The Ed Sheeranisation of Irish Economic Policy

0:00Coming up on today's podcast, the Ed Sheeranization of the Irish economy. It is all topical. It's all about choices. It's all about being on the right side of history.

0:11David McWilliams: We are talking about the Irish economy, the global economy, the European economy. We are going to see how we are doing a couple of weeks ahead of the budget. We're going to take five specific topics. Don't miss it. It's all coming up in a couple of minutes.

0:33Hey everyone, it's Chris Guillebeau here, host of the Side Hustle School podcast. This episode is powered by AT &T Business. In my early days, I did some of my best work in parked cars or coffee shops. But when I landed my first big contract, I realized I couldn't bet my future on a public connection that cuts out if someone turns on a blender. As a small business owner, you're already wearing at least 10 hats. You shouldn't have to be your own IT department as well. That's why I rely on AT &T Business. They keep your connectivity reliable so you have one less thing to worry about. Powered by AT &T Business, built to work.

1:08Get AT &T Business at business.att.com.

1:15As a fitness coach, my active psoriatic arthritis can slow me down. With Sky Rizzy, Rizzinkizumab RZA, I'm treating my skin and joint symptoms so I can keep moving. SkyRizzy, a prescription-only injection for adults, helps me move with less joint pain, stiffness, swelling, and fatigue. And for those who have plaque psoriasis, 90 % clearer skin is possible. With SkyRizzy, there's no daily dosing. It's just four doses a year after two starter doses. Don't use if allergic to SkyRizzy. Serious allergic reactions, increased infections, or lower ability to fight them may occur. Before treatment, get checked for infections and tuberculosis.

1:50Tell your doctor about any flu-like symptoms or vaccines. Thanks to SkyRizzy, there's nothing like clearer skin and better movement. And that means everything.

2:02Ask your doctor about SkyRizzy. Visit SkyRizzy.com or call 1-866-SKYRizzy to learn more.

2:15To understand the economy, you have to understand human nature. This podcast is powered by ACAST. How are you doing there? It is time for the podcast. I am sitting here in County Clare, in West Clare. Maybe North Clare even. You don't know where you are, Mac, do you? I'm not too sure of my Clare geography. Are we West Clare? It seems very West Clare here. The reason it seems West Clare, John, is I'm looking out on the Atlantic. It is a grey sky. The sun is trying to come out, but the wind coming off the Atlantic is extraordinary. The sea is huge. It's grey. It's looking angry. I'm not sure even if the best of those fellows who get up on boards, what do you call them again?

3:08Surfboarders. Surfers. Fellows who get up on bits of water, bits of plywood, bits of fiberglass. I'm not sure if even the most courageous of those

3:17David McWilliams: would go out today. And do you know what I'm worried about, John? I'll tell you what. I've also, as you know, booked in in about two or three weeks' time for a week in Inish Man on my Todd. And I'm just thinking, this is what it's like on the mainland. If this is what it's like on land in the west of Ireland as the nights get darker and the wind gets foulier. Stick up a windmill quick. Hey, foul them, Caelic. I would stick up two williams. Anyway, it is wonderful, dear listeners. We are coming from the west of Ireland here. John is going to join me in a couple of hours, maybe the day's time, down in a little pub called Frawley's in Le Hinch, where we're going to sit in the back with a number of us, a couple of us, and we are going to drink pints and talk about the world.

4:05David McWilliams: Yes, Dean. And John, I mean, you, on the other hand, have been waltzing around France, experiencing autumnal colours, almost like a Cezanne painting. And I have been here like pegsaires out in the middle of the West Atlantic. Well, I'm just back from France. I was at a fantastic, an epic wedding. Of course you were. Epic proportions. But I'm feeling a bit sudden. It was a full week of drink and carousing and all sorts of stuff. But when you say France in the autumn, France in the autumn is gorgeous because all the vines start turning oranges and the reds and it's just the right temperature. It's like the scanner in the autumn.

