Globalisation, the EPA and Bahamian Education

by Larry Smith

Globalisation - it means more cross-border travel, trade, information and investment than ever before. But what does it mean for the average Bahamian?

Well, a lot of us are understandably worried. That's because globalisation brings change, which favours the highly skilled and educated, while lower-skilled jobs are often shifted to lower-wage countries.

Although tourism and financial services are already 'globalised' in the Bahamas, our protected domestic economy includes retailing and wholesaling, publishing and the media, fisheries, entertainment, construction, transport and the professions, as well as a small manufacturing sector.

Now we are faced with a number of initiatives that threaten to demolish our cozy and old-fashioned business arrangements. Free trade proponents say we must become part of the global rules-based trading system because the alternative is a system based on power - in which we surely can't compete.

We can boil down our concerns over the Caribbean Single Market & Economy, the European Partnership Agreement and other liberalisation measures to fear - the fear of better educated and better-funded foreigners taking away our businesses and jobs.

In other words, by signing on to these agreements, will we hear, as former US presidential candidate Ross Perot once predicted, "a giant sucking sound" as jobs and profits rush out of the country? Will Home Depot replace Kelly's? Will Tough Call's ad agency be forced out of business by MCann Erickson?

More to the point, Will our smugly unavailable lawyers finally have to work for their living? Will our pothole farmers follow our poultry producers into oblivion? Will we outsource the civil service to India? Will "the Bahamian Supermarket" have to change its marketing? Will local contractors join the employment line? Will office workers be replaced by foreigners who don't eat breakfast on the job?

These are the questions about free trade and globalisation that most Bahamians want answered. But no-one is responding, on the theory perhaps that "nobody move, nobody get hurt." So it was left to Dr Don Boudreaux to make a generic attempt at a dinner meeting last week sponsored by the Nassau Institute, a local policy think tank.

Boudreaux chairs the economics department at George Mason University in Virginia and has published a guide to globalisation. He was invited to help us come to terms with what globalisation means for the Bahamas.

Clearly, we have mixed feelings about our integration with the global economy. On the one hand, foreign investment and foreign tourists already drive two thirds of our economy. Yet we are terrified of opening up the rest of our closed little world to foreign competition.

As if to underline this, a group of angry protestors demonstrated at the CARICOM meeting on Cable Beach last week. They claimed that our acceptance of a trade agreement with the European Union amounted to a new form of slavery because it talks about regional integration.

The Christie administration caved in to grassroots opposition to the CSME two years ago. But in the meantime, the European Partnership Agreement was being negotiated by CARICOM with Bahamian participation. We initialed the draft agreement in December, but there has been no effort to sell or explain its terms or consequences to the Bahamian people.

Indeed, after taking office last May, the Ingraham government initially spurned calls to sign on to the EPA. It later reversed itself, and although we still have a few months to determine the precise details of the agreement on services, experts say we cannot change anything of substance.

"We are left with the option to liberalise 75 per cent of our services sector," Bahamian trade economist Hank Ferguson told Tough Call. "The issue is which services, but I do not see this as particularly difficult as most of our economy is already open. There may be significant institutional changes, but we think minimal negative impact on the average business person."

He went on to say that small business would still be protected: "The agreement allows for reservations and advantages for local businesses and areas that are deemed sensitive, particularly those that are important for government revenue. And we will all benefit from greater transparency and clear guidelines that will apply to both domestic and international investment."

The EPA is a big step for us on the road to globalisation. And proponents say we are scrambling to jump a train that has long left the station. As soon as the EPA is behind us we will have to negotiate new trade agreements with the United States and Canada - to replace older preferential systems that are being phased out by the World Trade Organisation, which we are also on track to join.

"The EPA is a swift kick in the butt that has brought attention to the issue of modernization of our business practices," Ferguson explained. "Given its flexible implementation schedule (up to three years for goods and five years for services) it can help us become more competitive and prepare us for more engagement with the rest of the world."

There is still that unanswered question of why we need to engage further with the world, but most economists think it is a good thing. Dr Boudreax, for example, says the evidence is overwhelming that greater freedom to trade, both with persons around town and with persons around the globe, promotes prosperity. And the more free an economy is, the greater is the material well-being of its citizens.

"It is no exaggeration to say that our lives would be inconceivably less comfortable and more hazardous if it were not for global capitalism, and the prosperity that it produces," Boudreaux wrote in his guide to globalisation.

