Category: Economics

Book Review: ‘Wrong – Nine Economic Policy Disasters and What We Can Learn…’

Posted on March 25, 2014 in Economics, Planning, Strategy

Go Lean Commentary

CU Blog-WrongThe forgoing news article is a Review of the above-cited book; it highlights many of the same approaches being used in the publication Go Lean … Caribbean for the introduction and implementation of the Caribbean Union Trade Federation (CU). This book declares that a “crisis is a terrible thing to waste” and that Caribbean member-states are still reeling from the crisis of the 2008 Economic Downturn. What’s more, the Go Lean … Caribbean book, serving as a roadmap, provides solutions to optimize the region’s economy and security apparatus.

The source book by Richard Grossman is not focused on the Caribbean; but the many economic policies do have direct effect on the region, especially with the reliance on tourism from North America and Europe as the primary economic drivers. This status makes the Caribbean a “parasite” economy; as parasites go, the health of the host directly affects the health of the symbiot. So we are very much affected by the economic policies implemented in the US, Canada, Europe, Japan, China and other countries. What is worse is the fact that we, as the Caribbean, have no voice into the policies of these host countries, (nothwithstanding the Dutch & French Caribbean countries having some small representation in European Parlianment and Puerto Rico/USVI having non-voting representation in the US Congress). So rather than drive these countries’ economic policies, the Go Lean strategy is to mitigate the negative consequences from “wrong” economic policies.

Book Review: Wrong: Nine Economic Policy Disasters and What We Can Learn from Them by Richard S. Grossman

By: Anna Grodecka

In recent years, the world has been rocked by major economic crises, most notably the collapse of Lehman Brothers, the largest bankruptcy in American history, which triggered the breathtakingly destructive sub-prime disaster. What sparks these vast economic calamities? Why do our economic policy makers fail to protect us from such upheavals? Anna Grodecka reviews Richard S. Grossman’s contribution to the literature, and finds this an insightful and accessible read, especially recommended for economics students.

“We should be (…) wary of accepting common opinions; we should judge them by the ways of reason not by popular vote.” These words of the French Renaissance writer and philosopher Michel de Montaigne could be a good summary of Richard Grossman’s newest book Wrong: Nine Economic Policy Disasters and What We Can Learn from Them. Grossman, a professor of economics at Wesleyan University, describes nine economic policy failures from the past (both distant and more recent) and concludes that the main sin of the policymakers is the commitment to outdated economic ideologies and so-called conventional wisdoms.

Although it tackles a serious issue, the book is an enjoyable read. Starting with a quote from famous economists, politicians, and even Shakespeare, each chapter focuses on one economic policy mistake. The historical outlook prevails, although the last two chapters are devoted to the description of the sub-prime and the euro/sovereign default crisis. Grossman is aware of the fact that his book suffers from the lack of counter-factual analysis. The problem is that observing that a given policy had certain consequence does not mean that in the absence of the policy the consequences would not have occurred. We cannot apply laws of logics and sentence negation to reality, especially complex political and economic reality depending not only on rational analysis but also on the animal instincts of human beings, because causal relationships are very difficult to establish. Conducting counter-factual analysis is even harder. This of course does not mean that we should give up analysing past policies widely known as mistaken.

Grossman first describes the British Navigation Acts fueled by the ideology of mercantilism that speeded up the process of revolution in the North American colonies. Then he discusses the history of the first two ‘central’ banks in the United States, whose charters were not renewed due to partisan divisions in the country which could have an impact on the evolution of several banking crises.

There is also a chapter on the Great Famine in Ireland at the end of the 19th century, and the impact of policies and British Corn Laws on it. Grossman covers the well-documented mistake on the amount of war reparations imposed by the Allies on Germany after the First World War, as well as the return to the Gold Standard at the pre-war (too high) parity by Britain in the inter-war period. Another example of wrong economic policy that is described in the book is the Smooth-Hawley Tariff, which was a protectionist measure applied by the US in 1930. Lastly, before turning to the most recent policy mistakes, the author devotes one chapter to the infamous Japanese Lost Decade. What sounds like an enumeration of well-known policy mistakes already described in other books turns out in fact to be a fascinating collection of accounts providing interesting details and new insights into the subject. This is a well-written book that puts the events into historical and economic context. It certainly has a chance at becoming a best-seller and not solely a publication read by experts.

