Archive for January 14th, 2009

Managing the economy

Managing the economy

| 14/01/2009 | 2 Comments

There has been some public criticism of our Government’s poor management of the economy, lately. It’s fair comment, but it misses the main point.

Which is that our MLAs are not put in office to “manage the economy” – or manage anything else. They’re there to monitor the economy, and to set public policy, and to ensure that free private enterprise can flourish under the laws of the land. We seem to have forgotten that.

Unfortunately, the politics of vanity takes over as soon as an MLA is elected. Having failed to manage any successful businesses in their lives (most of them), they can’t resist the temptation to try their hands at what they think of as “the management game”, with taxpayers’ money. In real life their pay-packets would depend on success, but an MLA’s is not a real life.

Candidates don’t campaign for office on their economic-management skills. They don’t have any. They (most of them) don’t have any management skills at all, except the management of their election campaigns. That’s not a criticism, just a statement of fact.

What they are elected to do is to represent the interests of the voters. Most voters are bloodline Caymanians, and their chief interest is to be protected from competition from non-Caymanians in all areas of life.

Their protectionism ranks above all other concerns and interests – even Cayman’s economic efficiency. Protectionism puts a low cap on productivity. A protected industrial sector is a low-productivity sector, everywhere in the world. That’s another statement of fact.

So by pandering to the demands of the tribal-supremacy brigade, our MLAs deserve a collective ‘A’ for political management but a collective ‘F’ for economic management.

Our government Statistics Unit produces lots of pretty meaningless information, while never daring to calculate the effect of protectionism on our cost-of-living. My personal guesstimate is that 10% of all household and business expenses are attributable to protectionism. When the US recession starts to impact us here, even those Caymanians who have benefitted from protectionism may come to question its cost.

It puts the pensions-funds losses in perspective, doesn’t it? We know that our retirement pensions will be 30-40% less than we thought they would be, but that’s a one-off. The protectionism levy adds to our expenses year in and year out.

For decades we have been able to cope with this levy in comfort, owing to the strong overseas demand for our tax-haven and tourism products. However, the global recession will reduce the demand for both, and there may soon come a time when we will wish we had been able to keep the money in our pockets, instead of handing it over to be managed by our politicians.

We think of Cayman as being a free-enterprise economy. Well it was once, back in The Good Old Days of thriftiness and prudence in government. With the fabulous growth of Public Revenues, though, our later politicians allowed their vanity free rein. They got it into their heads that they knew better than private citizens how to spend the money.

The state now influences just about all expense-items in the Profit & Loss Accounts of all privately owned businesses. In a couple of years the state will influence all the income-items as well, through price-controls and taxes on profits. Then, we will have morphed into a centrally controlled economy.

What shouldworry us most of all is the appointment of what are in effect “political commissars”, to enforce compliance with the Caymanian-protection laws and regulations.

We don’t call them “commissars” – that’s the term used in communist Russia. Rather, we call them the Business Staff Planning Board and the Work Permit Board and the Immigration Department. But the job description is the same – namely, to ensure private businesses know whom to hire, fire and promote.

We call ours a “mixed” economy, but it is becoming less mixed by the day as the commissars tighten the screws on the private-sector workforce.

In the outside world, a mixed economy normally means a mixture of capitalism and socialism – the aim being to redistribute a portion of rich people’s assets among the poor.

In Cayman we have a mixture of privately owned and state-owned enterprises, plus a mixture of private and state management. I don’t know the name for that: “creeping statism”, perhaps. Statism isn’t concerned with redistributing a community’s wealth, but with creating state-owned commercial businesses and controlling the affairs of privately owned ones.

Of course there are private businessmen on all the workforce-control Boards and Departments. But those businessmen are generally political cronies and stooges who have an inside track with the issuance of Work Permits. (Not all of them take advantage of their positions, but the marl road is jam-packed with stories of those who do.)

Our politicians’ determination to manage the economy has saddled us with a huge bureaucratic empire. They see themselves not as humble representatives of the voters but as hands-on masters and managers of all they survey. Their empire encompasses the promotion of both Cayman’s tourism product and its tax-haven product.

It manages a plethora of loss-making businesses: Cayman Airways, all the airports and seaports, roads, schools, hospitals, sports and entertainment facilities. All this management is done with minimal reference to true experts. Even the complex field of international borrowings is managed by the inner circle of cronies and stooges.

This recipe for disaster has been a long time cooking. One wonders how it will taste when it’s done.