But there are plenty of skeptics out there. And some of them were at the Nassau institute meeting last week. How can a small country like the Bahamas compete with large economies like the United States and Europe? What will happen if foreigners are allowed in and local enterprises are not protected?

Boudreaux argues that free trade has no long-term effect on jobs, although there could be some short-term dislocation. The jobless rate in the United States at the start of 2007 was significantly lower than the average annual rate for the 1970s, the 1980s and even the high-growth 1990s - making a nonsense of Perot's 1994 predictions about 'sucking sounds' following the North American Free Trade Agreement between the US, Canada and Mexico.

And if job losses are a sufficient reason to restrict international trade, Boudreaux says, then they should also be sufficient to restrict domestic trade since "the root cause of such job losses is consumer sovereignty and economic change, not international commerce."

What this means is that removing tariffs on low-priced foreign chicken may well destroy our inefficient poultry industry, but those displaced workers will find jobs in other areas and become more productive. And since workers are compensated on the basis of productivity things should work out for the better.

As Ferguson points out, "the European Partnership Agreement has the potential to reform our economy, simplify the way we do busines, and modernize our Customs procedures and Immigration policies."

But it is pretty clear that wages do not track productivity in the Bahamas. In fact, our protected society allows workers to earn far more than their labour justifies, particularly in state corporations, the civil service and unionised industries. Economists say these gross inefficiencies could be fixed by opening our economy, but that is unlikely to be appreciated by those who would be directly affected.

Sure, these people will say, our society might be less wealthy and efficient, but we will be happier and more secure if we maintain barriers to global market forces. Boudreaux and others argue that it is economic change itself that will eliminate specific jobs, cut the profits of some firms and the wages of some workers, change our culture and generally upset our expectations and sense of security. In this view, globalisation is a false bogeyman.

But we must still deal with the question of education. How can we expect Bahamians to adjust to the competitive pressures of globalisation when they lack the basic skills of reading, writing and arithmetic. As Tribune columnist Andrew Allen once noted, the weakness of our human resources is a standing joke even amongst ourselves.

"Basic literacy and numeracy cannot be taken for granted among the Bahamian workforce," he pointed out. "Several generations of politicians have failed to find the formula for producing the abundance and kinds of skills that this economy needs...The result is a workforce that finds itself hemmed in at both ends, as low-skilled immigrants compete for jobs at one end, and high-skilled expatriates compete at the other. Without either, the whole thing would grind to a halt."

Everyone agrees that an understanding of basic maths and English is critical to both low-tech and high-tech jobs...from carpentry to information technology to the management of a small business and even the management of one’s personal finances. And everyone also agrees that we are producing very few high school graduates who have that understanding.

Somehow the country must awaken to the need to make hard decisions. If it doesn't, we can expect lower economic growth and increased social instability. And it won't matter how many free trade agreements we sign.

Comments

[drew Roberts]

First, set us free. Let us go and invest in foreign markets freely. let us own foriegn currencies. get rid of the restrictions on our own people.

Then let's talk.

all the best,

drew
http://zotzbro.blogspot.com/

[EB Christen]

Spot on as always... loved the comment about breakfast on the job... just priceless really... it kind of sums it all up.

Bahamians need to choose to fight for their own country, not by making noise, but by applying themselves. Nobody would hire a foreigner in a bank if a Bahamian could read and write fluently, do math properly, speak two languages, be punctual and professional - foreigners cost a company a hell of a lot more. What is so often labeled as prejudice or foreign elitism, is more often than not just the truth of a global world staring us in the face. It is up to us, it always has been and it always will be. The choice is something each and every Bahamian must make. To educate oneself, or not.

To continue to fail to make the right choice is to surrender that very same precious birth right that being Bahamian should bestow. Stop wanting something for nothing! There is literally nothing free in this world.

[C.Lowe]

So, the chickens are coming home to roost. What did we expect otherwise?
We already have foreign intrusion into supposed "reserved for Bahamian" catagories of business,
and let's face it, Bahamianization
was never legislated, just a "policy" so to hide behind that is fool hardy at best.
On an individual level, all we can do is improve our customer service, efficiencies, logistics, and invest in our human value, so that when we face this pressure in our business sectors, we can
A) compet, even if only for a measured time,
B) look attractive for investment/partnership
or at worst
C) be the last to go under.
By the way, the government, could consider mitigating our demise, by offering some of these marvelous consessions to Bahamian for profit companies, along the lines of those given to non Bahamian for profit companies.
But I forgot, that would be unconstitutional wouldn't it?
To give to some, but not others.....

