Political Risk

July 10th, 2011 by De Onion

Well, it’s nice to see some liberalisation of immigration and housing, but these issues highlight what a political risk Bermuda has become.

The problem here is that to repeal the policies is too little too late – the problem is that these policies became law in the first place. Changes to both immigration and housing rules bought with them massive unintended consequences that have seriously hurt Bermuda and Bermudians– from the term-limit induced economic meltdown that began at the same time as the global recession to the blatant discrimination against Bermudians married to expatriates while foreign developers were given carte blanche to get into residential real estate.

This quote really sums it up:

Leroy Douglas, president of the Real Estate Division of the Bermuda Chamber of Commerce said: “I hoped that Government would be more receptive to some of our input. I’m delighted to see this coming to fruition.” He added: “In the past, rules and regulations were put into practice and we were given no opportunity to have a say. This is a start.”

At the core – the PLP politicians did not bother to understand the impact of the rules before they were put in place, and when warned about the likely consequences by experts they were ignored. The inability to listen to expertise is a real cultural problem in the party and is one of the major elements of their unfitness to govern. Thankfully some new ministers are finally getting the message.

The Bull Case.

August 8th, 2008 by De Onion

After my recent posts of relative skepticism about the Bermuda real estate market I think it’s worth outlining the bull case for Bermuda real estate. It can be located right here: Royal Gazette Employment Classifieds.

As long as the government continues to allow population growth then Bermuda’s economy will continue to grow largely independent of the rest of the world, and despite poor government (really terrible government could still cause a local recession/depression). However this population growth fuels the decline in standards of living as more of us are packed into condos/human filing cabinets, and spend more of our lives sitting in traffic. This population growth also shields government from responsibility and side effects of having a government producing large numbers of (mostly black, mostly male) people who are only employed because we are building as fast as we can to provide housing for the growing population, so as long as the government continues to keep the demand side for housing growing by allowing net immigration, and as long as they continue to artificially constrain the supply side through incompetent management of urban planning and building control, then we should see prices remain firm.

Of course, we are building a social house of cards by leaving the lower income Bermudians chronically under-housed, and by keeping prices and rents high are transferring wealth from the young and poor to older (mostly white) home owners.

Anyone who claims the PLP is the party of “social justice” is clueless.

Scandal list draft

December 12th, 2007 by De Onion

Recently there have been a number of people in letters to the editor and on blogs saying that the current government can “run on their record”… their web page of their accomplishments is here.

I asked the posters on the Bermudasucks.com forum (yes, I deeply dislike the name and always will) for some help in creating a government scandal list for the past few years… Here’s what they came up with:

BHC – The big kahuna.
Premier sues the media to keep them quiet.
Limo Importation – Law changed to allow government insider to start a Limo business.
Hummer H3 commercial vehicle
Cedarbrige Mould
Education Statistics
Firing of Hotel Chef
Work Permit of Curtis Mcleod (construction boss v. George Scott)
Southlands Tunnel
Southlands planning approval
Hospital location
Discrimination against non-Bermudian spouses
Equality act
Col. Burch “House ****” comment
Long-line fishing
Berkley over-budget
“we had to deceive you”
Robert Jensen
RC’s profane e-mail
Mount Saint Monica (dump fire)
Calling squatters “criminals”
Faith Based Tourism
Tracking Chips for Vehicles
Emission Testing.. Buildings
Emission Testing… Contract
“settlement” with Pro-Active Construction
Club Med 1
Club Med 2
Club Med 3
Rebecca Middleton handling
Indigent Clinic and firing of Doctor for writing a letter to the press.
Stem Cell Clinic
Cedar Beams
Removal of Stuart Hayward and Bermuda’s #1 Eco Farmer from the round table.
Voting from the bathroom (applies to both parties’ MPs). (Gay Rights Issue)
Independence (most notably the BIC report)
After closing the Clinic, the Brown one, signed up as an “approved Dr” then refused to take any patients.
Forcing GPS upon the taxis
Brown’s Relationship with Tina Poitevien , Mark Lay and MDL Investments.
Free Bus & Ferry Transportation (that never was!)
The $11 million spent on cricket
The amount spent on football
The police contracts never being settled
No cruise ships for Hamilton
Building a pier over an historic wreck
The “deal” they cut with the US government re the cost of cleaning up the Baselands [$11 mill towards the bridge when the estimated cleanup costs were $65 mill]
The apparent about face re moving the Southlands project to Morgans Point (and the bill that will stick the taxpayer with)
Pay to Pray
Pay to Play
US Passport
$ 1 million per month spent on PLP travel junkets abroad.
$25,000 to $30,000 to fly entertainers to Bermuda on a private jet for Brown’s love fest
$1 million to set up Govt TV channel
Abdallah Ahad
Racist dog attack on Gibbons
non-Charity (THE)
Alex Scott’s email to Tony Brannon
$82,000 spent on security for Brown’s private residence.
$1,500,000+ for renovations at Clifton, and then overcharging for rent so it remains unoccupied.
“Political eunuch”
China tourist office
Plantation questions
Refusing to answer cost questions
Donation to a US congressman even though EB shouldn’t be an American anymore.
Gay cruise saga
Reducing funding for the Salvation Army.
Firing developers who were ready to go on Club Med.
Health Minister’s notes on need to obfuscate “embarrassing” report.
Bermuda Cement
BHC 2.0

