SPEAKER_09: Squarespace is the all-in-one platform for building your brand and growing your business online. Stand out with a beautiful website, engage with your audience and sell anything. Your products, content you create, and even your time. You can easily display posts from your social profiles on your website or share new blogs or videos to social media. Automatically push website content to your favorite channels, so your followers can share it too. Go to squarespace.com slash invisible for a free trial, and when you're ready to launch, Use the offer code INVISIBLE to save 10% off your first purchase of a website or domain. Every kid learns differently, so it's really important that your children have the educational support that they need to help them keep up and excel. If your child needs homework help, check out iXcel, the online learning platform for kids. iXcel covers math, language arts, science, and social studies through interactive practice problems from pre-K to 12th grade. As kids practice, they get positive feedback and even awards. With the school year ramping up, now is the best time to get iXcel. Our listeners can get an exclusive 20% off iXcel membership when they sign up today at ixcel.com slash invisible. That's the letters ixcel.com slash invisible. This is 99% invisible. I'm Roman Mars. On the west coast of Ireland, on the banks of an estuary dividing county Limerick from County Clare, lies a small town called Shannon. But Shannon is not a quaint fishing village or a farming community. Its industry is its airport. And Shannon Airport is big. It handles up to 1.7 million passengers and 20,000 flights a year, most of them from other countries. And a few months ago, I went to visit.
SPEAKER_17: That's reporter Kevin Caners. When you arrive at the airport, you're greeted by a modern looking building that's sleek and black. And when you enter through the sliding doors and step into the check-in area, you find yourself in a bright grand atrium with wooden furnishings and tall ceilings. It's a style that you might call international terminal chic. Everything attests to a certain kind of reassuring cosmopolitan competence. But my reason for entering the terminal wasn't to catch a flight to Majorca or Warsaw or to pick up a friend. It was to visit its duty-free shop. OK. And this is it?
SPEAKER_03: The duty-free shop? Our duty-free shop here in Shannon Airport.
SPEAKER_09: The world's first airport duty-free shop.
SPEAKER_03: The fact is it's the first duty-free shop. We take pride in it. It's unique. It's ours. And it always will be ours.
SPEAKER_17: That's now Maloney, the airport operation and commercial director, showing me around. The shop is what you'd expect from a duty-free, stocked with designer perfumes, jewelry, and various fine foods.
SPEAKER_03: And for us as an airport, it's also about promoting Irish products. So Watford Crystals, you know, food company or sweet shop or anything like that. It's about actually trying to support local industry as well as probably the more well-known brands.
SPEAKER_17: There are Guinness-branded t-shirts and baseball caps, green children's clothes covered with shamrocks, knitted sweaters, and of course, lots of whiskey. What I might do is I might ask Alan here.
SPEAKER_03: Do you want to talk about a whiskey bar? Sure. Alan, I couldn't tub you for two minutes. Kevin here is doing a program called duty-free.
SPEAKER_17: And naturally, I wanted to make sure I took full advantage of the situation, courtesy of 99 PI. I was actually told by the podcast production that I could buy one as a business expense.
SPEAKER_09: Wait, we did what?
SPEAKER_17: So, so if you have any recommendations.
SPEAKER_15: I can recommend you. Just tell me how big your budget is and I'll help you spend it.
SPEAKER_17: Well, I'm not paying for it. So how much did you spend?
SPEAKER_17: It's not important. What's important is the reason I came here, because it turns out that this first ever airport duty-free is the brainchild of a remarkable person, a local boy from right near Shannon, who would go on to change both Ireland and the world in some really unexpected ways, not just by hawking cheap booze, but by helping revolutionize how entire countries think about the idea of selling and buying things tax-free.
SPEAKER_09: Before the airport arrived, there wasn't much in Shannon. There wasn't even a town called Shannon for anything to be in, just some swampy marshland alongside the estuary of the river Shannon. But if the region wasn't exactly a center of commerce and industry, the same could be said for much of Ireland. The Irish Free State, as it was first known, gained independence from Britain in 1922.
SPEAKER_17: But for a long time, independence did not equal prosperity.
SPEAKER_08: The new Irish state, it was independence in theory, but in reality, it was still an offshoot of the British economy.
SPEAKER_17: Brian Callanan is the author of Ireland's Shannon story. And Brian says that after independence, the Irish economy was still reeling from centuries of colonization, during which Ireland had one job, to produce cattle and crops for Britain. Any native Irish industry had been actively discouraged by the British to prevent competition.
SPEAKER_09: So well into the 20th century, when much of the rest of Europe was busy urbanizing and industrializing, Ireland was still a mostly agrarian country that exported little besides food.
SPEAKER_08: Say in the 1950s, something like 40% of the workforce, 50% in those days would have been involved in agriculture-related enterprise. Wow, that's pretty late. That's a late developing country.
SPEAKER_09: But Ireland had a second problem, keeping it from looking more like its European neighbors. There just weren't that many Irish people around. Next to another legacy of colonization, famine.
SPEAKER_17: The Great Irish Famine of the 1840s was set in motion by a potato blight. But British economic policies made it far worse, decimating communities like those found around the Shannon Estuary. In a country of 8 million, it killed every eighth person and triggered a massive wave of emigration.
SPEAKER_08: They say that a million died and a million emigrated. And by the 1950s, the population was only 3 million. So it was a catastrophic experience.
SPEAKER_17: So these problems, the colonization, the rural poverty, the mass emigration, Brian says they did more than just depress the country's economy.
SPEAKER_08: Those were realities. And they would have given rise to a mindset of the Irish, or second-class citizens. And that feeling would have persisted right through, right up to the 1950s and 1960s. Almost a belief that the Irish could not do it as well as the British.
SPEAKER_09: But in the 1930s, the rest of the world quickly discovered that Ireland, and its west coast in particular, had three crucial advantages. Location, location, location.
SPEAKER_17: Because Western Ireland, it turned out, was the perfect place to land a plane.
