Austerity vs stimulus

This Friday parliamentarians will hold the annual economic debate against the backdrop of a sustained global recession and two competing views about how to get out of it. The debate will be particularly robust and acerbic given the election cycle we are in but we should be mindful not to confuse hyperbole with careful, fact-based analysis.  

Let us call the first view the austerity measures approach. This argument is based on the view that governments should always balance budgets; borrowing should be kept to the bare minimum; and that when recession hits it is time for more cost saving measures. This is the general approach embraced by conservatives and is best exemplified in the US by Republicans. Some Republicans have even proposed a constitutional amendment to require a balanced budget. The OBA is closest to this position and there is no doubt much of their commentary will be shaped by this disposition.

One of the consequences stemming from this approach is higher unemployment (in the short term, for sure) and less government support for those people most severely affected by the economic crisis.  A look over at Greece will allow one to readily see the particularly devastating consequences of EU imposed austerity measures.  

The second view we will call growth through stimulus. Essentially this argument is rooted in the belief that we can get out of the recession by injecting money into the economy through a variety of government initiatives and that, while increasing debt, it will help businesses grow. The Obama administration adopted the Cash for Clunkers programme with this in mind and the Bank of England pumped £325 billion into the British economy to stimulate business growth.  This PLP is closest to this approach, having set in place a number of tax concessions to help local businesses.

An important aspect of this recession-busting strategy is that a high premium is placed on job retention: further job losses simply place a greater burden on the state since it will lead to an inevitable increase in benefit claims. Responsible governments cannot allow the weak and the vulnerable to go without food and shelter.

Both views have merit, should not simply be dismissed  and require careful reflection. It may well be that an ideal approach combines elements of each.

How Bermuda got into a recession in the first place will also be hotly debated. There can be no doubt the global recession has been the primary determinant of our current economic circumstances but you will certainly hear on Friday that this government is largely responsible. It takes an incredible leap in logic to view the damage to countries in every corner of the world caused by the financial meltdown and then posit a theory of Bermuda exceptionality. The redevelopment of Sonesta Beach and Coral Beach/Horizons were stopped dead in their tracks with the dramatic collapse of investment giant Lehman Brothers, the company providing the financing. Bermuda lost hundreds of millions of dollars and 100s of jobs and this had nothing to do with domestic policies. This is one clear and obvious consequence of the global recession.

Bermuda has been severely impacted by the global recession and government is attempting to stimulate the economy, protect jobs and provide business incentives. A government which puts people as it first priority will not seek to run the country as one would do a business; governments do not operate on a for-profit basis. There is certainly more that government can do to stimulate growth and make the country a more attractive place to invest; we need to focus on getting the appropriate structures and policies in place to achieve this goal. Getting this right can help position us to recover quickly as the recession winnows away.

How the media shape public opinion

While attending a plenary session at a Commonwealth Parliamentary Association conference in Nairobi 18 months ago, I listened to a number of politicians from many countries speak to the problematic relationship they have with the media. Speaker after speaker challenged reporters to do their job differently and, effectively, declared themselves at war with those who produce the news. It is a battle they cannot win. 

One essential role of the news media in a democracy is to report on government policy, political parties and the decisions of politicians. It is not their responsibility to be an outlet for press releases. In this role, however, the news media do a great deal to shape the news and the public’s focus on issues. 

First, the media set the parameters for public discourse by the content they deliver. The stories published or aired help shape what the public think is important. During any given day there may be literally scores of stories that could make the news but only a few are chosen. An editor or producer somewhere makes a decision about what is newsworthy. Further, the placement of stories front page, page five, lead or last story equally sends a message about perceived importance. And these stories will form the basis of talk show, blog and water cooler discussions tomorrow. 

Related to this aspect of the news media is the myth that facts speak for themselves. They never have. A reporter can write a purely fact driven story yet leave out pertinent facts that would lead the reader to another conclusion. 

The power of the visual image can never be ignored. Again, editors and producers have to make decisions about the imagery they wish to convey on their front page or lead television story. Each image is carefully selected and in so doing is sending you a message, perhaps even more powerful than the written word.

Secondly, the news content is shaped by the worldview of editors and producers their ideological orientation. It is widely accepted that the news media in countries we are familiar with the UK, the US, Canada have clear positions along the ideological spectrum, and it is equally so here in Bermuda. 