[drew Roberts]

I don't see why we should be surprised that Bahamians want their government to protect them from foreign competition in our country, our government protects those same foreigners from us competing with them in their countries.

As long as they put barriers in our way to keep us from competing on an even footing with foreigners in the big markets, we will always be at a huge disadvantage.

Let's say a Bahamian happens to get 1% of a startup Bahamian company. What's the maximum upside for them if that small company grows up to equal the largest Bahamian company to date?

Now, let's say a Bahamian happens to get 1% of a startup U.S. company. What's the maximum upside for them if that small company grows up to equal the largest U.S. company to date?

Set us Free. Stop messing about.

all the best,

drew
http://zotzbro.blogspot.com/2008/02/wild-idea-opt-in-income-tax-for-bahamas.html
Wild Idea - Opt In Income Tax For The Bahamas

[Bill]

Hi Larry,

Nice article as usual. There are a few things with the "sentiment" in relation to the actuality of the nature of the Bahamian economy; I would love to address- both with Hank Fergusson and the latter, with the truth about the Bahamian economy.

1. I am forever queasy when I hear a pseudo academic, like Mr. Fergusson, prattle on about the need to modernize and neglect the economic gains or losses- in particular regards to trade agreements. I always dismiss these folks as bourgeoisie, void of the understanding of the total impact of trade agreements to the entire economy, and, un-imaginative on how to work your position for the best. For example, for him to say, that any government, signed onto an agreement to "modernize" and "push us forward, faster and for the better" (in so many words) when wrapped in the sentiment, he realizes the deficiency in that very same body-politics’ leadership to bind itself to a commitment to move forward progressively for the better of that country, makes Mr. Fergusson sound as if he is merely repeating what he heard on a Starbucks coffee shop date.

We can't argue effectively economic gain, from someone's personal feeling on how far he thinks the Bahamas has come and has to go. His position is biased and he is not speaking the total truth- not that we want to hear anything else from him in any event.

Now, on to the Bahamian economy: You do know that wages in this country, has NOT kept up with inflation. In fact, real wages in this country has not moved since the mid-90s- would be my best guess. Civil service jobs are GROSSLY underpaid. Anyone who says anything other has not worked in the civil service and does not have a family member, or friend, who works in the civil service or has worked in the civil service in the last 4-5 years.

Private firms, have been bound by lack of innovation in our market- this is the only part of Hank Fergusson's argument, that I can agree with. But, globalization would not ensure that Bahamians would benefit from the innovation and increased growth in the services- especially if we import new labour to meet the demand for jobs. Skilled labour, with the right to migrate. Dear God...I HOPE, we have NOT signed the agreement on services yet.

That being said, inflation is the key issue in this country. Now, we have to ask ourselves; where is the inflationary pressure coming from? Is it demand pull, cost push etc...??

The question is not so simple. Fact is, our inflationary prices are brought in over the border- prices of imported goods, in particular, are higher than usual- this then works into services, as service workers, need to ask for higher paying jobs, to meet the new living demand. If you have not noticed, there has been a lot of job shifting in this economy on the last 5 years- some people move so much, they even move back to their old jobs- I hope not by mistake...hehehhehe...

Back to the topic:

Governments, in the developing world, have got to adjust their wages to meet the new inflationary distortion, brought on by increased demand in goods, from the emerging economies.

Wages have got to go UP, and not just remain status quo- certainly we should have no job cuts and a push downward in wages. No matter how much dem lazy civil servants does get in ya craw. We need enforcement of the rules and not a letting of blood. Cutting staff, has and always will be, a failure to innovate and, in our case, a failure to execute services in an efficient manner. The problem is not the ordinary worker or the line staff- it's with the leadership's lack of commitment on making sure the government services operations, are functioning.

If it were, neither you, nor I, should have a problem with the lousy service. To be honest, the private sector is TWICE as lousy as government. I can and many can attest to this. Cable Bahamas is one of them.

It's about time we forget this free market mantra- and take control of this economy. We need a plan...so far, I have not seen one.

Best,

Bill

[Bob Knaus]

Kalik. Globalization 101 for Bahamians.

It's made in Nassau, protected by the Bahamian government. Drove Beck's Clear out of the islands... note the similarity of the label design.

Who benefits? The Bahamian investors and factory workers; also the brewmasters from Heineken who help run the factory.

