Go Lean…Caribbean

Go Lean Commentary

Picture this: one week after the greatest threats to the global financial system, since the Great Depression. You cut out and store – for safe keeping in a “virtual time capsule”, (see Appendix A) – a newspaper commentary and subsequent review/analysis of that crisis. It’s time now to open that capsule! Why so early? Why only after 6 years? So that this analysis would serve as a course correction. Those placing the time-capsule, hoped for a different result.

This is the scenario depicted in the foregoing news article. It was published on September 23 in 2008; 8 days after Lehman Brothers filed the largest Bankruptcy in world history – signaling the peak of the financial crisis, the precipice of a total system failure. The book Go Lean … Caribbean is based on that premise, declaring that a crisis is a terrible thing to waste”, quoting noted Economist Paul Romer’s assessment that the Great Recession would be a crisis for the modern world. The book posits that the Caribbean, with its parasite economy, is still in that crisis – no noticeable recovery.

A joke lampooning economists declares “that an economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today”.

So now, this review/analysis of a 6 year old newspaper editorial from a Guest Columnist, the focus of which was to an audience in the Bahamas; (but this is equally representative of the entire Caribbean):

It is the assessment by the publishers of Go Lean that the foregoing analysis was spot on!

It describes the new normal, a term cementing the truths that the economic realities that suddenly emerged in 2008 would thereafter remain as the norm. This has proven to be the case. The foregoing writer lamented that his government appeared to be using the same set of tools to fix a new vehicle with all different parts, and they pondered why the vehicle would not repair (recover) and get going. The writer concluded that the stewards of the economy needed to prepare a 20 year plan to navigate his country among the new realities facing the world. But he doubted that such a plan would emerge.

By: Craig Butler

I know what you must be thinking. ‘The new normal’, what in heaven’s name is he talking about? Well, the other day I was in Florida listening to talk radio.

There was a director from the International Monetary Fund, an economics professor, and a few others. They were talking about the global economy and what the future holds. The professor was the one who used the ‘new normal’ phrase and he did so in reference to the high prices that we are experiencing worldwide.

He said that, as he did not expect a significant strengthening of the dollar any time soon; coupled with the fact that the price of oil was likely to remain high and the war in Iraq was ongoing, he believed that the current high prices are going to be the norm.

Most of the panelists agreed that some experts have given folks a false sense of security by suggesting that prices will come back down once the price of oil drops. But all on the panel were of the view that the price of oil will never again be under $90 to $100 per barrel.

This was partly based on the weak dollar and partly on our dependency on fossil fuels and the lack of resolve shown by politicians to fully develop alternatives. They also noted that the oil lobby was one of the most powerful in Washington, which was a leading factor in the stalled development of renewable energy.

And the price of breadbasket items and other basics has not been helped by climatic change, which has led to falls in wheat and rice production over the last few years. Add to this the diversion of corn for use as a fuel (ethanol), and we have the new normal.

My views tend to be conservative so my first reaction was that these are some leftwing liberal nuts talking. However, on reflection much of what was said is correct.

Why should we expect to see a reduction in the price of oil? Producers are making so much money it’s not realistic to think they would relinquish that. And the high price affects so many other industries that have had to pass on these increases to the consumer. Just look at the airlines. And all the solutions being put forward to wean us off our dependency on oil will take at least five years to have any kind of impact.

The panel went on to say that there will be a widening of the income gap – something we are already seeing in the Bahamas. Many people who I know in the middle class are struggling so much that they can now be classified as the working poor.

I say that because they are now living from pay cheque to pay cheque. All their savings have been depleted; and things that they once could afford are out of the question now.

Think about it – how many of the people you know around you have their houses in foreclosure; have lost their car to the bank; have had to take their children out of private school; or have been unable to take a vacation this year?

Look in the newspaper this week and I’m sure one of the leading commercial banks will have a double page ad featuring distressed properties. The other week two banks had ads back to back.

I have written before about misguided priorities and how, despite all that is going on, we still prefer the materialistic rather than seek what is important.

I remember from my youth a song by Eddie Minnis called the ‘Finance Man’. I loved that song, and the words to one of the verses bears repeating: ‘See him there he poor as me and you but he driving round in Malibu. His car sleeps in the road at night, Lord you know that just ain’t right, He is living in the hands of the finance man…’

I apologize to brother Eddie if I did the lyrics an injustice. But it demonstrates how we have lived on credit for a long time. We have maintained a lifestyle well beyond our means without a thought as to what might happen in hard times.

