Go Lean…Caribbean

Go Lean Commentary

How to grow the economy?

This was an original question that launched the book Go Lean … Caribbean. In August 2011 the US Chamber published a recommendation to American power brokers on how to recover from the Great Recession and create jobs in the US. They detailed a plan that included doubling down on infrastructure spending in the US. In response, the Go Lean publishers created its own roadmap for the Caribbean; assuredly, infrastructure activities was also prominent for the regional plan. The 10-point plan – as published in the Go Lean book on Page 152 – included:

• Lean-in for the Caribbean Single Market & Economy
• Feed Ourselves
• Clothe Ourselves
• House Ourselves
• Update Our Own Infrastructure and the industries they spun
• Steer More People to S.T.E.M. Education and Careers
• Help Regional Businesses Find Foreign Markets
• Welcome Home Emigrants
• Welcome “Empowering” Immigrants
• Draw More Tourists

This commentary is the 2 of 3 from the Go Lean movement on the subject of Infrastructure Policy. As related in the previous submission in this series, “if we build it, they will come”. This movie metaphor conveys the surety of investing in capital infrastructure projects; or worse yet, the surety of failure by not investing. The other commentaries detailed in this series are as follows:

1. Before & After – Washington DC’s Streetcars Model
2. Clinton vs Trump Campaigns – Politics of Infrastructure
3. India’s Model – $90 billion in infrastructure projects

All of these commentaries are economic in nature, not political. As depicted in this news article, regardless of the candidate elected President of the United States in the impending November 2016 election, infrastructure activities must be pursued. See the article here:

Title: Clinton, Trump both would build infrastructure, likely pay for it the same way
By: Patti Domm, CNBC Executive News Editor

No matter who wins the White House, there is likely to be a big jump in infrastructure spending — and both Republican Donald Trump and Democrat Hillary Clinton may ultimately look to the same pot of gold to fund their spending, according to Strategas.

Trump made it clear when he unveiled his economic plan Monday that he’s going to be a big spender on the nation’s highways and bridges, though voters have heard him discuss it before. He also says he wants U.S. companies to repatriate their foreign cash, proposing a one-time tax holiday that would allow them to pay just 10 percent to bring their cash home. That money would be used to pay for infrastructure.

Democrat Hillary Clinton also proposes an infrastructure plan, and both candidates will have to get their proposals approved by Congress. The Democrats propose an infrastructure bank as part of their plan.

But both candidates could look to the repatriation tax holiday for the $2 trillion stashed overseas to cover some of the costs of their proposed infrastructure spending, according to Dan Clifton, head of policy research at Strategas.

Clifton said it’s likely the House of Representatives remains Republican, and House Republicans are going to challenge either candidate on spending.

“You could even say that she’ll be forced to do repatriation to get her infrastructure. She also wants to do renewable energy and broadband, and that’s all negotiable,” said Clifton.

Strategas put together a basket of infrastructure stocks, and that index is up 23 percent year to date. It includes 21 names such as Jacobs Engineering, KBR, Lennox International, Martin Marietta, Vulcan Materials, Granite Construction, Apogee Enterprises, Fluor Corp, Eagle Materials and Simpson Manufacturing.

Other names in the index are Dycom Industries,Gibraltor Industries,Masco Corp, Quanex Building Products, Headwaters Inc, Griffon Corp,NCI Building Systems, Universal Forest Products, Quanta Services and EMCOR

Clifton said despite the fact that both candidates had been strong proponents of infrastructure spending, the stocks have been more correlated to Clinton. “There’s 92 percent correlation between their outperformance and her probability of winning,” he said.

But Trump has been pushing a tax holiday, and stocks that would benefit from that are also gaining.

Strategas used seven companies with the most aggregate cash overseas as a proxy for the possibility of a repatriation deal. Those companies have been rising since mid-July and they are all tech, a sector that started performing better during earnings season.

They include Alphabet, Apple, IBM, Microsoft, Qualcomm, Cisco and Oracle.

The repatriation idea is not new. A voluntary repatriation was approved by Congress in 2004, and $300 billion of $600 billion stashed overseas returned to the U.S., according to Strategas.

In 2005, the companies that repatriated the most cash had no outperformance when compared to the S&P 500. But those that repatriated the most as a percentage of market cap doubled the S&P 500, according to Strategas.
Source: CNBC Consumer & Business Channel – Market Insider –  Posted & Retrieved August 8, 2016 from: http://www.cnbc.com/2016/08/08/trump-clinton-tax-plans-may-need-same-pot-of-gold.html

 

Source for charts: Strategas

Rising above the politics, are big infrastructure projects being considered for Caribbean deployment?

Yes! The book Go Lean … Caribbean asserts that infrastructure investment is necessary to grow the regional economy and asserts a plan to fund them (Page 152). It conveys the same thought of doubling down on infrastructure spending.

