August 2011 Archives
The PLP's layoffs at Berkeley are being justified with the over-used rhetoric of doing more with less, but are a direct consequence of the PLP spending 10 years doing less with more. Ironically the centrepiece of less with more is the new Berkeley school building itself.
The project was budgeted at about $70M, and was built for $128M. There was also a loss of the $5M or $6M construction bond from the BIU which the Government forgave in exchange for no more wildcat strikes (which of course never happened).
So, let's call the overspend to build the new Berkeley $60M with the building opening 3 years late in 2006.
If that $60M hadn't been blown, how many teachers or maintenance staff could it have paid for at every school on the island?
Or, looking at it differently, if that $60M had been set aside to earn say 3% interest compounding since 2003, it would today be worth $76M. That's bigger than most Ministries annual budgets.
The interest alone on the $60M overspend would easily have kept those 8 laid off staff employed and a whole lot more.
The PLP always got a free pass on the overspending because the UBP's robust economy paid for it, so they just blew off as no big deal - as did much of the electorate.
Well, it's a big deal now. Particularly to those whose livelihoods are being lost because of Paula Cox's inability to manage the public's finances.
Five days later and I'm still surprised and shaking my head that Glenn Jones was willing to sign his name to what has to be one of the most ridiculous up is down, down is up, excusing the inexcusable Op-Eds published in Bermuda in recent memory.
And that's saying something. Even for a partisan former press secretary.
The PLP intentionally went out to reduce demand in the economy. It was kicked off in earnest at the 2003 election with term limit talk, and amplified by the predictably disastrous and self-serving term of Ewart Brown which Bermuda will be paying for for many, many years.
The PLP's job killing policies (term limits, land licenses) and crony enrichment driven overspending directly reduced government revenues by driving out investment and infrastructure (ie. jobs) and now the economic pie is shrinking.
While the bus dispute appears to be just more of the usual dysfunction and brinkmanship of the BIU with a government which has always caved to their pressure tactics, the prison officers and docks issue seems to be about reduced demand in the economy and the not totally unrelated social knock on effect of the exploding anti-social behaviour under the PLP.
It seems to me that it is self-evident, and somewhat ironic, that labour's interests were - and are - better served by an enlightened pro-investment party in power for an island which can offer only services; not an allegedly labour party which set out to kill demand in the economy prior to the double whammy of a cyclical economic downturn (albeit extreme).
The continuing and probably accelerating economic contraction in Bermuda is somewhat cyclical, but mostly structural. The attacks from within courtesy of the PLP's self-destructive economic policies have done far more damage than any attacks from without, or Paula Cox's crutch of a 'global recession' excuse.
The overspending and pre-recession deficit spending blew the nest-egg which could have been deployed as a social safety net and stimulative capital post-2008. That money could have been earning interest and appreciating in a Bermuda Sovereign Investment Fund rather than our current position of about 10% of Government revenues going to service structural debt.
The structural change, a changing Bermuda financial services model, is something which the PLP have not recognized and/or acknowledged was occurring because of them - prior to the economic crash of 2008. Politically they will never say it of course, but it's patently obvious.
The PLP really has no ideas, but were just riding the crest of the economic wave they inherited in 1998 which swelled due to external circumstances in 2001 and 2005. But that isn't enough anymore. The wave has hit the shore - and as Buffett said, the tide has gone out and we're seeing that our Finance Minister and her party were swimming naked. Now they're begging for time hoping for an external lift from a global economic recovery. That is a long way off.
The only answer is a complete repudiation of their own policies and a complete embracing of the warnings and ideas of the Opposition (many which they are trying to co-opt, albeit watered down to the point of useless and called something different).
The dockworkers, civil servants and blue collar workers are the canaries in the coal mine of Government's plummeting revenues. But this is exactly what was bound to happen based on the PLP's policies. This shouldn't be shocking to anyone. Many people warned these policies were economic suicide and undercut Bermuda's economic position of strength. It should be obvious that the PLP's policies are not pro-labour but anti-everyone.
But to threaten labour action for example if you aren't paid to sit on empty docks which can no longer justify the hours of the past decade for example is just not based in reality. They are presumably just trying to buy time, but layoffs are inevitable otherwise (and maybe either way). The existing labour model on the docks is completely unsustainable if demand has been slashed by 30% over the past 3 years.
The laws of economics are taking root in Bermuda in a negative way for the first time in a long time.
We can all thank the PLP for this.
This is what happens when the truth gets out ahead of the political PR machinery.
Stay tuned. The story is young.