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How the World views One Little Country called The Bahamas

By S3S

Having promulgated my thoughts about The Bahamas in a number of Blogs over the past 12 months that included coverage from my perspective of the multitude of 'evils' facing our little country (thus far 12 and counting ….), I thought it might be appropriate to provide pointers to what the 'world' thinks of us.

I do this because Governments are very easy targets; they reside in the public spotlight ('fish bowl') and cannot avoid the incessant public stare, despite sometimes going to extremes to hide their decisions and actions.  So it is right that alternative views should be offered that would tend to 'balance' the picture, especially if objective commentary is provided from those with vested and no vested interests. My thoughts could then be properly contextualised and the precarious position we are in reconfirmed or rejected/denied outright.

I think all would agree, however, that we are in a global competition that intensifies by the day and are competing from an increasingly weakening position, as precious internal resources (human and social capital) diminish and mismanagement of the resulting fewer resources continues at a regular pace. One of the main resources being diminished is a knowledgeable and educated population that can drive a talented workforce that will be attractive to a more diverse Foreign Direct Investment (FDI).  I have identified evils over the past year or so that I have headlined 'GIANT Evils' in my Blogs, in an attempt to promulgate my thinking on these issues, which include but are not limited to: Lack of a National Vision; Crime & Anti-social Behaviour; Declining Education; Economic Misfocus; Economic Dependence; Food Insecurity; Health & Welfare; Natural Disasters; Political Indecision; Need for Labour Reform (Unions and Collective Bargaining); Socio-political Reality; and the Immorality & Hypocrisy which inheres our population.

With regard to the issues listed below, these are the views of others, in particular, international, regional and local agencies, supra-governmental and non-governmental organisations (NGOs), including the United Nations (UN), World Bank (WB); International Monetary Fund (IMF); Inter-American Development Bank (IADB) and other agencies that gather and analyse data on countries on an ongoing basis. The indicators include governance, ease of doing business, corruption, failed states index and human development, inter alia. They are in no particular order (though I have tried to lump together the more general indicators at the start):

1. World Governance Indicators

http://info.worldbank.org/governance/wgi/sc_chart.asp http://www.imf.org/external/np/exr/facts/gov.htm

http://www.iadb.org/datagob/

** The Bahamas - Business Freedom of 72.5 (above regional average of 63.7)

2. UNESCO Statistics

http://www.unesco.org/new/en/education/themes/leading-the-international-agenda/efareport/statistics/statistical-tables/

The long statistical table is particularly instructive

3. Ease of Doing Business

http://www.doingbusiness.org/rankings

http://www.doingbusiness.org/data/exploreeconomies/bahamas

** The Bahamas is ranked 77^th out of 185 countries overall but 179^th for ‘registering property’ and 123^rd for ‘enforcing contracts’. What can we infer from these two rankings?

4. Corruption Index
http://www.transparency.org/cpi2012/in_detail  http://www.transparency.org/cpi2012/results  

** The Bahamas is ranked 22^nd with a score of 73, not bad, not bad at all.

5. Small Island Developing State (SIDS) Ranking

http://www.sidsnet.org/

http://www.un.org/special-rep/ohrlls/sid/statistics.htm

6. Failed States Index

http://ffp.statesindex.org/ http://www.foreignpolicy.com/failed_states_index_2012_interactive

** The Bahamas is ranked 134^th with a score of 55.1, not bad, not bad at all (c.f. Somalia ranks #1)

7. Human Development Index (HDI)

http://www.un.org/special-rep/ohrlls/sid/HDI-SIDS.pdf

** The Bahamas is ranked 6^th with a score of 41, and in ‘high human development’ column

8. Trade Liberalisation

http://www.gatt.org/trastat_e.html

http://www.oecd.org/tad/tradeliberalisation.htm

http://ec.europa.eu/development/icenter/repository/scanned_bs_csp10_en.pdf

Are we on the right track?

9. National Economic Indicators - GDP per capita

http://www.tradingeconomics.com/bahamas/indicators http://www.tradingeconomics.com/bahamas/gdp-per-capita

Compare any two years, e.g. 2004 to 2012 to see the trend 

10. Debt-to-GDP Ratio

http://www.tradingeconomics.com/country-list/government-debt-to-gdp

http://www.tradingeconomics.com/bahamas/government-debt-to-gdp

Important here to look at the trend lines for each country; again, can compare years

11. GDP Growth

http://www.tradingeconomics.com/country-list/gdp-annual-growth-rate

Compare any two years to see the trend

12. Foreign Direct Investment (FDI) attraction

UNCTAD World Investment Report 2012

http://www.unctad-docs.org/files/UNCTAD-WIR2012-Full-en.pdf

Patently small in stature, we nonetheless figure prominently in many of the above indices. On the surface, we appear to be an extremely wealthy little country, but when we dig a bit deeper, we can infer from trends that our vaulted position of the past is slowly ebbing away.  Also, there is no thought given to emerging social issues that might be masked by this apparent decline in wealth. Together the indices paint a mixed picture, but as stated at the start, it is for you to make up your own minds.

© S3S

Why the PLP Government is WRONG to cut funding to the College of The Bahamas!

