Go Lean Commentary
“Honor among thieves’ …
… this seems to be the code by which Caribbean society is based. And this is not new! This is the community ethos that dates back almost 500 years.
This ethos seems to “raise its head” again with the below news article as published in a Jamaican newspaper. Even though the US middle class has been devastated by globalization – shipping jobs overseas, many times to Caribbean countries like Jamaica – the motives behind the cited legislation seems wholesome for American self-interest. What is astonishing is the adversarial comments of a Jamaican readers. Consider the original article here and the comment:
By: The Associated Press
Subtitle: The Senate voted Wednesday to advance an election-year bill limiting tax breaks for United States (US) companies that move operations overseas. But big hurdles remain.
The Senate voted 93-7 to begin debating the bill, which would prevent companies from deducting expenses related to moving operations to a foreign country. The bill would offer tax credits to companies that move operations to the US from a foreign country.
Senate Democratic leaders say the bill would end senseless tax breaks for companies that ship jobs abroad.
“It would end the absurd practice of American taxpayers bankrolling the outsourcing of their very own jobs,” said Senate Majority Leader Harry Reid, a Democrat.
Most Republicans joined Democrats in voting to take up the bill. But Republican senators are unlikely to support final passage of the bill without significant changes.
Senate Republican Leader Mitch McConnell said the bill is an election-year ploy that has no chance of becoming law.
“It’s a bill that’s designed for campaign rhetoric and failure, not to create jobs here in the US,” McConnell said. “But that’s not stopping our friends on the other side from bringing it up again – just as they did right before the last big election, too.”
The bill would cost US companies that move overseas $143 million in additional taxes over the next decade, according to the Joint Committee on Taxation, which analyses tax bills for Congress. Companies moving into the US would see their tax bills drop by $357 million over the same period.
The difference – $214 million – would be added to the budget deficit.
The Jamaica Gleaner Daily Newspaper (Posted 07-25-2014) –
“Seems like a stupid bill if you ask my opinion”.
Question: Why would Jamaican stakeholders (all of the Caribbean for that matter) lean-in for a contrarian view? Answer: Their own self-interest – a penchant to operate on the shadows of American (and European) economies and pilfer illicit gains.
The book Go Lean…Caribbean examines the varied history of the Caribbean during the colonization and post-colonization eras, and then concludes that the region always operated with an outlaw mentality – always on the dark side. While there is wise business strategy associated with satisfying unfulfilled market needs, the Caribbean experience is decidedly different, one of exploiting loopholes. It is apparent that aspects of Caribbean society still reflect this outside-the-law disposition, it is an institutional trend that appears consistent over the centuries. (The book posits that this approach has been counter-productive for building an industrious society; not everyone wants to, or should operate in the shadows).
Consider the historic evidence as follows:
Privateering [a] – This was the practice of private ships, authorized by governments or royal decree, to attack foreign vessels during wartime. While Privateering was a way of mobilizing armed ships and sailors without having to spend treasury resources or commit naval officers, this was a business operation, with the cost being borne by investors hoping to profit from prize money earned from captured cargo and vessels. The proceeds would be distributed among the privateer’s investors, officers, and crew.
Pirates of the Caribbean [b] – The distinction between a privateer and a pirate has always been vague beyond the licensing Letters of Marque. Without the letters, the parties were considered pirates; of which many frequented the Caribbean region. This industry employed many unemployed seafarers as a way to make ends meet, but became increasingly damaging to the region’s economic and commercial prospects.
Wrecking (Ships) [c] – This was the practice of taking valuables (cargo) from a shipwreck which has floundered close to shore; this evolved into what is now known as “marine salvage”. While wrecking is no longer economically significant, this practice was in itself an industry as recently as the 19th century in some parts of the world, and a mainstay in many Caribbean economies. The Caribbean islands, waterways and ports have to contend with a lot of hidden water hazards, like reefs. So this industry thrived on the uncertainty of shipping, (before better navigational tools and systems), but also created their own pro-wrecking incidents and threats, like false lighting and sabotage.
