Guest Writer

The Global Warming myth unraveling

The global warming argument continues to unravel even as some of its more rabid proponents grasp at straws.  Phil Jones, the former head of the embattled Climate Research Unit in the United Kingdom who resigned in disgrace amidst the Climategate scandal, has now made a startling admission.  Jones conceded to the BBC that there has been no statistically significant warming since 1995.

Furthermore, he admitted that it is quite possible that the world was warmer during medieval times than it is now, a position long held by global warming skeptics and long denied by the global warming fear-mongers.

Jones’ concession on both issues points to a sea change in the entire global warming debate.  If our world was warmer during the Medieval Warm Period then it’s highly unlikely that any warming over the last century has anything to do with us.  And keep in mind that this “warming” they point to is 0.7 degrees.  What the global warming folks don’t tell you is we were coming off the Little Ice Age which followed the Medieval Warm Period. The Little Ice Age ran from about 1300 to 1850.  It stands to reason that we would be warming a bit after coming off a 550-year cold snap.  Many experts tell us we’d have to warm significantly more to match European temperatures during medieval times when vineyardswere abundant in the London area.

Professor Jones’ backtracking is coupled with all sorts of holes that, of late, have been blown in the much-ballyhooed 2007 UN IPCC report.  That report is riddled with outlandish claims that have now been corrected and dubious sources for important parts of the research.  One claim of temperature and ice change came from casual observations taken from a hiking magazine.  Their claim that the Himalayan glaciers would disappear by 2035 had to be revised when it was discovered someone had transposed the numbers.  It was supposed to be 2350.

Okay, so they only missed it by 300 years.  But who can realistically claim that they have any idea what the climate will be doing in 300 years?

Other mistakes in the report include a claim that up to 40 percent of the Amazonian forests could react drastically to even a slight reduction in rainfall.  Instead of coming from a peer-reviewed paper, that claim came from the radical World Wildlife Fund.

We now know that temperature data the IPCC has relied on since its inception is suspect given the manner in which this data has been collected.  A staple of previous IPCC reports, the Michael Mann hockey stick graph, which showed little temperature change over a thousand years then a sudden spike, like the blade of a hockey stick, in the last 50 years, has been widely discredited.  The IPCC quietly dropped the hockey stick data in its last report.

Also, the claim of a consensus by Al Gore and others is laughable.  The IPCC used 150 scientists to compile the report, notthe thousands Gore has claimed.  Other scientists involved simply reviewed the material and a good number of them disagreed with the findings.  Hardly unanimous, as Gore has claimed.

The most laughable is the claim that the recent snowstorms in the Northeast corridor were caused by global warming.  They actually said that.  It would seem if that’s the case then the planet has already solved the global warming problem.

The IPCC, along with Al Gore, won a Nobel Peace Prize for their work.  Of course, global warming has nothing to do with peace but that’s okay.

Apparently, the IPCC and Al Gore have nothing to do with real science

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A new category of Permanent Residency

I wish to outline a new framework for the Term Limit and Roll-over policy regime which I think will be equitable to Caymanians and non-Caymanians and which may also encourage economic growth and build investor confidence. My proposal is for a new system of Permanent Residence, particularly a new Permanent Residency (Restricted) category, while also building upon and fine-tuning the existing provisions of the Immigration Law & Regulations, and effectively rationalizing the “Caymanian Status” eligibility (for only a specific category of people).

I will admit that the following ideas of a new category of Permanent Residency is not exclusively mine, as although I publicly wrote about this 5 years ago it has also been generally discussed in some quarters for at least a decade. The concept has however enjoyed much more “traction” in recent times, due to the mid-stream impact of the rollover policy and by extension its implications on the economic resilience of these Islands.