4:45The oranges, the reds, the temperatures, but it's interesting. I'm looking out here and you know the way you look out at the Atlantic

4:51David McWilliams: and when you are in this part of the world, it is very evocative of Ireland, of emigration, of the relationship with New York. I mean, the next parish over is either New York or Boston. I'm going there, as you know, in a couple of weeks to do an event in the Irish Arts Centre. Have a look at the Irish Arts Centre in Manhattan. irishartsenter.org an evening with me chatting away with Doni O'Sullivan but John when you're out here you kind of have this extraordinary echo of the millions of people who left this part of the country for America you really feel much more close to it than you do in Dublin much much more close yeah yeah yeah yeah absolutely and all those kind of famine villages and you know those little a few stones left of these houses that huge families lived in.

5:42And they're gone. I mean, that's the one of the reasons I'm going down to Inishmane to do a bit of Gaelic again, because you just forget that

5:48David McWilliams: a language was spoken in this country and particularly as part of the country for 2 ,700 years. Yeah. And it disappeared in three generations. Baten out of it. Or maybe four generations. Do you know what I mean? Yeah. That is a linguistic elimination of a culture on an industrial scale. Anyway, enough of that. Yeah. Well, anyway, Mark, apart from all of that stuff, let's talk about modern Ireland. You know, we're coming up to a budget. We're coming up to Christmas. Trump has just left. You know, there's all sorts of stuff going on. There's all sorts of internal pressures and external pressures on the Irish economy.

6:29So what I want to ask you is, where are we at now at this stage? Give us a kind of an overview of the Irish economy, a snapshot. Okay. Well, John, what we'll do, So it'll be like a midterm assessment, right? You've just had your first, I mean, it's back to school. You've had your first six weeks of school. It's Halloween. You're about to go and you're a holly-earth for Halloween or it's close to Halloween. And the teacher is going to say, well, how is the young fella doing? How is the kid doing?

6:57David McWilliams: So what we're going to do, John, today, we are going to have a snapshot of the Irish economy. I'm going to break it down into five specific areas. So if you're taking notes, I'm going to do number one is going to be called the show house. And that's going to be a description of the top line numbers in Ireland. The reason I call it the show house is because it is a little bit like a brag. You know, it's that Irish humble brag. It's like the show house in a new estate, right? Yeah, yeah, yeah. Perfect. All the white goods are put in. Yeah. IKEA have been around and they've done the interiors, the entire thing.

7:33but the rest of the estate is a total mess. But the show house looks good. The show house is full of those kind of inappropriate colours for a family because they're all kind of lovely beige and white. And the minute the kids get in there, it's fucking trashed. So the first thing to the show house, I'll give you the top line numbers, which are very good. Yeah.

7:51David McWilliams: The second one I'm going to say is where does the Irish economy live in the global economy? What is our strategic geographic, financial and political position? And I'm going to call this in parenthesis because of the week it's in it, the Ed Sheeranization of the Irish economy. We're going to go back to Ed Sheeran, okay? And we're going to talk about how Ireland is the Ed Sheeran of global economics. Right, okay. Okay? That would be interesting. And it's crucial that we don't make the mistake that Ed made this last week. Then I'm going to talk about under the hood, take a look at what is actually happening underneath the economy, the mechanisms, what's pushing it in certain directions.

8:31That's the third factor. The fourth factor we're going to take is the risks. What are the risks to the economy? What are the risks to society? What are the risks to, for example, the way in which Irish prosperity has evolved over a while? And they're largely going to be located in the United States, John, in AI, in the super scalars. One of our problems is we are so American adjacent that if something happens in America, particularly in the financial or stock market side of things,

9:00David McWilliams: we could feel things very nastily. There's also a few Reds coming from the East as well, but we'll come back to that. This is the Russians are coming. The Reds are to the bed. The Russians are coming. They are, they are. Before you know it, there'll be a bunch of Cossacks pouring down Le Hinch main street on horses, okay? And finally, then we're going to look at what are the problems? Are there the problems of success and the problems of failure? I'm going to take that. So we've got five specific subplots in our midterm break assessment of the Irish economy. Okay, okay. So let's start with the show house.

9:37David McWilliams: Bing bong. Bing bong, exactly. So basically, if you look at the show house, Ireland is the show house economy of Europe, if not of the developed world, ex-Asia. And by that, I mean, if you look at all the indicators, things have never, ever been stronger. So the rate of unemployment has never been lower. The amount of people at work has never been higher. Retail sales, John, are extremely high at the moment. Car sales are extremely high at the moment. Tax revenues are unbelievably buoyant. You know, things like the electricity grid, the use of electricity, these are all sort of leading indicators that you would look to say, okay, how is the economy doing?

