Oh there's talk about balancing the budget and reducing the deficit here as well, but if history is our guide, we know what the actual results will be.
So what's the "radical" proposition? "Freeze public spending for as long as five years." Read more here…
That's right, freeze it at current levels, which are astonishingly high and have been increasing now for decades.
Canada did it with great success some time ago. Why can't we?
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Last week Mr. Franklyn Wilson was interviewed by Tribune Business, and finally a card carrying member of the PLP lays it on the line that cutting government spending is the key.
Here are his points in summary:
1. Neither political party wants to reduce the size of government.
2. As a result the government only focuses on the revenue side of the budget.
3. While the tax base has shrunk all and sundry seem to want subsidies of taxpayer money.
4. Slowing spending 6% (reducing the size of government) would provide the same benefit as raising taxes.
Economic growth (private sector) is what creates jobs not government spending. In other words, the opposite of what we've been getting for a long time now.
As Charles Kadlec noted in Business Insider;
"The path to more robust growth is first to stop doing what demonstrably has not worked for the past two years. As I wrote in “Toward a New Economic Consensus,” studies by professors from Harvard to the London School of Economics are providing a growing body of empirical evidence that shows the combination of spending restraint and reductions in tax rates are the best ways to stimulate economic growth and employment."
Now we need more of the business community including the bankers, oil companies, food stores, and yes the Chamber of Commerce - business in general - to stand up for what we know is right.
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That's $480,000 for each house?
What's wrong with this picture?
Not to mention the fact that these funds are being "borrowed" from NIB, our social security fund.
Oh, and isn't the Bahamas Mortgage Corporation technically bankrupt already? So who in their right mind would buy mortgage backed securities from them? Remember the US Housing Crisis and Freddie Mae and Fanny Mac?
But why worry, the Minister assured us there will be proper oversight every step of the way!
Hat Tip to fellow blogger, S3S, for pointing this out.
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"Doing Bad by Doing Good answers this question (why humanitarian efforts, intended to help alleviate suffering, fail so badly) both in the case of Haiti and in other instances of human suffering. Moving past emotional and ideological-driven debates, Doing Bad by Doing Good uses the economic way of thinking to focus on the constraints and realities facing humanitarians. It explains how and why humanitarian efforts not only fail but impose harms on those who are already suffering." Read more about the book here…
You can read the Preface and Table of Contents (pdf) here…
Why not visit Dr. Coyne's web site here…
Enjoy part of his recent presentation at the CATO Institute below. This is definitely one book I've got to get.
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This Nassau Institute event will be held at the British Colonial Hilton, Bay Street.
Register online here... or call 242-302-0130 extension 2226, while spots last.
Dinner is $75 per person with a cash bar.
Event Summary:
Date: Tuesday, June 18, 2013
Place: British Colonial Hilton, Bay Street, Nassau, N.P. Bahamas
Cash bar opens at 6:00pm
Dinner (Cream of Mushroom Soup, Roasted Leg of Lamb, Parsley Mashed Potatoes, MArket Vegetables, Marble Cheesecake, Coffee and Teas) starts at 7:00pm
Presentation starts at 7:45pm
Summary:
Mr. Francis, highly respected former Governor and Chairman of the Board of the Central Bank of The Bahamas with his keen insight into economic matters both here in The Bahamas and abroad, and his topic, "The Bahamas public debt in perspective, and why it's important to contain its further growth," should provide lots of food for thought.
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One can't help but be cynical when reading the recent statement issued on behalf of Mr. Shane Gibson (PLP), Minister of Labour, about a new National training Agency.
Mr. Gibson is reported to have said:
“The National Training Agency will aggressively address the challenge of preparing young adults, in particular those 25, and who make up 32 per cent of unemployed persons, for successful entry to the workforce,” And,
“This is critical to the development of a dynamic and productive workforce that will be able to keep pace with a progressive and expanding economy, evidenced by the development projects that the 2013-2014 Budget foreshadows,”
I'd be willing to bet that if we read the press releases over the years for what is now referred to as BTVI we would get more of the same.