By S3S

The PLP Government is wrong to cut funding to the College of The Bahamas for several reasons (including, if for no other reason, the fact that the Prime Minister said as recently as last month that they would do nothing to 'compromise education'). In this Blog, I will focus on what I believe is the most important reason: the proven impact of public spending on education on a country's economic growth. 

Taking my departure from two recent Blogs, which generated much emotional feedback, I employ empirical evidence from a three different contexts (the studies referenced here include India, Nigeria and Bangladesh) to underpin my assertion. The evidence shows somewhat conclusively that public spending on education has a positive and significant impact on a country's economic growth in the long run. In support of this thesis and as a way to inject more objectivity into the debate, I present excerpts from four published research papers for your consideration.

The first, Abhijeet (2010) "Does Government Expenditure on Education Promote Economic Growth? An Econometric Analysis" found that “ economic growth affects the level of government spending on education irrespective of any lag effects, but investments in education also tend to influence economic growth after some time-lag".  You may wish to take particular note of Michaelowa's (2000) modelling of the "Micro and Macro Level Effects of Education on Economic Growth". The research finds further that "Expenditure on education bring(s) into the economic system the externalities and other indirect effects such as higher education attainment and achievement of children, better health and lower mortality of children, better individual health and lower number of birth which subsequently cause higher productivity in terms of increased earnings, more participation in the labour force i.e. increased labour force; all these coupled with lower population growth and better health of population tend to positively influence higher economic growth" (Michaelowa, 2000 cited in Abhijeet 2010)[1].

The second paper ("Public Expenditure on Education and Economic Growth") investigates the long-run relationship between public expenditure on education sector and economic growth in Bangladesh and finds 'an increase in Higher Education spending increases long-run growth'. Using an econometric model with time series data from 1995-2009, it found that "… public spending in education has a positive and significant impact on economic growth in the long run. …. it observed that a one percent increase in public expenditure in education contributes 0.34% increase in GDP per capita in the long run" (Muktdair-Al-Mukit 2012).

Paper 3, from the IMF, ("Composition of Government Expenditures and Demand for Education in Developing Countries") also found that '....an increase in Higher Education spending increases long-run growth". Quite significantly (and very much relevant to our situation), the research found that “these effects can be substantial even when increasing education spending comes at the expense of public infrastructure investment” [2]. Bahamas, take note!

The final Paper ("Government Spending on Education, Economic Growth and Long Waves in a CGE Micro-Simulation Analysis") discusses the issue with respect to Nigeria and "shows that the re-allocation of government expenditure to education is significant in explaining economic growth in Nigeria”. The paper then “recommends that in order to achieve a steady economic growth, investment in education service should receive the highest priority in the public investment portfolio"[3]. Again, Bahamas, take note!

I have addressed one reason why the Government is wrong to reduce HE funding and focused on what is arguably the most important reason.  However, I have presented a mere snapshot of the volume of empirical evidence that exists in support of this and related propositions regarding the correlation between spending on education and economic growth.  Because"investment in education is critical for economic growth and social cohesiveness of society", it follows naturally that public spending on education is a desirable thing.  Yet despite the overwhelming evidence, some allow ideology to cloud their judgement on this most basic of economic truths. 

In The Bahamas, we are saddled with a host of challenges, not the least of which is our declining educational standards, steadily weakening workforce and loss of skills. This is not the time to take funding away from our only tertiary institution**.  In fact, a strong counter argument could be made for the Government to do exactly the opposite and re-double its efforts to create the four-year institution that has been promised, as soon as practicable and not later than the end of this Parliament. As argued so elegantly by Amartya Sen of Harvard, LSE and Cambridge fame (1999, cited in Muktdair-Al-Mukit 2012), "Education has both intrinsic and instrumental value: it is desirable not only for the individual but also for the society as a whole".  "The social benefits of education provide a powerful set of arguments in favor of public investment to achieve the social optimum” (Harsha, 2004, cited in Muktdair-Al-Mukit 2012).

NOTE: For those who certainly will miss the point of my Blog, it is necessary to state at this point, that the above does not absolve the COB of its responsibilities to get its fiscal house in order! By my counting of faculty, it is overstaffed (216 teaching staff); does not have a clear strategy (as exposed in its 2009 - 2015 Plan); and is encumbered by one of the banes of Bahamian society (a powerful uncompromising industrial union), all of which need to be sorted and sorted quickly.

** As recently as 06th March, 2013, the Prime Minister announced 'there was never any proposed budget cuts nor was there intention on his administration’s part to “compromise education”' ('PM Not aware of COB Cuts', reported in The Tribune).

© S3S

[1] http://ideas.repec.org/p/pra/mprapa/25480.html  22.04.13

[2] http://www.imf.org/external/pubs/ft/wp/2002/wp0278.pdf 22.04.13

[3] http://www.ajournal.co.uk/EFpdfs/EFvolume1%282%29/EFVol.1%20%282%29%20Article%206.pdf 22.04.13

One Little Country facing Many Giant Evils: Lack of a NATIONAL VISION

By S3S

Thus far, I have addressed what I truly believe to be, the most intractable issues facing The Bahamas.  Somewhat belatedly and after further prompting, I have come to the realisation that the single biggest ‘evil’ of the multitude facing us must be the lack of a clear, compelling and coherent national vision to galvanise and guide our Bahamas.  I have come to the realisation in part because most of the evils I have exposed, relate to, derive from, or are, in some way, associated with the lack of a national vision.   For example, what type of competences do we want to develop in our education system to ensure we produce a competitive work force?  How do we orient our economy to ensure it sustains job creation and is not so dependent on that of our neighbour?  We have no ready answers to these questions because the bigger picture has not been properly contemplated.  Meanwhile, the country languishes and we become further benighted, without realising it.

