Over 60% of the world cruise ship fleet is in the Caribbean in the winter high season... ...bigger and bigger ships today... which apparently have less than adequate emergency back-up systems to allow safe operation of the vessel in the event of a major fire or severe grounding or collision

Is the Caribbean prepared for a cruise ship environmental disaster?


By Robert Maclellan



In the last six weeks, two cruise ships from the same company, Costa Cruises, have experienced very serious incidents that could have resulted in potentially disastrous damage to the marine environment in tourism sensitive areas of the world.

Both ships drifted helplessly, without power or steering capability, the Costa Concordia capsizing on rocks near the Italian tourist island of Giglio and the Costa Allegra coming within 20 miles of the pristine Alphonse group of coral atolls in the Seychelles.

In the Caribbean -- which is THE most tourism dependent region in the world – Costa Cruises have ships calling in ports in Jamaica, the Turks and Caicos Islands, St Maarten, The Bahamas, Antigua, the British Virgin Islands, Belize and the Cayman Islands. Costa is part of Carnival Group and their ships, including Princess, P&O, Holland America, Cunard, Seabourne and Aida cruise lines, call at almost every major island in the region and the group’s financial resources dwarf the GDP of most Caribbean economies.

In total, over 60% of the world cruise ship fleet is in the Caribbean in the winter high season – bigger and bigger ships today, which apparently have less than adequate emergency back-up systems to allow safe operation of the vessel in the event of a major fire or severe grounding or collision.

The Italian Coast Guard employed multiple vessels and helicopters in rescue attempts at the scene of the Costa Concordia and a large French fishing vessel first took the Costa Allegra under tow. A Dutch salvage company was soon alongside, pumping out the Costa Concordia’s fuel tanks to reduce the pollution potential, although the ship apparently may still break up on the rocks and scatter all kinds of debris. What resources exist in most Caribbean islands to limit the effect of a similar or greater cruise ship disaster?

Off the Italian coast the ship hit rocks, while in the Seychelles and in the Caribbean the resulting damage would likely be caused to reefs. The damage to Caribbean reefs and the marine environment -- simply from cruise ship anchors and disposal of garbage overboard -- has been well documented in the past. However, a serious grounding or collision could result in a devastating long term environmental disaster. Most cruise ships move to other regions of the world at the end of the winter season and detailed Caribbean island cruise itineraries can be readily changed. Therefore, in the event of a disaster, it is a single or small group of island governments that will bear the full impact.

How much assistance and cooperation have Caribbean governments received from cruise lines to finance and resource effective disaster planning to mitigate these risks? In recent years the spend on island per cruise ship passenger appears to have declined significantly, while Caribbean government port taxes have not even kept up with inflation in the region. Today’s cruise ship business model is a highly aggressive one, in terms of both its competitive position with Caribbean hotels in high season, and its resultant negative impact on inward investment for new resorts. Is it not time that the fiscal contribution of cruise lines to the Caribbean more fairly reflected their impact on the local environment and, ultimately, their potential for environmental disaster in the region?

Robert Maclellan is CEO of MacLellan & Associates, the largest hospitality, tourism and leisure consultancy based in the Caribbean. He has worked in the hotel industry across the Caribbean and was a cruise ship hotel officer and vice president hotel services of a cruise line earlier in his career.

March 3, 2012

caribbeannewsnow

Bahamas Blog International

Legal gambling versus illegal gambling in The Bahamas

The Bahamian gambling saga

By Arinthia S. Komolafe

The election season is well in full force in The Bahamas.  All of the major political parties have cranked up their machinery and politicians are making their presence felt on the talk show circuit.  No one would argue that crime and the economy are two of the biggest concerns on the electorate’s mind as we move toward the 2012 general election.  However, politicians should not make the mistake of campaigning on these issues alone.  The Bahamian electorate want answers and proposed policies on a multitude of issues including immigration, exploration of natural resources for economic benefit and future plans to address our failing education system.  One of the issues that the next government of The Bahamas must confront is the more than half a century topic of gambling by Bahamians in The Bahamas.