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Divides revealed as talks start

Divides revealed as talks start

| 14/01/2009 | 6 Comments

(CNS): Despite an optimistic opening tone from Leader of Government Business Kurt Tibbetts and the FCO delegation leader, Sir Ian Hendry (left), the open statements of the second round of constitutional talks revealed that a considerable amount of disagreement remains between the parties. Both church representatives indicated that the UK’s working draft document was unacceptable, and Opposition Leader McKeeva Bush said there was too much politics in it and not enough representation.

While Hendry and Tibbetts said they were optimistic of reaching agreement on a potential draft constitution by the end of the week, points presented around the table suggested this will be easier said than done, when fundamental objections were raised by the Cayman Ministers’ Association (CMA) and the Seventh Day Adventists (SDA), as well as the Leader of the Oppositions comments that the UDP would fight some of the issues.

Speaking afterwards, Tibbetts, who congratulated everyone on the progress made, suggested the difference were not so great and could easily be resolved if everyone entered in to the spirit of compromise. Bush, whose remarks were exceptionally short, said there were parts of the document which the UDP supported and parts that they will fight against. “One thing I know is that the people of these islands want less politics not more and I believe this will give us more politics, this will give us more in-fighting not less and then not enough representation.”

Pastor Al Ebanks, representing the CMA, and Eric Clark, representing the SDA, both had issues with the working draft composed by the Foreign and Commonwealth Office in October on which the talks were now being based.

Ebanks and Clark pointed to issues in the bill of rights, which they said they could not accept as it stood. While Ebanks also questioned the part of the constitution dealing with the governor’s powers, saying that CMA did not believe any person should be above the law, his main concerns focused directly on the bill of rights.

He said that given the support for CMA’s position in the community it had “no option but to state emphatically that we cannot support the current draft proposals as put forward by HMG.”

Ebanks said he had particular concerns over the non-discrimination provision in the bill of rights and he said that he felt the UK’s working draft had moved away from the position established on the bill of rights during the first round of talks. He indicated that the language had changed to widen the non-discrimination section to cover “any such” and “other status” from what had originally been a specific list of things that did not include sexual orientation. He said by changing the language this left the constitution open to undefined categories of discrimination.

He also raised concerns about the language of application and was concerned that the UK draft invited the possibility of horizontal application of the Bill of Rights and not, as had been agreed in September, merely vertical.  

The bill of rights was also an issue for Melanie McLaughlin, who spoke on behalf of the Human Rights Committee, although not for the same reasons. She heavily criticized the language of the bill which she said was complex and cumbersome and did not clearly set out the rights of the people in an accessible way. She said the HRC had made it very clear they had wanted to see a bill of rights written in such a way that even children could understand it.

“The HRC remains firmly of the view that the bill of rights should be set out in clear simple and positive language that must be understandable,” she said, adding that everyone should be able to have access and that the first step to improving the bill would be if people’s rights were listed first and then limitations set out afterward. 

Using the non-discrimination section as an example, she said the reader would have to cross reference four difference sections and that was not conducive to public understanding. She also noted that at the moment the section establishing the right to a fair trial was set out over three pages and that this needed to be written in far more succinct language. She also raised concerns over vague terminology and undefined concepts such as the use of the words like ‘values’ and ‘morals’ which she pointed out would be difficult for the courts to interpret.

Acknowledging the inclusion of educational and environmental rights, she said the HRC was also looking for the inclusion of more apparitional rights such as health care for all and housing rights. However, if the bill was re-written in much more simple language the HRC could accept the content, she said.

The Chamber criticized the language of the whole constitution, not just the bill of rights. President Eddie Thompson said that, while the document seemed to be moving in the right direction, the working draft was more like a cut and paste exercise.

“The second draft makes no attempt to simplify the language of the original constitution,” he said adding it looked like the language in other constitutions in overseas territories and crown dependencies, intended to be read by lawyers. He called on the FCO to use the UK expertise as established by the Crystal Mark, an organization which supports plain English in government documents.

“The constitution is the highest law of the land in the Cayman Islands. Let us make the document easier to read and to interpret so that everyone, no matter of your age or learning ability, can understand how our government works,” Thompson added. He also criticized the fact that the Chamber was not given the opportunity to circulate the working draft document among its members before the second round began to gather their opinions.

Hendr,y who opened the session, said there was a lot of work to do with some tricky outstanding issues and while he was aware that the leader of the opposition had requested the talks to be in the open, he said that the Overseas Territories Minister Gillian Merren agreed with his own position that the talks would be more likely to succeed if the forbearance and compromise required was done so behind closed doors outside the glare of publicity. He said that he hoped substantial agreement would be reached by Thursday afternoon and he said the next open session would be on Friday morning.

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