Debunking the myths

We are truly immersed in the silly season. No doubt inspired by the tremendously creative political tactics permeating the American political landscape, Bermuda will clearly see more hyperbole coming from competing political forces. Alongside this, there is a sort of petulant propaganda masquerading as an economic recovery strategy. We see this in the series of arguments made recently by former Premier John Swan and Larry Burchall.

At last week’s public forum, Mr Burchall opined that, “Bermuda is undergoing an absolute decline in its residential population. This residential population decline underpins and affects everything else in Bermuda’s national economy.”

Based on this opinion Messrs Swan and Burchall proceeded to argue, in reverse Malthusian theory, that Bermuda needs to bring more people to the Island in order for economic growth to take place. And so we have a new economic growth theory advanced by non-economists and accepted nowhere in the world that some of us are actually taking seriously. Increased number of foreign workers may well be a consequence of various economic growth strategies but increased numbers alone will not stimulate growth. Mr Burchall has even gone so far as to identify the precise size our workforce should be: 40,000.

The reality is that our residential population has increased, not decreased, over a ten year period based on the only accurate count of Bermuda’s population — the census. Between 2000 and 2010 the total population increased from 62,059 to 64,237, or four percent, the residential workforce population increased during this same period from 29,970 to 30,729; and the total workforce grew from 36,878 to 37,197. These facts alone undermine the entirety of their argument.

A national census is a counting of numbers to allow for proper planning; it is undertaken at regular intervals to allow for trend analysis and to smooth out distortions created by sharp upward or downward movements — such as one would chart business sales and revenue.

The Swan — Burchall ‘theory’ is based on using figures that came from the height of our economic bubble, from 2007-2009, our own period of irrational exuberance, and taking that as the new norm — in direct contradiction to the most basic principle of statistical analysis. Adopting that technique is to descend into the realm of propaganda, to distort and misrepresent figures to meet the objective you seek.

The remedies proposed by Swan and Burchall are perhaps more important than the intellectual foundation of their argument. We do have to re-examine term limits, but not for the reasons they identify: my views on this issue were outlined a year ago in this column (September 21, 2011). And we do need to extend greater rights to PRC holders — ideally all rights as a Bermudian save for a Bermuda passport and the right to vote.

An increased residential population is not necessarily the outcome of increased foreign currency earnings for Bermuda. And it is earning more national income that is key. We have already seen from ABIR’s figures that they injected more money into the economy last year while experiencing a 1.7 percent decline in people employed.

I am also told by friends in the reinsurance arena that new companies coming to market are driven more by technology and thus require smaller staff than would otherwise have been the case ten years ago. Further, outsourcing will continue as cheaper technology is applied to sound business decision making — hence the HSBC call centre in the Philippines.

Beyond reinsurance, a successful regeneration of tourism will generate greater foreign earnings without the same considerations prevalent in discussion with the international business community.

Increasing the number of people today will certainly help in the rental of the many vacant properties and save commercial property developers who took a gamble during the bubble. And ideally, with an economic turnaround there will be modest increases in the population which will in turn provide a measure of relief in these areas. But no sound economic growth strategy will have such growth as part of its underpinning.

Insurance Fact and Fiction

I recently had the opportunity to review the 2011 Economic Impact Study put out by the Association of Bermuda Insurers and Reinsurers a few months ago. There is something rather odd going on: their narrative is at odds with their own data. 

In commenting on the study, ABIR chairman Constantine Iordanou cites as a key finding the continuing downward trend in jobs since “it means fewer jobs in Bermuda; lower payroll tax revenues; less compounding economic activity from these highly compensated executives; and fewer meetings filling up hotels and restaurants”. The organisation’s executive director Bradley Kading attributes the 2011 results to “the continued impacts of a global economy in recovery mode and a soft insurance market” but also “$105 billion in global natural disaster catastrophe losses”.

