Debunked neoliberal ideology is killing us

Dear Editor,

I have been frequenting Lyford Cay since the 1970s. For almost all of that time, the long, winding road to that community has been one of the last reserves of Caribbean Yellow Pine in New Providence — a veritable haven of inactivity, frequented by raccoons and little else.

Only in the last two decades, with the proliferation of middle class Bahamian communities in the area has there been sufficient consumer demand to justify a relatively major shopping center, gas station and a few restaurants.

Wealthy people are simply not big consumers. Additionally, many of the wealthiest foreign residents of places like Lyford Cay directly import their foods and other life needs, bypassing the domestic economy.

Contrast this with Carmichael.

When my grandfather died in February 1977, his was the only gas station on Carmichael Road and there was no electricity.

Today, it hosts a John Bull, a Dairy Queen, two Bamboo Shacks, Home Fabrics, Modernistic Gardens, Wendy’s, FirstCaribbean, the Royal Bank of Canada, Scotiabank, Bank of The Bahamas, Super Value, Meat Max, John’s Department Store, Fourth Terrace Diagnostic Centre, Kelso Lab, Commonwealth Building Supplies, Bristol Wines, Colina Insurance, Walk-in Clinic, Outdoor Sportsman and at least four gas stations. Every major Bahamian retailer that is not there yet is trying to get there.

All of this activity results from direct spending from residents in the area, whose wages come either directly or indirectly from large multinational corporations (Atlantis, Baha Mar, Sandals, etc.), rather than from wealthy local residents, who increasingly employ Filipinas and Peruvians. This consumer spending of the Bahamian middle class remains the lifeblood of the domestic economy.

Sadly, Bahamian policymakers have been taken in by a big lie called neoliberal capitalism. This doctrine holds that, by giving tax breaks and concessions to the rich, this somehow “trickles down” into the economy to all our benefit. It also advocates a globalist approach to economics, dismantling worker protections (barriers to trade) and easing capital flows, while immobile labor is left to adapt.

All over the world, this doctrine has now been debunked.

In the U.S. it led directly to the shrinkage of the middle class and the vast gap between rich and poor that fed the rage that brought forth Trump.

While the economy supposedly performs well, three individuals (Gates, Bezos and Zuckerberg) have more money than the lower 50 percent of Americans combined.

Relative to prices, average incomes have not increased since the 1970s and 60 percent of Americans cannot afford a $1,000 emergency.

First World inequality is probably at its worst ever, beyond even the horrors of the Victorian age.

Meanwhile, capital hunts for new labor markets abroad, funneling money to politicians (like the Clintons) who specialize in transferring sovereign economic policy to unelected global capitalist interests under the guise of “free trade agreements”.

Not to be outdone, our government is belatedly (and needlessly) trying to scramble onto the WTO bandwagon, even as its doctrinal basis is coming under increasingly negative scrutiny in the big countries and Trump is ready to jump ship.

All in all, neoliberal capitalism has been one of the costliest disasters in human history, while the only large country to weather its era well (China) has done so by engaging in capitalism strictly on its own terms, while sheltering its population from its ill effects.

This way, in 40 years it has lifted almost a billion people out of poverty, while the west has been set back a generation in terms of income equality.

Translated into the Bahamian context, the neoliberal doctrine is manifested in a revenue policy that has made us one of the most tax regressive countries on earth and has delivered no benefits in terms of growth.

It has led us to offer obscene tax concessions to foreign investors, even though we get levels of foreign investment per capita that would make most of the world dizzy with disbelief — even without trying.

Perhaps it is not surprising that neoliberalist ideology would prove so persistent here in The Bahamas.

After all, when it is combined with a colonially-ingrained sense of racial inferiority, it seems to blind its adherents to even the most manifest common sense.

Hence, despite the obvious evidence, it has probably never occurred to many of our policymakers that residents of Carmichael are more important direct contributors to the domestic economy than residents of Lyford Cay (and thus tax breaks to them would produce greater economic benefits) because it simply offends some vague, ingrained notion of hierarchy that lies too deep to be examined.

Contrast the indecent speed with which the FNM complied with a single letter by Lyford Cay residents over property tax with their obstinate refusal to consult (much less reconsider) over a 60 percent VAT hike that very summer.

As every economist predicted, the VAT hike has slowed growth, even while our tourism is performing miraculously well (which government keeps reminding us, apparently without irony).

By contrast, an increase of property tax on Lyford Cay residents would have had absolutely no effect on consumption or growth and would have boosted revenues.

It may even have helped combat the exorbitant real estate prices in New Providence if Henry Cabot Lodge III and some of his friends had left us as threatened (or promised) in their letter.

– Andrew Allen

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