SPEAKER_03: The reason why Shannon is here was aircraft had limited range.
SPEAKER_17: Niall Maloney says that in the 1930s, the very first passenger aircraft were seaplanes. Big clunky aluminum things with propellers. But most long-range seaplanes only carried enough fuel to fly about 3,300 miles.
SPEAKER_09: The distance between London and New York was 3,460.
SPEAKER_03: So if you were flying from Europe to North America, or vice versa. The challenge really was fuel. So you had to have fuel to start.
SPEAKER_09: And right there, on the western edge of England, was this whole other country, Ireland. Which was just that much closer to the American seaboard.
SPEAKER_17: So in 1935, the governments of the US, the UK, Canada, and the new Irish Free State agreed that all transatlantic commercial aircraft would be required to land at an Irish airport to refuel. And the location they picked for the airport was the estuary of the River Shannon.
SPEAKER_08: And if you wanted to fly from New York to London, you flew New York to Newfoundland, and you stopped. Then you flew Newfoundland to Shannon for nine hours, and you stopped here. And then you flew on to Southampton, and you took the train into London.
SPEAKER_09: The airport at Shannon was an instant success. After all, they had a captive audience. In 1945, the now fully sovereign Republic of Ireland opened a concrete runway on the other side of the estuary. And within just two years, the airport was handling up to 100,000 passengers a month.
SPEAKER_17: But there was one tiny problem early on with this whole arrangement, at least for the Irish. And it had to do with the airport's restaurant and food services.
SPEAKER_08: Because the Irish Prime Minister and Minister for Transport knows that the food was managed by British Airways.
SPEAKER_09: Not exactly who you want serving the meals at your country's largest airport when you've only just finished kicking the British out.
SPEAKER_08: And so the message was given to the Minister for Transport, can you find an Irishman to take this over?
SPEAKER_17: And the name that the ministry came up with was a 26-year-old hospitality worker named Brendan O'Regan.
SPEAKER_09: Brendan O'Regan was born in the nearby village of Six Mile Bridge, a town so small it was simply named for a bridge six miles from Limerick. But O'Regan's birthplace was the only unremarkable thing about him. I don't think I've encountered anyone in my life who was as charismatic and as compelling
SPEAKER_06: as he was. He just had this persuasive ability to get things done.
SPEAKER_17: Keen O'Carroll is the co-author of a biography about Brendan O'Regan. He also worked under O'Regan at Shannon. And he says that O'Regan might have been a local boy, but he was also a dashing cosmopolitan. The son of a hotelier, he had trained at hotels in Switzerland and Germany, and he had brought back with him an obsession with high standards and perfect execution. So he tapped into the pursuit of excellence in everything, you know?
SPEAKER_09: But from the beginning, O'Regan understood bringing high standards to Shannon's food services wasn't just going to be about serving nice meals. We were being written off as the vanishing Irish.
SPEAKER_17: This is a recording of O'Regan taken from an oral history interview in 2004, explaining how most foreigners still thought of the Irish in the 1930s. They've got their freedom, but they're not able to use it.
SPEAKER_05: They're immigrants to England and to the USA.
SPEAKER_15: I suppose we haven't had the chance to prove ourselves. No.
SPEAKER_05: No. But in those days, crossing the Atlantic was a big, a big event, and big people were doing it.
SPEAKER_09: And these big people remember they're just stopping over at Shannon. They weren't disembarking to see anything else.
SPEAKER_05: So the staff there came to recognize that the stream of passengers passing through, that the only impression they would get of Ireland was what they got at Shannon.
SPEAKER_06: So the thing about standards was very important. That we're Irish, but we could do things as well or better than anywhere else.
SPEAKER_17: So from the moment O'Regan took over the restaurant at Shannon from the British, he started adding all these little touches. He improved the decor. He dressed the waitstaff in nice suits. And one day, when he saw the head chef carrying out an unadorned plate of food, he chided him for its lack of eye appeal. And I said, Chef, there's no eye appeal.
SPEAKER_05: And he looked around desperately for something to give it eye appeal.
SPEAKER_09: And apparently the head chef could sense a challenge because he quickly took the opportunity to invent a new kind of alcoholic beverage for arriving passengers.
SPEAKER_05: And the following day, I came into my office with coffee and a glass and white cream on top of it and said, how's that for eye appeal? I said, what's that?
SPEAKER_09: And what that was, was the first ever Irish coffee.
SPEAKER_05: And we offered it to people at the entrance to the restaurant. Of course, it became famous then.
SPEAKER_17: By the mid 1940s, everyone agreed the food at Shannon was better in almost every way than it had been under the British. As one rave review put it, no better window dressing for Ireland could be designed than the impression of a passenger's probably one Irish meal. And for up to 100,000 passengers a month, that one Irish meal was delicious.
SPEAKER_08: So people like Brendan O'Regan would have been very important in starting to give the new assurance to Ireland that we can do it, that our quality can be just as good as anybody else.
SPEAKER_09: Now, for most people, setting up a wildly successful restaurant at 26, burnishing your country's international reputation and helping invent the Irish coffee would be a fine enough legacy, but it turned out Brendan O'Regan was just getting started.
SPEAKER_17: In 1950, O'Regan was traveling back to Shannon from the US by ship. And on the ship, there was this little shop. And I saw the shop was selling duty free goods.
SPEAKER_17: Because the ship was in international waters, it was selling items without paying any government taxes and passing those savings along to passengers. And my brain said to me, well, if they can do it when you're crossing the sea in a boat,
SPEAKER_05: you surely should be able to do it on your land for the first time.
SPEAKER_09: O'Regan realized that, in a way, all these transiting passengers in Shannon were essentially in a no man's land, somewhat akin to international waters. They had left their starting port, but they had not yet arrived at their final destination.
SPEAKER_17: So O'Regan reached out to his government connections and pitched them a new idea. A government owned operation that, just like with a restaurant, he would run in exchange for a fixed salary and a percentage of the profits.