10:20And what you would say is that the show house looks particularly showy. Everything is bright and shiny. And the sort of brochures that Ireland would put out are that, for example, if an economist from outside of Ireland were to come in here

10:36David McWilliams: and do the tick list, the top 10 items that need to be going the right way, then Ireland is going the right way in terms of show has looked amazing. Well-appointed and all the rest. All those phrases that they use. Exactly, exactly. So if you were to take a snapshot of the main macroeconomic indicators, like an overview, you would say, hold on a second, this society is being powered by an extraordinarily robust economic engine. Income tax, John, for example, is up 4.3 % this year. That's a huge increase in income tax, about 36.6 billion. And again, the reason that income tax is important is because income tax measures employment, employment measures wages.

11:27David McWilliams: Wages are most people's wealth is in their wage in the sense that most people's income depends on their wage, not on their housing wealth or on dividends or on rent or anything. Most average person, it's based on wages. So if your income tax revenue is going up, What it does is it tells you that broadly based, the economy is motoring along. And as I said, in the last year, income tax is up 4.3 % to 36.6 billion. Can I just ask you there, is that because there are more people in work now? Because we always had pretty much full employment. Or is it that wages are rising and therefore tax revenues rising?

12:08David McWilliams: Well, it's a combination of both. Wages are rising modestly, but there are more people at work. and you said there we always had full employment. There's a little caveat. We've had full employment for about 10 years. Prior to that, the major failing in Ireland has always been the inability to provide enough employment for the people, which is why West Clare and places on the West Coast have seen so many historically high levels of emigration because we simply couldn't provide enough wages for the people. Now, of course, we have immigration, which is, again, a new phenomenon and is a phenomenon, a function of the fact that the economy...

12:51Trump has employed them all over there in... Well, down the road in Doon Bay, they won't say a word again in here. They won't say a word again over here. No, no, they won't.

12:58David McWilliams: The other thing is corporation tax. The big one, John, that is up 17.2 % this year. It's enormous. Enormous. 32.9 billion euros in corporation tax. It is a phenomenally high. It's about one third of all taxes are from corporation tax. The equivalent in typical OECD countries is a tenth of all taxes come from corporation taxes. In Ireland, it's a third, which means that we are both profiting enormously from corporation tax. But we're also highly vulnerable today, that tax, because it is much more volatile. And of course, what it means is that we are an American adjacent economy in the sense that we are soldered on to the tech sector in a way we have doubled down on our connection with Silicon Valley.

13:55If you want to find a derivative of Silicon Valley outside of California, it is the Irish economy. And that is most evident in the corporation tax take. That is a good and a bad thing. And we'll talk about that in a second. VAT is already up 5 % this year. Now, VAT is your value-added tax.

14:15David McWilliams: It basically is an indirect tax. It's a tax on spending. So what it shows you is that consumer spending is extremely buoyant. So you can tell loads of things about just the snapshot of the economy. If you ever want to look at this, just look at the tax take. It tells you everything in terms of where growth is, where growth is not, etc. So VAT is up 5%, about$22 billion. And then you've got PRSI. Hang on a sec, before you get on to that, can I just ask you about the VAT then? That also includes them keeping the low VAT rate, as we were talking about last week, for the nighttime economy, restaurants, cafes, all that kind of stuff.

14:55So reducing the VAT in that sector hasn't impacted, you know, the tax receipts, which was the argument that the government were putting up. You're absolutely right.

15:04David McWilliams: Some people are saying you reduce VAT, you reduce what they call the tax base, and you become more exposed to falls in taxation. What we're seeing here is the Laffer curve idea, which is the lower the tax goes, the more you generate income, and actually you will end up generating more tax revenue at lower tax rates. That's the Laffer curve. I would dismiss over time whether that actually holds. But right now, what you have is that VAT in Ireland is a combination of buoyant domestic demand, which has been driven by higher wages, which has been driven by more people at work, which has also been driven by the wealth effect, particularly for the middle classes, from higher house prices.