Two important aspects of the news media on our Island merit attention since they too shape our views of politics. First, almost all of the news is event driven with very little investigative journalism. While this may well be a function of strained resources it means the public rarely get access to an in-depth understanding of critical issues: crime, the economy, poverty, for example. One result is a failure to see a bigger picture or obtain an enhanced understanding of the issues. 

The second relevant aspect is that the media here have an unwritten code whereby they do not report on the private lives of public figures. Again, in those countries we are most familiar with, what you do in your private life is deemed by the media to be absolutely relevant to your ability to serve the public interest. In fact, as we know, it can derail presidential ambitions. That the media eschew reporting along these lines might be seen as a concession to the politics of a small society but it does raise legitimate questions about their role as it relates to the news. 

The media report the news as much as they shape it. What is excluded can at times be more important than the actual content of a newspaper or television broadcast. My view is that the public interest is better served when we assess news actively and critically and are not merely passive recipients.

Our system has a mechanism for dealing with unethical behaviour

The news media, social media and blogs have been saturated of late with extensive reports and commentary about the conduct of public figures. Such saturation has led some to believe that unethical behaviour and corruption is rife within the corridors of political power and civil administration and that this has adversely affected good governance. Untrue. 

The overwhelming majority of people involved in public service conduct themselves with high levels of professionalism and ethical conduct and has never been so much as tainted by the hint of corruption. For those who do cross this line there is an existing framework for dealing with them.

For those who engage in corrupt behaviour we have a police service and public prosecutions who act independently of the political arena and who are empowered to collect evidence and bring charges where there is sufficient evidence of criminal conduct. One person was recently convicted of corruption and others have been charged with corruption and are now before the courts. I have no doubt that anyone else with evidence of corruption against them will also be brought before the courts. Our judicial system has always operated completely independent of the political arena and there is a long history of practice to expect this will continue.

For those who have engaged in unethical behavior as it relates to the abuse of power or the public purse there are also remedies available: one can be removed from the position, be prevented from holding any such position again, and lose the privilege of serving the public in any other capacity. These remedies are the domain of leaders responsible for the appointments and these leaders’ assessment by the public will adjust depending on the nature of the remedy they impose. At issue here is public confidence and sending the correct message about acceptable behaviour. And we cannot ignore the electoral aspect: voters disillusioned about how abuses of power are handled have another reason not to come out to vote or will simply vote against the government.

With all the legitimate outrage at some of the actions of public figures we should not be enveloped by the political web some are attempting to weave by saying, suggesting or intimating that government is drowning in a sea of unethical and corrupt behaviour. It is not. 

Put in perspective, the expenses scandal involving corrupt actions by scores of UK politicians and which led to jail terms for MPs as well as members of the House of Lords, outraged the British public. The crooks were dealt with but few, if any, came to the conclusion that the UK government itself was inherently corrupt.

It is therefore surprising that there have been calls for the UK to come in and conduct a Royal Commission into corruption in Bermuda. Our governor does not see the need; our ratings agencies hold the view that Bermuda is well governed and has affirmed our high ratings; and, most importantly, there is no evidence of widespread abuse of power.

Government has already committed itself to introducing new legislation to ensure higher standards of governance, including greater transparency. We should assess the seriousness of government’s intentions in this regard based on what it accomplishes legislatively. For those who continue to demand an inquiry this is something I would be prepared to countenance. But it would need to be done appropriately. 

Surely any such inquiry examining allegations of corruption or unethical behavior must be broad enough to dispel any notion of there being a witch hunt. My proposal would be that the inquiry commence from the dawn of Cabinet-style government in 1968 so that successive governments could be compared and contrasted. My own personal interest in this regard would be an examination of two issues: (1) why the 25 acre Wreck House property offered for free to government came to be owned by a government Minister and (2) how the franchise for McDonalds (then located at the American base) was granted to a former premier, who led the negotiations for the base closure.

These are serious issues during deeply challenging times. We must address them and those responsible for inappropriate actions must be held accountable—whoever they are. We cannot and should not, however, destroy people through innuendo and allegations without evidence. While justice demands people be held accountable for their actions it equally requires they be accorded due process and fair treatment. I think this is something we can all embrace.