Readers – please help me remove the inaccurate ones and add any others – I have done some of this on my own.

If I had more time I’d like to go through and add up the cost of these various mistakes to the taxpayer – it would probably run into the thousands of dollars per person in Bermuda.

What you have to believe…

December 6th, 2007 by De Onion

…to see things from the government’s point of view…

…unethical but not illegal is ok…
…the banks will call mortgages of people who speak out against the UBP… BMA be damned!
…the UBP are all white or controlled by whites…
…the BHC leakers were white UBP supporters…
…tourism is in great shape…
…government is being efficiently run…
…the BHC allegations were properly and fully investigated…
…all responsible for the 8 million write-down have been appropriately punished…
…Dame Louis Brown Evans thought Ewart Brown was a good guy…
…the Premier needs heavy personal protection (but celebrities and billionaires only need a nanny or a Labrador)…
…hiding the truth at taxpayer expense is good for the voting public…
…the best way to destroy racism is to hate white people…
…libel suits are not enough to protect the innocent…
…housing price increases are the product of good affordable housing policy…
…the best way to prevent over-development is to build more…
…helping working Bermudians means importing labour from the third world…
…Bermudians are capable of doing jobs requiring 30 years experience after only 6 years…
…that we should reserve Bermuda for Bermudians married to Bermudians, unless it’s related to a hotel development…
…it’s the tennant’s fault when they move out…

What else?

The blatantly obvious.

September 19th, 2007 by De Onion

I have a hard time with this article about 1,000 jobs being added to the economy every year. Why? Because to anyone who is paying attention to the jobs section of the Royal Gazette, the building industry, or pretty much anything else knows this… anyone with a background in economics that is. And that is the great challenge – to take the very basics of supply and demand and put them in terms that even politicians can understand. At least politicians who have no business or economics background, which unfortunately is most of them.

So what’s going to happen
– Housing is going to go bonkers. No construction managers because they’ll be on big projects (like the 8 office buildings going up now in town, plus at least two major hotels), combined with falling US interest rates as the USA heads into recession… which will employ people who we don’t have houses for. And the private market won’t be able to build fast enough at all, and the government will inevitably make it worse by diverting resources or failing to manage their bureaucracy. This will send construction prices and housing costs up big time.
– Anyone who competes with foreigners for their jobs (construction, accounting, low/mid-level intl business, wage earners in general, etc.) is going to be squeezed big time since the open door immigration policy will not allow wages to rise (and we probably wouldn’t want them to too quickly).
– Anyone who owns a construction firm or other business that plays in the local market to service them is going to make a shitload of money.

Sound familiar?

IMHO.bm is a little shop of horrors!