I define national vision as the documented statement of a realistic, credible and attractive future for a nation based on how its leaders see it becoming over the long term.  What makes a vision strategic is the period of time because it should not be less than 20, but may be painted as many as 50 years into the future.  A vision must be ‘realistic’ to be meaningful for a country and its citizenry (e.g. a Leader should not try to persuade us that we will aspire to enter ‘the first world' when its definition precludes such a possibility).  A vision must be 'credible' to citizens because they are the ones who will ensure its realisation (usually long after leaders have gone).  A vision must be 'attractive' in order to inspire and motivate citizens, who can feel a part of the future scenario envisioned.  Finally, the strategic nature of a vision means that it must be set well into the future for at least two reasons: first, to give the country time to work toward it; and second, progress toward a vision often depends on external factors, which may impact development from time to time, after which ‘corrections’ must take place.  The strategic aspect also means that a vision cannot be a statement of where a country is now (God knows, our current state of affairs is not one that we want to persist) but a statement of where a country wants to be at some future point.  

The Bahamas has struggled for all of its 40 years without a vision to define its aims, goals and aspirations.  Our politicians have ambled along, seemingly competing against each other to bury themselves in the present or recent past whilst treating the future as if it is simply too daunting or overwhelming to contemplate.  To borrow a quote from Krugman [1], we are ‘a nation whose politicians seem to compete over who can show the least vision, the least concern about the future and the greatest willingness to pander to short-term, narrow-minded selfishness.” Meanwhile, the country languishes as all socio-economic, socio-cultural and socio-political indicators point to the fact that our little country is in extreme stagnation at best or in terminal decline at worst.  Crime spirals out of control, educational standards decline, joblessness finds new heights, the oligopolistic power of unions remains unchecked and our national debt balloons.  Would a national vision arrest either of these trends?  Probably not immediately but certainly over time, a national vision would help to turn the tide.  The debate would start by contemplating questions, including but not limited to the following ideal aspirations:

1. What do we want from our political establishment (politicians, institutions and burgeoning public sector)?
2. What do we want from our economic system (institutions, decision makers, agents and primary contributors)?
3. What do we want from our business environment (industries, competitiveness and the firms that constitute them)?
4. What do we want from our educational system (nursery, primary, secondary and tertiary levels in both public and private schools)?
5. What do we want from our scarce natural resources (including our contractual relationship with foreign investors to help with extraction)?
6. What do we want from our technology and infrastructure (including information technology, roads, bridges, airports, ports, etc)?
7. What do we want from our population and at what ideal size (and how should our population be distributed)?
8. What do we want from our legal system (a further expansion of the supply of legal talent or should we adopt a broader view to development)?
9. What do we want from our culture (a further deepening of current norms, rituals and artefacts or wider cultural diversity)?
10. What do we want from our environment (what must we conserve and how do we ensure sustainable development takes place)?
11. What do we want from our regional and global relationships (indeed, with whom should we pursue ‘special’ relationships, if any)?
12. What do we want from our visitors (i.e. tourists and what is an ideal tourist-type)?
13. What do we want from our immigrant class, whether asset-rich (bringing wealth) or asset-poor (seeking wealth) and to what extent should we proactively seek them?
14. What should we stand for and as importantly, stand against, as a society (are we comfortable with the ‘power distance’ that exists, should we pursue ‘individualism or collectivism’, espouse ‘masculine or feminine’ virtues, avoid or seek uncertainty, ‘long or short term orientation’ or continue to be ‘indulgent or practise self-restraint’ [2], etc)?

One Little Country facing Many Giant ‘Evils’: NATURAL DISASTERS (Part II)

By S3S

As noted in Part I, the National Emergency Management Agency (NEMA) manages and coordinates disaster preparedness on a national scale and appears to be doing some things right.  Nonetheless, there may be ways in which we could improve our overall disaster planning efforts through decentralisation, thinking more widely about the natural threats that may face us, planning year-round (rather than during the hurricane season) and ensuring that disaster (and recovery) planning plays a more prominent role in our nation’s psyche.

First, like everything else we do in The Bahamas, our coordination efforts are totally centralised in the Capital.  Whilst it is desirable to centralise certain aspects of disaster planning such as decision-making, due to co-location with the seat of government, our geography does not lend itself to total centralisation.  This is mainly because of the infrastructural damage caused by storms which makes it difficult or impossible to transport relief supplies to the ‘outer islands’ after passage.  This hampers recovery efforts, so moving relief supplies to hurricane ‘hotspots’ before the storm would eliminate the hassles of transport when transport is compromised. 