Who pays? Bahamian beer drinkers! What other tropical island has such high priced beer?

If you do the math, the higher costs of beer to the consumer add up to more than the higher incomes of the factory workers and owners.

This lesson can be generalized to all sectors of the economy. Free trade will always, in the long run, benefit Bahamian consumers more than it will hurt Bahamian workers.

Will free trade, or protectionism, make Bahamians happier? If you think people's happiness depends on trade policy... then you have a strange view of humanity :)

P.S. What is this new Sands brew from Freeport? FNM beer? Tastes bland!

[larry smith]

Well, I don't quite know what your main point was, Bill, but I beg to differ on the topic of wages vs productivity.

I have run my own small business in Nassau for a quarter century, and before that I was someone else's employee for about a dozen years.

In 2003 I spent a year in the GM's chair at the Nassau Guardian, and since last June I have been on the board of the Broadcasting Corporation.

I have also had to deal with the Bahamian civil service and public corps for decades as a customer/supplicant. So I do have some idea of what goes on in our economy.

There is a consensus that the public sector is grossly overstaffed. Bahamians prefer a position in the public sector because it affords them job security with the ability to do their own thing on the side.

Public sector employees get union- and voter-driven pay increases at least once in every political cycle, which provide for multi-year increments.

A consensus also exists that public corporations and government agencies are grossly inefficient, and routinely suffer from political interference primarily for purposes of employment.

I can confirm this from personal experience at the Broadcasting Corporation.

The point I was making in the article was that wages often do not track productivity in the Bahamas, meaning it matters little whether you show up for work or not in the public sector. There are no consequences and you still get paid.

This lack of productivity extends into the private sector as well. But as for the example you gave about the private sector being twice as lousy as the public sector
- surely you jest?

No matter what complaints you may harbour against Cable Bahamas, there is simply no comparison with the service offered by BTC. You do have SOME recourse at Cable Bahamas.

And finally, you can't enforce rules unless there are consequences - and there are none in our closed little society. That's why the crime rate is spiralling out of control.

[Bill]

Last one first:

Larry:
The first point is that your "feelings" does not equal to "what's faithfully congruent"...the issue with the civil service, is that it is overstaffed in non-essential jobs. More janitresses and filing clerks, over professionally paid staff. There are more clerks and junior staff, because there is no path to upward mobility in the civil service- this is government leadership fault. One in which we have to address.

In many cases, we don't have enough trained man-power to do the work we need. For example, the Dept of Statistics, have not produced any thing of note for the last 10 years. This is a man-power and human resource issue. Managing human resources is not the job or fault of the line staff, but the job of the bureaucratic leadership, which ends up in the Minister's and board members laps!

The "consensus" you base your argument on, is based on false information and built on an irrational fear and the understanding of that irrational fear, that we are overstaffed- hence the tax payers, who don’t know any better than to not buy into the propaganda, up and support anything to get back and them filthy, stinky, lazy gubment woikah’s. That is not true. While we may have on some extra weight, we are not nearly getting the job done the way we should- this is due to a lack of true manpower and lack of true organizational initiatives. Also, with an economy like this, where the private sector is slow and the leadership within, is out of step with the real world, I expect for government to put people to work.

Firing them, especially in this economy, is marching people to their deaths- especially when we have no exit plan for them. And also, when sending them home, would create an administrative nightmare. The former FNM administration tried it before- teachers and BTC- and they had to bring people back to work, who it gave pay out packages to because they found out that they could NOT do the type of work, that was needed, to provide keen services.

The teachers debacle, probably set education back by 15 years- because it sent trained human resources, out of the system, and left the system to the device of inexperienced staff...you finish the rest.

We have to think carefully when we start screaming for FIRING DEESE LAZY GUBMENT WORKERS...as much as it may pain you to bear, we need them.

Bob Knaus:

(Second point for Larry) I’m a proponent of “free trade”...but, forced tariff arrangements, and, the prying open of foreign markets for the sake of the exporter, is not free trade and is against the necessity for domestic development- forget about even sovereignty for the moment. If we practiced true free trade, we should worry about security of transportation of goods, and not forced tariff rates for any industry. Free Trade is not even practiced by the US- the Byrd Amendment fairly recently. And, not even by the EU- the shutting out of Boeing from defense contracts in the region and their subsequent contract with the US Air force, causing and up-roar as we speak.