Vision 2008 (the 10-year National Strategic Plan which was launched in 1998) provides in Strategy 16 (pages 111 to 116) the over-arching objective of “establishing a comprehensive immigration policy, which protects Caymanians and gives security to long-term residents”. I have been a strong advocate for some form of “rollover policy” for at least 2 decades, and from the early 1980’s, when I was overseas at university, I even wrote letters to the newspaper back home advocating such a policy – in the interest of providing a career path for qualified and able Caymanians, while at the same time ensuring a Caymanian population advantage in the interest of future generations. Sadly, such a policy only came formally into effect on 1 January 2004, against the back-drop of potentially different motives and with a somewhat rushed legislative package and timeline.

On the subject of security of tenure for long-term residents, there has been resistance in embracing the changes brought about by the “rollover policy” because of the delays in implementing the policy and the then robust economic climate (in Cayman and elsewhere), which made recruiting a challenge in some areas. To further aggravate the prevailing feeble change management efforts leading up to the passage and enactment of the law, the introduction of this new policy framework (enshrined in the Immigration Law 2004) was further compromised by the impact of Hurricane Ivan in September 2004, as this made it even more difficult to implement both the immigration and the human capital development objectives of the law. After the completion of the general elections in May 2005 (delayed from November 2004 as a result of Ivan), the new government decided to continue the implementation of the Immigration Law 2004 and its term limit provision, rather than to delay, amend or repeal such clause(s). Respective immigration boards, including the Business Staffing Plan Board (of which I was deputy chairman from August 2005 to June 2009) undertook valiant efforts to accommodate the law and to serve is various constituents, albeit under difficult conditions.

However, in view of the fact that the immigration statistics seem to indicate that the average length of stay of expatriate workers is 4 to 5 years and the often stated claim by many expatriates that they do not necessarily want Caymanian status or citizenship but only some security of working tenure, we may therefore have a perfect recipe for a solution. If the foregoing assumptions are indeed correct, where some expatriates (whom their employers may have difficulty replacing in the short term) only desire to become “Key” is to enable them to qualify to apply for Permanent Residence in order to have some security of employment tenure, then another option for them may be more suitable. This new option would achieve their and their employers’ objectives, while keeping them under immigration control and monitoring their training of Caymanians, conduct etc., but preventing them from ever achieving Caymanian Status.

In substitution of the current system of a 7-year term limit or “Roll-over” for everyone, except those who are designated as “Key Employees”, I suggest that certain categories of specified non-Caymanian workers could begin the application for a new Permanent Residency (Restricted) category after they have been legally and ordinarily resident in these Islands for a at least three (3) years. In order to create equity and to avoid abuse, obviously the ImmigrationLaw and Regulations would have to stipulate the category or job level of eligible employees, specific expectations and rules for the employee to fulfil, and similarly for the employer (perhaps following a similar standard as was proposed 3 to 4 years ago known as the “Immigration Accreditation System”). Those employees who choose not to pursue this new option of Permanent Residency (Restricted), would continue to be subjected to the 7-year “Roll-over” and the rigours of the Key Employee application process (where merited).

The “mechanics” of my proposal for a new option of Permanent Residency (Restricted) category is therefore outlined in a 7-point plan, as follows:

1. Establish a new category of Permanent Residency(PR), with Restrictions in regard to the type of work/industry the holder can be engaged and also preventing them from ownership in certain categories of businesses as well as from voting in General Elections;
2. Carry out an exhaustive analysis of this proposal, particularly with regard to any human rights objections or hurdles, and obtain opinions from relevant international legal luminaries, including queen counsels, and internationally recognized human rights scholars;
3. If the two foregoing points are confirmed, then amend the Immigration Law and Regulations accordingly;
4. Those individuals who meet the criteria of being critical to their employers, but who do not wish to obtain the existing Permanent Residency, (and thereafter Status), can apply for this new category of Permanent Residency (Restricted). Other employees would be able to continue to seek to be “Key” so as to qualify to apply for Permanent Residency, however they would continue to run the risk of being unsuccessful in being classified as Key Employee and/or gaining Permanent Residency, i.e. they would then be “rolled over” after 7 years and not be able to reach their 8th year to apply for PR;
5. Those employees who exercise the option of this new (Restricted) category of Permanent Residence, would do so voluntarily and would also voluntarily waive their right (by a certified and Notarized legal instrument) to apply for Permanent Residency or Status in the future;
6. This new Permanent Residency (Restricted) would be awarded for 3 to 5 years each time, with annual reports (police clearance, Caymanian training or availability etc., marital status, dependents etc.) being required each year with the payment of the fee;
7. At a confirmation every 2 years, the employee would have to renew their waiver to apply for the other Permanent Residency or Caymanian Status, i.e. they would remain on the Restricted “license” with no claim to PR or Caymanian Status.