Gambling no doubt is one of the most controversial topics of discussion in The Bahamas.  There are many proponents and critics.  It remains uncertain, however, what percentage of the Bahamian population is for or against legalizing gambling by Bahamians.  The reality is that we as a nation continue to go round and round in circles on this matter, while thousands of Bahamians patronize the multitude of what are commonly referred to as ‘number houses’ in The Bahamas.

The arguments

An argument against the legalization is that it will bring with it a myriad of social issues that are opposed to Christian values and will cause a decadence in Bahamian society.  While it is accepted among some that gambling may not be an outright sin in the Bible, gambling done in excess is sinful.

Others opposed to the legalization of gambling have put forth an economic argument claiming that gambling is an open form of regressive taxation that will affect those of the lower income brackets more than those of the middle and upper class.  As a result, those of the lower income class will fail to take care of their financial obligations at home such as paying necessary bills and caring for their families.  A perception exists that individuals below the poverty line gamble more than persons who are not poor.  However, studies in America suggest that the reverse is true as it was found that more persons of the middle class played the lottery as opposed to those of the lower income class.

Proponents of legalizing gambling assert that government cannot legislate morality.  Further, proponents claim that there are many potential benefits including an increase in government revenue which can contribute toward charitable purposes, infrastructure and most notably education.  Advocates of the legalization of gambling also argue that it is another legitimate source of income for a government that has limited ability to increase its revenue intake.  Although this argument has been successful in persuading a lot of Americans to vote in favor of a national lottery, it was found that the eventual revenue was not utilized in the manner that many had hoped for.  For instance, the additional revenue from the lottery did in fact go towards education; however, many states reduced or offset the allocation to the educational budget against revenue received from the lottery.  Hence, the education budget was not increased overall but education was merely funded by another source of revenue.  To remedy this effect, a few states in America have passed legislation to ensure that a certain percentage of revenue received from the lottery is allocated for the specific purpose of education.  This ensures that the funds are used for the purpose intended on the one hand, and on the other hand it ensures that the states do not decrease their allocation to education.

The greatest issue with gambling in The Bahamas is the fact that there is much hypocrisy surrounding the point.  Several decades ago, the government of the day approved policy for hoteliers and casino operators to provide gambling services, however casino gambling and ‘playing numbers’ was outlawed for Bahamians.  It is interesting to note that civic organizations, churches and schools still have the ability to distribute raffle tickets as a major fundraiser.  However, provisions have been made for such activities under the Gaming and Lotteries Act.  Over the years, law enforcers have conducted random raids of ‘number house’ establishments in an attempt to discourage the practice of gambling by Bahamians otherwise called ‘buying and selling numbers’.  However, the truth of the matter is that neither the government nor the law enforcers have done an adequate job ‘shutting down’ the number houses.

There is widespread hypocrisy in that the government allows foreign investors to enter the country and provide amenities for casino gambling for their guests, but Bahamians though guests of these hotels quite often are unable to utilize these gambling facilities.  It is unclear whether the operators of ‘number houses’ want gambling by Bahamians legalized.  Any potential legalization will certainly decrease their profits, reduce market share and relinquish their current control to a government authority.  Liberalization of the gambling market will foster competition and encourage the entrance of more competitors.  Hoteliers and casino operators may not prefer any gambling policy that allows Bahamians to gamble not because of a threat to their market share, but because it will provide Bahamians with the licence to enter these establishments and patronize all the amenities just as the foreign tourists and non-residents do.  Arguably, hoteliers and casino operators may not find such a policy good for their businesses.

It appears that there are arguably many special interests who prefer to keep the status quo.  However, maintenance of the current state of affairs will increase hypocrisy and anarchy among Bahamians.  It is advisable for the next government of The Bahamas to ascertain the gambling appetite of the Bahamian population and propose a referendum on the matter.  We must take a “what is good for the goose is good for the gander approach”.

Legal gambling in The Bahamas should benefit both Bahamians and non-residents alike.  The same is true for illegal gambling; neither Bahamians nor non-residents should benefit.  If Bahamians agree to legalize gambling, it follows that the government must take the necessary steps to comply with the wishes of the people.  However, if the overwhelming response is to keep gambling by Bahamians illegal, the government and relevant government agencies must enforce the law and uphold the provisions of the Gaming and Lotteries Act.  This is the essence of democracy – a government of the people, for the people and by the people.