Becks left because it tastes horrible. Heineken is the beer of choice and so is Guinness, a close second. Old Milwaukee and Budweiser are other beers that enjoy the same price as Heineken and Guinness, both domestically brewed, but have not caught on because they taste a little off...

No beer drinker worth his hops would come near a Kalik, when he can pay 50c more for a decent beer...Heineken.

The second point of factory workers benefitting, does not add up to or relates to Kalik, being the beer that drove out Becks....Because, we WANT the factory workers to get paid. I WANT factory jobs to remain at a production advantage. Kalik beer is reasonably priced. How much do you expect to pay for a beer? In fact, Kalik is for about a dollar in Miami the last time I checked- Becks, costs a little more. The fact that they are exporting Kalik, shows you that they can make profit and compete- they have been doing just that. People still have not been drinking Becks and that’s a fact jack.

But, what I am saying is, we have a local distribution price on our own goods and we sell it across the border for even cheaper.

Kalik is where it is...saying that allowing for a forced reduction in tariffs, when we gain most of our revenue from tariffs, to suit free entry of goods, goods we are not sure to even buy and like, reduces tariffs off of goods to suit exactly who and what purpose? From this angle, it is a waste of time and money for nothing. It is not on sound economic principle or true trade for profit.

Why would you want to put out of work, a Bahamian based Brewery, for a nastier tasting beer, we have no price control over in the global market?

Also, Heineken, who helps run the factory, is part of the reason why globalization is out of whack on many aspects. So, you would like for Heineken, to continue to get the concessions it enjoys, while charging more for its beer, in the Bahamas?

The arguments are inconsistent. Free Trade, the way it is bandied about, is a farce and should be changed to something else- more on the line of smart trade.

As said, no one would drink a Kalik, when there is a Heineken...the preference does not add up to the issue of price and competition.

As for the Sands beer, if it is FNM/PLP or BDM, if it sucks...then it will fail. No tariff rate change can save it!

Bill

p.s.
Red stripe is also sold at a low price, but the quality is 100x worse than Kalik, but they sell more due to fantastic marketing. Support Kalik, even though it tastes like embalming fluid!

[Bill]

Larry,

Just to add some notes on Cable Bahamas vs. BTC in service for internet.

I have used both. Cable Bahamas has a habit of going down ALL THE TIME- one Saturday afternoon, it went down for 12 hours. It has been a bit better as of late- but- BTC has NEVER gone down 12 hours on a stretch and, certainly not down more than 2 days in a row.

Living abroad for a considerable amount of time, I was at my complete wits end, trying to get communicae back to home base, but, could not get through because internet is down. Wasting money on phone cards, when internet should do. I know what service is and was, during BTC and when my family switched. Trust me, I never talked to my family via the internet, LESS.

Also, searching using Cable Bahamas, is a total pain. Many times you don't get your pages to open. That's due to their servers...BTC has never treated me like that. Also, their collections and revenue process is more than highway robbery. In fact, it borders on criminal. $40.00 for re-connection is absolute thievery...in fact, someone should check that. Especially if cable tv services and internet services, are to be con-joined.

Also, there is this idea that you pay less for Cable Bahamas. You pay almost the same thing- considering the service you get in my point. Cable Bahamas has terrible Customer Service staff, also, their corporate board is VERY unprofessional. I had a meeting with a lady and twice, she cancelled- one time I was waiting outside of her office, for her to say she had something else to do. Also, their call centre is a nice touch- but- their tech staff is very "hand off"...HAHAHAHAHAHAHAH....

The staff at Cable Bahamas are accustomed to people needing their service. BTC is not nearly as bad. In fact, I have not had a complaint to bear at BTC in a long, longgggg time.

Cable Bahamas programing is a bit soft as well. I don't know if it has to do with Christian Council, but, watching Cable TV in the US and in the UK, trust me, Cable Bahamas is slightly off- but, it has gotten allot better in the last 2-3 years.

While we may think Cable Bahamas is hot stuff, we have no other Cable company locally to compare it to. I wonder why?

Needless to say, I would never promote crap service in Cable Bahamas especially when I have seen and used better. No matter how sexy saying "we have coral wave" sounds!

Bill.

[drew Roberts]

Larry:

"This lack of productivity extends into the private sector as well. And as for the example you gave about the private sector being twice as lousy as the public sector
- surely you jest?"

Even if it was true, the government was being compared to a government granted monopoly.

The private sector has its problems but...

all the best,

drew

[drew Roberts]

Bill,

I would not doubt that there can be government departments that are understaffed or incorrectly staffed.