As I see it, if the following option becomes a reality, the Immigration “landscape” would be materially but not adversely altered, and would include following options:

• Residency & Employment Rights Certificate – Reserved for persons who are married to Caymanians, or those with Caymanian connections due to descent, etc.
• Permanent Residency with Right to Work – For people who may be successful in obtaining PR after they have become a Key Employee and are successful with the PR exam etc (if they choose to go that route)
• Permanent Residency (Restricted) NEW – As outlined above
• Permanent Residency without the Right to Work – Reserved for wealthy retires, investors, or other eligible long-term residents of property/home owners, whose resources are sufficient to take care of them without their need to work.
• Caymanian Status — This would normally be for a Grant due to birth, marriage to a Caymanian, or on the basis of Residency under the existing Immigration Law.

There may be some who may argue that this new system may givesome expatriates access to more power quicker than they can now achieve it. However, this is not necessarily the case if we examine the current economic situation and the other proposals and sentiments which are circulating. Additionally, if the proper monitoring and enforcement is done, preferably by a new authority, then the damage to Caymanians can be effectively mitigated, and the prospects for Caymanians' upward career mobility will be enhanced.

Others may say that there is a risk that children born to families who possess this new Permanent Residency (Restricted) category may themselves have a Right to Caymanian Status. Again, this is a matter for the legal luminaries to examine, as suggested in #2 of the 7-point plan above.

Third, some may say that this establishes a risky precedent. Well, that objection is also not without its weakness, because the present government has already amended the Immigration Law and have exempted certain categories of caregivers (of the elderly, physically handicapped/afflicted etc), from the provisions of the term limit. I am not sure what protective and control mechanisms are in place to prevent abuse of this new exemption for caregivers; however, with the Permanent Residency (Restricted) category which I am proposing there would be proper rules and monitoring.

Finally, some may suggest that those people who agree to the waiver and sign a “renewal” every 2 years may (say after 10-15 years) eventually renege on their commitment and then try to claim their right to Caymanian status. However, this would be subject to a court order, as the government would defend its position and appeal any unfavourable outcome, with the assistance of a credible queen's counsel. It is understood that a similar crown dependency, Bermuda, has also introduced a similar system, with favourable results.

Conclusion

The foregoing appears, in my mind, to be a fair compromise, which upholds the spirit of Strategy 16 of Vision 2008. However, for this to be truly effective, it ought to be done under the aegis of a long-range development plan (a renewed Vision?), as well as having a National Training Initiative imbedded in that bulwark. As I have also said repeatedly in the past, Action Plan 7 of Strategy 16 (to establish a Human Resources Authority) is a critical link in the chain of hope, in the new frontier of tranquility and prosperity for Caymanians, long-term residents, and our economy. In my next commentary, I will address this matter, as I have always maintained that the best home for the effective implementation of labour and human capital policies is not with the immigration department or the various work permit boards.

I commend the foregoing ideas, once again, for discussion and analysis on the agenda at the highest levels in the private sector and the political directorate. I stand ready to assist with, and engage in, a genuine discussion on a comprehensive and equitable solution in relation to the protection and development of Caymanian human capital as well as the equitable integration of non-Caymanian talent, as a recipe for sustainable development of our beloved Cayman Islands.