Second, we have focused exclusively on one type of natural disaster (tropical cyclones/hurricanes), so all resources and knowledge gathering efforts are geared toward tropical storms.  As the world’s climate evolves, we can expect changes in our natural events in future, for example, more frequent tornadoes.  Of potentially more concern, is our position with regards to the North American and Caribbean Plates (see below) and the likelihood of earthquakes (or more likely, the after effects of earthquakes in neighbouring countries).  Why should the country be immune to the possibility of quakes, generally, or indeed tidal waves? In Jan-2011 the effects of the Haiti ‘quake were felt strongly in Inagua, a short distance away.

[1]

In consideration of Atlantis, a major civilization that allegedly disappeared completely into the sea more than 10,000 years ago, Robert Ballard, acclaimed Ocean explorer, said “the legend of Atlantis is a logical one since cataclysmic floods and volcanic explosions have happened throughout history …”[2].  I am not suggesting that we ought to lapse into ‘the world’s going to end’ mode but we should expand our thinking on other disaster possibilities, no matter how remote the probability.

[3]

If we look at the abpve seismic hazard map, which “depicts Peak Ground Acceleration (PGA) with a 10% chance of exceedance in 50 years” we could infer that more than a minor possibility exists. This particular seismic hazard map of North and Central America and the Caribbean “depicts the likely level of short-period ground motion from earthquakes in a fifty-year window”. 

Third, our ‘disaster planning’ seems to kick into gear in Nassau during the few months prior to the hurricane season (01-June to 30-November) and focus on the Capital, when clearly, it would benefit from year-round education, training and awareness campaigns on all islands. 

Finally, ‘disaster planning’ should maintain a more prominent position in our nation’s psyche, which could start by encompassing a wider scope of public activities and events and consider all of the following:

A dedicated national weather/emergency radio station to broadcast information on an ongoing basis between event seasons and do so frequently and comprehensively during natural events.

Education and training programmes should be ongoing to ensure that we are always conscious of the dangers that may visit us and how we might mitigate them.  

Adequate collection and ‘pre-distribution’ of relief supplies (food, building supplies, mobile generators, etc) must be strategically stored around the country before storms arrive in designated 'hurricane supplies depots'.

Notwithstanding the above, we must improve our capability to transport relief supplies (after passage of a storm, once we know where the storms have actually hit).

Effective water management is needed to ensure that adequate potable water is available or at least, accessible, when needed.  

Teams of emergency personnel comprised of RBDF personnel, RBPF personnel and local volunteers on each island are required on a 'matrix structure' basis.  Personnel should be ready for immediate deployment and mobilization after passage of a storm. 

Improved national and local coordination (centrally controlled from Nassau) but based on a national network of satellite phones on all major islands (apparently in limited use at the moment). 

Last but by no means least, and dare I say it, Government intervention in the market (a clear ‘exception to the rule’), to stop the greed of a few suppliers from ‘price gouging’ or preying on the misery of others, who, through no fault of their own, find themselves without food, water, shelter or just under-resourced. The 'flip side' to this is to make available funds to aid recovery in the hardest hit areas (possibly through a 'national disaster insurance', paid for by all stakeholders in the country). 

The eight steps outlined above above should build on current disaster planning efforts and strengthen our capabilities to deal with natural disasters and other ‘Acts of God’ that may visit upon us from time to time.  Our recovery from these events has been woeful; it is shameful to see properties lying damaged 5 years after the storm.

© S3S

---

[1] http://victoriastaffordapsychicinvestigation.wordpress.com/2012/06/02/ecliptic-equator-beryl-earthquakes-1-june-2012-1035-pm-edt-1-7-1-8-e-tennessee-n-carolina-domincan-republic-san-juan-south-atlantic-ocean-tsunami-tidal-waves-15-ft-25-ft/tectonic-plates-cocos-south-american-caribbean-oceanic-plateau-north-american-plate-great-arc-of-the-caribbean-cyman-trough-gulf-of-mexico-atlantic-pacific-oceans/ Accessed 01.04.13

[2] http://science.nationalgeographic.co.uk/science/archaeology/atlantis/ Accessed 07.04.12

[3] http://sedmap.ethz.ch/gshap/northam/report.html  Accessed 01.04.13

Seismic Hazard Map of North and Central America and the Caribbean
Kaye M. Shedlock, U.S. Geological Survey, Golden, CO, U.S.A

One Little Country facing Many Giant ‘Evils’: NATURAL DISASTERS (Part I)

By S3S

As one of 52 small island developing states (SIDS) in the world, The Bahamas is particularly vulnerable to the formidable forces of nature that visit with unwelcomed regularity, as they did in 2005, a year not to be forgotten for the number (27 in the North Atlantic), frequency and ferocity of tropical storms (see above). For us, these natural disasters (both those we have experienced or are yet to experience) constitute another ‘giant evil’.

In 2005 and other years, our vulnerability was exposed on a number of fronts, not the least of which were our small size and dispersed, low-lying archipelagic geography, which are never adequate physically to deal with nature’s fury, such as that unleashed during Hurricane Katrina (2005) Hurricane Ike (2008) and Super Storm Sandy (2012).  Despite our location and propensity for violent hurricanes, however, we have been fortunate to endure mainly only one type of natural hazard, though natural disasters include a wider range of storms and natural events, like Tornadoes (such as the one that made landfall in Grand Bahama with loss of life a few years ago), Earthquakes (one of which devastated Haiti, in January, 2011) and Tsunamis (like those that devastated Japan in March, 2011 and Indonesia in December, 2004).  We tend to overlook these, as well as other not-so-obvious natural disasters, which occur over a prolonged period of time, so may not be so obvious and therefore, have not commanded our attention, including: droughts, extreme weather (hot or cold), global warming and cooling, changing sea levels, coastal erosion (except after hurricanes) and shift in resident species.

