Go Lean Commentary
This is a similar expression as the title of the below commentary by Canadian Public Policy Professor Dr. Jack Mintz:
“All is not well in the sunny Caribbean”.
The opinions of Canadian stakeholders are and have always been important from a Caribbean perspective. “Look to the Northern Star!” – the book Go Lean…Caribbean relates the hope and refuge that Canada always provided to this region (Page 146).
This book purports that an examination of the history of Canada can be productive for the Caribbean. Despite the different geographic address, Canada has had to contend with a lot of challenges similar to the Caribbean; Canada has succeeded while the Caribbean has failed. Early in the book, the point of lessons from Canada is pronounced in the Declaration of Interdependence (Page 14), with these opening statements:
xxxiii. Whereas lessons can be learned and applied from the study of the recent history of other societies, the Federation must formalize statutes and organizational dimensions … to implement the good examples learned from developments/ communities like … Canada.
Canada recognizes that the Caribbean is in crisis; and despite billions and billions ($$$) in Canadian investments, the region is still in crisis.
Commentary By: Dr. Jack M. Mintz
Economic problems in the Caribbean should be a wake-up call for governments and businesses operating there.
As a middling power, Canada has limited influence in most areas of the world — save for the Caribbean countries. To escape the winter, three million Canadians trek annually to one of the islands to enjoy the sun and relaxation. Roughly 600,000 Caribbean [expatriates] have migrated over the years to Canada, with the largest contingents coming from Jamaica, Guyana, Haiti and Trinidad.
Canada has also invested over $140-billion in capital in the Caribbean islands, especially in Bahamas, Barbados, Bermuda and Cayman Islands. Capital stock held in Barbados alone is over $60-billion, more than any other country except for the United States. The money does not stay there but moves on to other countries so that Canadian multi-national companies can take advantage of the Canada-Barbados tax treaty to achieve lower global effective corporate tax rates through tax-efficient financial structures.
So when Canadian Imperial Bank of Commerce announced a $420-million write-down in goodwill invested in CIBC FirstCaribbean, it should attract attention, given our deep ties to the region. All is not well in the Caribbean region with its bloated, over-indebted governments operating in slow-growth environments. The economic and fiscal problems in the region raise critical economic and security concerns for Canada.
Many Caribbean governments face financial instability. Gross public debt has risen to over 80% of GDP in 2013 for Antigua, Barbados, Grenada, Jamaica, St. Kitts and Nevis, and St. Lucia. Many of these countries are also heavily exposed to global markets with the current account deficit over 20% of GDP in the Caribbean region. Foreign direct investment inflows are more than 8% of GDP for Antigua, Bahamas, Barbados, Grenada, Guyana, St. Kitts and Nevis, St. Lucia and Trinidad-Tobago.
At a flick of the switch, international lenders could turn off the spigots, resulting in a financial crisis and hefty devaluation of currencies. The implications of a severe economic contraction in the region would put the Caribbean countries in limbo and have important consequences to Canada, given our relationships in the region.
The outlook for the Caribbean countries is not exactly cheerful. Overall, economic growth has been poor, about 1.5% for the region, and close to stagnant for Bahamas, Barbados, Grenada and Jamaica. Many of the Caribbean countries face competitiveness problems with some of the highest electricity rates in the world, unionized wage costs and high real interest costs. The business climate is weak with poor regulatory practices, enforcement of contracts and crime.
With the global economic slowdown, tourism has been relatively flat, lagging most regions of the world in 2013. Tourism, after all, is not a necessity and more money is spent on it only when people are better off. The outlook is not looking much better in the near future with little income growth in North America and Europe. Should there ever be reconciliation between the United States and Cuba, U.S. tourism could significantly shift from other islands.
Nor are commodity prices expected to be booming as China and the rest of Asia slow down, with little take up from the rest of the world. Only oil and gas prices seem to be firm, which is good news for Trinidad and Tobago.
With the G20 and OECD countries focused on curbing tax evasion and avoidance, several Caribbean countries – Bermuda, Barbados and Cayman Islands – would be subject to a tightening tax noose. These countries could face a deceleration in economic activity if international tax structures are to be dismantled.
Thus, economic and fiscal problems in the Caribbean should be a wake-up call for governments and businesses operating there. The CIBC write-down is just the tip of the iceberg.
A financial crisis will heavily impact many Canadian businesses that have turned to the Caribbean islands to set up financing and insurance structures. A major economic slowdown in the Caribbean islands would also raise security issues for Canada as crime, including drug trade, could become more problematical to control.
The Canadian government should therefore work with other major countries and international organizations to stabilize Caribbean economies. Attempts to build capacity for good governance in the past years have not been easy but it cannot be abandoned. Some new initiatives should be considered that would help the Caribbean islands improve their fortunes.
Certainly, trying to harmonize policies and merge certain institutions to achieve economies-of-scale across the region would be a useful step. This includes post-secondary education, financial markets and transportation. A shift by Caribbean countries away from oil to natural gas from Trinidad-Tobago and North America would reduce their cost of oil imports.
At the same time, Canada and other Western countries should invest in improving the judiciary and security forces in the [Caribbean] region. The reduction in crime would also benefit our economies by reducing risks faced by tourists and investors. Drug trade with Canada would be curbed.