SPEAKER_08: The government passed a special legislation applying purely to the airport terminal building where goods can be sold free of duty to passengers in transit.
SPEAKER_09: Which is how, in 1950, in a move that has to go down as one of the most pivotal moments in airport retail history, O'Regan opened up the world's first airport-based duty free shop, located in a small space at the entrance to the main lounge. Passengers had no choice but to walk right through it.
SPEAKER_05: That became the first shop. And I said, we'll begin with Irish whiskey. So people came into the lounge and one of the early things they saw was hundreds of bottles of whiskey for sale.
SPEAKER_09: Which in addition to being on brand, was also kind of genius. It was portable, non-perishable, and normally heavily taxed.
SPEAKER_17: So a bottle of your favorite whiskey that would have cost one and a half Irish pounds at a Regan store only cost you half a pound. It was a savings of two thirds.
SPEAKER_09: Because it was an airport, this would be most passengers only chance to shop there. So rather than buying just a single bottle, it actually made more sense to just go ahead and buy an even dozen.
SPEAKER_17: The shop soon expanded into a second area and moved way beyond just offering alcohol. So what sort of things were being sold? There were all kinds of Irish products, knitted jumpers and caps.
SPEAKER_17: Liam Skelly worked there in the 1950s, only a few years after it opened.
SPEAKER_07: And then the best of Europe. So we had watches and clocks and jewelry and then souvenirs of Ireland of all descriptions.
SPEAKER_12: Here in the internationally famous duty-free shop, transit passengers from all over the world enjoy shopping in this unusual and exciting place. A sort of fairy land into which they wander as soon as they leave their planes during refueling stops.
SPEAKER_17: Fishing gear, large artworks, even chandeliers. The duty-free shop at Shannon was like a Black Friday sale, if Black Friday happened 365 days a year and could only be found in an Irish airport.
SPEAKER_09: As it was sometimes said, Shannon was an airport built around a shop.
SPEAKER_17: By the mid 1950s, the duty-free shop at Shannon was also a huge source of jobs. Kean O'Carroll says that in a nation with mostly small businesses, this one store in this one airport was actually one of Ireland's largest employers. It was an extraordinary arrangement really.
SPEAKER_06: It was a one man company, but they had about a thousand people employed. So it was a whole industry.
SPEAKER_09: For six years, Shannon was the only airport duty-free shop in the world, but the model spread quickly from there.
SPEAKER_07: People from other airports came along fast to see what he was doing. He told them how to do it and they all took off and opened up in Paris and in London and everywhere else.
SPEAKER_17: And he was happy to tell them how to do it.
SPEAKER_07: Oh, he was. Yeah, he gave them, he gave everybody free advice.
SPEAKER_17: Some people from Shannon, like Liam, actually went abroad and helped set up duty-free shops in other airports, including in the Soviet Union. I set up duty-free in Moscow and then we went up to St. Petersburg or Leningrad and then
SPEAKER_07: we decided to have one on the Russian-Finnish border, duty-free up there.
SPEAKER_17: Within a few decades, duty-free became a thing that just exists, practically in every airport in the world, from Abu Dhabi to Bangkok. Even now, these shops are based on the same basic model that was pioneered by Brendan O'Regan and Shannon.
SPEAKER_09: But then in the late 1950s, a leap in aviation technology threatened to undermine everything that O'Regan and his team at Shannon had built.
SPEAKER_13: The jet age is now here. The first American commercial jet capable of economical transatlantic service.
SPEAKER_09: Jet passenger aircraft were faster, lighter, and critically could fly much further without having to stop for fuel, meaning airports like Shannon weren't needed anymore. New York to London, in the same time that it takes you to go and see a baseball double
SPEAKER_13: header, six and a half magic hours.
SPEAKER_09: Flight range, the very thing that created the airport, was about to render it obsolete.
SPEAKER_12: Without passengers, an airport cannot survive. It has no functions and Shannon has had a great passenger problem in recent years.
SPEAKER_17: Starting in 1958, the same year Boeing's first mass-produced passenger jet went into service, passenger traffic at Shannon began to plummet. And I gotta say, of all the tape I listened to of Brendan O'Regan, this was the one moment in the whole saga when, looking back, he sounds genuinely rattled. There was a continuous word being passed on.
SPEAKER_05: We're going to lose this. I mean, they're going to overfly us. For sure, they're going to overfly.
SPEAKER_17: But Brendan O'Regan, whose initials BOR were sometimes said to stand for Bashan Regardless, wasn't about to give up.
SPEAKER_05: Because I was thinking in terms of finding a way of stopping a thousand people from being redundant.
SPEAKER_08: So if O'Regan's word of the time was the aircraft dropped there and they won't come down, let's reach up and drag them down.
SPEAKER_09: And the idea O'Regan and his team came up with would take the concept of duty-free and apply it to way more than just a few stores at an airport.
SPEAKER_17: O'Regan had seen something similar to the duty-free shop in Panama, called a freeport, a small area near the canal where ships could load and unload goods without paying customs. So why not create something similar to a freeport near Shannon, not aimed at attracting consumers, but something else Ireland desperately needed? Industry.
SPEAKER_09: In 1959, O'Regan made another pitch to his connections in the Irish government. And this time, he got permission to put a fence around an area right beside the airport. Cross the fence and you'd be subjected to normal import taxes.
SPEAKER_17: But stay inside the fence, explains Kean O'Carroll. And you were officially inside the Shannon Industrial Free Zone, a place where companies could fly in parts, assemble them in factories staffed with Irish workers, and then fly out finished products, tax-free.
SPEAKER_06: So the industrial free zone was a variation on the theme of the duty-free shop. The only difference was that raw materials could be brought in and processed and then exported with the absolute minimum of any customs formalities.
SPEAKER_09: Today, customs-free zones can be controversial, something we will be getting to. But back then, O'Regan's idea wasn't controversial, so much as experimental.
