Some thoughts from Tradewinds

With all the written and vocal commentary opposed to the establishment of VAT in the Bahamas by the PLP Government, it is somewhat puzzling that there has been no pronouncement or policy statement issued by the Opposition FNM either opposing or supporting this unpopular and highly regressive consumption tax. Could this apparent silence by the FNM be the result of an innate fear that the VAT issue first arose on their watch, when they were the elected government, and that a deliberate decision was made to put off any assessment until after the upcoming general election? If the FNM were to win, then they would have to then address the VAT question, but if they lost, it would become the new government's problem. No one really knows the answer except FNM party insiders, but by ignoring this hot economic issue at that particular time seemed to make political sense for in reality it never once became an election issue. Nevertheless, one would have thought by now, with the PLP having been backed into a corner by the increasing public outcry against VAT, the Opposition FNM would have taken a more forceful stance against such an unpopular tax that could very well become the ruination of the country. Again one must question why is the FNM letting this coming "crisis go to waste" when it could be a political opportunity with broad popular support? One can only assume that such silence is nothing more than tacit approval or unspoken support on the part of the political Opposition for this unpopular VAT proposal that is about to be forced down the throats of all Bahamians and future visitors to our islands.

Often in past Weblog Bahamas commentaries, it becomes rather obvious that there is very little if any significant differences that distinguish these two political parties from each other. Only the players, the political patrons, elites and backers as well as the traditional hangers-on are different, but upon a closer examination the similarities become more apparent. First and foremost, both of our political parties support bigger and larger governments with increasing power being vested in an ever expanding public sector. This is "the government always knows best" syndrome that has been the driving force in Bahamian politics for the past forty years. Both parties support greater and larger government spending programs which has lead to a continuous but gradual increase in taxes on both the public and Bahamian companies. To further support expanded government spending both parties have supported increased government borrowings, both domestic and foreign, which has resulted in the huge national deficit that is now crippling the future development of our country. In addition, both parties have continued to support the growth and expansion of the government bureaucracy as a means of extending political power and control not to forget or over look the bureaucracy being used to expand increased employment and jobs for loyal party supporters. In summation, there is not much difference to be found in the big government philosophy being pursued by our two primary political parties.

Finally both parties seem to have been blind or unknowing supporters of Keynesian economic policies of tax and spend which has gradually shifted economic power from the once prosperous private sector to the public sector. Whether by design or chance, Keynesian thinking became the perfect recipe for expanding political influence and control. Today this continuous adherence has resulted in a lessening of investment and a reduced employment by the once thriving private sector. This commonality of thinking seems to be more than coincidental as neither political party ever has much economic expertise in their political ranks. Perhaps this also might be a holdover from per-Independence times, as the acceptance and expansion of Democratic Socialism in the United Kingdom, constructed on a Keynesian economic platform, was after 1946 the cornerstone of British domestic policies. With the replacement after Bahamian Independence of the Bahamian Monetary Authority in 1974 with the Central Bank of the Bahamas, the stage was permanently set for increasing deficit financed spending by successive governments right up to present day.  It does seems apparent, even to skeptics, that both our political parties are fundamentally alike in their pursue of similar economic policies based on underlying Keynesian thought. These socialist policies have resulted in a continuous advancement in the consolidation of political power and increasing control over the Bahamian people.

The commonality of political thinking by our governing parties over the past twenty-five years has created an adverse situation with a dilemma based upon unsatisfactory choices.  This is often referred to in contemporary micro-economics as "Adverse Selection". This concept can be applied to political theory as well when one rationally considers the symmetry of limited choice in the Bahamian democratic process. As both political parties basically represent a similar economic and political  modus operandi or protocols, there is little meaningful alternatives in political choices when participating in the electoral process. Voters who have preferences for small, more efficient government, who oppose excessive debt and deficit spending are literally left without any meaningful choices. It is either accept outright a further continuation of failing Keynesian economic policies combined with corrupt policies of political patronage, or express dissatisfaction by electing not to participate in the election process.  Perhaps this may account for the declining count in voter participation in recent general elections and referendums. At any rate, the theory of "Adverse Selection" is taking its toll as the continuation of imprudent financial policies pursued by successive governments have take our country to the very edge of possible economic failure.

Today is of vital importance to understand that VAT is nothing more than a failed policy in practice that will not save our country from the adverse consequences of potential economic failure. Yet, both political parties appear to support this unworkable solution as being the saving grace to get us out of our growing financial dilemma. The party in power has bowed down to the recommendations of the IMF and the opposition party's apparent silence is an implicit support for the government's ill-advised acceptance of the VAT solution. It is a commonly understood actuality that the strict adherence to IMF recommendations could lead to further economic failure, while nation's that were wise enough to do the opposite of what the IMF recommended have experienced broader economic recoveries.. By taking the opposite strategy to economic recover, several countries in Latin America successfully turned around their debt burdened economies. In another blog to hopefully follow, we shall attempt to take a closer look at success stories.

As for now VAT must be challenged in the press, in the electronic media and at public forms throughout the country where open and free discussion can be forth coming. Question-scripted government meetings must be questioned with knowledge and above all always ask intelligent questions and demand specific answers to your inquiries. VAT is simply the wrong solution for the Bahamas for it is a process that most likely can only lead to failure. It is not the saving grace that government is hoping for from the IMF.  Both of our political parties must be made to be fully aware that VAT is an unworkable idea and that government must move on to workable economic reforms that will turnaround and reinvigorate the Bahamian economy.. It is never to late to do the right thing and never the time to pursue the wrong thing for which we will always regret.