These are important considerations because using the widest possible definition, 'Natural Disasters' include ‘events of a natural cause with a high death rate or that cause extensive destruction; events of a natural cause that have a negative impact on the environment; events of a natural cause with low death rate but frequent occurrences; and natural trends that have negative long-term consequences’. For us, these are yet another ‘giant evil’, but of a different kind from those I presented previously. This is because natural events are ‘externally-generated’ and consequently, we have no control over them ('Acts of God'). Nonetheless, we are obliged to study, analyse (past events and those occurring in other places), plan for, anticipate and effectively manage these events.  Why should we be obliged to study such events?

As noted repeatedly via this and other media, The Bahamas has a high (and increasing) expenditure, so pressure exerts on financial resources from all sources.  For a small country trying to marshal its already scarce resources to effect sustained development, anything that detracts from this overriding effort frustrates development.  Natural disasters kill people (and pets), destroy property, incur costs (preparation, prevention, relief efforts and rebuilding) and unsettle populations due to the attendant fear and uncertainty.  According to one source, ‘costs have increased exponentially over last 50 years’, totaling more than 700 billion over the past 21 years and ‘the gap between losses and insured losses increases’. Hurricances that paid us a visit included Hugo (1989), Andrew (1992), Katrina, Rita and Wilma (2005), and Ike (2008).

Unlike other giant evils that confront us, however, this particular challenge appears to be managed with some foresight and we appear to be doing some things correctly.  For example, a national body, the National Emergency Management Agency (NEMA), was established to manage and coordinate disaster preparedness on a national scale.  According to NEMA’s organisational chart, a ‘National Disaster Coordinator’ oversees a ‘National Emergency Management Advisory Committee’, which itself superintends ‘13 Emergency Support Functions’ (unspecificed).  The Coordinator reports directly to the Cabinet Office, suggesting it occupies a strategic position in government, which must be a good thing.

But are we doing all we can to ensure that life and property are protected and lives can be returned to normalcy as soon as practicable after a storm passes? In Part II, I will examine how our current efforts may be supplemented to ensure we are much better prepared for disasters, whether tropical cyclones or other.

© S3S

http://en.wikipedia.org/wiki/File:2005_Atlantic_hurricane_season_map.png  Accessed 07.04.13

Testing Your Core

By S3S

Sometimes, life throws up challenges that prompt us to rise to them and renew our passion and appreciation for life. Such is the situation that confronted my friend, Chris Eglin, in 2008. 

As an experienced Systems Analyst/Developer, specialising in 'stress' testing complex systems, Chris has worked on numerous extended projects in many industries, including Investment Banking and e-trading.  His work has taken him to locations around the world, most recently, Boston, Santiago and San Francisco. In 2008, Chris was on a project in Stuttgart, when he was senselessly attacked on the street by a knife-wielding mad man for no apparent reason.  As he said, 'there is no template for recovery from something like that' but for more of what Chris did in response to his near fatal encounter, see: http://www.justgiving.com/Spitalfields-Crypt-Trust

On Sunday, Chris leaves London on an awesome 10-day Expedition to the North Pole to complete his response that will test his physical and mental endurance to the core.  He will raise money for charity in the process, on a trip that will take him by air to Oslo and then by air to Longyearbyen, Spitsbergen (Svalbard), before travelling by helicopter to Barneo Ice Camp: http://www.icetrek.com/?id=937 from where his 4-man team's 110 km trek to the farthest point north will commence. 

"You could be a part of this epic adventure by making a small donation to the SCT Charity that will be the main beneficiary of Chris' efforts, for which he has been training for the past seven months, the last three of which have been intensive endurance training with weights":
http://www.testyourcore.com/#!donate/c1ghi

One Little Country facing Many Giant ‘Evils’: IMMORALITY & HYPOCRISY

Our Unending Battle with Immorality

By S3S

 “It is evident that both law and morality serve to channel our behavior. Law accomplishes this primarily through the threat of sanctions if we disobey legal rules. Morality too involves incentives: bad acts may result in guilt and disapprobation, and good acts may result in virtuous feelings and praise.” (Shavell, 2002:1)[1]

The Law versus the Moral

The Bahamas faces an unending battle with immorality and hypocrisy, two labels that shoud make any country uncomfortable.  Small in size and stature, we face ‘giant’ challenges of which steady degradation of our morals, in all its varied forms, is but another.  In my view, the challenge is rooted in an over-appreciation for one of the sets of standards that govern society (the law), offset by a severe under appreciation for the other more important set of standards that overrides all others in society (the moral) – at its most basic, meaning what is right – at its more advanced, the “rules of conduct that are associated with certain distinctive psychological and social attributes” (Shavell, 2002:4).  We possess much love and admiration for the ‘law’; we esteem lawyers, celebrate the profession and if offered the chance, opt to join the profession ourselves, rather than enriching society by becoming learned in other areas.  Unfortunately, this level of admiration and respect does not extend to ‘the moral’ and arguably, the overarching and therefore, superior tender to the law!  Of course, what is legal is not necessarily moral, though the latter has the much higher authority and a much wider remit. 