SPEAKER_17: In the 1950s, the economic miracle of the duty-free shop still didn't expand much beyond the airport. Ireland remained a poor, largely agricultural country. And the government's approach for years had been steep taxes on imports. It was a way to protect what little industry Ireland did have, hoping it would eventually make stuff the rest of the world wanted.
SPEAKER_09: The government was ready to try something new. But O'Regan's industrial free zone, in which any company from any country could come and make anything to be sent anywhere? Well, that was seen by many as a kind of weird long shot.
SPEAKER_06: And there was a lot of cynicism about it, really. Like, would the industries come? Would it be viable? Would it work?
SPEAKER_05: I felt if we didn't start with something, we would never start. So we took a risk.
SPEAKER_09: In the ultimate, if you build it, they will come approach, with no committed clients, O'Regan's team started to erect empty factory buildings in the zone, ready for occupancy, and use them to convince companies to set up shop.
SPEAKER_08: And once one or two companies came, it then provides an example for other companies.
SPEAKER_06: And starting really from the 1960s, to everyone's surprise, really, the industrial state was developing quite well.
SPEAKER_17: At first, it was mostly smaller American companies that came. For them, Shannon was a convenient foothold into Europe.
SPEAKER_09: They were followed by big multinationals like GE, De Beers, and a young Japanese firm called Sony. But there were also companies with more specialized products.
SPEAKER_14: This is a corner of the Ripon Piano Factory at Shannon Airport, County Clare, turning out something like 3,000 pianos a year.
SPEAKER_17: By the mid-60s, freight coming in and out of the free zone accounted for the majority of Shannon's flights. Once again, the airport and the surrounding area was booming.
SPEAKER_12: In a very few years, over 2,000 jobs have been created, producing a wide range of products for firms whose headquarters are in countries as far apart as Holland and Japan. And flowing from the increased employment, there are great economic benefits to the whole hinterland of Shannon.
SPEAKER_17: After years of stagnation, Ireland's economy was beginning to grow and industrialize. And Shannon had a not insignificant part to play in that transformation.
SPEAKER_08: In fact, by the mid-1960s, something like 25% of Irish industrial exports were coming out of the Shannon industrial zone.
SPEAKER_09: It was also in the 1960s that Ireland's centuries-long trend of emigration finally started to reverse. Many Irish immigrants and their descendants were now moving back to Ireland. And one of the places they were moving to was Shannon.
SPEAKER_08: So to see the returning immigrants coming back in the 1960s was a new thing. And Shannon was one of the leaders of that.
SPEAKER_17: But remember, the airport and its industrial zone were in the middle of nowhere. There was no place to live called Shannon. And all those returning workers needed accommodations. That was actually one of Keen O'Carroll's main jobs, getting everyone housed.
SPEAKER_06: And there were 137 apartments built, but there was nothing else. So all of the industrialists there would be complaining about the lack of facilities. Such as what sort of facilities? They complained, they'd say, about where do they buy their groceries. And the schools weren't there, and there was no library in the place, and there wasn't even a resident doctor.
SPEAKER_05: And thereafter we were building a town. And of course, there hadn't been built a town in Ireland since the Danes, I think, as far as we know.
SPEAKER_17: And O'Regan isn't joking there. The village of Shannon was Ireland's first new town in hundreds of years.
SPEAKER_09: Now again, you would think, setting up a wildly successful restaurant, burnishing your country's reputation, helping invent Irish coffee, jump-starting the economy, attracting back emigrants, and founding your nation's first new town in centuries would be a good place for Brendan O'Regan to stop. But no, he wasn't done.
SPEAKER_17: In many ways, Shannon's industrial free zone anticipated the low-tax, free-market global economy of the 1980s. But at the time, O'Regan viewed the entire Shannon experiment in explicitly anti-colonial terms. Because I could see that our poverty had come from the fact that Britain had stopped us
SPEAKER_05: really from industrializing.
SPEAKER_09: And O'Regan became convinced that the best way for other developing countries to fight colonialism was capitalism.
SPEAKER_05: I thought particularly in third-world situations was a requirement of every country to help those that were down. So I was very involved in the idea that the Shannon zone should be duplicated all over the world on a big scale.
SPEAKER_09: Starting in the mid-1960s, O'Regan began spreading the gospel of industrial free zones as a path toward economic independence.
SPEAKER_17: In 1966, after consulting closely with O'Regan, the Taiwanese government opened their first free zone at Kaohsiung Harbor. And in 1972, with U.N. funding, Shannon began offering multi-week training courses where foreign officials could learn how to set up their own zones, now called Special Economic Zones or SEZs, based largely on the Shannon model. Brian Callanan taught many of these courses. And how many countries do you think passed through here? Oh, I would say roughly about 20 or 30, I think.
SPEAKER_08: Colombia, Sri Lanka, Egypt, Indonesia, Mexico, Nigeria, Ghana.
SPEAKER_17: But there's one visit in particular that has since taken on almost folkloric status.
SPEAKER_09: In 1980, a Chinese delegation led by future President Jiang Zemin embarked on a 40-day world tour of various Special Economic Zones. And at the end of that trip, they came to study with Brian at Shannon, where they were taken to the top of a local landmark.
SPEAKER_17: Tolly Glass Hill had a panoramic vista where they could take in the airport, the industrial state, and the town. And as they stood there, Jiang Zemin reportedly said, this is our solution. We'll build 100 of these in China. Do you mind if we just get up? I'm just curious to have a view of. I went to the hill with Brian when I was in town, and I was actually kind of surprised. It's a tiny, unassuming hill lined with suburban houses. Not exactly the kind of spot you'd expect to feature in the story of China's meteoric rise. And nowadays, when you get to the top, trees mostly obscure the view. OK, I guess we can see one building over there.
SPEAKER_08: Oh, yes, we can see the industrial zone. Fantastic. And beyond the trees there is the airport. OK, so this is... As you can see, it brings it all together here. So this is what stimulated the Chinese movement into the private sector. This is the place.
