Some thoughts from Tradewinds

Everyday when we awake in the morning, the sun is shining and it is another beautiful day in our Bahama land. The aqua-blue seas and golden beaches are some of the most beautiful waters and beaches to be seen in the world. To live, work and play in the islands of paradise is truly a blessing from our Creator. Forty years ago we gained our Independence under majority rule, we were a sovereign nation taking our rightful position among the nations of the world. We didn't know that it was the best of times as our tourism and financial services industries were beginning to blossom. It was the high water mark for the cuntry as the Bahamas was almost debt free and our government had money in the bank.

Over the next forty years or so the Bahamas was to change in many ways where once economic prudence and logic was our guide it soon became subordinated to the rising tide of political abuse and power. Our government gradually became a tool for the new political class that used it position of power to build and ultimate control a huge and growing bureaucratic class that exercised expanding control over the nation's destiny. Our people changed and were not Bahamians first, but became PLPs, FNMs and more recently DNAs first before being their steadfast Bahamians. Individual identity became political before nationality. Political and selfish, all for me baby, self interests came first before the National Interest of the country. The governing political parties pursued a continuous tax and spend philosophy which resulted in a policy of ever increasing tax rises feeding the never ending appetite to increase the growing size of government and to increase power through out-of-control government spending. Keynesian economics became the driving force creating larger and bigger government. To further fuel this spending, successive governments from the very beginning undertook debt borrowing policies to off set annual revenue shortfalls resulting from excessive spending policies. Deficit spending soon became the cornerstone of the recurring annual government budget deficit that has grown a $141 million in 1974 to over $5.2 billion today. Our national deficit today is totally unmanageable and is taking our economy down the path to financial collapse and failure. Government has to be frightened to death as it finds the Bahamas nearing the economic Crossroads of recovery or failure. The stakes at risk are extremely high and will impact every Bahamian citizen and future generations for decades to come. We are now at the Crossroads; government MUST do the right thing in the country's National Interest or we all shall go down in default and failure.

To avoid the inevitable outcome of an economic collapse and failure, the Bahamian government has blindly cup in hand accepted the counsel and directives of the new "Washington Consensus" at the International Monetary Fund (IMF),  that bastion of Keynesian thinking, that has caused so much pain and suffering wherever its economic footprint and quick cures have been sought. Never to out do themselves, the IMF has forcefully recommended the establishment of a VAT as the ultimate cure-all to save the Bahamas from pending economic disaster. This is the "one size fits all" approach that the IBRD/IMF always employs and has become famous for not taking into consideration any specific attributes or characteristics of the country under technical review. If VAT is good for, let us say Iceland, then its must be just as good for the Bahamas. Taking a contrary view, one could postulate that if VAT has failed in Iceland, then it could fail in the Bahamas. In fact VATs record of failure is worldwide and doing the opposite of what VAT was promised to do. Will the Bahamas be the next passenger on the IMF's ship of fools? Will the VAT medicine be worse than to so-called cure? If VAT cannot be stopped, the Bahamas will soon find out.

What is definitely clear is that the Bahamas is now at the Crossroads, and that government is about to undertake perhaps the most crucial decision since Independence regarding the future course of the economy. If government errs, the economic consequences will be unmeasurable.There is NO room for "trial and error" thinking as there will be no second chances as our nation is at the pivotal Crossroads.  We will have one chance and one chance only. So government must at least give careful deliberation to downsizing the excessive burden of supporting a bloated and unproductive bureaucracy that has been entrenched over the last forty years. They are the ones that drain the nation's Treasury along with ongoing wasteful spending programs that creates no return for the people's money. Overdue building maintenance, like our once proud Post Office, pothole filled streets in downtown Nassau, traffic lights that are either broken or out of sink, trash that  seldom gets collected should be prioritized spending.. Maybe then more of the 80 percent of cruse ship arrivals will then consider getting off the ship in Nassau if the price of our products onshore would become competitive. There will be no VAT to pay when shopping at sea.

Government is now on the spot and if they adopt VAT and it fails, similar to what has happened most other countries were it has been blindly implemented, we may then have reached the frightening financial point of no return to economic sanity and hoped for recovery.

To be continued…