15:54People feel wealthier. They're more inclined to take out mortgages against properties. They're more inclined to spend because there's a feel-good factor. All of this, John, is the show house. So does that mean there's more scope for VAT cuts? There's definitely scope for tax cuts. There's no doubt.

16:12David McWilliams: I mean, there's absolutely no doubt. But, but, but, but, at the moment, I presume the state is going to take the view, particularly the Department of Finance, because they are intrinsically conservative boffins, they will take the view that the ship is steady, don't change anything. Yeah. And we don't need more. Stuff that money under the mattress quick. Well, we don't need more tax cuts because there's already enough demand in the economy. Yeah. That's the economic side. Then there's the moral and political side, which is, hold on a second, people are pinned to their collars, they're working their arses off.

16:45David McWilliams: At the end of the day, because inflation is high and rising, the show house doesn't necessarily translate into people feeling that they're rich. This is the contrast that we'll talk about in a minute between the standard living, which is the number that tells you you're doing okay, and the quality of life, which is the feeling. So I've always said the reason economists get things so wrong is when economists see a price, they see a number. When normal people see a price, they get a feeling. And it's a feeling that, you know what, the economy is running away from me. I'm just about keeping up. I'm knackered every day.

17:27David McWilliams: I have nothing at the end of the month. You might tell me that I'm doing well. You might tell me that unemployment has fallen. You might tell me the tax takers up, but I'm not feeding it. So the fee is the key thing. And value is a purely subjective thing anyway. And inflation is subjective because your inflation is very different to my inflation. So for example, if I am an older person, my inflation is the cost of heating. Yeah. electricity, a basic basket of goods in terms of basic food. And that's about if I'm older, right? Whereas if I'm a kid, my inflation is the price of booze, price of going out.

18:03No, think about it, the price of going out, all that sort of thing.

18:06David McWilliams: If I'm middle-aged, my inflation is the price of private health insurance, the price of car insurance, the mortgage rate, which doesn't apply to older people because the mortgage are paid. Child care, all that kind of stuff. Doesn't apply to younger people because they don't have a mortgage. So everyone's inflation is different. And the idea that there's one rate of inflation experienced in the aggregate in the same way across the society is, again, nonsense, which is why the rate of inflation, in effect, tells you everything and nothing. That's what I've always said when you try to explain that to economists.

18:42Well, we need a figure. Yes, we do need a figure, but we also need that figure to be relevant, right? So that's the show house, John. Yeah, so talk to me about Ed Sheeran and the Ed Sheeranization of the economy. Okay, so this will be good.

18:56David McWilliams: Basically, what happens is the Irish economy is, as I've always said, half American, half European. Our corporate Ireland is an American phenomenon. Political Ireland is a European phenomenon. the risk for Ireland is making a choice between those two ideas. So for the last 25, 30 years, Ireland has played off the Americans and the Europeans. We've never had to make a choice. Our head is American. Our heart is European. Our sense of justice is European. Our sense of morality is European, but our back pocket is American. So we've always been able to make this sort of idea that, look, we're the nice guy in the middle.

19:45David McWilliams: We don't really upset anybody. Sure, why would you be looking in our direction? We're only a small little country. And if whatever you say, say nothing. It's a kind of a cute whore approach. Okay. Yeah. Yeah. The problem with poor Ed Sheeran is he was trying to do the same thing for years, right? Sure. I know I sound English, but I'm Irish and my grandfather's Irish and I'm a nice fella. And I think he is a really nice fella right and his whole idea was never make a choice between your commercial machine which is Ed Sheeran Inc and your PR machine which is Ed Sheeran the nice bloke yeah and really don't draw attention to the compromises that those two things have to make right except for last week yeah He got it very wrong.

20:33David McWilliams: He had to make this choice, whether it was foisted on him by your man Kraft. It doesn't sound like a nice character, by the way. But in effect, Ed Sheeran chose corporate Ed over bloke on the street Ed. Yeah. Well, he kind of had to, though, at the same time. No, he had to. Because he's put in that terrible position, right? But he had a whole, you know, he had contracts for the next year of with bands, but also with venues and the whole lot. So yeah, his hands were kind of tied. So this is what the people roaring at Ed Sheeran about making a choice. Michael Moore, is he pro-Palestinian? Is he pro-Israeli?