As an example, we can take a closer look at the chapter on the Irish Famine, which took place from 1845-1852. Grossman not only describes what happened, but puts it into the perspective of other famines, starting from the BCE period. In terms of absolute numbers, the Great Hunger in Ireland was not the worst famine recorded but it did tragically lead to the death of twelve per cent of Irish population, forcing many others to emigrate. The author details how the potato – which originated in the Americas – arrived to a fertile Ireland, and that the poorest third of the Irish population consumed up to twelve pounds of potatoes per day (per capita). Only after this introduction the economic policy is mentioned. Grossman compares the responses of two Prime Ministers of the United Kingdom to the famine: Sir Robert Peel and Lord John Russell. Russell was so committed to the limited government intervention that he refused to buy food for the starving masses in order not to disturb the free formation of prices in the market. Similarly, he refused to increase the scale of public works that would give job to Irish workers so as not to disturb the free labour market. The paradox is that when the Great Famine occurred, Ireland was not a poor country. The Famine would not have been so ‘great’ if it were not for the free market ideology followed by the policymakers at that time. As it turns out, leaving things to the invisible hand of market is not always an optimal solution.

Another interesting chapter is devoted to the Lost Decade in Japan. Entitled Why Didn’t Anyone Pull the Andon Cord? The chapter begins with an explanation of the method of solving problems applied in the Toyota production system: when some potential problem is discovered, a worker may pull the andon cord that activates a signboard and starts the process of solving the problem. If the problem is not resolved within a specific time, the whole production is stopped until the issue is cleared. So, unlike the Toyota employees, Japanese authorities in the 1990’s did not pull the andon cord and continued “production” despite obvious economic problems in the country. Grossman focuses on the relationships between the Japanese Ministry of Finance and the banks’ personnel. Each bank had a clerk – mofutan – who stayed in daily contact with one employee of the ministry. Very often ex- ministry employees found work in the banks they were supervising before, once their ministerial duties were over. This sort of opaque relationship between the supervisory authority and banks in the end led to an inaccurate response to the crisis. Japanese officials did everything to maintain the status quo, refusing to introduce necessary changes or restructure the banking system for almost a decade. This chapter will be a treasure for economics students.

Of course, not all stories presented in Wrong are equally captivating. The two last chapters on the recent economic crisis seem to be the weakest, as they do not provide any new information from the perspective of a person that followed the news and other publications on the subject. But all in all, Grossman does an excellent job in picking up the most severe economic policy mistakes, providing a thorough description and analysis of them, and giving us anecdotes linked to the described events. Wrong is a very eloquently written book that leaves the reader with many new insights.

London School of Economics – Social Science Book Reviews – Retrieved 03-19-2014 –
http://blogs.lse.ac.uk/lsereviewofbooks/2014/03/18/book-review-wrong-nine-economic-policy-disasters/

The authors of this Go Lean publication represent stakeholders[d] who have been in key policy positions in those “host” countries, so the recommendations in the book, reflect sound economic policies and best-practices. This expertise is highlighted at the outset of the Go Lean book, in the Declaration of Interdependence, as follows:

xxi. 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 & 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.

Similar to the publication by Richard Grossman, the Go Lean book highlights lessons that are learned from failed economic policies[a] and applies strategies, tactics and implementation to mitigate the wrong policies and set the region straight.[b][c]

Now is the time for the Caribbean region to lean-in for the changes described in the book Go Lean … Caribbean. The benefits of this roadmap are too alluring to ignore: emergence of an $800 Billion economy, 2.2. million new jobs, new industries, services and opportunities for the youth of the Caribbean and even an invitation to the Diaspora to repatriate from those North American and European countries that have been on the wrong side of the history featured in Richard Grossman’s book ”Wrong: Nine Economic Policy Disasters and What We Can Learn from Them”.

