Draw Breath

There’s a strangely sloppy piece of editing in an article by John Murray Brown and Sophia Grene in today’s FT that begins incorrectly with the claim that “the Irish government has passed legislation to make it easier for hedge funds based in the Cayman Islands and other tax havens to move to Dublin.” Well, as Brown writes in paragraph three, the Irish government certainly will introduce legislation to this effect in the 2010 Finance Bill, but it hasn’t done so yet.

Update: As John points out in the comments, I was wrong about that: easier company migration is provided for in the Companies (Miscellaneous Provisions) Bill 2009, s.3(j) I think from a quick peek. Thanks John!

Still the rest of the piece is quite good, obliquely pointing to the challenge that the Irish face with this sort of initiative. The problem is that the IFSC has traditionally been marketed as a low regulatory price alternative to London, both in terms of taxes and in terms of regulatory costs. The key has been to keep Dublin’s regulatory regime a little lighter in touch than London’s, thus presumably attracting more footloose business to Ireland. It’s sounds good but it’s a risky approach. Make the regime too blasé and you end up tainting everyone who trades in your area with your reputation for being the “Wild West of European capitalism.” Make the regime too tough and you run the risk of international capital heading off to find a more amenable government.

And indeed this is the problem with Ireland’s undoubted success in attracting hedge fund ‘business’ to the country. On the one hand you don’t want to blind yourself so much that you attract too many Madoffs. At the same time you can’t gift yourself the gift of 20:20 regulatory vision if you want to nab business from the Brits. Ireland is attractive because, as an EU member, it doesn’t quite have the sulpheric smell of true a offshore haven. But it has to behave as much like one as it dare in order to compete. And there’s no reason on earth that the other EU members, particularly the UK, would like this.

So let’s just exercise a degree of scepticism about Irish plans in this area. You can be Michael Douglas or you can be Martin Sheen but you’re rarely allowed to be both.

I joined Simon McGarr’s show the Papal Nuncio the door Facebook campaign last night. No matter how Brian Cowen tries to fudge it, the Vatican has been a disgrace on child abuse from beginning to end. I agree that the primary responsibility for abuse lies within Ireland. The abuse took place in an atmosphere where the state had ceded total power over children to an unaccountable group (which, by the way, places Ireland in the sad and grubby tradition of Eastern Bloc countries when it comes to childcare). But that doesn’t mean that responsibility can’t be identified elsewhere too, especially when the Church, from top to bottom, actively pursued a policy of favouring their reputations and incomes over any consideration of child welfare.

Actually, that’s not fair to people who care about reputations. My sense is that the Church didn’t at all feel that its reputation was threatened. In order to fear for your reputation you must first be cogniscent of the shameful nature of your act. I haven’t seen any evidence that the senior figures in the church felt an ounce of guilt when they moved priests on to pastures new (well, until they were caught). So let’s call the Bishops’ cover-up an attempt to maintain a self-regulatory regime in order to maximise the rents accruing from the running of Ireland’s welfare system and in order to maintain a grip on the polity so they could continue to shape the state towards their own benefit. Strange how their ideological ends tended to coincide with their own profits.

Anyway, back to the Nuncio. I think it’s important to recognise that in booting the Papal Nuncio out, as well as expressing displeasure over his attitude towards the investigation into abuse, we would also be rethinking the character of the Church and of religion in Irish law. The Catholic Church, in deed or in claim, is more like a multinational company than a state and – what’s more – it seems to regard the trappings of statehood as little more than a convenient corporate veil, to be trotted out in response to any threat that local liabilities might drag head office into the fray.

As things stand, the Church is an organisation whose members have a primary duty to a sovereign state and who work for that state. But, for what it’s worth, the Vatican state’s territory is quite a bit smaller, if prettier, than the office space occupied by the Microsoft Campus in Redmond. The organisation is run as a global enterprise. The only trappings of statehood that are applied are those relating to diplomacy: as a state the Vatican is essentially a free-standing Foreign Office that only represents itself. Maintaining the fiction that the Irish Church is an arm of a state or is subject to that state’s rule is like saying that a clump of bog oak is a forest. It’s high time we stopped treating the Vatican like a state and started treating it more like we do McDonalds: if they want to operate here then they should be subject both to whatever level of regulation and taxation we deem appropriate. If people want to pursue their religious predilictions through the church that’s fine. But that doesn’t mean that the Irish state has to pretend that the Catholic Church’s executives are really diplomats, heads of state or what have you. If we Irish state inquiries seek information it should be forthcoming through policing channels. If the Vatican doesn’t like that, it can withdraw its representatives and cease trading in Ireland.

Let’s end the fiction and completely withdraw all diplomatic recognition from the Vatican. Or rather, oh to be from a country where that happened.

Update: Via Pete Baker, I see that Fintan O’Toole hits on a similar point. Far better put of course.

I’m skipping through this paper (h/t Baseline Scenario) this evening (in between finishing more appropriately weekendish books) and am very much enjoying it. Check out the two charts on page 24 if you want to get an insight into what’s gone wrong with global capitalism in the last three decades. Anyway, I love this quote from the intro:

As in the Middle Ages, perceived risks from lending to the state are larger than to some corporations. The price of default insurance is higher for some G7 governments than for McDonalds or the Campbell Soup Company. Yet there is one key difference between the situation today and that in the Middle Ages. Then, the biggest risk to the banks was from the sovereign. Today, perhaps the biggest risk to the sovereign comes from the banks.

I’m always a fan of Chekov’s blog (yes: I’m reading far far more than I’m writing!), but I am at times perplexed by his politics. I’m with him on the scepticism about nationalism in all its hues, but I’m confused about the manner in which he picks fights with his nationalist opponents. There is a huge gap between his more reflective comments on unionism and, in terms of political strategy, his comments on the Union. Compare for instance his considered and interesting post here with this strange, albeit short, post here.¹

I’m in a grouchy mood today, so I’ll focus on the kvetch.

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