 

Arinthia S. Komolafe is an attorney-at-law.  Comments can be directed at: arinthia.komolafe@komolafelaw.com

Mar 01, 2012

thenassauguardian

Living and surviving in today's Caribbean

By Julie Charles

Gone are the lazy days of summer where you were experiencing the pleasures of a Caribbean childhood.   Eating mangoes till you had a serious bellyache and Grandma decided you needed a proper clean out; riding on the village donkey until the animal had enough of you and decided to kick you off; being sent up the road to catch water to be used for cooking and other sanitary purposes; playing childhood games such as Mississippi, ladder, hide and seek, or just plain out hunting lizards with your catapult just for the fun of it.

You waited patiently for Grandma to finish baking her famous coconut pie from the stone oven; or for her to take her soup off the coal pot and share it out in your enamel bowl.   Helping to raise the goats, pigs, chickens, and any other animal that would help to feed the household was a chore that taught you to care for and love the animals that were around you.

Those were the days where we had no care in the world.  It did not matter what fashion it was in or the clothes we wore, although the dread of having your hair ironed was definitely not a thing to look forward to, but it was either that or the endless hours of plaiting our kinky hair.   All our needs and supplies were taken care of as far as we were concerned.

We did not see the struggles of our parents to put food on the table; the concern in their faces as to how they would pay the bills; or how they wondered and worried if their children would grow up to well-adjusted and contributing citizens of our islands.   We were free to think, feel, play, and relax our little minds and fully believe that we would be anything we wanted to be.

Now those days are gone and we are now in our parents’ shoes but this is a different Caribbean.   We are all now having to face the trials and tribulations of this modern world. Politics, economics, and social issues are all intertwined in our decisions.  Everything is different and difficult and we wonder what happen to the carefree days of our childhood.

Politicians offer the Promised Land but all we receive are hardships as we are working three times as hard for the exact same pay from three years ago; crime is everywhere for it does not discriminate and worry sets in as you wonder if the things that you worked so hard for would disappear in the wink of an eye.

As for the social issues, they hit us like bricks, as we step over one another but it appears there seems to be no solutions readily available.   Relationships, which should assist with these adversities, become strained, difficult, and unsupportive; friendships no longer appear to be real and churches, whose duty it is to provide ease and spiritual comfort, now appear to only want what the bill collectors want and that is money.

Where is the relief for us in this modern Caribbean?  Our foundation has always been a spiritual one but in the face of such misfortune, are we doomed to be consumed by our problems?  No, we are not, as we are a strong people, a resilient people; a people who understand that where there is a valley there must be a mountain.

We will continue to strive, push, and crawl if we must but we will survive and eventually succeed.  It is innate in us, as Caribbean people to always thrive no manner the obstacles that are placed before us.  We may wallow, complain, and stress ourselves until we see grey hairs begin to appear but deep down in us is always the will to persist. It is not in us to give up on our problems but instead we are always driven to find solutions.  We are now realising that we cannot win every battle but we also know that given our faith and belief systems anything is possible.

So to my Caribbean people facing these difficult times understand the following:

• Know thyself and if you know thyself then you will know what you deserve and work towards it

• Understand that problems will come as they are a part of life and do not allow your vision to be clouded by those problems, for if all you see is problems then you will never see the solutions

• Always remember your spiritual foundation, as in times of extreme difficulty it will teach you to persevere and survive

• Nothing is ever as bad as it appears.   Life is a balance where there is sunshine; it must be followed by rain.   Rain is not a bad element.  It may prevent us from doing certain things but its true purpose is to cleanse the earth and nurture our food

• No matter your trial or tribulations, always seek the positive. It is a change of thinking that changes our path.

Life in this modern Caribbean is definitely more difficult than what our ancestors may have experienced, but luckily for us we have been given the tools to navigate these turbulent waters.   Therefore, we will shape the present and assist our children in their future by passing down the tools of survival.

February 29, 2012

caribbeannewsnow

Dons are criminal non-state actors that evolved out of the divisive trade union and partisan battles in Jamaica from the 1940s to 1960s... ...The term 'don' is a recent one, however, one that gained venom in the 1980s... ...before that you had 'rude bwoys', 'top rankings' and 'area leaders'

Garrisons: Empires Of The Dons

By Damion Blake, jamaica-gleaner guest columnist

The Jamaican don is a unique figure, created by a divisive and polarised partisan culture, and produced by the social and economic conditions of urban poverty and limited access to legitimate employment.