Debt relief for some of the countries would be appropriate so long as certain commitments are made to reform governance and economic policy. This has been the role of the IMF over the years but Canada should itself pay more attention to the region.
For Canadians looking to bask in the sun and escape harsh winters here, a stronger Caribbean region will be welcome.
Jack M. Mintz is the Palmer Chair, School of Public Policy, University of Calgary. Contact: firstname.lastname@example.org
Source: Financial Post – Canadian Daily; retrieved 05-23-2014 from: http://business.financialpost.com/2014/05/22/jack-m-mintz-all-is-not-well-in-the-sunny-caribbean/
The underlying theme of Jack Mintz commentary is that Caribbean society needs a reboot. The book Go Lean… Caribbean serves as a roadmap for the introduction and implementation of Caribbean Union Trade Federation (CU), a reboot for Caribbean society with these 3 prime directives:
- Optimize the economic engines of the Caribbean to grow the economy to $800 Billion and create 2.2 million new jobs.
- Establish a security apparatus to protect the resultant economic engines and stakeholders.
- Improve Caribbean governance with technocratic excellence.
The foregoing article highlights the mis-management of credit/debt of the governments of the region. The commentary specifically warns:
At a flick of the switch, international lenders could turn off the spigots, resulting in a financial crisis and hefty devaluation of currencies.
Why such poor financial planning? It is obvious that there is a lot of success missing in terms of fiscal expedience. It is not reasonable to expect that current administrations can solve Caribbean fiscal problems with the same tools and techniques of the present. The Go Lean roadmap calls for a different toolbox and different techniques.
If beauty is in the eye of the beholder, then perhaps this commentary is just one person’s assessment of ugly – just a perception. But unfortunately, the facts are the facts. Dr. Mintz relates ugly examples, such as the fact the region has the “highest electricity rates in the world”. There is no denying the “Amount Due” figures on actual electric utility bills.
This is the present, as perceived by Dr. Mintz. Plus, his assessment of the near future is even more “gloom-and-doom”.
True, there is work to be done. But not the job of a Calgary professor, or any other Canadian stakeholder, to do the heavy-lifting. No, this is the job of the Caribbean for the Caribbean. Who is up to the task?
The Caribbean Union Trade Federation hereby “reports for duty” for the job to forge this change.
The Go Lean book details that solutions must come from all aspects of society. There are community values/attitudes that must be in place to ensure that any quest for permanent change would have some measure of success. Those attitudes are referred to as community ethos. There must first be the adoption of many such ethos, followed by the executions of strategies, tactics, implementations and advocacies to impact the region’s prospects, as detailed here:
|Community Ethos – Lean Operations||Page 24|
|Community Ethos – Ways to Impact the Future||Page 26|
|Community Ethos – Ways to Help Entrepreneurship||Page 28|
|Anecdote – Entrepreneur’s Best Place To Live? Canada||Page 39|
|Strategy – Vision – Integrate Region into Single Market||Page 45|
|Strategy – Agents of Change – Globalization||Page 57|
|Tactical – Confederating a Permanent Union||Page 63|
|Tactical – Fostering a Technocracy||Page 64|
|Separation of Powers – Banking Regulatory Authority||Page 73|
|Separation of Powers – Justice Institutions||Page 77|
|Implementation – Foreign Policy Initiatives at Start-up||Page 102|
|Implementation – Security Initiatives at Start-up||Page 103|
|Implementation – Ways to Deliver||Page 109|
|Implementation – Ways to Improve Energy Usage||Page 113|
|Implementation – Ways to Better Manage Debt||Page 114|
|Implementation – Ways to Foster International Aid||Page 115|
|Implementation – Ways to Benefit from Globalization||Page 119|
|Planning – Lessons from Canada’s History||Page 146|
|Advocacy – Ways to Grow the Economy||Page 151|
|Advocacy – Ways to Better Manage ForEx||Page 154|
|Advocacy – Ways to Improve Governance||Page 168|
|Advocacy – Ways to Enhance Tourism||Page 190|
|Advocacy – Reforms for Banking Regulations||Page 199|
|Advocacy – Ways to Impact the Diaspora||Page 217|
|Advocacy – Ways to Preserve Caribbean Heritage||Page 218|
|Appendix – Offshore Tax & Financial Services Industry Developments||Page 321|
The Go Lean roadmap calls for a different entrepreneurial approach than some of the tax avoidance industries promoted in the past. These strategies have actually failed. Most offshore financial centers have modernized their lax laws to mitigate terrorism financing, thus lowering their attraction to tax evaders. The hold-outs, (Bermuda, Barbados and the Cayman Islands), are now being forced to cow-tail to the New World Order. The people of the Caribbean deserve better than waiting for “illicit bread to fall from the table” of rich nations (G-20). We have the world’s best address, for goodness sake, people should be beating a path to our doors (like the 3 million Canadians annually), not the 600,000 Caribbean citizens who have beaten down our doors to get out.
Time for change! The Go Lean roadmap is hereby presented.
The region is hereby urged to lean-in to this Go Lean roadmap, to fulfill the vision of making the Caribbean region a better place to live, work and play. 🙂