I do thing that our percentage of government workers is way to high. I do think that this messes with our democracy in a bad way.

I do think that for certain jobs at least, government workers make better than at least some of their counterparts in the private sector. And get better benefits and more besides.

"That is not true. While we may have on some extra weight, we are not nearly getting the job done the way we should- this is due to a lack of true manpower and lack of true organizational initiatives."

I think that at least in some places, this is due to over staffing. Putting too many people to do a job can make things go slower than if less were trying to do the work.

I think we both have issues with this so called Free Trade. I may be in favour of real Free Trade, but I am not in favour of the fake thing.

"There are more clerks and junior staff, because there is no path to upward mobility in the civil service- this is government leadership fault. One in which we have to address."

While it matters whose fault it is from some angles, from the position of a working taxpayer who often gets shoddy service, what does it matter who's fault it is if it is not going to get fixed?

Now, if we can fix the problems...

all the best,

drew

[drew Roberts]

Bill:

"but- BTC has NEVER gone down 12 hours on a stretch and, certainly not down more than 2 days in a row."

BTC has a lot to earn back with some of us.

I was running a family business a long time ago. Location: Collins Avenue.

My phones went out. It took 45 days of daily (well, I tried, some days I could not bring myself to waste my time and I took weekends off) calling before the first repair man paid a visit and way longer (I think 60 plus days) before I had phone service again. Granted, that was a long time ago.

Just this year though, a truck came down my street and pulled down my phone wire. A low wire that should have been raised before. We called saying our phone was out.

It took weeks before BTC came by and ran a new wire for me. Luckily, I had found some old wire by the side of the road and spliced it in myself and tied the thing back up with some string from the recent road paving project so that I was only without phone service for a few days.

That said, I will not try and defend Cable Bahamas either. To me, they also suffer from monopoly issues. And I seriously dislike that I have to pay for TV to get internet.

At least they give you an actual IP address though. I have seen friends on BTC getting private addresses.

all the best,

drew
http://zotzbro.blogspot.com/

[Bill]

Hi Drew,

First post:

The main point you made; "we need to fix the issues, over finding who's at fault". Finding what exactly is the fault, is how we begin fixing the problem for the long term.

You want me to keep it straight up with you? Everytime I hear "cutting staff", my mind runs directly on some fat cat appointed board member, or, the top civil servants, sharing up the extra fluff they created by firing everyone else- with loss of productivity to boot.

Second post:
As for your run in with BTC....I think we all have issues with service in private and public. But, in this case, the private market would not secure better service over government services all the time.

Bill.

[drew Roberts]

Hey Bill,

I like people to be straight up.

If that is the plan for cutting staff, I can see why you would not be in agreement with it.

How about we cut some fat cats? Some of the overstocked janitors and file clerks you mention? How about we get some more productive workers if we need them?

While a private market monopoly might do a little better or a little worse, I would expect monopolies to behave badly overall, be they government or private monopolies.

I would be happy to continue in a civil discourse with you on these matters and see if we can explore and perhaps learn something from it.

all the best,

drew

[Bob Knaus]

Bill...

Let me try again. I chose "beer" because it's an easy example that most people can relate to. Most people drink beer to relax and get happy and buzzed. If you don't think so... have another beer.

In Miami, Bud costs $12 a case. So do most other canned beers in the moderate end of the price range.

In the Bahamas, beer is $36 a case, whether you buy Kalik or Bud or Heinekin.

This proves that markets set prices.

Think about the number of Bahamiams who drink beer. Think about the number of Bahamians who work at a beer factory. Ask yourself if paying 3 times the amount for beer is really worth it to the nation for having some beer factory jobs.

Let me know what you think.

[Bill]

Bob,

Great Point. However, free trade would not ensure that beer from the Brewery would go down in price- the price of what is imported, to make the beer, determines this. Cheap beer over the border, would not alter consumption patterns either- especially if the beer tastes like piddle....we had "dollar beers" before and they lasted 6 months- at best. We sell Old Milwaukee and a few other chepo's, which even the hard core drunks would not touch. If you don't believe me, go and try a few more....then tell me what you think!

Through free trade, the increased demand for commodities, increases the prices- always. Especially with FTA's and Multi-Lateral arrangements, with 3 or more countries.

What would happen, as it usually does, price dips and then it spikes- and continues to rise. Factor in the normal intangibles beyond our control (weather, war and women), prices, when made unstable, would be unbearable just as how we have it now...no true "good" is produced in the long term. In fact, the price you would pay within a 3-5 year span, would be sticky upwards- especially in non domestic commodity goods.