As a lawyer I can see first hand what has happened to many in the middle class. You see, it was important for them to have the grand house with the two European cars parked in the garage, kids in the best schools and all the trappings that went along with it. And I will be the first to say that there is nothing wrong with wanting to attain your desires.

However, the bank loans were in many instances predicated on both the husband and wife maintaining $50,000 a year salaries, as well as some creative financing to help the couple get the loan.

Now that many offshore companies have closed or downsized, one of those pay cheques has disappeared and so has the dream, because the severance package is not going to last long and there is a distinct shortage of similar jobs available.

So what we are facing here is now being experienced all over the world. The radio panel noted that there will have to be a reclassification of the status of many people as the poor are going to be poorer, the middle class are going to be the new poor and only the very rich will be able to sustain themselves.

Dark days are ahead, and this means we need our politicians to get their collective heads out of their rear ends and devise a comprehensive plan for the next 25 years that takes all of the current factors into consideration and ensures our viability.

But there I go dreaming again – most of the time they can hardly get out of their own way let alone see past the next general election. So lets wait for the eventual anarchy that is to follow.

*****

Craig Butler studied law at the University of Wolverhampton, England, and at the Norman Manley Law School in Jamaica. He also has a degree in economics from Rollins College in Florida. Mr Butler’s column runs in the Nassau Guardian, the Bahamas, on Mondays and he also hosts a weekly political talk show on Bahamas’ Island FM.

He is the grandson of Sir Milo Butler, the first governor-general of an independent Bahamas. He blogs at Bahamapundit and can be reached at cfmilobutler@hotmail.com.

The New Black Magazine – Online Source – Tuesday, September 23, 2008 –http://www.thenewblackmagazine.com/view.aspx?index=1596 

Flash forward 6 years later; lo and behold, the book Go Lean … Caribbean is proffered as that plan, a roadmap to navigate today’s troubling economic waters and offer solutions. The book calls for the introduction and implementation of the Caribbean Union Trade Federation (CU), a super-national administration, for the 30 member-states that constitute the Caribbean region. The book posits that the problems of the Caribbean are too big for any one member-state to tackle alone. That rather, there needs to be a methodical leveraging of the 42 million people that populate these island/coastal states. With such numbers come economies-of-scale, and the benefits of these 3 prime directives:

• Optimization of the economic engines so as to grow the regional economy to $800 Billion and create 2.2 million new jobs.

• Establishment of a security apparatus (with prosecutorial powers for economic crimes) so as to mitigate the eventual emergence of “bad actors”.

• Improve Caribbean governance.

These prime directives recognize that the change the region needs starts first with re-thinking community ethos and economic engines. Early in the book, an economic interdependence is pronounced, (Declaration of Interdependence – Page 13) with these statements:

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.

xxv. Whereas the legacy of international democracies had been imperiled due to a global financial crisis, the structure of the Federation must allow for financial stability and assurance of the Federation’s institutions. To mandate the economic vibrancy of the region, monetary and fiscal controls and policies must be incorporated as proactive and reactive measures. These measures must address threats against the financial integrity of the Federation and of the member-states.

The book identifies a number of new community ethos to forge change in the region and to harvest the benefits of the new global marketplace. From the ethos, comes the solutions – for example, sharing!

Six years ago, the columnist in the foregoing article could only envision his country, Bahamas, seeking solutions alone. This roadmap, on the other hand, seeks solutions as a confederated region, a group of partners. This will mean speaking with one voice, acting together as the CU; the 30 member-states will have far greater weight and influence than acting individually. Benefits will flow from this economies-of-scale, like a Group Purchasing Organization (GPO) to negotiate value and savings.

The CU roadmap drives change among the economic, security and governing engines. These solutions are as new community ethos, strategies, tactics, implementations and advocates; as follows:

Change has come to the Caribbean; the world is different. It’s not the world before 2008, but rather a new world shaped by 2008. This is illustrated as a moving freight train. It cannot – must not – be stopped. Everyone must get “on board”, or get “run over”.

Appendix A: How to Create a Time Capsule

A time capsule can be as simple as a shoe box full of items reserved (or even forgotten) somewhere. Other time capsules may need to last a very long time, in which case a strong stainless steel container is recommended, with a proper seal. Keep in mind that creating a capsule for unveiling at some future date is really a two sided adventure involving both you and those who will uncover it once again. Make sure that the items you select will add the element of surprise and discovery for those who open this curious treasure chest of history. Learn how to make a time capsule that will be sure to please and surprise whoever opens it. (http://www.wikihow.com/Create-a-Time-Capsule; retrieved May 5, 2014).

Download the book Go Lean … Caribbean – now!!!