When the data are examined in aggregate we see that during this difficult economic period job reduction of the ABIR members was a negligible 1.7 percent in 2011 over 2010 (1,696 employees) and down 6.5 percent from the 2007 peak year. The number of Bermudian jobs is down by 13 from 2010, or 1.1 percent. It may well be that “the five ABIR members with historically the largest number of employees in Bermuda have reduced their employment during that time by an average of 23 percent” as Mr Iordanou asserts, but it also necessarily means there has been growth among other ABIR companies. Further, the data seem not to suggest there is “a direct correlation between these senior executives being in Bermuda and employment opportunities for Bermudians”.

By praising Government for passing the Job Creator’s Act, ABIR — and no doubt Government — believes there is a strong causality between encouraging more senior executives to the Island along with giving them security of tenure and the creation of more jobs for Bermudians. That remains to be seen but available data do not support this contention. This legislation is a consequence of international business lobbying and its origins seem to stem more from personal motivations than business logic and a focus on strengthening the Island’s economy. Perhaps it is a nod to fragility of our economy and that we rest on a single pillar. 

In contrast with the comment that job losses automatically lead to less injection of money into Bermuda we see that these declines in employment notwithstanding, ABIR’s 22 members had a greater economic impact in 2011 than during the previous year in critical areas: travel and entertainment expenses are up seven percent; business services expenses in Bermuda are up by about six percent; charitable donations up by 13 percent; and construction and housing costs up by 4.3 percent. That that increased revenue was derived with a slightly smaller workforce is instructive and there may well be some merit in probing deeper to better understand this. 

These findings should give us all pause. There is no doubt that international business — and insurance and reinsurance in particular — is the core of our economy today. 

We should all value it and work to ensure that it remains strong; and appropriate policies and strategies from both the government and private sector are important to achieve this goal. Decisions, though, should be rooted in fact, not anecdote, and careful assessment of available data. Our dependence on international business should not blind us to our responsibility to critically assess any and all assessments and proposals regarding improving our economy. A failure to do so may well mean we fail Bermuda.

OBA Bereft of Economic Plan

At Wednesday’s OBA press conference on the economy Shadow Finance Minister Bob Richards and candidate Sylvan Richards detailed the impact the global recession has had on Bermuda. They went on to posit that our current circumstances have a clear “Made in Bermuda” stamp on them and that the PLP government is to blame. Not a surprising position given the current climate. But what is surprising is that the OBA is bereft of any ideas of how to get out of this so-called made in Bermuda recession.

They do provide the text book economic viewpoint on the relationship between the state and the private sector: the role of government is to create the environment for growth and investment. But other than arguing that there is waste in government and abuse of GP cars (which I agree with) what would the OBA do if elected? The PLP has already put a freeze on new Government positions and plans to reduce the size of the civil service through attrition rather than massive redundancies but we know not what the OBA would do. While they said they will not lay off civil servants and in the past they also said they would reduce the size through attrition, they have equally called for dramatic action to decrease civil service numbers.

I agree with the OBA that “It is critical that this deficit trend is reversed” and that we get to a point “where government is able to pay its current expenses, just like we would expect any household to do.” But as every economist knows, during a period of global recession the challenge of meeting this goal rises exponentially. It is also during such tough times that we see the difference between a government that cares about the most vulnerable compared to a party that focuses on a balance sheet more than human misery. Financial Assistance and Legal Aid have both gone way beyond their budgets in the last few years, and yes, they no doubt need to be reformed.

But which senior or struggling family meeting the criteria for assistance should be denied? What defendant should go with legal counsel? Conservative political parties, like the OBA, say people need to plan better. Can we really argue this with straight faces while knowing we have a regressive employment tax giving the wealthy an important benefit over workers who in some cases do not even take home a living wage? 

Messrs Richards and Richards dismiss the important investments in infrastructure as “reckless and desperate” but would they not have built Berkeley, Heritage Wharf or affordable homes? Which project do they think should not have been on the drawing board? And to make the point that our infrastructure is “crumbling”, “rusting” and “broken” is to make reference to a reality that is not Bermuda. Drive around, have a look and you will see a country with a well-developed, well-maintained infrastructure; but my colleagues already know this and they are well travelled so they further know Bermuda is among the best in this respect.