The ugly truth about "free trade".... it is a sham to pry open developing markets. Tis all.

Bill

[Rick]

As usual you make your point very well, regretfully this weeks post opposes your post of last week where you argue that The Bahamas needs a great moderniser.
Mrs. Thatcher opened the British economy.
As Walter Williams always says, there are winners and there are losers in a dynamic economy.
Thankfully there are always more winners than losers.
For the record, I think we have access to almost every type of business or service imaginable through the Internet and somehow local businesses survive?

[larry smith]

My article, Rick,reviewed the concerns about opening up our economy. These concerns must exist because all the politicos and trade experts at the town meeting last night talked about reservations and continued protectionism.

Other than exploring the pros and cons of these concerns,the only "point" I was trying to make is that our education system has not prepared Bahamians to compete in an open economy.

[Bill]

Hi Rick and Larry,

Let me start off saying for the record- I am not a blind protectionist. Just against this model of "free trade"...it is not true free trade in my mind. Everyone knows it, but are afraid to say it against the "popular theory"...

I am a proponent of "smart" and "mutually advantageous" trade. Force feeding, or, prying open our markets to suit someone else- country or group of countries- does not serve our best interests in the long term.

While, I will not sit here, and say to you that there are NO advantages in regards to "free trade"...the bad, far outweigh the good- economic, political and social.

Some brave academic, with a strong voice, needs to put an end to this model of "free trade" and start anew with a new term- and make it popular. Krugman, Stiglitz and/or Bghwati, need to re-state their version of the truth. AGAIN!

In relation to the Bahamas; I certainly do not trust our "trade specialists'" like Laing and/or Hank Fergusson. One of who has repudiated his entire book "Who stole my Conch" and the other, sounds as if he has a few "foriegn friends", who decide to have coffee with him when they have nothing better to do.

For the latter, Fergusson, to say that this is a continuation of the Contonou Agreement, where that agreement was not centered around trade liberalization primarily. In regards to trade, is is what they always have done; "give you sweetness, and then hit you with the bill" they made trade of goods non reciprocal, knowing full well it was against WTO rules (like they ever follow WTO rules)...to turn around now, and to sign onto an agreement, with Hank Fergusson's endorsement, where the terms of "competition policy" and "trade faccilitation" are vague at best (as it was in the Contonou Agreement, which is a continuation of the Singapore Issues, which caused many Developing countries to balk at it's mandate.

These "terms" are left up to an arbitration arm "to be determined", who base their agreements on "a memorandum of understanding"...to what "they think is best" for the group...this is insane.

Not trying to make myself sound like a smart-alleck, but, these things are of vital importance- and more baffling, we signed onto the agreement, with little or no true power and input in the negotiations' process- let alone have we set aside any defined standard, to when these standards are to be met!?!?

Is that the way to do business, Rick and Larry? Would you sign onto an agreement, where the terms of what standards are to be met, are left up to the interpertation of a your competitor? This is just ONE issue.

So, I understand why Laing had reservations in the onset. But, we should not have signed THIS one. They did it to themselves- governments have- because they did not share all of the the information with their public, in the time it was needed and in a way, that provided at least better public input into making it better "for the domestic free market"...Rick, how can you leave the signage of a trade and commerce deal, up to a government, when governments do NOT, as you know full well Rick Lowe, have true sound economic information in and on the private market...this is REALLY huge. They do not know what they got us into....they should have brought it to the open or not sign it.

You see how these "free trade agreements" are full of flap doodle?

We need a firm and sound trade policy. Not twist and turn in the wind, to suit the phrase of the day- certainly not to be like litte Johny Echo in the back of the class, and say "me too", just for the sake of agreement.

Best,

Bill.

[Bill]

Rick,

The great moderniser, does not equate to the great fool...

Thatcher opened up the British economy, what is NOT added onto her list sucesses and follies is; the rampant and out of control inflation, the loss of jobs and real income for persons who were once the British middle class, the increase of ghetto's in the UK, the rise of poverty, the decrease in scores in math and science's....on the good side is that the marketization of coal and telecommunications, gave average investors, who wanted a break away from financial services, a chance to buy stock in those industries- the true development effect of such marketization, cannot be truly seen over their high tax rate and their socialist tendency to spend highly on social programs.