It is my considered opinion that the adoption of this policy, in a sincere and holistic fashion, will preserve the core of Caymanians values and aspirations, while at the same time rewarding and embracing needed and compatible non-Caymanian human capital. In my opinion, this new economic environment will result in a paradigm shift which will stimulate progress, promote workplace tranquility and productivity, and encourage investor confidence and sustainable development. In a service economy, where labour is a key input, such a combination would be the catalyst for dynamic economic recovery and propel the Cayman Islands from “Good to Great”.

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Where do we go from here?

As I read, listen and watch current events in Cayman today, I am desperately trying to find a caption which adequately describes our situation. The closest I can come is the words to an old country music song, sung by my friend, the late Conway Twitty: “ We’ve never been this far before”.

I have worked through every economic downturn/recession this country has experienced since the early 1970s, starting with the collapse of Interbank, the stagflation of the Carter presidency when interest rates were 22%, the 1980-83 recession, the 1999-2002 downturn, and now the present.  All of these were serious, but what we are facing today is more than serious; in my opinion it is a crisis, particularly when you factor in the global financial conditions, especially the USA on which we depend for trade, investments and tourism. The Caymanian people should have gotten their heads around this by now and realize that sitting around hoping that things will soon get better is no longer a viable option.

I try to pay close attention to economic/political affairs both here and on the international scene. Some may remember that during the last election campaign I publicly stated on several occasions that Cayman was heading into a five year hole with respect to its economy, assuming we took the right medicine. I was criticized by some and doubted by many, but three years later we have not even diagnosed the illness much less written a prescription. I also said that there would be no “international rescue plan” for Cayman. Instead, we would have to rescue ourselves. This should now be clear to all, yet we keep looking outward for solutions when the solutions are staring us in the face. A simple exercise like inviting the best and the brightest in our community to contribute their ideas, knowledge, investments and experiences to help forge a vision and strategy to help turn this mess around has not even occurred. Instead, our policy makers continue to surround themselves with political party beneficiaries.

Let us take a quick snapshot of our crisis: we have a bloated, inefficient government which appears incapable of keeping a proper set of books; a government which is approximately US$1billion in debt, with no cash; a government management system which is in dire need of reform, operating on flawed principles with no accountability and old tired thinking; a financial industry that is shrinking daily (some say dying); a tourism industry that has been on autopilot for about 20 years; the continuous degradation of our fragile environment; an overbuilt real estate market with few new customers  and a stubborn refusal to implement any type of moratorium to help maintain values; an education system that produces more prisoners than skilled tradesmen; the highest unemployment in 30 years with no meaningful skills training despite having over 20 thousand foreign workers employed; an unprecedented crime wave; the highest cost of living in our history with fuel and electricity being the main drivers, along with high commodity prices in the USA from which we import all we consume; a gradual entrenchment of political party divisiveness which will soon become permanent, while copying the mistakes which have contributed to the demise of other countries; a shrinking middle class (the backbone of any society), an increase of the lower class and the consolidation of our shrinking local commerce by large conglomerates; small businesses and individuals losing their assets to foreclosures; and most important – young people who dare not dream because drifting is more popular and alternative opportunities are becoming scarcer.

These are just some of the challenges on Cayman’s radar, but if one had to describe their cumulative affects, “a perfect storm of trouble” comes to mind. To pull through will require a steady focus on conditions and corrections not going in circles with pronouncements and retractions that threaten to finish off what little credibility we have left.

In any discussion relating to our situation we must take a quick look in our rear view mirror. For the past 35 years we have developed a country without a vision or a plan (latest development plan 1977).  The rate of development simply outpaced the abilities and wishes of our people. We did it by “flying by the seat of our pants”, as they say, with no idea of what the final product would look like. Are we now living the final product? Serious mistakes have been made in the management of our affairs and many of these continue today. It is imperative that these be admitted and identified before we can move forward in a sustainable direction.