This government has embarked upon a bold new tourism initiative to rebrand, rebuild and reinvigorate our tourism product in an effort to recapture the grandeur that tourism once was. Success would put more money directly into the hands of more Bermudians than many other industries. Other than the ideologically driven call for a Tourism Authority what is the OBA position?

It is fair game for the opposition to challenge government on its record — to identify shortcomings. Hyperbole will no doubt form part of that challenge and contributes to a robust environment for debate. Thus far the OBA has been long on criticism and short on solutions. Given the conservative ethos that underpins much of its positioning they may be deliberately holding back from letting the public know what they would do if elected. And for this, the public should be gravely concerned.

Protect Freedom of Speech

We are now immersed in an intense debate surrounding free speech issues. Social media, comment pages on electronic news sites and talk radio have created a wide arena for public debate, banter and a great deal of mudslinging. While many of these comments can best be described with a depressing number of negative adjectives — sexist, racist, homophobic, xenophobic, etc. — they share common ground in that this freedom to express oneself is now taken for granted. It has not always been so.

Free speech in Bermuda has only really developed over the past ten years; twenty years ago our Island was constrained by a culture of intimidation and backroom tactics exerted by the power elite to stifle dissenting opinions. So much so was this the case that a Royal Commissioner Justice Stephen Tumim in 1992 referred to a “fear of speaking out” as a fundamental challenge for Bermuda. 

One personal story illustrates the nature of the political terrain 20 years ago. In 1993 I produced and hosted a weekly television show called Behind the Headlines, where I interviewed prominent personalities on key issues. When I sought to interview the Minister of Finance and the Shadow Minister, the Minister declined, leaving me to interview only the Shadow Minister. After this interview the Broadcasting Commission labelled my show a political broadcast and sought to impose significant restraints. When I appeared before the commission, chaired by Louise Jackson, and explained the show was of a “political nature” but not a “political broadcast” as outlined in the relevant legislation, the commission told me I did not understand the law. One member, John Plowman, asked me, “What is your real agenda?” With two directly opposed views the show remained off the air. Immediately after the 1993 general election the commission wrote to me indicating they now accept my position the programme was indeed of a “political nature”, not a “political broadcast” and that I was free to resume my broadcast. My conclusion was the obvious one: the politically appointed commission members did not want open discussion on political issues in the run up to an election.

Such tactics would never be tolerated today and we have evolved to a place where the public across the political spectrum takes for granted the centrality of free speech in our discourse. But with free speech comes responsibility; and we are unfortunately inundated with a great deal of irresponsibility today. Some of this irresponsibility causes embarrassment to individuals and poses challenges for political parties, although the latter are fair game. Amidst calls for restraint there is the inevitable call for the state to be more assertive in exercising control over what people say. Any move in this direction would be unwise and would require challenge — we cannot go back 20 years. The reality is that free and democratic societies — and we aspire to that — must protect this right to free speech.

One way to shift the tenor of our public discourse is to lead by the example you wish to set. If you think anonymous writers are anathema to sincere debate, ignore them. If you conclude that talk show caller is making merely personal attacks and not dealing with issues, ignore them. And if you determine the person challenging your position never seeks to actually engage you in debate but merely vents, then perhaps they should be ignored as well.

Free speech is a cornerstone of a strong democracy. It needs to be both cherished and respected. When we respect this right perhaps more of us will exercise it responsibly.

Lessons from the Olympics

There is much we can learn from the recently concluded 2012 Olympics. These games were impressive on many fronts — from the opening ceremony, to the daily and perfectly executed competitions to the behind the scenes efficient management — and London, indeed Britain, has a great deal to be proud of. The spirit of the Olympics extends well beyond the competition among nations for gold and it makes sense to reflect on what lessons can be discerned.

An obvious lesson is that talent is the significant relevant factor, not privilege. Too often in other areas of life we reward people either because of a privileged background or some connection that gives them a head start over others. Those who try to cheat the Olympic system are usually found out and they lose out altogether. The rigour with which the International Olympic Committee enforces the focus on talent and a level playing field sends the right message to those talented athletes from small and smaller countries that through hard work their raw talent and ability can translate into success — witness Kirani James from Grenada.