May 21st, 2007 by De Onion

Ok, so maybe the title was a bit of an overstatement… but it seems to me there there’s another misidentification of an issue in this post at IMHO.bm … In general I think he’s spot on, but there is perhaps a bit of a different spin that we can put on this part:

Don’t get me wrong, I’m a strong supporter of having as many Bermudians in all fields of work, but anyone who would suggest that we don’t need foreign works is a fool, plain and simple. We need something that is more mid ground. As I’ve said it before, I feel that we should have an apprenticeship program where a Bermudian is trained under a foreign worker, and I feel that it should be supported, and in cases, partially compensated by Government. The way it stands now, we are going to start to see gaps in many fields of work which are already under stress from a sheer lack of people resources.

I don’t think our goal should be to have as many Bermudians in all fields of work. Quite the opposite. In many cyclical industries – ie. construction, we should really hope to only have Bermudians as the owners and a fairly small number of Bermudian labourers and tradesmen. Why? Because when there is a building recession (and there will be one eventually, there always is) we will be able to export our unemployment by sending the foreigners home when the number of jobs falls. This way a competent Bermudian always has a job, even in a recession… although back to the very non-cyclical and less fascinating world of dental hygiene.

We need to ask why people need jobs? This may seem like an absurd question – but let’s be honest. People need jobs so that they can earn money that can be then used to consume the necessities of life (shelter, nourishment, entertainment, etc). The problem of government “encouraging” things is twofold – one problem with specific attempts to favor an industry either through training or tax subsidy is that there is an increase in dead weight loss, and also cost us more in higher taxes and dead weight loss than we gain from having a Bermudian in that position. I know this kind of thing makes most people’s eyes glaze over quickly, but please bear with me. The other down-side of government “encouragement” is that supply of Bermudians for specific positions is completely inelastic short-run and still very inelastic long-run. This is Economics for “even if you offer people huge amounts of money, it’s still going to take them a few years to get qualified (short-run) and there still aren’t going to be many people who would decide to make a career of staring down people’s throats”. What this implies is that most government attempts to get people into specific industries are very likely to cost us all more than the benefit of having someone say “Hey bye! You bin flossin’?”

To make a long story short: If we really want to be all better-off in terms of being able to have the most people in our population who are able to afford a decent level of basic consumption (housing, nourishment, entertainment) then the way to do that is make it easier for people to invest in themselves and choose their own by ensuring that finances are not a barrier to entry into careers… letting the market decide how to allocate our subsidized investment in human capital. In the mean time let me go see the cute Irish hygienist every six months. Thanks.

Long-run immigration.

April 9th, 2007 by De Onion

These are probably dangerous thoughts in the wrong hands, and I haven’t fully thought them through or discussed them much yet – so they’re pretty raw and probably not fit for consumption and likely to change with time…

Many of our problems and successes as an economy are directly related to our unlimited talent pool that we are able to draw to this island…

1. Keep going ad-hoc and have a consistent and often arbitrary growth of population, including random laws that are designed to help Bermudians but in reality only reflect the ignorance of basic economics of the people producing the legislation (a topic for another day). This will in the long run lead to various Bad Things such as the eventual elimination of buildable land and a continuing rise of the cost of living, with an increasing share of basic necessities going to higher-earning professions that a very large percentage of people have no hope of entering.

2. Strictly limit net immigration. This avoids continuing rise in prices (at least relative to wages), but the current system means that there will be serious shortages of certain types of workers, new businesses will be unable to come to the island, old ones will find it impossible to grow, new local businesses will find it hard to grow, some basic services will simply not be done because there will be nobody to do them.

3. Find some way to apply a market based system of immigration. This is one of those things that if implemented badly would probably be worse than the current system. However, if we limit net immigration as we will need to do to keep Bermuda’s unique charm and economic success then we need to find a way to make sure that the highest value people to the economy are brought in (and preferably kept here long-term like my and every other Bermudian’s ancestors, again a topic for another time.) I don’t know if there is some sort of market that could be used . A market for immigration permits would potentially skew to the higher-income jobs and leave blue collar labour empty, but there must be some way to ensure that needs are met at a market price.