So, your article, Rick, does not speak directly to the free trade argument for the Bahamas and development. They are two totally seperate, if not conflicting.

Bill.

[Hank]

Hi Bill

Thanks for your post – You raise some very relevant and important points. I will ignore your personal views as they are not relevant to this discussion. I have never claimed to be the absolute authority on this particular issue but I do have a few views and experiences relevant to this particular topic.

I agree fully with you for the need for a plan – ‘development plan’ and therein lies the greatest criticism of The Bahamas signing onto the EPA or any other agreement for that matter. The reality is that this Government like the ones before it has not answered that most basic question – WHY ARE WE JOINING and what interests we are seeking to protect and gain from membership.

In an ideal world it is a necessary first step. What we do know however is the risk we run by continuing to exist as a paria in an increasingly global, rules based world economy. Things will not continue as they have been for the past thirty years and if you have already determined possible net economic gains to this economy by not engaging I would love to see your analysis.

Your correct about me being biased- as The Bahamas I live in – is one where we still await the distribution of potable water and for me to respond to your post requires a 9 mile drive to access internet. My point is I am acutely aware of the disparity in the levels of development in this Country and recognize the need for investment in the provision of basic amenities. I believe in our fundamental right to determine the pace and nature of our development – But from my experience I am not satisfied with our Governments efforts and hopeful that agreements such as the EPA will assist in creating an environment that is beneficial to Bahamians. (I can tell you how when its costs less than 50 cents a minute)

The EPA will not solve many of the issues that we face in the Bahamas – its will not create development – but it can facilitate it via new sources of FDI etc – New business opportunities for Bahamians with guaranteed rights, privileges and market access.Also remember the basis of this agreement and the maintenance of the prinicple of Special and Differential treatment. Long and short is - It will not heal the sick and make the lame walk – But we can find advantages and opportunities in it –And Sir Bill if you differ I would love to hear your views as to how we further our development and maintain the status quo without any of these agreements.

There is more to be said but we will catch up when I am back in your jungle -

As with most things – the truth lies somewhere in the middle

Blessed love

H

PS Drink a Sands a Truly Bahamian Beer - ie.Both create jobs but Sands is the only one that is 100% Bahamian owned - last i check Tiger et al had a very small percentage.

[Hank]

Bill

Last thing the point I made about the continuation of Cotonou - was relevant in so far as when we signed Cotonou in 2000 we knew this was the next step.

The more important point is that the benefits under Cotonou extend until 2020 - including the Euro 16 million this Government holds as balances from the 7,8,9th EDF - Not to mention funds currently being programmed under the 10th EDF National Indicative Programme as we ll as the Euro 145 million being programmed for the regional programme - BTW this is grant money and doesnt include the hundreds of millions that we have previously and will continue to be able to access from the EIB and other agencies - I gone for tru this time

[Bill]

Hi Hank,

Thank you for responding. Take my vituperation as a sign of love and in the idea of me wanting you to do better...:-)

As for development, trade is a vital step to development- but is has to be done right.

Force fed trade, simply pry's open our market for nothing really.

We should be working bi-latterally and, we should be "leary eye'd" to say the very least with the EU.

As for the Contonou agreement- have you seen any impact that can be traced back to it, in regards to true development?

It was an agreement to push the trade agenda- this is why many people saw it as bullying- the EPA in particular- in getting Caribbean and African countries to sign onto it. The "Everything Except Arms" clause, was smug and insulting within itself.

We can and should develop ourselves. Not because someone forces us to- in fact, if we don't do it ourselves, we run the risk of greater divide in the class system we have now.

Larry said education- I totally agree. There is no committment on education, simply, we need one- sad indeed. This trade agreement does not ensure that we get this done.

Hence, why it was a waste of time, and, why the Contonou agreement was a flimsy excuse to pander to the Human Right's nutters in the UN.

JMO!

Glad to have you respond. Feel free to take a personal twinge- it makes the debate more lively!
;-)

Best,

Bill.

[Rick]

As noted, there will be winners and losers but in the end will most of us be better off?

By the way, I do not necessarily agree with all these agreements, I think we should just unilaterally drop our barriers to trade.

Do we really need a 390 plus page EPA document to trade? We've been trading all these years.

[Rick]

Maybe you would all like to listen to the recent Nassau Institute/Dr. Boudreaux presentation about Globalization?

If so please visit this link:

http://www.weblogbahamas.com/blog_bahamas/2008/03/globalization-a.html

I hope this is okay Larry?