Dons emerged in a country where social status and prestige are important markers of upward mobility, and what the late Professor Rex Nettleford termed a 'smaddy'.

But who really are dons? How have they come to dominate the geopolitical spaces of garrison neighbourhoods in Jamaica? I view them as governance actors who use both fear and material rewards as tools for achieving and maintaining power inside Jamaica's garrison communities.

I write this article against the background of research I conducted in one of Jamaica's urban communities in the Kingston and Metropolitan Area last year from August to December 2011. This urban inner city, which I will refer to as 'California Villa', is in a garrison constituency and has been termed a garrison community.

I interviewed more than 40 persons who lived and/or worked in the community. I also spoke with civil-society and NGO groups that have worked in garrison and inner-city communities for decades in Jamaica.

One respondent who lives in California Villa remarked, "Don is a leader, a man who decide when the war fi start and when it fi end. Him decide who lives and who dies." I found the pronouncement of the respondent to be both instructive and scary. Like an investigator, I followed several trails trying to better understand who these community figures really are.

The late Professor Barry Chevannes once referred to dons as "folk heroes"; I think in many ways Prof was right. Dons have a kind of social power inside garrison communities that gives them perverse legitimacy, respect, social prestige but, most of all, a deep fear among residents. Residents fear dons and the gangs they lead. To cross paths with, or diss, the don is an almost sure ticket to punishment.

Dons also have network connections outside the walls of garrison communities. One respondent who runs a community-based association remarked, "There is no don without a politician, and there is no don without his own police."

Categorising criminal dons

But are all dons the same?

From the research I carried out, I realised that there are different types of dons in garrison spaces; in fact, there are some community figures that have social influence, but are not really dons.

One respondent, who works closely with inner-city and garrison communities, informed me that there are some men called 'boss man' who provide material resources to residents in these communities. They have respect among the youth in the area, but they are, technically, not dons.

Based on my research, a three-tier structure of dons emerges: there is the mega don, the powerful community don, and the lower-ranked street/corner don. Most garrisons, it seems, tend to have street-level dons, with fewer powerful dons and still fewer mega dons.

The mega don operates across garrison communities, is awash in wealth, has transnational links to organised crime (drug and gun trafficking), leads a gang, has legitimate businesses but also organises mega robberies and extortion rackets.

The don is essentially a male (I came across no female dons) who has resources in the form of money, has some political association (loose or strong), has an arsenal of weapons, usually is a leader or top-ranking gang member, has respect in the community (whether out of fear or admiration), and someone who provides some social benefits to the community.

Dons are criminal non-state actors that evolved out of the divisive trade union and partisan battles in Jamaica from the 1940s to 1960s. The term 'don' is a recent one, however, one that gained venom in the 1980s; before that you had 'rude bwoys', 'top rankings' and 'area leaders'.

Damion Blake is an instructor and PhD student at Virginia Tech State University. Email feedback to columns@gleanerjm.com and damionkblake@gmail.com.

February 27, 2012

jamaica-gleaner

Hugo Chávez: "We will live and win!"

• Venezuelan President expresses thanks for the support and love of his people

FÉLIX LÓPEZ

CONSTERNATION at the news that President Chávez is to undergo further surgery was followed by an impressive wave of popular support and love.   Venezuelan revolutionaries listened to his first-hand and frank explanation of the situation.   Immediately, their collective response could be heard everywhere, "Palante, Comandante!" (Keep on going, Comandante!)

Once again this relationship, human and almost umbilical, which has developed between Chávez and his people, is being put to the test.   What happens to the President also hurts the people and vice versa.   This explains why, since this past Tuesday, all the informative and emotional life of the country has focused on the leader’s medical condition, expressed in the media and the street, on social networks and cell phones.

Chávez once again used his Twitter account to respond in an intimate way, on Wednesday afternoon.   "All my love to you. I promise that I will fight without respite for life. We will live and win!"

Contrary to this support from public sectors, the media campaign aimed at taking advantage of the situation continues.   A cable from the agency which reproduces the U.S. line speculated Wednesday, "The voluble socialist leader and sarcastic critic of the United States might have no option but to appoint a successor."