SPEAKER_09: That same year, the Chinese government would set up not one, but four special economic zones.
SPEAKER_04: And the fact that it happened in the same year, I think was not a coincidental coexistence, right? Xiaoming Chen is a professor of urban sociology at Trinity College in Connecticut.
SPEAKER_17: And Chen says that starting in 1980, the Chinese took all of the techniques used at Shannon and began applying them at a Promethean scale. Perhaps nowhere more so than at what has since become the world's most famous SEZ, Shenzhen.
SPEAKER_09: Unlike Shannon, the SEZ at Shenzhen was set up right across from one of the richest cities in the world, Hong Kong. And while Shannon's free zone was 2.5 square kilometers, Shenzhen's was more than 300 square kilometers.
SPEAKER_04: So compare that to Shenzhen, right? So now we're talking about apples and oranges now, right? Very quickly. Nevertheless, the core ideas of duty-free, low taxes, or tax assumptions...
SPEAKER_17: All those things were pretty much the same, even the fence that went around it. So Shenzhen obviously was part of that influence.
SPEAKER_17: Soon, this standard SEZ model became a major driver of the Chinese economy. By 1984, they had already opened up 14 more. How many special economic zones are there in China today? Or is that like an appropriate question to ask? Well, depending on how you count, right?
SPEAKER_04: I would say, you know, easily a couple of thousands.
SPEAKER_09: Some of these zones might be only a few hundred acres. Others are the size of a small province. But in one way or another, they're all SEZs. And as for the most famous SEZ of all... The Shenzhen SEZ continued to expand to a city that ultimately became a megacity with
SPEAKER_04: over 20 million people.
SPEAKER_17: Xiao Ming is quick to stress that not all the credit for China's SEZs can go to Shannon. There were the examples provided by Taiwan and British Hong Kong, which also operated as a customs-free port. And the Chinese came up with lots of their own ideas. But if you doubt Shannon's role in all this, just take a look at the Chinese leadership's
SPEAKER_09: travel itinerary. On a monthly basis, I've got weekly basis, I would have delegations from China.
SPEAKER_17: Vincent Koonan was the CEO of Shannon Development about a decade ago. And meeting with Chinese dignitaries was a surprisingly big part of his job. On a weekly basis?
SPEAKER_02: Nearly weekly. And in my instance, the biggest dignitary, of course, was Xi Jinping.
SPEAKER_01: The vice president of China, Xi Jinping, has arrived in Ireland for a three-day visit.
SPEAKER_17: In 2012, current Chinese president Xi Jinping was about to take over power, and went on a three-continent coming-out tour of sorts. And on his European leg, where did he go? Not to Brussels, not to Berlin, not to London, but Shannon.
SPEAKER_10: Earlier, the man who will soon take over at the helm of the world's second largest economy landed at Shannon Airport. First stop, a visit to Shannon Development, which has strong links with China.
SPEAKER_02: But the main point of his visit was, again, symbolism. Main point of his visit was, I'm going to the place where it all started.
SPEAKER_17: Did he mention, or did Brendan O'Regan's name come up? Like, did he seem to know who that was? Oh, yeah. Yeah, yeah, yeah, yeah.
SPEAKER_02: They're very conscious of the history.
SPEAKER_09: On the second day of his visit, Xi went to Six Mile Bridge, the tiny town where Brendan O'Regan was born.
SPEAKER_17: Today, according to the UN, there are nearly 5,400 SEZs in more than 100 countries, more than 1,000 of which were established in the last five years.
SPEAKER_09: The Shannon Industrial Zone is still around, but it's no longer special. The fence is gone, and since 2005, so too are the special tax breaks. They aren't possible anymore inside the European Union.
SPEAKER_17: But Shannon has still had an outsized influence on Ireland itself. The country's taxes are some of the lowest in the EU, with a comparatively deregulated economy focused on international investment. Quality is credited with both the Celtic Tiger of the 1990s and 2000s, but also Ireland's record economic slump after the Great Recession. So for better or worse, while Shannon moved towards the Irish model, the rest of Ireland also moved towards Shannon.
SPEAKER_09: Brendan O'Regan died in 2008 at the age of 90, but his legacy goes beyond his contribution to Ireland's economic development.
SPEAKER_17: Listening to those oral histories, you get the sense that O'Regan's real goal was something at once simpler and more complicated. Pride.
SPEAKER_05: I have a great regard for the English. I married one of them. But I mean, that situation where we took over from them and did better than they were doing was a great spiritual uplift, I can tell you, for the Irish. And then we knew that we were as good as those who were empire builders, that we were as good as them.
SPEAKER_17: Speaking of Irish quality, back at that shop in Shannon, there's still the small matter of my invoice for the whisky. Oh yeah, that's right.
SPEAKER_09: How much?
SPEAKER_15: I'm buying the tealing 32-year-old whisky limited edition, and that's only 2,000 euro if you like some of that. Yeah, that'd be great. Can we do that? Yeah, I'll bring it around.
SPEAKER_17: Just kidding. I got a very sensible bottle from a nearby distillery. It was 50 euros. All right, I suppose we can pay for that.