The book extols the principle that infrastructure activities are necessary to leverage the region for future growth. This is a mandate for the technocratic Caribbean Union Trade Federation (CU). This book serves as a roadmap for the introduction and implementation of the CU. This technocracy must rise above the politics and oversee the regional optimization in these areas:

• economics
• security
• lean government

The foregoing news article focuses on more than just politics, but considers the capital markets and related companies to invest in to profit from America’s imminent infrastructure Big Spend. Rather than just 1 company, the article is advocating investing in an “Index” (see Appendix) that tracks the performance of the infrastructure construction and maintenance industry as a whole.

Ditto for the Caribbean!

Any hope for success here will depend on adequate funding. The Go Lean book therefore advocates for Caribbean people (and Direct Foreign Investors) to take stock – invest their time, talents and treasuries – in Caribbean infrastructure projects and Caribbean capital markets.

What projects are considered for the Caribbean? The book identifies this sample lists:

Virtual “Turnpike” Operations – Page 127:
Ferries, Causeways/Bridges, Pipelines, Tunnels, Railways and limited access highways will function as “blood vessels to connect all the organs” within the region, thus allowing easier transport of goods and people among the islands and the mainland states (Belize, Guyana or Suriname) – See Appendix IC (Page 280) Alaska Marine Highway.

Capital Markets as Economic Engine  – Page 151:
A single market and currency union will allow for the emergence of viable capital markets for stocks and bonds (public and private), thereby creating the economic engine needed to fuel growth, expansion and development.

Update Our Own Infrastructure Operations – Page 152:
Roads, bridges, ports, ship-building dry-docks, utilities and media outlets create companies and jobs for implementation and maintenance. Many of the infrastructure projects will cover the transportation sector; with improvements here, the result will be more traffic (passenger & cargo). This opens new modes for travelers/visitors/tourists to come to their favorite resort destination. (Consider Fast Ferries boats and Spring Break).

The Go Lean/CU movement champions the cause of building and optimizing the overall Caribbean infrastructure. According to the foregoing article, it is important to identify and qualify funding sources for such ventures. There is the need for “new guards” for the Caribbean in this perspective. So there is the expectation that integrating and consolidating to a Single Market will contribute to the fulfillment of the Go Lean prime directives, defined here as follows:

• Optimization of the economic engines in order to grow the regional economy to $800 Billion & create 2.2 million new jobs.
• Establishment of a security apparatus to protect the resultant economic engines.
• Improve Caribbean governance – including the funding of capital projects – to support these engines.

The Go Lean roadmap anticipates the opportunities of major infrastructure investments. However, the roadmap recognizes that many of the projects envisioned for the region may be too big for just one member-state alone; that it will take regional – super-national coordination. This point is highlighted in the opening Declaration of Interdependence, (Pages 12 & 14):

xiv. Whereas government services cannot be delivered without the appropriate funding mechanisms, “new guards” must be incorporated to assess, accrue, calculate and collect revenues, fees and other income sources for the Federation and member-states. The Federation can spur government revenues directly through cross-border services and indirectly by fostering industries and economic activities not possible without this Union.

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.

xxvi. Whereas the Caribbean region must have new jobs to empower the engines of the economy and create the income sources for prosperity, and encourage the next generation to forge their dreams right at home, the Federation must therefore foster the development of new industries … impacting the region with more jobs.

xxix. Whereas all Caribbean democracies depend of the free flow of capital for municipal, public and private financing, the institutions of capital markets can be better organized around a regional monetary union. The Federation must institute the controls to insure transparency, accounting integrity and analysis independence of the securities markets, thereby shifting the primary source of capital away from foreign lenders to domestic investors, comprising institutions and individuals.

The CU mission is to plan, fund, deploy and maintain many infrastructure projects that are too big for any one member-state alone. A regional eco-system will deliver on new market opportunities of improved infrastructure for the Caribbean, as depicted in the foregoing news article for the US. The Go Lean book therefore details many strategies, tactics, implementations and advocacies that will facilitate this readiness; a sample is detailed here:

Previous blog-commentaries touched on many related issues and subjects that affect the politics and planning of Caribbean infrastructure projects. Consider this sample:

The Caribbean needs help…with transportation, jobs, and overall economic activities. Infrastructure projects are a great place to start: bridges, tunnels, causeways, highways, government building, etc. These do not just bring construction jobs, but they also improve the eco-system for a better business climate. This is bigger than just politics; this is survival.

This is also how to grow our economy.

The people of the region are urged to “lean-in” for the deployments/empowerments as described in the book Go Lean … Caribbean. The benefits of this roadmap are too alluring to miss out: emergence of an $800 Billion single market economy, 2.2 million new jobs and a hopeful prospect for our Caribbean youth. 🙂

Download the book Go Lean … Caribbean – now!

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Appendix VIDEO – Common Sense Investing: Use index funds when possible – https://youtu.be/GF5vThMkF-U

Uploaded on Jun 27, 2011 – http://www.financinglife.org
What is an index fund? And why do they outperform in the long run? Plus, learn how to tell a good mutual fund from a bad one.