21:19David McWilliams: Et cetera, right? They're not taking into account all the extraneous ideas that are also going. The contracts, the income, all that sort of stuff. And what they're just saying is you're rich enough and you should do the right thing. Ireland is in the same position. Look, Trump last week, huge amount of Irish people protesting. The government has to just kind of negotiate everything, right? All those people say, we shouldn't have American investment here. America's the great state. And you hear this all the time. Every single march in Ireland is anti-American. And they're all saying, we should not have American multinationals here, or if we do, they should be here on our terms, and we should be anti-Israeli, and we should...

21:59Get those data centres out. Okay, right. The data centres, right? Yeah. But the other side of the thing is, what about the 300 ,000 people who work for American corporations? What about that 32 billion of tax revenue I'm talking about? What about all the deep and familial relations we have with Americans, right? Yeah.

22:19David McWilliams: So what I'm saying is the Irish economy is edge here. The key thing is not to make a choice between your corporate interests and your PR interests, between your head and your heart, and always try and avoid those particular issues, right? And I know it doesn't sound romantic, but it's actually the geostrategic bottom line. It's pragmatic. Absolutely pragmatic. So what we have to avoid at all costs in the next couple of years is the Ed Sheeranization of the economy having to make that choice or having that choice worse foisted upon us. Yes. Either the Europeans or the Americans. I see a French politician the other day was saying that we should pay all our taxes to Europe now.

23:08So there are threats coming in from all sides. The Americans are tariffing, as we know, maybe not Irish whiskey, but this is only the latest round. So what I'm saying is, regard, if you have an image in your head, you have a red-haired bloke with a guitar, okay, and a pedal. And that's not you. And it's not me. It's not me. That is the Irish economy, right? And you have to play that game. Yeah, you played the tambourine. I played the tambourine exactly, very badly. So in effect, you have basically, if you want to look at an article, you have the IDA, the Irish Industrial Authority, versus the DFA, the Department of Foreign Affairs.

23:45And basically, you've got to mix these all up. You've got the head versus the heart. You've got the public position versus the private position.

23:52David McWilliams: You've got the pragmatism versus the ideology. All of those choices come with upsides and downsides. And just think about the Irish football team is playing next week against Israel in a tiny place outside Subotica, which I've been in northern Serbia, in Vojvodina, which is a province full of Hungarians in Serbia, right? Right. Behind closed doors next Sunday afternoon, lots of people roaring, we shouldn't play this game. And then lots of people are saying, look, just play it. Right? Just play it, get it over with, hopefully win it and move on. So basically, the more the world is divided and black and white and binary over either Israel, over Ukraine, over whatever it happens to be, the more the risk of the edge-sharingization of the economy increases.

24:48And I think we're going into a world where the increased risk is going to be elevated. And therefore, corporate diplomacy, fairway diplomacy we talked about the other time, doing the right thing, that's all going to be significantly, Secondly, well, it's all going to be slightly more acute, John, and we have to play that game. So that's the second part, the edge-sharingization. Okay, Mike, so you kind of touched on it there. What are the risks, and what's going on under the hood then? A bit more detail on the economy and its performance.

25:22David McWilliams: Yeah, I mean, the really interesting thing, John, is why is the economy performing so well? Why is the show house so more showy than any other show house in Europe? Yeah. But why is the beauty and the pristine nature of the show house actually a problem, or at least suggestive of other underlying problems? And that is where we have these two competing forces. We talked about them a couple of podcasts ago. Yeah. One is the Dutch disease with respect to much money coming into the economy from the American multinationals. That money cascading into every nook and cranny. that money increasing the rate of inflation all across the board because we have a small economy of five and a half million people with a finite amount of resources and on the other hand what we have is an infinite amount of money relative to our resources cascading into the economy yeah the political class are doing what they always do which is they spend other people's money.