Anna Grodecka is a PhD student in macroeconomics at Bonn Graduate School of Economics and a visiting researcher at the LSE. She obtained her Master’s Degree in Finance from Warsaw School of Economics and Johannes Gutenberg University in Mainz. In her research, she focuses mainly on monetary policy, the financial and housing markets, and their role in the recent crisis.

Go Lean References

 Page Number
[a] 10 Lessons Learned from 2008

136
[b] 10 Ways to Impact Wall Street

200
[c] 10 Reforms for Banking Regulations

199
[d] SFE Foundation

8

Download the Book- Go Lean…Caribbean Now!!!

 

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‘10,000 Bahamians Living in Darkness in Grand Bahama’

Posted on March 24, 2014 in Economics, Implementation, Industries, Locations, Social

Go Lean Commentary

Cruise Powe Outage(1)“10,000 in the dark” … is probably a hyperbole.

But there is something wrong in Freeport, the 2nd city in the Bahamas, on the island of Grand Bahama. This foregoing article is just the “tip of the iceberg”. There are some major issues being endured there that warranted the attention of the publishers of the book Go Lean … Caribbean, a roadmap to implement the Caribbean Union Trade Federation (CU). The book focuses on re-booting the economics of the Caribbean, a region of 42 million people in 30 member-states; and yet there is a special advocacy in the book just for re-booting Freeport (10 Ways to Re-boot Freeport; Page 112).

The underlying issues in Freeport stems from the Hawksbill Creek Agreement, the 1955 landmark legislation that created the City of Freeport under the guise of a private company, the Grand Bahama Port Authority. This agreement makes Freeport unique compared to all the other Bahamian communities. But some tax-free provisions of that agreement expire after 60 years in 2015; industrial development in Freeport depended on those provisions. Today, companies, developers, and investors do not know if there will be an extension of those provisions. Alas, a lot of industrial activity has come to a stand-still; the resultant unemployment is undeniably debilitating the community. One observer, a noted local Chartered Accountant Kevin Seymour, likens this state to a ‘Damocles Sword’ hanging over the city – an imagery from Greek mythology.

See this news story here:

By: Denise Maycock, Tribune Freeport Reporter; (with some re-formatting by the Go Lean promoters)

Families For Justice President Rev Glenroy Bethel says it is inhumane that over 10,000 families in Grand Bahama are living without power, and are unable to feed their children a hot meal.

He is calling on Grand Bahama Minister Dr Michael Darville to launch an investigation to determine just how many families have been disconnected by the Grand Bahama Power Company.

In a press statement issued on Wednesday [February 26, 2014], Rev Bethel said: ‘Families for Justice Organisation’ sent a letter to the Minister for Grand Bahama, Dr Michael Darville concerning the inhumane treatment the Grand Bahama Power Company have imposed on thousands of Bahamians in Grand Bahama. [His direct statement:]

“It has been reported from reliable sources that there is over 10,000 family members, throughout the community of Grand Bahama, living in their homes in the dark for months, and in some cases for over one to two years without power – some with newborn babies and small children.”

Rev Bethel claims that many families are unable to feed their children and themselves because they have no power in their homes. [He continued:]

“This is inhumane and we call on the Minister for Grand Bahama to take some action against the Grand Bahama Port Authority, which is the regulators for the Power Company in our community.”

The civic leader said that while researching the Hawksbill Creek Agreement, their legal team discovered that the Power Company in Grand Bahama was never supposed to be a profit-making company. He said, [about] the Power Company is making high profits and putting a great burden on families in Grand Bahama:

“We make this plea to the Minister of Grand Bahama on behalf of the thousands of family members who are finding it difficult to cook a meal for their families, to intervene on those families’ behalf.”