Not only do we not possess a penchant for ‘the moral’, we flaunt our lack of respect for what is right.  There is nothing more morally perverse than a society saying it believes in something that is right but then behaves contrarily or to put it another way, refuses to practise what it preaches.  Common examples of deviant moral behaviour occur at the national (government), societal and most disturbingly, at the level of the family, the core ‘moral’ unit of society. 

Declined Morals in the Public Sector

In the public sphere, monies are misappropriated from public corporations and in response, governments initiate ‘toothless’ investigations with apathy, which normally translates into nobody being identified, much less punished, for the wrongdoing.  Public officials accept bribes as if a normal part of operations and public servants are in service of the public to see what they can get from it.  Corruption in public office erodes trust in our elected officials and frustrates our development ambitions because we become distracted with the acts of impropriety.  Take the recent announcement of the depleted Confiscated Assets Fund (CAF), which reportedly held more than $20m in 2008, but now holds less than $185,000 (The Nassau Guardian Online[1]); or the previous report of missing millions from the Bahamas Mortgage Corporation; what happened to these funds and why is there no public accounting or indeed, accountability?

One Little Country's Economic MISFOCUS, Part II - The Benefits of an Entrepreneurial Culture

        This Blog continues from my Blog of 30-January-2013: http://www.weblogbahamas.com/blog_bahamas/2013/01/one-little-country-facing-many-giant-evils-giant-economic-misfocus-antiquated-economic-development-m.html.

        Our apparent disdain for entrepreneurship in national economic development has meant that we routinely misallocate resources and waste an inordinate amount of time chasing and competing for large investments.  As characterised by William Wong and later quoted by Pam Burnside in “Sustainable living in The Bahamas”[1], we rely on these ‘mega resorts’ to stimulate economic activity but are often oblivious to the damage they can cause.  She said: “I trust that its former “anchor property” mega schemes will be re-examined as the current global debate on living is now focused on the importance of sustainable development”.  Unfortunately, the overriding goal has been to attract what has become the ‘Holy Grail’ of our economic development.  Certainly, the case since Independence and probably well before this time, during the minority government, so again, well in need of a radical re-think.  

        Of course, Wong and Burnside were addressing environmental damage but although my Blog is about economic damage and the effects of entrepreneurship on national economic development, I could not agree more with their premise.  For too many elected officials, economic development means government-run or subsidised programmes that provide assistance to individual (large) foreign businesses in order to increase local jobs, usually in the hospitality and tourism sector and usually in Nassau (recently has expanded to include Exuma).  To rely on such large-scale projects is to ignore the potential (and lasting) benefits of an entrepreneurial culture, which would straddle more industry sectors and which are cited below[2]:

(1) Entrepreneurship promotes Capital Formation – Schumpeter extending Say, who extended Smith, argued that entrepreneurs promote capital formation by mobilising the idle resources of society.  They employ their own and the resources of others, which lead to value addition and wealth creation. (In The Bahamas, we have opted for an unhealthy proportion of lawyers, who patently are not wealth creators but wealth consumers!)

(2) Entrepreneurship creates Large-Scale Employment Opportunities – Collectively, entrepreneurs contribute to large-scale employment which can be a chronic problem of underdeveloped nations. (As noted above, we opt for mega projects which are 'quick fixes' and employ thousands but not for longer term solutions that would also employ thousands but not necessarily in one workplace!)

(3) Entrepreneurship promotes Balanced Regional Development - Entrepreneurs help to reduce regional disparities by establishing new, spin-off industries in less developed areas, thereby promoting balanced regional development (In The Bahamas, we have opted for the development and re-development of the 21 x 7 mi. piece of land we call New Providence, which has attracted virtually all of our development resources, including incentives to foreign firms, with a rare exception!)

(4) Entrepreneurship reduces Concentration of Economic Power - Economic power is the natural outcome of industrial and business activity. By increasing the number of entrepreneurs, it ensures that economic power is not concentrated in the hands of a few individuals (In The Bahamas, anecdotally, a (not ‘the’) minority population controls a disproportionate amount of economic power; this is not a bad thing per se, but the power can be more widely distributed in a new economic culture). 

(5) Entrepreneurship creates and distributes Wealth  - Entrepreneurship stimulates a more ‘equitable redistribution of wealth and income in the interest of the country to more people and geographic areas, thus giving benefit to larger sections of the society’, and thereby creating the much sought after ‘multiplier effect in the economy’ (See above point).

(6)  Entrepreneurship increases National Wealth (GDP and GDP Per Capita) – By definition, entrepreneurs are routinely on the look-out for opportunities, which they explore and exploit. Entrepreneurs effectively mobilise resources and capital, develop new products, services and markets, and contribute to national wealth (The Bahamas’ GDP is comprised mainly of tourism, offshore financial services, shipping administration and one or two other industries).

(6) Entrepreneurship improves the Standard of Living – ‘Entrepreneurs play a key role in increasing the standard of living of the people by adopting latest innovations in the production of wide variety of goods and services in large scale that too at a lower cost’ (In The Bahamas, we seek prolonged income in the form of long tenures with a public sector organisation or one large private sector firm as the route to raised standards of living).