SPEAKER_09: It is after all duty free. When we come back, a look at the downside and sometimes very dark side of SEZs throughout the world. After this. The International Rescue Committee works in more than 40 countries to serve people whose lives have been upended by conflict and disaster. Over 110 million people are displaced around the world, and the IRC urgently needs your help to meet this unprecedented need. The IRC aims to respond within 72 hours after an emergency strikes, and they stay as long as they are needed. Some of the IRC's most important work is addressing the inequalities facing women and girls, ensuring safety from harm, improving health outcomes, increasing access to education, improving economic wellbeing, and ensuring women and girls have the power to influence decisions that affect their lives. Generous people around the world give to the IRC to help families affected by humanitarian crises with emergency supplies. Your generous donation will give the IRC steady, reliable support, allowing them to continue their ongoing humanitarian efforts even as they respond to emergencies. Donate today by visiting rescue.org slash rebuild. Donate now and help refugee families in need. Article believes in delightful design for every home, and thanks to their online-only model, they have some really delightful prices, too. Their curated assortment of mid-century modern coastal, industrial, and Scandinavian designs make furniture shopping simple. Article's team of designers are all about finding the perfect balance between style, quality, and price. They're dedicated to thoughtful craftsmanship that stands the test of time and looks good doing it. Article's knowledgeable customer care team is there when you need them to make sure your experience is smooth and stress-free. I think my favorite piece of furniture in my house is the geome sideboard. Maslow picked it out. Remember Maslow? And I keep my vinyl records and CDs in it. It just is awesome. I love the way it looks. Article is offering 99% invisible listeners $50 off your first purchase of $100 or more. To claim, visit article.com slash 99, and the discount will be automatically applied at checkout. That's article.com slash 99 for $50 off your first purchase of $100 or more.
SPEAKER_09: This show is sponsored by BetterHelp. Do you ever find that just as you're trying to fall asleep, your brain suddenly won't stop talking? Your thoughts are just racing around? I call this just going to bed. It basically happens every night. It turns out one great way to make those racing thoughts go away is to talk them through. Therapy gives you a place to do that, so you can get out of your negative thought cycles and find some mental and emotional peace. If you're thinking of starting therapy, give BetterHelp a try. It's entirely online, designed to be convenient, flexible, and suited to your schedule. Just fill out a brief questionnaire to get matched with a licensed therapist, and switch therapists at any time for no additional charge. Get a break from your thoughts with BetterHelp. Visit BetterHelp.com slash invisible today to get 10% off your first month. That's BetterHelp. H-E-L-P dot com slash invisible.
SPEAKER_09: So I'm here with Kevin Caners, who produced that story you just heard about Shannon. And Kevin, you know, we talked about both the spread and the success of special economic zones outside of Shannon. But I know that the impact and legacy of these SCZs is really messy. Kevin Hi, Robin.
SPEAKER_17: Yeah, I mean, one thing we can say right off the bat is that there are thousands of SCZs scattered throughout the world. You know, they vary drastically in size, outcomes, and occasionally in what exactly makes the zone special to begin with. So with that in mind, I'm going to walk you through some of the more general criticisms and big picture questions around these zones. Robin Great. Okay, let's do it. Kevin So I'll start with one major critique, labor. Patrick In most zones, there is definitely less labor
SPEAKER_16: rights.
SPEAKER_17: Kevin This is Patrick Niveling. He's a political economist I spoke with, and Patrick paints a pretty bleak picture of SCZs. He says that for the companies who operate inside some special economic zones, the poor labor rights are not a flaw, but a feature. Patrick They're basically designed to kind of destroy
SPEAKER_16: bargaining power, collective rights movements of workers in developing nations and create one could say rights-free zones where capital can freely run riots against workers rights. Kevin This happens partly because when a new zone
SPEAKER_17: is being set up, the power dynamic tilts towards the businesses and corporations that the zone is trying to attract. So if a government can help entice a company to its new zone by, say, offering less labor protections or less red tape, then some unfortunately are tempted to do just that.
SPEAKER_09: Kevin So did Patrick have some examples of what he was talking about where you can find these labor issues and labor exploitation playing out?
SPEAKER_17: Patrick Yeah, so one actually is from Shenzhen, the Chinese SCZ that we mentioned in the main piece, which opened in 1980 and which has really become the world's most famous SCZ. Kevin I mean, you will remember the kind of images
SPEAKER_16: of the Foxconn factory in Shenzhen, where they had this netting around the dormitories and the factory building so that people couldn't successfully commit suicide anymore.
SPEAKER_17: Kevin Patrick is referring to these nets that were put up in 2010 around Foxconn factory buildings in Shenzhen after a disturbing spate of suicides. These factory workers who were in part producing Apple products were regularly forced to work inhumane hours for minimal pay. And Patrick says that Foxconn in Shenzhen is far from the only example of tripling labor practices in special economic zones.
SPEAKER_16: Patrick We are talking about the maquilas on the Mexican-US border. We are talking about the ready-made garment industry in Bangladesh. We are talking about workers assembling furniture for Ikea in India. Kevin So Patrick basically sees these SCZs as places
SPEAKER_17: where capitalism has run amok, where the rights of corporations are prioritized over the people who actually work and live in the area. Kevin So did any of the more pro-SCZ interviewees
SPEAKER_09: that you talked to for this story, especially ones that were sort of enamored with the origins and story of SCZs, did they have anything to say about this labor criticism? Kevin Yeah, so I spoke to Brian Callanan.
SPEAKER_17: He's one of the characters from the main piece who was involved in teaching the how to set up your own SCZ courses that were offered in Shenzhen to foreign officials. And he fully acknowledges that special economic zones can have downsides. Brian Positive outcomes have been associated with
SPEAKER_08: good labor rights, good skills development, good linkages. But negative outcomes have been associated with poor labor rights. And in some minority of cases, the regulation in the zones has given less rights to workers than in the domestic society, which is really problematic. Kevin Now, Brian notes that decreased labor rights
SPEAKER_17: were not what their SCZ workshops were advocating, since in Shenzhen the same labor rights applied in the zone as in the rest of Ireland. But for some SCZs, that's not always the case. And in some countries, labor laws are poor to begin with, which leaves room for corporations to come in, set up shop in a low wage, low tax environment and offer very little spill off benefits to the local economy.