For us to manage this crisis and extract the opportunities from it, we must be prepared for significant changes in almost all aspects of our lives. The challenge before us all is how we move forward with a new vision, clear strategies and plans that include all of our people – all missing ingredients in the way we currently manage our affairs. One thing is certain, we must discard the idea that past routine, past ways of doing things are probably the best ways. On the contrary, we must assume that there is room for improvement in all areas. There is probably a better way to do almost everything.  Our leadership must now consist of those who reject common thinking to accomplish uncommon results. Policies based on popularity and the next election must be abandoned for policies which are best for all. Creative thinking is hard work and it demands a willingness to be unpopular and go outside the norm.  Nothing limits achievement like small thinking; nothing expands possibilities like unleashed thinking.

For a country which has received billions in revenue both direct and indirect over the past 35 years but failed to save a dime for the rainy days, these challenges may exceed the scope and abilities of many of those who helped to drive thiscountry into this abysmal situation. The Caymanian people must now take the lead in determining our future and our young educated should be the tip of this spear, for it is their future which hangs in the balance.

Cayman is our home, a very unique place which was founded upon the seas, and built on a few sound principles by our forefathers who worked so hard in a mosquito infested land to leave for us a better land than they inherited. Our challenge is to do the same for our children and grandchildren. I believe we can, but remember, the greatest enemy of tomorrow’s success is sometimes today’s success. What some are calling today’s successes could become our children’s nightmares. We have one last chance to get this right and that is now.

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We can’t spend money after it is burned

About 70 million of our tax dollars went up the smokestack in the form of wasted heat. This article explains how some of our tax dollars are being incinerated. It is aimed at you the taxpayer and the policy makers to expose this calamity and offers ways to stop it.

Although CUC is mentioned here, there is no fault directed toward this company. CUC is very good at what it does and I am thankful every time I enter an air-conditioned space or flip a light switch. I do not take them for granted and offer some insights as to how the current systems work and what can be done to improve the overall contribution to our economy by both Government and CUC.

CUC’s 2010 Annual Report states concern that electrical consumption declined while the number of customers increased by 3%. This was partially explained by empty rental units still hooked up but not in use. Additionally, it is likely that the existing customers are making a concerted effort to use less power because of the high cost of electricity.

In July 2010, government increased the duty on a gallon (imperial gallon) of diesel fuel from 50 cents to 75 cents. Government collected about 20 million dollars in tax by my calculations.

Here’s where the waste begins. A gallon of diesel fuel represents 40.64 kilowatt hours of power. In a perfect world CUC would produce 40.64 kwh for each gallon used. But there are losses due to heat and machine inefficiencies and transmission line losses in the wires coming to your home that result in an overall efficiency of about 36%. This means that although we are paying for 40 kwh worth of diesel we are actually getting at most about 24 kwh per gallon.  The remaining 64% of energy is lost along the way. It is not criminal, it is science and the way electrical generation works. Of course electrical producers strive to attain maximum efficiency in order to maximize profits.

The financial impact of this fact is painful. Of the 110 million dollars we spent for CUC fuel in 2010; about 70 million dollars of it went up the smokestack in the form of wasted heat.

I will address a real world solution to reclaim some of this lost energy and turn it into electricity and more net profit for CUC but first I want to address a bigger problem. The problem is that government is placing a tax on this fuel. Therefore it follows that 64% of the money we spend on this tax is being burned up and wasted in the process of creating electricity. If government collected about 20 million dollars in this fuel tax then this means 64% or $12,800,000 of our taxes went up the chimney as waste heat. We did not get the bang for our buck we just got a lot of smoke. The most damaging thing in this scenario is that these 12 million dollars will not be used ever again to purchase goods or services that would generate more revenue for government in the form of duties and other fees and taxes. This is 12 million dollars we won’t have to put gasoline in our cars to provide government with gasoline tax revenue. (This burns money too). This money is gone and cannot come back.