(7) Entrepreneurship promotes a Country's Balance of Trade - Entrepreneurs help in promoting a country's balance of trade, by producing goods and services, some of which can be exported (In The Bahamas, we rely on a handful of industries to contribute to our exports; at 162^nd in the world, exporting is not something we’re good at!)

(8) Entrepreneurship induces Backward and Forward Linkages in industry - Entrepreneurs thrive on change and maximise profits by innovation, which induces backward and forward linkages from the new developments (We have very few truly innovative firms in The Bahamas).

(9) Entrepreneurship facilitates Overall Economic Development – In the words of Schumpeter, ‘entrepreneurs act as catalytic agents for change’; the creation of a new product, service or market sets in motion ‘the process of industrialisation’ (In The Bahamas, we have managed to retain an ‘employee society’ and remain light years away from becoming an ‘entrepreneurial society’).

(10) Entrepreneurship prevents or mitigates ‘shocks’ in the Economic System – Currently, if a large firm goes out of business or falls on hard times in The Bahamas, hundreds of people are laid off. (In an entrepreneurial culture, the shocks are more widely distributed so the system can better withstand them because a number of smaller firms may lose a few employees, rather than one large firm losing hundreds!)

Why is an Entrepreneurial Culture better, specifically for The Bahamas?

Revising the above in relation to The Bahamas, an entrepreneurial culture would, inter alia:

1. Free us from the economic slavery in which we have embroiled ourselves for all of our 40 years!

2. Give Bahamians more and better control of their economic lives!

3. Protect The Bahamas from external economic shocks, such as recessions in the USA!

4. Create a wealthier country and distribute wealth more widely in the country!

5. Put The Bahamas on a course for sustainable economic development for the future!

6. Relieve Governments of the pressure of having to create jobs because this is not a government's role; instead, its role is to create and maintain the conditions and business environment for firms to start, thrive and grow so that they can create jobs!

7. Change our educational focus so that our youth see entrepreneurship/self-employment as an ‘honourable’ and viable career option!

8. Produce more entrepreneurs who would become our societal idols as we put wealth creation at the centre of our society, rather than wealth consumption (as practised by lawyers and such like)!

9. Get rid of our ‘employee society’ and labour mentality, which means we are always looking for jobs, rather than ways to create jobs, and which have become millstones around our necks!

10. If we are lucky enough to develop competitive entrepreneurial firms, it would assist our balance of trade and put us 'head of the class' in the Caribbean region (currently, Barbados is the trend setter in this regard)!

The white Bahamian population (guesstimated to own as many as 40 – 50% of businesses) has long valued self-employment and enjoyed its fruits. The population at large could learn a lot from this entrepreneurial segment and as a country, we should highlight more their commercial successes.  Other ways to start changing our economic culture would be to teach entrepreneurship in our schools (and CoB) and invest in entrepreneurship training in the final years of secondary education. This is an imperative, the importance of which cannot be overstated! Others have called for a capital market driven economy [3] - but I know of no capital markets that can exist without firms! 

© S3S

END

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[1] http://www.weblogbahamas.com/blog_bahamas/2013/01/sustainable-living-in-the-bahamas.html

[2] Adapted from: http://www.preservearticles.com/201101143326/role-of-an-entrepreneur-in-economic-development.html 20.01.13 

[3] http://ourbahamas.org/pages/view/1246/would-the-bahamas-benefit-from-a-capital-market-driven-economy-cmde

One Little Country facing Many Giant ‘Evils’: GIANT Economic MISFOCUS (Antiquated Economic Development Model)

As the world’s best known thinkers (not necessarily the world’s leading thinkers) make their annual pilgrimage to Davos to discuss the global economy, I am minded once again to consider again how far removed our economy is from those of the developed world.  In a series of Blogs so far, I have shown The Bahamas to be a ‘little’ country by virtually any measure selected (I chose to focus on Land area (161^st in the world); Population (167^th); and three Economic measures (e.g. Purchasing Power Parity (PPP), 152^nd; GDP growth, 181^st; and Exports, 162^nd) but could have chosen others.

In each of the Blogs, I argued that in sharp contrast to our small stature, we face gigantic challenges, which include but are not limited to: Crime and anti-social behaviour; Economic dependency; Education; Food insecurity; Political indecision and lack of will; our Skewed socio-political reality; Disease and other health-related issues and two on the scourge of Trade unionism.  In this two-part Blog, I explore yet another challenge, which I term the Economic Misfocus of successive Bahamian Governments, which blissfully have ignored the importance of updating our national economic development model.  In the first part, I define the basis of a different model and comment on our tired economic policy; in the second, I will examine the benefits of that alternative model, underpinned by an entrepreneurial culture. 

       For decades we have clung, as if our lives depended on it, to an antiquated economic development model that saw its heyday in the 1960’s and 1970’s, after which it was dumped by most developed countries in favour of an entrepreneurial culture to drive and sustain the growth of their economies, with America leading the way.  By entrepreneurial, I don’t mean ‘small business’, even though small businesses can be entrepreneurial but it does mean constantly scanning the business environment for opportunities and exploiting them.  As defined by Peter Drucker, entrepreneurship is the practice of searching for change, responding to it, and exploiting it as an opportunity’, and which can be practised in large as well as small and medium firms[1]. At its core, lies innovation, new and different ways of doing things.  Drucker was extending Schumpeter (1934) whose conception of economic development was based in the idea of ‘creative destruction’ in which “new entrepreneurs could emerge from the ruins of a fallen capitalist system (and) create a resurgence…” He pointed out that “entrepreneurs innovate, by introducing new means of production, new products, and new forms of organization that are built in the ruins of the old means of production and old organizations"[2].