Source: http://www.tribune242.com/news/2014/feb/27/10000-bahamians-living-in-darkness-in-grand-bahama/

The book Go Lean … Caribbean advocates for change in the Caribbean in general, but also specifically for Freeport. It posits that the private company, the Grand Bahama Port Authority should go! That the interest of the private shareholders should be divested (bought at market prices) and sold to a democratic municipality, the City of Freeport. The roadmap states further that the City should then assume the rights and benefits of the Hawksbill Creek Agreement, and then the tax-free provisions should be extended. With the 1955 law expiring, the power in this negotiation is with the people of the Commonwealth of the Bahamas.

The functionality of the CU would then impact the model of Freeport better than anywhere else in the Bahamas. The roadmap describes the integration of a regional power grid (Page 113) with underwater pipelines and cabling (Page 107), allowing lower energy costs, ranking/ monitoring of monopolies (Page 202), establishment of Self Governing Entities (Page 105), and incubating a ship-building industry (Page 209). The book further introduces the Union Atlantic Turnpike (Page 205) for efficient transportation and logistics options to empower the economic engines of the region. Freeport would be on the frontline of these endeavors, due to its infrastructure and proximity to US trading centers.

How to pay for all of this change? The roadmap details initial funding options (Page 101), escalation of the economic money supply/M1 factors (Page 198), and the consolidation of the region’s capital markets (Page 200), in a manner that would provide liquidity for the community investments activities.

This Go Lean roadmap projects the creation of 2.2 million new jobs (Page 151). How many of those jobs will be in Freeport? This is open to debate; but this constitutes a better debate compared to this headline of how many thousands are left in the dark, due to the failures of the Freeport society.

Download the free e-book of Go Lean … Caribbean – now!

 

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PR’s Comprehensive Cancer Center Project Breaks Ground

Posted on March 24, 2014 in Economics, Ethos, Industries, Strategy

Go Lean Commentary

imgresThe forgoing article touches on a critical mission and motivation of the Caribbean Union Trade Federation (CU): to impact the battle against cancer. The roadmap for the implementation of the CU, Go Lean … Caribbean highlights that 1 in every 3 Americans are at risk of cancer, so surely the Caribbean rate of affliction cannot be far behind. Therefore the Caribbean region must prepare. Cancer treatments are expensive! Some treatments can cost $20,000 – $30,000 each month for 4 – 6 month stretches. Our population, like many other societies, continues to age, get sick and battle cancer, so we cannot be ill-prepared. Lives are at stake!

The CU mission is to prepare in advance for cancer: to install the mechanisms to garner as much cost-savings as possible while delivering the highest quality of care and health-related services for our people. And while we are making efforts to save lives of Caribbean citizens, Diaspora and visitors, we also want to exploit any economic opportunities.

By: The Caribbean Journal staff

A major new hospital project has broken ground in Puerto Rico, Governor Alejandro Garcia Padilla announced.

The new Comprehensive Cancer Center Hospital project is being built with an investment of $196 million. The 12-floor facility will include eight operating rooms and 72 beds.

Construction on the project, which is located in Rio Piedras, is projected to last around 30 months, with a completion date set for April 2016.

The government said the project could create more than 1,300 direct and indirect jobs during construction and 750 once the hospital is up and running.

“These types of centers are characterized by scientific excellence and the capacity to integrate a diversity of research approaches to investigating the problem,” Garcia Padilla said in a statement. “They have a key role in advancing the cause of reducing deaths from cancer.”

The Governor said the hospital is aiming to be a “primary source for discoveries about the nature of cancer and the development of new approaches to prevention, diagnosis and therapy.”

Construction of the hospital had initially been slated to begin in 2010.

“The ultimate recovery of Puerto Rico depends on economic development and the jobs we create,” the Governor said.

Source: http://www.caribjournal.com/2014/02/19/puerto-rico-comprehensive-cancer-center-project-breaks-ground/

The Go Lean roadmap takes a strategic approach. There is the need for cancer and medical research, so the CU promotes and invites the establishment of medical research parks, laboratories and campuses as Self-Governing Entities (SGE). These bordered facilitates, similar to the PR project depicted above in the artist rendition, would only submit to CU jurisdiction and authorities – no FDA regulations! This freedom allows for more latitude and creativity in the pursuit of cancer cures and treatments.