26:25David McWilliams: That's necessarily their job. And of course, what that means is that all public expenditure policies are captured by the extraordinary cascading, what I call it, it's like a spigot of oil. It's a spigot of money, throwing, showering money like manna from heaven, John, coming down into the economy. Now, of course, what that is doing is that is making us bloated. It's making us lazy. It's making us, in some way, I think, non-cognizant of the risks because there's so much money floating around. That's the first thing. But in economic terms, it's making us uncompetitive. What it's doing is it's making small Irish businesses uncompetitive because their cost base is being increased by the money coming from the American multinationals who operate on a totally different economic world.

27:25In fact, they might as well be aliens when it comes to talking about the real world.

27:30David McWilliams: So that is the first problem. So our fiscal policy is being driven by Dutch disease. I told you about Dutch disease before, very briefly. It's when the Dutch found gas. Everyone thought that would be hunky-dory in the 1960s. It wasn't, because what it did is shifted and jaundiced the economy towards the gas sector. It's called the curse of resources and development economics. And for us, it's called the American multinationals. It's the same. And it hollows out the rest of the economy. Yeah, because everyone wants to work in Google and Facebook. And all the kids want to work in those places. They want to work in TikTok.

28:04They want to work in those places where the wages are highest, where the status is highest, and where those places are located in the Silicon Dock and they want to live in town and all that sort of stuff.

28:18David McWilliams: And of course, stemming from that are restaurants and bars and high-end shops, all these catering for very well-paid people in their late 20s and early 30s, leaving the rest of the society. Yeah. So, Mac, that brings us to number four and number five. Yes. Number four being risks and triggers and number five being the success. Is it a good thing or a bad thing? So let's come back to those after a bit of this.

28:56Hey, everyone, it's Chris Guillebeau here, host of the Side Hustle School podcast. This episode is powered by AT &T Business. In my early days, I did some of my best work in parked cars or coffee shops. But when I landed my first big contract, I realized I couldn't bet my future on a public connection that cuts out if someone turns on a blender. As a small business owner, you're already wearing at least 10 hats. You shouldn't have to be your own IT department as well. That's why I rely on AT &T Business. They keep your connectivity reliable so you have one less thing to worry about. Powered by AT &T Business.

29:30Built to work. Get AT &T Business at business.att.com.

30:01your calls, texts, and voicemails live in one place, so anyone on your team can pick up a conversation, see the full history, and respond fast. No more, wait, who talked to this customer last? And if you're worried about after-hours leads slipping through, Quo's optional built-in AI agent can answer questions and even book appointments while your team's offline. It's the number one rated business phone system on G2, and over 90 ,000 businesses already trust it to Stay reachable. Money is on the line. Always say hello with Quo. Try Quo for free. Plus get 20 % off your first six months when you go to quo.com slash tech.

30:38That's Q-U-O.com slash tech. I love days like these at the pool, but my moderate to severe plaques rises can sometimes take me out of the moment. I'm ready to make a splash with clearer skin. Thanks to Sky Rizzy, Rizinkizumab RZA SkyRizzy is a prescription-only injection for adults who are candidates for systemic or phototherapy. At four months, most people saw 90 % clearer skin when measured from head to toe, and many were even 100 % plaque-free. People also saw significant improvement in psoriasis symptoms of pain, redness, itching, and burning. Don't use if allergic to SkyRizzy. Serious allergic reactions, increased infections, or lower ability to fight them may occur.

31:18Before treatment, get checked for infections and tuberculosis. Tell your doctor about any flu-like symptoms or vaccines. Now there's nothing on my skin, thanks to SkyRizzy. And that means everything. Ask your doctor about SkyRizzy, the number one dermatologist-prescribed biologic and psoriasis. Visit SkyRizzy.com or call 1-866-SKY-Rizzy to learn more.

31:43So, Mac, we're taking a snapshot of the economy. where we are because the budget is coming up and there's pressures both internally and externally. So we're taking that snapshot. So let's now go to number four, which is the risks and triggers for the economy. What's going on there? So we've shown that the show house is great. Ed Sheeranization of the economy,

32:06David McWilliams: something we don't want to do. Then we've explained what's really driving things is this fiscal largesse coming from the American multinationals, which makes Ireland completely different to any other country. That's the key. Yeah. So the thing is, the risks are, normally in Ireland, what we have done over all of my professional life as an economist and prior to that, is our economic calamities have been homemade. They've been really a result of very poor local policy. I'm not saying that has changed. But I'm saying the key trigger now, I think, is what happens to the so-called hyperscalers in the United States.