Rum-running/Bootlegging [d] – This refers to the illegal business of smuggling alcoholic beverages (over water) where such transportation is forbidden by law. Most prominently, this activity was done to circumvent the taxation and prohibition laws of the US in the early 20th Century (1920 to 1933). Due to its close proximity, many ships came from the island of Bimini in the western Bahamas to transport cheap Caribbean rum to Florida. But rum’s cheapness made it a low-profit item for the rum-runners, and they soon moved on to smuggling Canadian Whiskey, French Champagne, and English Gin to major cities like New York City and Boston, where prices ran high. (It was said that some ships carried $200,000 in contraband in a single run). Distilleries and breweries in the Caribbean flourished during this period as their products were either consumed by visiting Americans or smuggled into the US illegally. When the US government complained to the British that American law was being undermined by officials in Nassau, Bahamas, the head of the British Colonial Office refused to intervene. The British Caribbean attitude was echoed by UK Prime Minister Winston Churchill, who believed that Prohibition was “an affront to the whole history of mankind”.
Offshore Banking [e] – This refers to banks located outside the country of residence of the depositor, typically in a low tax jurisdiction (or tax haven) that provides financial and legal advantages- a mainstay in Antigua, Bahamas, Bermuda and Caymans. These advantages typically include: greater privacy, little or no taxation, easy access to deposits, and protection against local, political, or financial instability. These Offshore banks have often been associated with underground (informal) economies and organized crime, via tax evasion and money laundering. Legally, offshore activities do not prevent assets from being subject to personal income taxes on interest income, often times it is the privacy feature that skirts tax computation and collection.
Tax Evasion [f] – This activity is part of the business model of the Caribbean, though it is commonly associated with the informal economy. There are legal and illegal activities associated with the avoidance of taxes by individuals, corporations and trusts. Tax evasion often entails taxpayers deliberately misrepresenting the true state of their affairs to the tax authorities to reduce their tax liability and includes dishonest tax reporting, such as declaring less income, profits or gains than the amounts actually earned, or overstating deductions. Tax avoidance employ many tax havens or jurisdictions to facilitate lower tax bills. Caribbean member-states encourage many tax avoidance practices, campaigning to high net worth individuals to do business or establish their residence in the region.
Offshore Gambling – This category refers to more than just casinos operating at Caribbean resorts, but rather the practice of coordinating gambling/gaming operations worldwide that only have a legal footprint in the region. Caribbean jurisdictions have actually emerged as a favorite destination for legally licensing gaming institutions and companies, like sports books and online gambling. “In 1994 the Caribbean nation of Antigua and Barbuda passed the Free Trade & Processing act, allowing licenses to be granted to organizations applying to open online casinos. The practice continues, even fighting and winning legal bouts at the WTO against the US. Many of the companies operating out of Antigua are publicly traded on various stock exchanges, specifically the London Stock Exchange. Antigua has met British regulatory standards and has been added to the UK’s “white list”, which allows licensed Antiguan companies to advertise in the UK. By 2001, the estimated number of people who had participated in online gambling rose to 8 million and the growth continued, despite legislation and lawsuit challenges to online gambling. By 2008, estimates for worldwide online gambling revenue were at $21 billion.” – Go Lean…Caribbean; Page 213.
The book serves as a roadmap for the introduction and implementation of the Caribbean Union Trade Federation (CU), a technocratic federal government to administer and optimize the economic/security/governing engines of the region’s 30 member-states. The goal is to move business operations “out of the shadows” and “into the light”, mitigating against the threats represented in the historic review above. There are many legitimate business endeavors that the Caribbean can, and must, pursue in order to elevate its society. The Go Lean book details specifics for growing the regional economy to $800 Billion and creating 2.2 million new jobs – all using legitimate, in-the-light activities.
The Caribbean is the “best address in the world” and provides the best of certain products (see previous blog/commentary sample here: http://www.goleancaribbean.com/blog/?p=1847 – ‘Declared “Among the best in the world”’) and is the best at performing certain services. We can compete! There should not be the need to “run for the shadows”. The world should be soliciting us, not us begging for the “crumbs following from the table” of the world economy.
At the outset, the Go Lean roadmap recognizes the significance of best-of-breed industrial developments with these statements in the Declaration of Interdependence (Page 13 & 14):
xxiv. Whereas a free market economy can be induced and spurred for continuous progress, the Federation must install the controls to better manage aspects of the economy: jobs, inflation, savings rate, investments and other economic principles. Thereby attracting direct foreign investment because of the stability and vibrancy of our economy.
xxvii. Whereas the region has endured a spectator status during the Industrial Revolution, we cannot stand on the sidelines of this new economy, the Information Revolution. Rather, the Federation must embrace all the tenets of Internet Communications Technology (ICT) to serve as an equalizing element in competition with the rest of the world. The Federation must bridge the digital divide and promote the community ethos that research/development is valuable and must be promoted and incentivized for adoption.