Without a doubt, this strategy of SGE’s fulfills many CU objectives. In addition to the life-saving potential of local cancer research, the CU seeks to improve the environment for academic and occupational endeavors for STEM (Science, Technology, Engineering & Medical) professionals. The region would now offer an alternative to the debilitating brain drain. In fact, the opposite would occur: the region invites empowering immigrants to help facilitate this vision. The Go Lean … Caribbean roadmap describes that the Diaspora and their legacies (foreign-born children), would see a Welcome Mat to “come in from the cold” – welcome home – to a better place to live, work, learn, heal and play.

Download the Book- Go Lean…Caribbean Now!!!

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Tim Armstrong, the CEO of AOL – Health-care Concerns

Posted on March 24, 2014 in Economics, Industries, Planning

Go Lean Commentary

Medical Management Services_AOL InsuranceIn the forgoing article, Tim Armstrong, the comments of the CEO of America Online (AOL) resulted in outcry around the country! There were allegations of scapegoats, privacy violations and various sins in making this announcement. What gives this CEO the right to highlight these families’ struggles? Well, can you say two million dollars? This man is not a Director of a Hospital refusing care. No, he is the CEO of the company paying the bills. Two million dollars taken out of the budget and the CEO cannot comment on it? Why are his actions being chastised?

By: Michael F. Cannon, Contributor

Unless you’ve been living under a rock, you’ve heard about AOL CEO Tim Armstrong’s strikingly insensitive comments about why the company is cutting its retirement benefits:

“As a C.E.O. and as a management team, we had to decide, do we pass the $7.1 million of Obamacare costs to our employees? Or do we try to eat as much of that as possible and cut other benefits?…”

“Two things that happened in 2012”, he continued, “we had two AOL-ers that had distressed babies that were born that we paid a million dollars each to make sure those babies were OK in general. And those are the things that add up into our benefits cost. So when we had the final decision about what benefits to cut because of the increased healthcare costs, we made the decision, and I made the decision, to basically change the 401(k) plan”.

Perhaps Armstrong felt commendations were in order. After all, the company’s health plan did pay a ton of money to keep those kids alive. Not as much as his annual salary, but still. And though you could be forgiven for missing it, he was actually announcing he had decided not to drop AOL’s “distressed babies” benefit.

But it’s hard to muster an “Attaboy!” when Armstrong is effectively blaming extremely premature infants, who are clinging desperately to life, for the cuts he chose to make in his employees’ retirement benefits. We’re still paying to keep these precious little angels alive, he assured his employees. But if any of you are mad about your pay cut, you know who to blame.

One of those babies has a mommy who wasn’t about to take that lying down.

In October 2012, only five months pregnant, Deanna Fei went into labor. Her daughter arrived via caesarian section weighing only 1 pound, 9 ounces, and spent the next three months in a neo-natal intensive care unit. Fei, a novelist, wrote at Slate about the anguish she and her family endured.

She also had choice words for her husband’s boss.

“Let’s set aside the fact that Armstrong—who took home $12 million in pay in 2012—felt the need to announce a cut in employee benefits on the very day that he touted the best quarterly earnings in years,” she wrote. It was “a cruel violation” to make her child “a scapegoat for cutting benefits.”

There was “the whiff of judgment in Armstrong’s statement, as if we selfishly gobbled up an obscenely large slice of the collective health care pie” when in fact “we experienced exactly the kind of unforeseeable, unpreventable medical crisis that any health plan is supposed to cover. Isn’t that the whole point of health insurance?”

“While he’s at it, why not call out the women who got cancer? The parents of kids with asthma?”

