Ultimately, taxes will have to rise. Suggested amounts run into trillions in the United States and the European Union. There are estimates of £100 billion in the UK and between €10 and €20 billion in Ireland. We play the children’s game that begins with doubling the number we first thought of.
That word “borrowed” is a slippery idea when the lender is yourself. When the lender is the Central Bank and the borrower the Government, we are lending money to ourselves. That, in practical terms, is why the previously esoteric concept of helicopter money is now a feature of most front pages.
I have a modest suggestion for Ireland. A potential source of much needed money that doesn’t involve a helicopter. Not too long ago it would have been regarded as extreme, idiotic and at the reckless end of policy proposals. It’s a sum that sits, happily but coincidentally, in the middle of those guesstimates for Ireland.
At a time when firmly held prior beliefs are discarded on a daily basis, any sacred cow is a candidate for slaughter. All radical ideas need to be examined and taken seriously.
A company called Apple recently handed over a large sum of back taxes to the Irish exchequer. Neither Apple nor Ireland wanted this to happen: it was mandated by the EU. With interest, I reckon that roughly €15 billion is sitting in an escrow account, quietly awaiting an appeal court verdict that could be a decade away. I’m not sure Tim Cook, Apple’s chief executive, would put up much of a fight if we decided to spend the money now.
All previous budgetary arithmetic is out of the window. If Ireland does need an extra €15 billion (or more), does it matter if it comes via borrowing or from disputed back taxes? While deficit scolds are a threatened species – governments have been able to borrow cheaply and with alacrity for a long time – their basic point still holds: too much debt can be a bad thing.