32:47David McWilliams: So... Who are they, first of all? So they're Antropic, NVIDIA, Google, you know, Meta, all the companies that are now involved in this bizarre intersection of tech, AI, and finance. And what we've seen is over the last couple of years, and particularly the last couple of weeks, John, the demand for capital is so high. We spoke about in last week's podcast from the AI superscalers that they're actually elbowing out the American treasury. The American government is now having to compete in the market for available funds with private companies. And those private companies are now, as we know, beginning to try and appeal for regulation, which we did in our last podcast, the realist in me believes that that appeal for regulation is that they want to solder onto them the American state.

33:52David McWilliams: Because once you appeal for regulation, you become a ward of the state. And once you become a ward of the state, what you do is you build a moat around yourself. That's the first thing. You basically say, well, we, in the event that things go pear-shaped, We are part of the American government. So in a way, in the same way as the banking system was regarded as systemic in 2008 because people had deposits and because the banking system extended into everybody's kitchen, the AI guys are looking to play the same trick. The question is, is it because they themselves are worried that their IPOs won't go off, that there's too much capital spending?

34:30David McWilliams: And so that's the first thing. The second thing is the difference. we touched on a couple of weeks ago, between closed and open source AI. So the American model is closed source AI. So what happens is, let's say Antropic or take Antropic or Nvidia, doesn't really matter, right? Open AI, pay the AI employees, their AI researchers, they pay them phenomenal amounts of money to privatize artificial intelligence in order that they will own AI in the future, and the streams of income from them will be so enormous that they'll be able to pay back all their debts, right? Yeah. So in a sense, it's a closed-end idea where every company is in competition with each other.

35:15David McWilliams: Let's say the American way. Yeah. On the other hand, you have open-source AI coming from China. You might remember there was a big battle between Microsoft, which owned the software that we all use. And Linux, which was a Finnish open source software, which was giving it away for free. So basically ideological, idealists, do-gooders, wonderfully, wonderfully interesting people based out of Finland, set up a competitor, a counterpoint to Microsoft. Because Microsoft is all about licensing. So that's how they make their money. So basically, if you go on to Microsoft Word or whatever, it happened at Microsoft Office, you use the software.

36:00David McWilliams: It's the software that powers the hardware of business of the world. We're using it and we pay a license. And Linux was this, or Linux, maybe it was. Linux. Linux was this Finnish open source competition that says, you don't have to pay for software. We give it away for free. Software is like fresh air. It should be part of our natural ecosystem, etc. Now, think that battle, which was won by Microsoft because it was backed by American law, in effect. And that's why Microsoft became the biggest lobbyist in the United States, because it had to buy off political power in order to put a moat around its IP.

36:44David McWilliams: Same thing is happening in AI. So the biggest threat to the AI super scalers is that open source AI comes from China, which is just as good, but free or at half the price, will totally destroy its business model. and as a result of that will totally destroy the investments that have been put into that business model, which are the tens of billions moving towards trillions of dollars, which are wrapped up now in the AI, in effect, arms race. So that's what's happening in the States. Yeah. And as Trump said, whoever wins AI wins. So they're just doubling down, tripling down. And they're so far along the line now that there's no getting out of it.

37:36They have to complete. They're like a gambler at the 220 at Kempton, John, right? 220 at Kempton. They've actually lost all their money on previous nags, and they have one old nag to go, and they have to triple down on that nag, and they have to do an accumulator, and it has to be all or nothing. You're exactly right. So that's the image, right? Now, the dilemma for Ireland, and this is briefly, I'll come back to the risks, is that we are leveraged onto that business through our exposure to the tech companies, some

38:16David McWilliams: of which are in this super scaling race. Yeah. And if either the Chinese on open source destroy the business model, which could well be the Chinese long-term play, or the financial market gets windy about refinancing the gambler at the 220 at Kempton. Sam Altman, imagine Sam Altman at the 220 at Kempton, okay? In his silks. Down to his last dollar. So that's the image. Now, if that were to become the background noise for the global economy, 2027, 2028, then the Irish economy, which is adjacent to or soldered onto Silicon Valley, suffers more than most. And I think that's the big risk. Yeah. And it's a big risk.