Communications and Information Minister Andrés Izarra immediately responded, "The wave of rumors concerning President Hugo Chávez’ health, fuelled by the right wing in some of the media, is an attempt to block his candidacy for the October 7 elections.   What they are seeking is to break this confidence and the possibility of Chávez being the candidate.   We believe in the word and strength of the Comandante: he will live and win."

Havana. February 23, 2012

granma.cu

Cari-Crisis... again

By Norman Girvan:


“Crisis” is one of those words that is used so much that it has practically lost its meaning. And if there were a competition among regional organisations on which was most often said to be “in crisis”, my bet would be on CARICOM winning by a wide margin.


In the run-up to the half-yearly meetings of CARICOM leaders, we have become accustomed to a flurry of reports, studies, speeches and media commentaries bemoaning the sorry state of the regional movement and promising renewed attention to the dying patient.

Latest in the procession are two reports in the regional media appearing this week, just a fortnight before the March 8-9 “Intersessional meeting” of CARICOM heads of government in Suriname.

Veteran regional columnist Rickey Singh is quoting at length from a letter said to be sent by Prime Minister Ralph Gonsalves of St Vincent and the Grenadines to newly installed CARICOM Secretary General, Irwin LaRocque. The letter is said to offer a “blunt assessment” of CARICOM.

According to the Prime Minister, "CARICOM's current mode of marking time at an historical moment of overwhelmingly awesome challenges for our region which compelling demands a more profound integration, is mistaken…"; and further that "Minimalism in integration has its attractions but in our regional context, it can be fatal to our people's well-being.”

One must commend Prime Minister Gonsalves for caring sufficiently about CARICOM to take the trouble to craft this letter, and for his candour. But one is hard put to find anything in the extensive passages quoted that hasn‘t been said before.

Neither is there any hint of what specific actions Mr Gonsalves is proposing in order to salvage the regional enterprise.

I also wonder if the prime minister is aiming his guns at the right target. Seems to me he should be addressing his fellow heads of government directly; and with concrete proposals about how to move out of the present malaise. As everyone knows, the way that CARICOM is structured endows the secretary general with very limited authority to act on his own. More of a “secretary” he, than a “general”.

In any case, the expectations that accompanied Secretary General LaRocque‘s appointment six months or so ago, have all but dissipated. Seems to be business as usual!

Prime Minister Gonsalves concedes that he himself took part in a collective decision in 2011 to put the Single Economy “on pause” -- a decision which, ironically, was taken at a Special Retreat hosted by then President Jagdeo of Guyana, which had precisely the opposite objective.

So what reason do we have to believe that the latest letter, sincere though it may be, will make one iota of difference this time around?

The second news item, coming out of Bridgetown on February 22, tells us that a “Project Management Team” has warned that without a “fundamental change”, CARICOM could expire slowly over the next few years as stakeholders begin to vote with their feet…

Well, well. I wonder which planet these gentlemen inhabit.  Don‘t they know that stakeholders have been “voting with their feet” for some time? Whatever happened to the Caribbean Business Council, brainchild of former Barbados Prime Minister Owen Arthur? How active are the Caribbean Chamber of Commerce, the Caribbean Association of Industry and Commerce, the Caribbean Congress of Labour, the Caribbean Policy Development Centre?  These organisations have just about given up on the CARICOM Single Market and Economy (CSME).

1. Don‘t they know that the OECS is prioritising their own union?   That three CARICOM countries have joined ALBA, with two more in the queue?  That Guyana and Suriname are founding members of the Union of South American States (UNASUR), and looking southwards?  That Belize looks as much -- if not more -- to Central America as to the Caribbean?  Isn‘t it already “every man for himself”?

I have some other news for the Project Management Team: it’s all been said before.

For instance, here is what the present writer wrote seven years ago:

“The pessimistic scenario is for fragmentation of the Community and eventual abandonment of the CSME as an objective. This could result with loss of momentum in the integration movement due to the difficulties discussed in this paper, the growth of ‘implementation fatigue’ among governments and of ‘implementation cynicism’ in the regional public, waning political support for integration, and increased economic divergence.”