SPEAKER_09: Kevin So how does a country avoid getting stuck in these low wage, little return to local economy type of SEC? Kevin Well, to avoid this trap, Brian sees a big
SPEAKER_17: role for local government in helping to manage the zone and make sure that the zone is fulfilling its purpose of actually helping the wider economy. So for him, these zones are not some sort of laissez faire approach where the government just puts up a fence, lowers taxes and leaves things to the market. Brian And in fact, those zones that just offer
SPEAKER_08: low taxes and nothing else, those zones are failures in terms of very poor impact. What the successful zones have been, have been, I just say a partnership between the state and the private sector, where the state provides the centers, provide the infrastructure, but also the state can decide who gets into the zone and who has a right to establish their. So it's very much the state being selective on what type of companies it gets in. Kevin Brian points out that in Shannon's case, there
SPEAKER_17: was a pretty significant outflow of skills from the zone to local Irish companies. After working in the Shannon zone for companies like Sony or GE, workers would go on to work with Irish owned companies outside of the zone and bring those skills that they learned in the zone with them. Dave I mean, it sounds like what Brian's talking
SPEAKER_09: about is an idealized SEZ that sounds good if it works. So what are the conditions that make a good SEZ work? Kevin Well, despite the labor issues that we just
SPEAKER_17: talked about, I would say that the SEZ approach is most useful in cases just like Ireland in the 1960s or China in the 1980s, where a country with pretty little industrialization and a relatively closed economy wants to test out a new approach in a small area. Brian It allowed the receiving country the ability
SPEAKER_08: to accept capitalism in restricted doses in selected areas, and therefore to gain benefit in those areas and to manage capitalism and structure the impact of capitalism in an organized way that possibly might maximize the benefits and minimize the costs because capitalism can bring very substantial costs. Dave Brian sees SEZs as a sort of stepping stone
SPEAKER_17: towards industrialization, not necessarily a final destination. For example, in China's case, if they just thrown open the floodgates to capitalism, it probably wouldn't have worked out very well because there's no way it's protected state industries would have survived a sudden onslaught of global competition, which is actually what happened to the industry in former communist countries like East Germany at the end of the Cold War. But by testing out reforms in defined zones, China was able to slowly open up to a market economy, which obviously proved very successful in the case of Shenzhen and China as a whole.
SPEAKER_09: So you have these at least economic success stories when it comes to Shannon and Shenzhen, despite bad labor practices potentially in these places. But are there certain SEZs that just failed like from the get go, like never really took off?
SPEAKER_17: Brian Yeah, I mean, I looked into this and there are lots of stories of SEZs not really working out. In Africa, especially the record of these SEZs have not been great when looked at through metrics like employment and export figures. And one possibility of why that is, is that most African countries didn't start creating special economic zones until much later. So the growth and success of the zones in places like Taiwan, China and Korea in the mid 20th century, were largely driven by the incredible growth in overall global trade that occurred in the 1980s. And by the time most African zones started to be set up in the 90s, it was kind of too late. There were already so many well established and attractive possibilities in the world where companies could set up their manufacturing options. So why choose a less established zone that's just getting going? Michael Right.
SPEAKER_09: And I would imagine that because you know, there's so many economic zones in the world, that when you're competing globally, these zones kind of spark a race to the bottom in terms of taxes in these various countries, like many countries around the world would offer lower and lower taxes in order to compete with each other for a company's business.
SPEAKER_17: Dave Right, Brian agrees with this criticism. And as he said in our first interview, while low wages and low taxes can be an important initial instrument to attract business, Michael If they become part of the long term strategy,
SPEAKER_08: they're a disaster. Because low taxes means you're not getting the revenue from enterprises to finance your own development programs. And you're not getting your revenue from enterprise to financial services, your skills development, and your public service programs. So in the longer term, it's essential you move towards a higher level of tax and a higher level of wages. And that means you develop into a more sustained economy and a sustained society that can pay for itself. So low wages, low taxes, they're a kickstart, but they're not part of the long term permanent strategy of a country and they should never be.
SPEAKER_17: Dave But what's interesting is that low taxes are in a way a legacy of the Shannon Free Zone. Because when Ireland joined the European Economic Community in 1973, this is the forerunner to the EU, they were no longer allowed to offer special low taxes in the Shannon Zone. And Patrick, our resident SEC skeptic from earlier, says that in order to maintain the tax incentive that Ireland was known for, the Irish government reviewed the national corporate tax rate and reduced it to the point that it was one of the lowest in the EU. Michael Which was fairly groundbreaking back in the
SPEAKER_16: day, and which kind of set the tone for this kind of race to the bottom of corporate taxation that we have seen in not only in Western Europe, but across the world ever since. Dave And this is why you hear about, you know, US
SPEAKER_09: companies having some kind of headquarters in Ireland that they set up at some point. Michael Exactly.
SPEAKER_17: That's why Facebook is there. I think maybe LinkedIn is there. There's lots of different, especially kind of Silicon Valley type companies that have set up in Ireland exactly for this reason. Dave Okay, so that gets me wondering, like, what
SPEAKER_09: do Brian and Patrick see as some of the other legacies of the Shannon Zone for Ireland as a whole, like beyond low taxes? Michael Well, if you ask Patrick, he thinks that kind
SPEAKER_17: of negative attitude towards regulation and taxes that Shannon helped foster, he sees those things as helping artificially fuel Ireland's so-called Celtic Tiger economy in the 90s and 2000s, which famously went belly up quite dramatically during the Great Recession. Dave Yeah. Michael But Brian, for his part says it's hard to make a direct cause and effect connection between the founding of the Shannon SEZ and the financial crisis that happened some 50 years later. He points out that the overheated Irish economy prior to the recession was largely based on rising property prices, not trade or manufacturing. Dave Yeah, this is definitely a case where the answer
SPEAKER_09: depends on who you ask.
SPEAKER_17: Michael Yeah, definitely. But interestingly, the legacy of low taxes might finally be reversing. Just a couple months ago, Ireland relented and signed on to a landmark tax agreement that will see it along with countries around the world, implement a higher corporate tax rate for large corporations. And Brian Callanan thinks the agreement is a step in the right direction. Brian I don't think Ireland has anything to fear,
SPEAKER_08: because we are a mature, advanced country with the best technology and the best skills and a manageable tax, reasonable tax is part of our apparatus, but only one part of our apparatus now. It's not even the most important.