It is important to note that while there is a focus on winning medals, even those who do not win medals can still showcase their talent and growth. Our own Roy Allen Burch set a new Bermuda record, while just missing out on making the finals. Both he and our national swim coach, Ben Smith, should be applauded for this. Success can come in a multitude of forms. 

With the Olympics we see the emergence of national pride that at times may be euphoric but never jingoist. It often has a unifying effect on a country as citizens suspend the daily battles with real and imagined enemies and thrust their support behind their athletes, with momentum gaining as one advances to the next round and the medals are won. There is much to be said about events that can bring a country together, where its citizens come to appreciate that at times the pursuit of the national interest minimises other differences that exist. 

An enduring characteristic of the Olympic spirit is a clearly demonstrated respect for people of all nations and a policy of zero tolerance for those racists and bigots who would tarnish this image through their actions. Their administration of justice in this arena was clear, swift and definitive. A consequence of this is that all athletes and their representatives are more likely to have high confidence levels that there will be minimal factors at play to take their focus away from the games themselves. 

Of particular note this year, the Olympics demonstrated that they can adjust their policies and rules given a changed set of realities. Having respect for all religions meant there had to be found a way to accommodate Muslim women who wanted to compete and continue to practice their faith. This was accomplished with little fanfare yet set an important precedent which no doubt will evolve further in 2016. The IOC made the sensible decision to allow Oscar ‘Blade Runner’ Pistorius to compete and, again, set an important precedent for the admission of competitors with prosthetic limbs.

Finally, the infrastructure built for the Olympics provided the backdrop for these impressive Olympics. It is true that there were significant cost over runs — a report from the Said Business School at Oxford University puts it at £8.4 billion, double the original estimate of £4.2 billion — but there is little doubt the tremendous investment into economically depressed areas of London will reap long rewards for the people living there.

The spirit of the Olympics has now been passed on to Rio de Janeiro; the legacy of London is both instructive and encouraging.

Disagree, but keep talking

Let me first thank Kevin Comeau for his response in the Tuesday edition of this newspaper to my earlier comments. This is precisely the sort of engaged debate we should be having around critical issues rather than the diatribes passing for discussion and the exchanges burdened by the non-sequitur. I therefore accept his invitation to respond.

Mr Comeau begins by asserting that the undercurrent of my argument is that he is “politically motivated”. Untrue. His comments are undoubtedly political insofar as he wants to see important progress in Bermuda on the issue of race but I have no idea of Kevin’s political proclivities nor is it germane to our debate. Nothing in my comments can support his contention in this regard.

It is true that I encouraged Mr Comeau to take his clear passion for addressing the race issue beyond the private domain to the public arena; as a matter of practice, though, I do not disclose the contents of my private discussion with private figures along with their identities to the public, unless explicitly authorised to do so. Further, I hold the view that Kevin is serious in his intent to improve Bermuda’s racial landscape — I simply disagree with much of his analysis and prescription.

The intellectual flaw in the Comeau analysis is the simplistic belief in a dual construct to explain the totality of black advocacy: “black authenticity” vs “morality based” constructs. 

The two fundamental problems are: (1) these constructs are imported from the US onto a completely different socio-economic and political terrain and (2) it examines black people as one dimensional characters. But we are also male, female, young, old, rich and poor. Reducing the analysis to race marginalises the importance of class and therefore clouds the reality of real political struggles. I document this in my book, “Bermuda and the Struggle for Reform”. As a consequence, I reject the labelling of me by Kevin as a “racial equity advocate.” My activism is more complex and more expansive than this. 

There are many who want to believe corruption is rampant in this Government. Mr Comeau says there is “strong circumstantial evidence.” He bases the entirety of his argument on cost overruns on capital projects making inferences about secret deals and questionable conduct by officials. Overruns on capital projects are not unique to this Government nor is it unique to Bermuda. A few months ago I had a long discussion with an individual who was a central figure in the expansion of the airport under the UBP. He explained credibly how the initial budget of $9 million ended up costing taxpayers $27 million. 