Long before that -- twenty years ago, in fact, there was Time For Action - Report by the Independent West Indian Commission -- -which spoke at length about the “Implementation Deficit” as the Achilles Heel of CARICOM.  More recently, one can point to any amount of studies, comments and warnings by regional media commentators, business leaders, academics, statesmen, leaders and former leaders. These have grown in the light of the still incomplete project to complete the CARICOM Single Market -- supposedly inaugurated by the governments in 2006 -- and the frequent missed targets for completing the CARICOM Single Economy, first set for the end of 2008.

So what‘s new?  Well, if the “Project Management Team” is supported by external donors, and has some foreign consultants among them, its report may be taken more seriously.  A cynical view might be that “Aid-driven integration” and “colonial mentality” could succeed, where all else has failed.  Even so, I wonder if the PMT is being correctly reported in their conclusion that “Hopes for arresting the crisis depend on a willingness on the part of Heads of Government to bite the bullet on the elusive issue of ‘fundamental changes’ in the management structure and operational modalities of the Georgetown-based CARICOM Secretariat.”

I have to ask if this isn‘t putting the cart before the horse.  The CARICOM Secretariat is a means to an end, not an end in itself.  How can decisions be taken on its structure outside of the context of larger decisions about the course that integration should take over the next 5-10 years; the priorities; the road map; the method of governance of the Community and the degree to which regional organs will be legally endowed with the authority to exercise “collective sovereignty”, in order to solve the recurrent problem of “implementation deficit”?

In reality, the “bullet” that needs to be “bitten” is the necessity to share sovereignty in designated areas of regional action, and to put structures of governance in place to give this practical effect.  Anyway you look at it, a revision of the Revised Treaty of Chaguaramas is inescapable.  And possibly a revision of several national constitutions as well.

A tall order, perhaps.  But to pin hopes on a reformed secretariat outside of this framework looks to me like a recipe for wasted investment, heightened frustration and continued decline.

So people, as the Suriname meeting approaches, dream of the best, but expect more of the same.  Don‘t hold your breath. You might be waiting to exhale for a long time.


February 25, 2012
caribbeannewsnow

The Bahamas: ...The growing debt and the deficits are a deadly cancer on the Bahamian economy... ...Together they will deliver a mortal blow to The Bahamas' economy if not dealt with... ...We believe that dealing with the deficit is the single most important factor for the future of The Bahamas

The cancer of debt

CFAL Economic view

Last week the Department of Statistics released the latest unemployment numbers.  They were not pretty to say the least.   Given that we are in the “silly” season we expect many political analysts to offer their own opinions as to why the employment numbers are so high.  What we would like to see are some specifics addressing the myriad of issues facing us today (including the high level of unemployment) over the next 36 months.   We can write and pontificate on why the unemployment rate is so high, particularly among the country youth, but will instead today focus on the debt cancer affecting on our national body.

One of the single biggest issues facing us is our national debt.  We are fast approaching the point when we will no longer be able to borrow at favorable rates in the international market.   Although the debt build-up was several years in the making, we still have time to change course and address some of the attendant issues.   We cannot continue to run deficits along with those unfunded liabilities which we never speak about — i.e., civil servant pensions.

We are in urgent need of a plan to address unfunded pensions but also a plan to grow our economy and manage the debt problem.  Debt is not all bad when used appropriately.  It becomes a problem when we stop borrowing for development only and begin to borrow to meet interest payments and recurrent expenditures — i.e., civil servant salaries, etc.

The Bahamas is not alone in this regard.   One by one, the countries of Europe are losing their ability to sell their bonds at an interest rate that is sustainable for their economies.   They have seen their revenue bases eroded and have had to resort to severe and socially disruptive restructuring exercises.   Even with central bank’s interventions to accommodate their spending by printing money together with the assistance of other countries, which tax their citizens to pay for the excesses, the debt burden still remains far too high.

Deficit must be addressed

We believe that dealing with the deficit is the single most important factor for the future of The Bahamas.   Some would argue that crime and education are more important but that would be shortsighted.   Whenever economies are doing well there is a tendency for crime and social ills to decline.  Indeed, unless the country has the financial ability to provide funding to fight crime and provide education, the social condition would only get worse.