SPEAKER_17: Michael So in many ways, this is why Brian sees Shannon's legacy as being a largely positive one, because it showed Ireland a path toward becoming precisely this kind of high skilled, high tech, industrialized modern country that can afford to raise taxes.
SPEAKER_09: Dave Well, that's interesting. It seems like that goes back to what he said about the SEZ model being a stepping stone and not an end goal. Like, you know, Ireland pulled that off with its SEZ, even if perhaps like many other countries didn't.
SPEAKER_17: Michael Yeah, exactly. Which is why although he did agree with many of the critiques that I put to him about SEZs, in the end, he really cautioned against making any kind of overgeneralization. Brian I suppose the critiques I would not agree with
SPEAKER_08: would be the black and white one saying that all zones are good or all zones are bad. You can't label all zones in any one way. Zones are different depending on the way they're developed and depending on the conditions in the country itself. So each zone needs to be looked at in its own right. Like any policy instrument, there are strengths and there are weaknesses. It's not all one single picture.
SPEAKER_17: Michael And one last thing I'd love to mention is that, you know, in the case of Shannon and Shenzhen, we're looking at these zones and they're spread now in terms of our 21st century thoughts and beliefs about capitalism and development. But what's interesting to me is that what came through in all the interviews I heard with Brendan O'Regan in the oral archive is that he wasn't a man who was particularly ideological. Rather, what comes through is that of a practical man thinking first in terms of saving his local region and airport and providing employment, and then later on an approach to industrialization with these SEZs that he thought would be most beneficial for alleviating poverty around the world. Here he is talking to an interviewer in the oral archive about industrialization. Brendan I feel that that's going to eventually be
SPEAKER_05: the thing that will remove hunger and poverty all over the world and war will be universal wealth by manufacturing of some kind. I don't know exactly how it will be, but it will be done anyway with machines.
SPEAKER_12: David You think this globalization, this globalized economy will lead to that?
SPEAKER_15: Will it? There are dangers then.
SPEAKER_05: Brendan There are dangers. There's a great lot of wisdom in the world that knows that it's wrong and is trying to get it right, will get it right eventually. David And as you can hear there, he's a pretty optimistic
SPEAKER_17: guy overall. I mean, he does seem optimistic, but he actually is more thoughtful about it than I would even
SPEAKER_09: anticipate given how successful he was at the time. So what about Brendan O'Regan's legacy in Ireland? Do people know how much he changed about their country? Like is he some kind of household name?
SPEAKER_17: Brendan No, surprisingly not. Even in Shannon, the town he basically built, among younger generations, he isn't all that well known. So for example, my friend Amanda who grew up in Shannon and first hit me off to this story and the existence of the zone, she didn't know who Brendan O'Regan was. And from my time in Shannon, that seemed pretty typical. But I think for O'Regan, that would have been just fine. O'Regan mentioned in the oral archive that he felt far too much attention and praise went to him when so many people worked on these ideas from the restaurant and the duty free store to the Shannon free zone, and were responsible for them succeeding and working. But nevertheless, it's still amazing to me how far the legacy of one person can go when the circumstances are right. Well, it's a fascinating story.
SPEAKER_09: Thank you so much, Kevin, for bringing it to us. I appreciate it.
SPEAKER_17: Oh, it was my pleasure. Thanks, Robin.
SPEAKER_09: 99% Invisible was produced this week by Kevin Caners, edited by Joe Rosenberg, mixed in tech production by Dara Hirsch and Martine Gonzalez. Delaney Hall is our executive producer. Kurt Kohlstedt is the digital director. The rest of the team includes Vivien Leigh, Chris Berube, Christopher Johnson, Emmitt Fitzgerald, Lasha Madon, Jason De Leon, Sofia Klatsker, and me, Roman Mars. Music for this episode by our director of sound, Swan Rial, with Sasha Šiuchek and Mickey Nilligan on fiddle. You can find more of their music at soundcloud.com slash the sister street aces. Special thanks to a bunch of people in Ireland and beyond who helped us with our story this week. Anne O'Carroll, Kevin Thomstone, Valerie Sweeney, Matthew Thompson, and Amanda Kang. And additional thanks to Kian who edited the Brendan O'Regan oral archive used in this piece and graciously let us use it. We'll have links to his biography of O'Regan as well as Brian Callahan's history of Shannon on our website. We are a part of the Stitcher and Sirius XM podcast family now headquartered six blocks north in the Pandora building in beautiful uptown Oakland, California. You can find the show and join discussions about the show on Facebook. You can tweet at me at Roman Mars and the show at 99pi.org or on Instagram and Reddit too. You can find links to other Stitcher shows I love as well as every past episode of 99pi at 99pi.org. This is 9-9-9er-puppet India calling Stitcher on approach to Sirius X-ray mic.
SPEAKER_14: Look around, you can find cars like these on Auto Trader like that car riding your tails.
SPEAKER_00: Or if you're tailgating right now, all those cars doubling as kitchens and living rooms are on Auto Trader too. Are you working out and listening to this ad at the same time? Well multitasking pro, cars like the ones in the gym parking lot are for sale on Auto Trader. New cars, used cars, electric cars, maybe even flying cars. Okay no flying cars, but as soon as they get invented, they'll be on Auto Trader. Just you wait. Auto Trader.
SPEAKER_11: With threats to our nation waiting around every corner, adaptability is more important than ever. When conditions change without notice, quick strategic thinking is crucial. And with obstacles consistently impending, determination is essential in overcoming them. It's this willingness, decisiveness, and resilience that sets Marines apart. With our fighting spirit, we don't just fight battles, we win them. Marines are the constant our nation counts on to fight the unknown. And through adaptable problem solving, we do just that. Learn more at Marines.com.
SPEAKER_07: When the weather app says rain, the McDonald's app says McDelivery.
SPEAKER_14: Order McDelivery in the McDonald's app. By participating in McDonald's delivery prices may be higher than at restaurants.
SPEAKER_11: Delivering other fees may apply.