The change starts now; say goodbye to the shadows, say hello to the light. The Caribbean is hereby urged to lean-in to the following community ethos, strategies, tactics, implementations and advocacies to re-boot Caribbean industry and society; as detailed in the book Go Lean … Caribbean, sampled here:
|Community Ethos – Deferred Gratification||Page 21|
|Community Ethos – Economic Principles||Page 21|
|Community Ethos – All Choices Involve Costs||Page 21|
|Community Ethos – Job Multiplier||Page 22|
|Community Ethos – Light Up the Dark Places||Page 23|
|Community Ethos – “Crap” Happens||Page 23|
|Community Ethos – Lean Operations||Page 24|
|Community Ethos – Return on Investments||Page 24|
|Community Ethos – Ways to Impact the Future||Page 26|
|Community Ethos – Ways to Help Entrepreneurship||Page 28|
|Community Ethos – Ways to Promote Intellectual Property||Page 29|
|Community Ethos – Ways to Impact Research & Development||Page 30|
|Community Ethos – Impact the Greater Good||Page 37|
|Strategy – Vision – Confederating 30 Member-states in a Union||Page 45|
|Strategy – Agents of Change – Technology||Page 57|
|Strategy – Agents of Change – Globalization||Page 57|
|Tactical – Fostering a Technocracy||Page 64|
|Tactical – Growing Economy – New High Multiplier Industries||Page 68|
|Tactical – Separation of Powers – Commerce Department||Page 78|
|Tactical – Separation of Powers – Self Governing Entities||Page 80|
|Implementation – Ways to Pay for Change||Page 101|
|Implementation – Benefits from the Exclusive Economic Zone||Page 104|
|Implementation – Steps to Implement Self-Governing Entities||Page 105|
|Implementation – Ways to Deliver||Page 109|
|Implementation – Ways to Benefit from Globalization||Page 119|
|Planning – 10 Big Ideas||Page 127|
|Planning – Ways to Improve Trade||Page 128|
|Planning – Ways to Make the Caribbean Better||Page 131|
|Advocacy – Ways to Grow the Economy||Page 151|
|Advocacy – Ways to Create Jobs||Page 152|
|Advocacy – Ways to Mitigate Black Markets||Page 165|
|Advocacy – Ways to Improve Homeland Security – Naval Authorities||Page 180|
|Advocacy – Ways to Foster Technology||Page 197|
|Advocacy – Reforms for Banking Regulations||Page 199|
|Advocacy – Ways to Impact Lotteries/Gambling||Page 213|
|Advocacy – Ways to Help the Middle Class||Page 223|
|Advocacy – Ways to Impact the One Percent – Tax Avoidance Options||Page 223|
The foregoing news article addresses an important move the US should make to counteract the effects of globalization on its core jobs. The Go Lean book stresses the importance of an empowered middle class. So the Caribbean has the same needs, but our success should not be dependent on breaking the laws of other countries. We can compete head on. This is a subject that impacts economics, security and governing engines. This is heavy-lifting!
The Go Lean roadmap maintains that change is coming to the Caribbean in general and industrial pursuits in particular, so that we may break from the past and have a vibrant future. The Caribbean will be a better place to live, work and play. 🙂
a. Retrieved July 29, 2014 from: https://en.wikipedia.org/wiki/Privateering
b. Retrieved July 29, 2014 from: https://en.wikipedia.org/wiki/Pirate#Caribbean
c. Retrieved July 29, 2014 from: https://en.wikipedia.org/wiki/Wrecking_(shipwreck)
d. Retrieved July 29, 2014 from: https://en.wikipedia.org/wiki/Rum-running and https://en.wikipedia.org/wiki/Prohibition_in_the_United_States
e. Retrieved July 29, 2014 from: http://en.wikipedia.org/wiki/Offshore_banking
f. Retrieved July 29, 2014 from: http://en.wikipedia.org/wiki/Tax_evasion and http://en.wikipedia.org/wiki/Tax_avoidance