As was pointed out in an earlier article I read, lowering electrical costs to the consumer result in growth to the gross domestic product of a country. I submit that when consumers are presented with extra money due to lower electrical costs that their spending power increases by much more than the amount saved since the prices of goods and services will also become less expensive. Therefore, an extra $10 in the pocket of the consumer could purchase more goods than before since they are now less expensive. Increased consumer spending causes more goods to be imported and more revenue for government. Electricity costs less so people use more and CUC realizes greater revenue and profits to shareholders.

The 2010 report also shows that over the 5 year period ending 2010 that an investment in CUC common stock returned only 3% while the Standard & Poors utility index produced a 48% return. Expensive electricity stifles economic growth and profits to shareholders. Our kwh cost to the customer is about 33 cents as compared to about 10 cents for the companies represented by the S&P index. Higher prices do not make for higher net profit.

By the way, the 20 million dollars in net profit earned by CUC represents 12% of their income for 2010. This does seem a bit excessive when banks are paying less than 1% in interest on savings. Reducing slightly this figure and passing the savings on to the customer would create more consumption and more return on investment than current levels. It truly is all about efficiency. It should also be noted that CUC pays the duty on fuel to Government even when customers fail to pay their bills. This creates a further financial burden on the company which was 6.5 million dollars billed that has not been collected at the end of 2010.

In spite of 3% more customers and less consumption, CUC managed to grow its income for 2010 by 8% through cost cutting and efficiency measures. Placing any tax on fuel used by CUC is a very inefficient use of our money and spending power. Many ask how Government would make up for this shortfall in revenue if they were to remove the fuel taxes. First of all, this year’s budget provides 10 million dollars for Nation Building. I recommend using that to offset the immediate shortfall. That leaves 10 million left to account for. Much of this money will go to subsidize things that are costing the country millions like the Turtle Farm, Pedro Castle etc.

Although I am a proponent of no government involvement in the retail private sector, we are currently saddled with these debt producers. Taxes could be raised by taxing unhealthy food items in order to reduce the cost of healthcare. There are many other areas where taxes could be increased or implemented that allow the money to still exist and be used again and again rather than have 64% of it vanish up the smokestack. As demand for goods and services grow, more revenue will flow to government immediately as these goods are brought back in. Demand for jobs will follow as economic growth begins. As the once unemployed now have income, they too will spend and contribute to the overall growth. Growth feeds on itself and continues whenunimpeded by the wrong kinds of taxes or excessive taxation. As the economy grows, crimes related to tough economic times will diminish which will mean decreasing Police, Court and Prison costs.

One very cost effective remedy: Many are familiar with OTEC (Ocean Thermal Energy Conversion). This is an alternative energy device that utilizes the difference between cooler deep ocean water and warm surface water to boil a gas like ammonia which has a low boiling point in order to propel a turbine in a closed loop system. This is the most efficient device to date and its efficiency rivals that of the Carnot Engine (Sterling Engine) also known asthe Sterling Cycle Engine. The efficiency averages in the range of 65% to 75% in converting heat to power. It is a means of capturing energy from heat. It has been studied here in Cayman because of our deep water.

I propose that such a device is not warranted or affordable. Rather, use the concept of the system to utilize the waste heat from the power plant and the nearby water of the North Sound to create the temperature differential needed to boil and condense a suitable gas like ammonia to drive turbines for electrical production. This is a large amount of potential power that could be reclaimed for the purpose of further lowering cost to the consumer and further increasing gross income and net profit to CUC. The benefits to the economy as a whole are increased immeasurably.

The above makes it clear that although we need taxes for government to run, this tax is highly detrimental to the country as a whole. There is one guiding premise that must always be remembered: energy is money and money is energy. They are one to one identical. Anything that wastes energy also wastes money. We cannot afford this waste any longer.

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