The Tribune

EDITOR, The Tribune.

It was reassuring to hear the Prime Minister single out the ideological shift of the post-1992 era as the most important challenge to the development of this country. It hopefully signals an emphasis on reversing the failed policies of that era and shifting us back toward genuinely progressive economic policies.

It is disappointing that Hubert Ingraham would take these remarks personally, to the extent of suggesting that time would somehow vindicate those neo-liberal fiscal and investment policies that have undoubtedly harmed this country and blunted its development trajectory.

In the circumstances, it would be foolish to await the verdict of time. All over the world, that model has already failed sufficiently to have shaken the democratic foundations of the two countries that were its keenest advocates. The twin revolts of Brexit and the Trump presidency were their verdict on the failure of so-called “Washington Consensus” policies.

In two lost decades, US and British living standards have stagnated and their middle classes have discernibly shrunk. In Britain, public services and the much-cherished National Health Service have been excoriated to accommodate “market forces” that are themselves ultimately publicly funded, while the once vast American blue collar middle class has all but vanished – a victim of the forces of “globalisation” which ultimately favored only big corporations looking for cheap labour abroad.

In both, the top one percent have gobbled up an ever larger portion of the national pie, accelerated by a financial crisis that they and their bankers caused.

Here in The Bahamas, the trickle-down ideology has failed the tests of both social responsibility and economic logic.

In fact, the whole notion of economic progress has been turned on its head in the post-1992 consensus. Business interests, economists and even government ministers frequently cite rising prices in the foreign second home market as evidence of economic success, even as they concede that middle class Bahamian professionals now require state assistance to own their first home.

This is the result of bad policy, undergirded by a failed ideology. The repeal of the Immovable Property Act without the compensation of massively increased property tax receipts was baffling, especially if you consider practice and experience elsewhere. Any place in the USA with a luxury second home market also boasts high and vigorously enforced property taxes, which are in turn pumped into public investment.

Here, while locals are increasingly priced out, we boast low property taxes, lax enforcement (except against locals!), a treasurer that is statutorily barred from seizing delinquent foreign-owned properties and a cap on property taxes that only benefits properties valued in the tens of millions.

These regressive features compound, rather than balance, the negative effects of foreign competition for limited land resources and, together with regressive taxes and austere spending on the population, negate any natural benefit that the industry might confer.

In other words, as the floodgates have been opened to foreign ownership of Bahamian land, the industry has been squeezed of any real benefit to the treasury or the domestic economy. It is highly doubtful whether, on balance, it is now actually beneficial to The Bahamas at all.

This and other policy initiatives of the Ingraham years have produced glaringly bad outcomes for Bahamian society. Policies like vast concessions to investors, non-existent taxes on wealth, high taxes on consumption and overly restrained wages have produced a bifurcation between the performance of the domestic and ‘investor’ economies – which is exactly the opposite of what a small, service oriented country should seek to achieve.

We host spectacularly successful mega resorts and boast levels of foreign investment per capita that are (even in a bad year) three times higher than any of our peers. Yet this has failed to bring unemployment under 7 percent in 30 years and has not halted the shrinkage of the middle class.

Why? Because the domestic economy is starved of stimulus by the same policies that are misguidedly applied to attracting foreign investment (which in turn actually requires little attracting).

Ironically, in the absence of foolish and regressive tax and wage policies, and with tightly applied ‘Bahamianisation’ protections, we could probably double the size of our domestic economy (our aim, one would think) with half the level of foreign investment that we now have.

Yet the plain ignorance of much of the political class and most of the media misses this completely, instead focusing on personalized politics (of which claims of corruption versus transparency are merely a variety) while we drift away from the ideological moorings that secured our early development and into a sea of chaos, epitomized by the ad hoc, but instinctively regressive policies of the Minnis regime (remember the horrendous Commercial Enterprises Act?).

As a member of the generation that helped build those moorings in the 1970s and 1980s, Mr Ingraham should indeed be proud. I am certainly proud of my father, who was a non-politician member of the same generation, and subsequently a member of Mr Ingraham’s government.

Indeed they first worked together back in 1982, when Mr Ingraham was appointed Minister of National Insurance and Housing and my father, then Governor of the Central Bank, was appointed to chair the Mortgage Corporation. I recall his admiration of the then young minister’s commitment to both these important portfolios and his expectation that he would go far in his political career.

In light of what was achieved in those years in terms of national development and institution-building, I find it unfortunate that all the damage subsequently done to those achievements by the harmful, erroneous policy shift of 1992 (much of which still abides and has become part of our political firmament) would leave Mr Ingraham “unbothered”. It certainly bothers me.

ANDREW ALLEN,

Nassau,

August 7, 2022.