I’m totally with Fei. I still remember the panic I felt when our first child (41 weeks) took about one minute to start breathing on his own and our second (37.5 weeks) was born a little too pale. I cannot imagine visiting my child every day in a NICU for three months, much less the added trauma that mommies suffer in those cases. And I would be just as outraged by the indignity of having my spouse’s employer use our experience as a scapegoat, or claim that we are indirectly responsible for someone else’s pay cut.

Fei and her family owe no one an apology. Full stop. They paid their premiums. They used their coverage for its intended purpose. Their situation is exactly why health insurance exists.

It is also possible to sympathize with Armstrong. He has a duty to AOL shareholders to keep the company profitable. Part of that responsibility is to decide how much to pay AOL employees – and how to divide that sum among salary, health benefits, retirement benefits, and other forms of compensation. Someone’s going to be angry at him no matter what he decides. And in this case, he decided not to let those cuts fall on health benefits. Assuming he’s doing right by AOL’s shareholders, who probably include many AOL employees, he owes no one an apology for his $12 million salary. To be sure, he owes Fei and her family an apology – which he has issued and she has accepted.

How did we get to this point, where Fei’s husband’s boss knows how much it cost to save their baby’s life and can telegraph that figure to his coworkers and the world? Where an offhand comment by your employer can add to your grief by exposing your family’s medical history to your coworkers, and possibly make you a target of resentment?

The answer is that even before ObamaCare, America has had a health care sector dominated by government involvement. Yes, this capitalist’s insensitive comments are an example of government failure.

Ninety percent of Americans with private health insurance get that coverage through an employer. This state of affairs wasn’t brought to you by the free market. In a market where we all get to make our own choices, what responsible parent in their right mind would voluntarily choose for their family a type of health insurance that disappears when you get sick and cannot work anymore? Or when the factory closes? A type of health insurance where, if you have a high-cost condition, you are more likely to end up uninsured than if you bought coverage directly from an insurance carrier?

The reason more than 100 million Americans make the otherwise irrational decision to enroll in an employer-sponsored plan is that around 70 years ago, the federal government created an enormous tax preference for those plans that is not available if you buy more secure coverage directly from an insurer on the “individual” market. The upshot of that tax preference is that if consumers purchase health insurance themselves, they can spend up to twice as much for the same coverage. Economists have chronicled how the tax exclusion for employer-sponsored health insurance increases health care spending and thus the cost of health insurance, as well as how it reduces consumers’ health insurance choices. Yet the federal government makes it economically rational for 90 percent of consumers to purchase an inferior product that creates so many harmful effects.

Another harmful effect of this government policy is that the Tim Armstrongs of the world have far too much (read: any) influence over your family’s health insurance and medical decisions. (What if Armstrong had chosen to pare back AOL’s distressed-baby benefit?) They also end up knowing far too much (read: anything) about your family’s most emotionally difficult moments.

I won’t pretend private health insurance companies aren’t also obligated to serve shareholders or always have their customers’ best interests at heart. But how often do you hear the CEOs of insurance companies publicly say the sort of boneheaded thing Armstrong did? Not very. Even though they have to make comparable tradeoffs between covered benefits, affordable premiums, and profits, they don’t do what Armstrong did. They’re in the business, so they know better. When insurance companies say boneheaded things about their high-cost customers, they tend to do so quietly. You know, in internal memoranda. If I’m overlooking instances of insurance company executives doing what Armstrong did, please let me know in the comments.

Even if the CEO of, say, Aetna mentions they had a couple of million dollar babies last year, it wouldn’t expose those families the way it does when CEOs say it about their company-sponsored health plans. If everyone were making their own coverage choices, your coworkers would have no idea where you buy your health insurance unless you wanted them to know. And that’s as it should be. You would also have the option of leaving Aetna for another carrier that wasn’t so boneheaded, or if only because you don’t like the tradeoffs they are making between benefits, premiums, and profitability. Switching health plans is much harder when it might require switching jobs.

The federal government has let this boneheaded tax preference for employer-sponsored health insurance sit undisturbed for seven decades, even as it led to privacy violations and fueled the problem of pre-existing conditions. That should make us even more wary of the government’s latest brilliant health care idea.