    Of course, there are many barriers to entrepreneurship, some of which are present in the Bahamian context (for example, access to finance, access to specialist support, excessive bureaucracy/regulations, etc), but these are not our main problems in The Bahamas.  Our main problem is the total lack of regard for the role entrepreneurship plays in national economic development.  The problem is one of Government but also of society at large. This is reflected in the 'professions' we value as a people, the personalities we celebrate publicly and our unbalanced enterprise stock because we prefer to study a limited number of subjects, idolise the wrong 'heroes' and invest in an economic development model that has long past its 'sell-by' date.  Consequently, we search relentlessly for the ‘magic bullet’ of foreign direct investment (FDI) in the form of very large companies or projects that promise thousands of jobs.  As labeled by William Wong and later, quoted by Pam Burnside in “Sustainable living in The Bahamas” [3], we rely on ‘mega resorts’ to stimulate economic activity but are often oblivious to the damage they can cause.  She said: “I trust that its former “anchor property” mega schemes will be re-examined as the current global debate on living is now focused on the importance of sustainable development”. 

    Unfortunately, the mega anchor property or mega anchor firm (e.g. Kerzner International) has been the ‘Holy Grail’ of our economic development policy, which prides itself on seven tenets[3]:

1. Freedom from Taxation

2. Economic and Monetary Stability

3. A Wealth of Investment Incentives

4. No Exchange Controls/Free Repatriation of Profits

5. Accessible International Financing

6. Facilitated Incorporation and Registration

7. Flexible Immigration Policy

The problem with the policy is that it’s unimaginative, undifferentiated (and therefore, uncompetitive because nearly every other developing country is offering the same incentives), but most of all, antiquated and shows laziness on the part of those elected to do better!  It has been our policy, in one form or the other, since Independence and probably well before this time, so certainly, requires a radical re-think!  Essentially pre-1970 in focus, the basic policy of attracting large firms was abandoned by progressive economies decades ago.  For example, see the Bolton Report (1971), which became the basis for the changes in the UK to its enterprise stock and for an update, see Lord Young's 2012 Report, 'Make Business Your Business' [2].  In Part II, I will lay out the benefits of creating an entrepreneurial culture and explain why it is incumbent upon The Bahamas to pursue such a culture, without delay!

©S3S

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[1] At the time of publication, it was not clear whether there is a classification system for firms in The Bahamas.

[2] Adapted from and as cited in: http://web.boun.edu.tr/ali.saysel/Esc578/Saeed2010.pdf  22.01.13

[3] http://www.geographia.com/bahamas/investment/incent01.htm 22.01.13

One Little Country Facing Many Giant Evils: Disease, Illnesses and Health-related Issues

By S3S

In a series of Blogs thus far, I have painted The Bahamas as a ‘little’ country by virtually any measure and used Land area (161^st in the world); Population (167^th); and three Economic measures (e.g. Purchasing Power Parity (PPP), 152^nd; GDP growth, 181^st; and Exports, 162^nd) to demonstrate this point.  I have argued also, that in sharp contrast to our patently Lilliputian stature, we face challenges of 'Gulliverian' proportions.  Thus far, identified challenges have included crime and anti-social behaviour; economic dependency; education; food security; political indecision and lack of will; our skewed socio-political reality; and trade unionism.

One further such challenge is the general health and welfare of our citizens, particularly, diseases, illnesses and health-related issues that affect our social standing and have the potential to affect our economic standing as well.  Ralph Waldo Emerson famously said “The first wealth is health”, which we seem content to ignore in The Bahamas.  This ignorance is not without impunity, however.  Topping our list of health issues are overweight and obesity, which the World Health Organisation (WHO) defines generally as “as abnormal or excessive fat accumulation that presents a risk to health”[1] and which the medical profession defines specifically as “a complex condition in which having too much body fat increases a person's risk for developing other health problems …. typically measured by body mass index (BMI), a calculation that shows weight in relation to height’[2]. A BMI of 30 or more[3] is considered obese, though athletes tend to be the exception to the rule. 

In The Bahamas, our population is afflicted by obesity with increasing frequency and seriousness (‘Doctor says chronic diseases account for more than 70% of hospitalizations and premature deaths’[4]); heart disease; various forms of cancer (specifically, male prostate, cervical and bowel cancers); and diabetes, particularly, Type II (Diabetes Mellitus), which are all linked to premature death.  Our current rate of hospitalisations related to obesity belies the International Association for the Study of Obesity (IASO) 23-year old data on percentage of adults who are ‘overweight or obese’.  The survey[5] (1988-1989) of a sample of 1,771 respondents, aged 15-64, found that 29.1% of men were overweight; 13.9% of men were obese; 25.6% of women were overweight; and 28% of women were obese.  This means that in 1989, approximately 34% of men and 52% of women in The Bahamas were overweight or obese.