We believe that the major focus of this upcoming election should ultimately be about dealing with the deficit and putting the country on a path to achieving a sustainable budget deficit rate; one that is less than the growth rate of our country.  By not dealing with this issue we run the real risk of creating many problems for ourselves including the likelihood of opening ourselves to harsh penalties such as those imposed by international agencies such as the International Monetary Fund (IMF).   Continued economic imbalances could, in the long run, affect the exchange rate and our sacred one to one dollar peg to the U.S. dollar.

No one likes to talk about devaluation but we must face a new reality, we can’t afford to put our head in the sand like the ostrich.   Instead, we have to develop a coherent plan to grow our economy.

Unless we seriously attempt to address our problems directly and urgently, we will face tough choices in the future.  Choices, which are not pleasant for any government.

The growing debt and the deficits are a deadly cancer on the economy.   Together they will deliver a mortal blow to the economy if not dealt with.   Putting off treatment as we all know will not make the cancer go away by itself, and the cancer of our debt is clearly growing and malignant.   It will soon overwhelm our national economic body.   The treatment of a cancer is always accompanied by both cost and pain, whether on the personal or the metaphorical national level.

Problem can be fixed

The problem is solvable and indeed there may be many different solutions.   Our difficulty is that we have not yet found the political will to decide on what type of treatment is needed and the will to change our way of doing things and move away from doing only those things which we are comfortable with.   Change is difficult, but we cannot grow without change.

Our solutions must be politically feasible; we have an aging population requiring increasing health service which is growing in cost annually.   Some estimates place the figure as high as 70 percent over the last decade.   This is clearly not sustainable.  We must address this issue as a matter of urgency.   As our population ages, an increased burden is placed on the National Insurance scheme.   Informed opinion suggests that National Insurance in its present construct won’t be able provide for all of us in the future unless fundamental changes are made.  We should add here that National Insurance was never intended to provide 100 percent for us in our retirement.

We also need to address our tax structure.   Why we continue to kick the can down the road is beyond us.  We must deal with this issue now.   It cannot be left for future generations to deal with.   If we continue to ignore those problems, it is our considered view that our economy will become like some of our friends to the south.

If the government decides to raise revenue via tax increases, it may be useful to conduct an exercise to examine the different implications for various tax increases.  Not all tax increases give the desired effect; some can have the reverse effect of further stalling revenue intake rather than increasing it.  We won’t argue how we should spend our tax revenues.   However, we do suggest that we should seek to collect them with as little negative impact as possible.   Taxes have consequences.

Some appropriate level of government spending is required.   We believe, however, that the spending should be targeted with a view towards creating new industries and employment opportunities for our citizens.  Keynes did argue that deficit spending was a good thing in recessions.   But he also assumed that the debt would be paid back in the next growth cycle.   Must government and citizens forget the latter part?

There are some ideas that are fundamental to the growth of the economy, capitalism and free markets as we know them today.   Thomas Hobbes argued that income measures what you contribute to society and spending measures what take away from it.  Adam Smith argued that it is the wealth of nations and not the wealth of governments that matters.   He argued it was more important to grow the economy and not government.

Without economic growth, the average person will be left worse off.   If our population grows by one percent a year and at the same time our gross domestic product fails to grow by one percent, there is less for each person to share.   It follows, therefore, that private sector growth is what is needed for general prosperity.

We should take the opportunity to learn from the crisis.  Our economic structure as it currently stands, cannot be supported or sustained if we are to move forward with minimal pain.  
 Our structure assumes that our government knows best how to allocate capital, a proposition that has been rejected in both theory and practice over the years.

We should never let a good crisis go to waste.   Our economic structure as it currently stands is just unworkable if we are to move forward with minimal pain.   Our structure assumes government knows best how to allocate capital, a proposition that has been rejected in both theory and practice over the years.

With regards to the problems facing The Bahamas in the next few years, we believe that there is no easy solution.  We are convinced that there are no easy choices.   Nevertheless, we are confident that the choices we eventually make will have both short-term and long-term consequences and we stand a better chance of success if we plan carefully.

 

•CFAL is a sister company of The Nassau Guardian under the AF Holdings Ltd. umbrella.  CFAL provides investment management, research, brokerage and pension services.  For comments, please contact CFAL at: column@cfal.com

Feb 22, 2012

thenassauguardian