How long will it take Congress to fix the more boneheaded elements of ObamaCare? Seventy years? More?

Source: http://www.forbes.com/sites/michaelcannon/2014/02/10/aol-chief-tim-armstrongs-insensitivity-argues-against-obamacare-not-for-it/

As the chief executive of the company, it was his job to pursue what he thought was in the best interest of the company. Would it have been preferred that instead, he simply laid-off some employees?

Many people were upset over his choice of the word “distressed babies”. Was he wrong? These babies were born early (pre-mature), with a $2 million price tag. And those bills were paid.

Had this been Joe-the-Plumber complaining that he lost his job because two distressed babies cost the company two million dollars, he would have gotten national sympathy and the news would have been about the failure of health care or Obama Care more exactly. Instead, this discussion is about the CEO of America Online. This is a BIG company, BIG business, BIG money – and so, this is a BIG deal.

From the perspective of the roadmap for this implementation of the Caribbean Union Trade Federation, this issue of Tim Armstrong-AOL-Health-Plan is also a BIG opportunity.

Something is wrong in this whole scenario!

It is “off-whack & off-kilter” that it costs families and communities so much for healthcare. There is no way we can afford this kind of price dynamics in the Caribbean. Nor do we want to leave our pregnant mothers and premature babies completely abandoned. No one wants to have a society like that. If so, there will be no opportunity to invite the Diaspora back home, nor dissuade families from abandoning their Caribbean homeland for foreign shores – the “push-and-pull” factors would be too great.

So where emotions may trump economics, economics are not eliminated just because we have emotional leanings. The article portrays the economic truths: “the tradeoffs … between benefits, premiums, and profitability.”

The Go Lean…Caribbean roadmap posits that the member-states need a larger pool for health insurance benefits, premiums, and profitability. The market size of 42 million is a viable solution. Plus new financial products like re-insurance sidecars in an energized securities/capital market, thanks to the Caribbean Dollar and a technocratic Caribbean Central Bank.

The roadmap also calls for strategic and tactical solutions for big money treatments, like cancer, by facilitating medical research campuses and medical tourism under the guise of Self-Governing Entities.

Lastly, the Go Lean roadmap promotes the practice of predictive wellness programs and disease management schemes, tackling head-on the root causes of so many medical distress and costs enablers.

Download the book, Go Lean … Caribbean and add your commentary.

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10 Things We Want from the US and 10 Things We Don’t Want from the US

Posted on March 24, 2014 in Economics, Government, Social, Tactical

Go Lean Commentary

There are things we, in the Caribbean want, and things we do not want from the United States of America. Here is a laundry list of the Good and the Bad and how the roadmap to elevate Caribbean society, the book Go Lean…Caribbean, describes how the lessons will be applied in the implementation of the Caribbean Union Trade Federation (CU):