39:09So we're on the final furlong now. Oh, I see what you did there. So, success under the guise of success. Is it a double-edged sword for the Irish economy?

39:22David McWilliams: So what we're looking at is the problems of success, the problems of too much demand, the problems of indigestion, in a sense, John. Right. That we've eaten too quickly, we've eaten too much. The ned is a little bit ropey. We're a bit burpy and stuff. We're sated, but we're bloated. Yeah. And we're well-fed, but we're uncomfortable. Yeah, yeah. It's a very common feeling, I have to say. This is very common, but these are the problems of economic success. So then the question is, would you rather that feeling than hunger? Because as I'm in the west of Ireland, and as I'm looking at those famine villages, as I'm looking about emigration, as I'm looking about depopulation of this part of the world, The economic history of our country in the last 200 years has been problems of not success, but failure.

40:19Failure to provide enough jobs, failure to provide enough income,

40:23David McWilliams: failure to protect our people from the vagaries of the economy. And what we have done is we've opened the safety valve of emigration. and that has been the story of our country for the last 150 years. For the last 15 or 20 years, that story has flipped. So we've gone from the story of hunger to the story of gluttony. Then the question is, which one is better to have? The thing is that the problems of success are the problems that we have. And therefore, the way you succeed with the problems of success is you become better at implementation. You become better at governance. You become better at getting shit done.

41:10David McWilliams: You become better at digging holes, making tunnels, putting in metros, putting in estates, building houses, building railroads, building infrastructure, et cetera. So in a way, for the first time ever, John, we leave it here, the solution to Ireland's dilemmas are in our hands for once. Prior to this, the solution to Ireland's dilemmas, we had to outsource to other people. So we went to Britain or we went to America or whatever, right? Well, that was always the government line, wasn't it? It was always, it's not us, it's them. Exactly. So now it's us. Yeah. Right? The show house looks great. and is kind of great at one level.

41:58Yeah.

41:59David McWilliams: The geostrategic line is do not become Ed Sheeran. Whatever you do, don't make that choice because that choice between America and Europe, between the morals and the pragmatism, between the head and the heart, between multinational Ireland and multilateral Ireland is always going to cost you. So never make that choice. Third idea is under the hood, we have Dutch disease. So analyze it, figure it out, and put in place a set of policies that make sure American investment here goes to make life here better. Finally, the risks are with AI and the superscalers. And at the end of the day, the problems of success mean that it's all about implementation.

42:50David McWilliams: It's all about governance. And you know what, John? It's all in our hands, which if you are a football manager and you're going into the end of the season and when football managers say, well, it's in our hands, they mean they have to win the next four games. Nobody else can win them for them. And consequently, John, we're like Shamrock Rovers at the end of the season. We're three points ahead of the Bows, which is always a great delight. and it's all in our hands. Just go and win your games and away you go. We'll talk to you on Thursday.

43:41Hey everyone, it's Chris Gillibow here, host of the Side Hustle School podcast. this episode is powered by AT &T Business. In my early days, I did some of my best work in parked cars or coffee shops. When I landed my first big contract, I realized I couldn't bet my future on a public connection that cuts out if someone turns on a blender. As a small business owner, you're already wearing at least 10 hats. You shouldn't have to be your own IT department as well. That's why I rely on AT &T Business. They keep your connectivity reliable so you have one less thing to worry about. Powered by AT &T Business, built to work.

44:16Get AT &T Business at business.att.com. Hi, this is Mark Bittman from the podcast Food with Mark Bittman. I've been writing about food and restaurants for almost 50 years, my whole career really. And what I know is that the good restaurants all have something in common. They're busy, genuinely, really chaotically busy. And somehow in the last few years, the best of them have begun to make it look easy. And do you know why? Because they're running on Toast's technology. Toast is built for restaurant owners who understand that Toast's tools keep the line moving and keep their customers happy, with fewer mistakes and hiccups in ordering and paying.

44:59For owners, that turns busy into business. To learn more, head to toasttab.com. That's T-O-A-S-T-T-A-B, toasttab.com. Toast, built for busy.