But, you can only write the same stuff over and over until it becomes meaningless if there are no results. But should we blame the politicians or ourselves?
Here's something I penned back in June 1999.
"It’s far too easy for us to believe the eloquent and seductive speeches from both sides of Parliament that politicians will fulfil our hopes and dreams for us. This is impossible. If they have the political will they can make opportunities available but as individuals we have to make the effort ourselves.
"Yes it seems to come easy for some people to succeed; others take years to get there, while others never “make it.” I don’t think it can be any other way. However I think we do ourselves a disservice when we prefer to believe that success – however we define it – comes without effort.
"Our misplaced faith in the politician is part of the problem.
And over two decades later, we're still getting the same speeches from our "caring government" and we're still waiting for the results.
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What is supposed to pass for dabate in the House of Assembly is becoming a joke.
With all the problems our little country faces, Parliamentarians spend time arguing over who should get credit for the National Stadium built as a "gift" from the Chinese.
It is well known the PLP made the deal and the FNM saw it through the construction phase.
What's the big deal?
Of course no mention is made of how we are supposed to pay the ongoing expenses to maintain the place and the Chinese don't really care. They bought our cooperation. What more do they need?
When considering all the problems associated with the stadium one wonders why anyone would want credit for that albatross?
But seriously folks, isn't there something more constructive our "leaders" could be discussing?
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Mr. Elcott Coleby, in a letter to the editor of the Nassau Guardian on Monday, applauded the government for it's "projection" that they will reduce the GFS deficit by 100 basis points in the upcoming fiscal year, emphasising this is good news for the economy.
He makes this claim after suggesting a 40 basis point reduction in the GFS deficit projections for budget year 2012/2013 puts "a brake on the out of control spiralling debt" by the government.
Mr. Coleby also applauds the PLP governments $8 million revenue surplus in 2006/2007 fiscal year.
Lets scratch below the surface for a moment:
Work the "basis Point" calculation for yourself here…
In other words Mr. Coleby seems guilty of similar improprieties he's charging other people with.
If party supporters like Mr. Coleby continue to attempt to provide "cover" for bad public policy with verbiage designed to obfuscate, is there any wonder we've had 40 years of debt and deficits and now the chickens are coming home to roost.
Keynesian policies have our 'democracy in deficit" as James Buchanan and Richard Wagner warned back in 1977.
Our country is in deep financial do do, and doublespeak will not help Bahamians. In fact it makes matters worse.
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It's fair to say there is an increased level of angst in the business community since the government announced it's new budget on May 29, 2013.
Higher import taxes, increased business license taxes and a myriad of other fee/tax increases.
A few points for consideration:
A study by William McBride of the Tax Foundation in the US, released December 2012 finds that, "Nearly every empirical study of taxes and economic growth published in a peer reviewed academic journal finds that tax increases harm economic growth."
According to McBride; "… a series of OECD working papers, [14] summarized by Arnold et al.,[15] OECD affiliated economists have determined a ranking of the most harmful taxes for economic growth. They find that corporate taxes are the most harmful, followed by personal income taxes, consumption taxes, and, finally, property taxes…"
In other words, higher taxes mean lower economic growth, caused by discouraged entrepreneurship, and business that impacts employment prospects.
For three successive budgets now there have been major increases in taxes and changes to the tax code that create confusion not only in the private sector, but the government as well. In addition, taxpayer subsidies continue to increase further impacting government revenue.
To top off the confusion, the government is proposing adding a Value Added Tax on July 1, 2014. A VAt of 15% will dramatically increase the cost of living and discourage investment even more.
Each budget gets more discouraging as government keeps rolling the dice that more of the same will improve the economy.
More betting against the odds will continue to push us toward slower economic growth.
Further reading
Doug Bandow; Raise Taxes to Clinton-Era Levels? How about Spend at Clinton-Era Levels?
William McBride; What Is the Evidence on Taxes and Growth?
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