In general, though, Mr Comeau is right when he raises the alarm bells about overruns, while I believe he is wrong as to the reasons. A report published by the UK based Taxpayers’ Alliance (http://www.taxpayersalliance.com/bgpob.pdf) shows that the average net cost overrun on capital projects in the UK is 38 percent. The larger projects tend to have the greatest cost overrun. The US conservative think tank the Cato Institute argues that these findings match US findings. When explaining this, the Cato Institute opines “the inefficiencies in government stem from deep, structural factors, not the skills of the particular politicians or administrators in office.” This is consistent with my publicly expressed position that governments should not be managing large capital projects.

I think Mr Comeau may have been unintentional in blaming black people for the problems of race today but there is no doubt this is precisely what he is doing. His argument may be logical — the black authenticity construct leads to a hostile environment for whites — but it has no applicability in Bermuda. It is a false construct. 

The entirety of his comments refers to what black people should be doing to create the terrain for white participation. Putting party politics aside, since that is shaped by class as much as it is by race, there is the realm of civil society which plays a pivotal role in shaping consciousness. The sad reality is that whites have not and do not generally participate in historically black institutions and events while blacks have done the reverse, at times under great duress. The recent brouhaha over the lack of white people attending the Carifta Games is one manifestation of this sentiment.

Many of us walk down the path in search of ways and strategies to create a more harmonious, stronger and united Bermuda. We see the proverbial Promised Land. Kevin Comeau and I seek the same objective even when we disagree about how to explain our current situation and the way forward. But dialogue such as this is a necessary precondition for any progressive steps forward.

Cricket, Cup Match and life

Whenever decision day draws near each year, both sides roll out their team and there is an unrelenting fight to see who will emerge victorious. The Island will clearly be divided, we will be saturated with a litany of colorful commentary- both positive and negative - and there will be a great deal of handwringing as the numbers come in. The people, however, will have to content themselves as passionate observers from the sidelines. This, after all, is Cup Match.

Born out of Emancipation celebratory activities, Cup Match, along with the numerous related activities, has now established itself as our most popular, most vibrant, most colourful cultural activity of the year. Almost all of us are engaged in something over this, for all intents and purposes, four-day holiday. The cricket match in Somerset, though, is the hub around which all else revolved.

In his brilliant book, “Beyond a Boundary”, the Trinidadian intellectual CLR James explored the relationship between cricket and the wider society; an analysis that still resonates today. Both Somerset and St George’s ensured team discipline and presented a united front, even if there were cracks in the armour. The strategies adopted to achieve a win were critical and there no doubt there will be many commentators critically assessing Somerset’s strong win. Team endurance is always a critical factor as they have to contend with the often oppressive conditions on the ground; not unlike the challenges facing other teams seeking a win.

As much as the team has to work together there is room for individual excellence: one or two players through their exceptional talents can help carry the day for their team: witness the superb performances of Greg Maybury and Kamau Leverock this year.

Team captains are the leaders, chief strategists and the ones tasked with adjusting the play according to events on the field. A captain without courage, unable to excite and mobilise his team or paralysed by over-analysis will not likely make it back next year in that same position. Merely aspiring to be team captain is not a sufficient qualification - the responsibilities are too great and the prize too valuable. Competence, courage and conviction are great qualities to begin with. 

The match was surrounded by highly opinionated spectators, who critically assessed each stroke, each play and the performance of each player. As is to be expected. Unlike other arenas where teams contest for victory, the partisan nature of Cup Match is such that loyalty reigns supreme - no switching of allegiances here. These allegiances run deep and have even been known to divide families, at least during the duration of the game.

Anyone having grown up in Bermuda will know that it is difficult to remain neutral when casting an opinion about the outcome of the match. The platitudes ending with, “and may the best team win” ring hollow with me and many others. Why? Because we know which is the better team, we know the talent of their players and we believe their strategy will carry them to victory. For many of us this is sufficient reason to stay to the wicket.