American Imports

What we want

10 GOOD Things We Want from the US
10 BAD Things We Don’t Want from the US
1
Free Market – In pursuit of the American Dream
100 years ago there was great debate in terms of the best governmental system for mankind: communism or capitalism. After 75 more years, that debate was over! Communism had proven ineffectual. Free Market capitalism as exercised in the US, in pursuit of the American Dream to elevate one’s standing in life, is what the Caribbean region needs, wants and deserves.
The Go Lean roadmap extols a Caribbean dream; that in addition to synchronizes with the American version also has additional advocacies like repatriation to the islands.
Strategic Interest Prioritization – Or Lack There of
The US is now the only remaining super power, but they only exert their “muscles” when their own strategic interests are involved. So after the promise of “never again”, after the Nazi Holocaust, the world found the US “sitting idle” as other genocides/ethnic cleansings transpired, as in Cambodia, Bosnia and Rwanda. Why this inaction? Simple: there was no strategic US interest.
The Go Lean roadmap advocates that despite the two US Territories (Puerto Rico & USVI), the Caribbean must forge law-and-order and plan/allow for its own priorities.
2
Tourists
Tourism is still the primary economic driver for the Caribbean region. While there is a lot of competition in the domestic US and internationally, the Caribbean continues to make the case that its region is the best tourist destination in the world. The region wants to continue to appeal to Americans of all demographic persuasions to come visit the islands for stay-overs (land-based hotels) and/or cruise ships. We want to forge vacation options and traffic for the upper, middle and lower classes of American society.
The CU forges plans, advocacies and re-boots to further enhance the Caribbean tourism product array.
Partisan Politics
In 2013, the US Government almost came to a grinding halt on two occasions; due to an impasse in raising the sovereign debt limit and a failure to pass a budget by the end of the fiscal year. The reason for these failures in delivering governmental obligations was partisan politics. Factions in the Republican Party were determined not to give in to the continuation of certain Democratic Party policies. These polar oppositions preferred to default on debt payments or shut down the government than to compromise from their positions.
The Go Lean roadmap dictates certain automatic provisions (budgets) to assuage legislative deadlocks.
3
Capital
There are many Financial Centers around the world (London, Zurich, Hong Kong, etc.) but none with the liquidity like Wall Street. They have the capital the Caribbean needs for Direct Foreign Investments. After the 2008 Financial Crisis, the US Federal Reserve Banks have maintained a policy of flooding the money supply to keep the cost of capital (borrowing) low.
The Go Lean roadmap calls for the emergence of the Caribbean Dollar (C$) managed by a technocratic Caribbean Central Bank. This structure allows for more liquidity in the existing stock exchanges in the regions. A strong regional currency will also mitigate primary cause for prior emigration.
Quantitative Easing – De-Americanize World Money
It’s a standard accepted practice not to overstate the money supply and that this practice results in de-valuing currencies. But the US feels that this policy does not apply to them. To offset the 2008 Credit Crunch, the Federal Reserve instituted a policy of Quantitative Easing and set the Discount Rate to near zero so that banks could get access to almost-free Central Bank money. The end result now is that the Euro, which started in 1999 pegged E$1.17-to-1 with the US dollar, now trades for at E$1.36.
Imagine a savings account established in 1999 losing 19% of value just sitting idle. The C$ plan is modeled on the Euro.
4
Pax Americana
Pax Americana is not a “de jure” policy of the US government, but rather a “de facto” policy. The spirit of the Monroe Doctrine is still imbued in US foreign policy. This implies that any European aggression in the Americas is an affront to the US. Practically, the US strong military ensures peace in the region. There is no need for massive military output by Caribbean states.
The CU roadmap includes Cuba into the brotherhood of a Caribbean Confederacy. Previous expressions of Pax Americana have resulted in a trade embargo for Cuba.
2nd Amendment
The “right to bear arms” has a personal application beyond the country’s entitlement to maintain a militia. This “right” has been interpreted in a manner in which any normal “man” can get possession of guns and other armament. This proliferation of guns in society results in the highest rate of gun violence in the world, even an unconscionable rate of school shootings.
The Go Lean roadmap purports that this status has also caused discord – a gross abuse and availability of illegal guns – in bordering communities of Mexico, and Caribbean states of the Bahamas, and the DR. This propels our gun-related crime.
5
Intelligence Gathering
After the September 11 Terrorist attacks the US ramped up its deployment of Intelligence Gathering capabilities. These systems allow for more predictive modeling and better tracking of suspects and threats.
The CU maintains the example of the investigation of the April 2013 Boston Marathon Bombings region – arrests were made in 48 hours – is a successful model to copy.
Privacy Violations
In the name of security, the US surveillance apparatus has been heavy-handed. They have even eavesdropped on phone calls for foreign heads of states visiting the UN, without search warrants from official courts. (One report and confession found the US spying on the Bahamas). The average law-abiding citizen should not have to worry about an over-reaching security watch dog.
The CU envisions a balanced Intelligence Gathering goal.
6
Crime Watch Initiatives
“If you see something, say something” – is the mantra of the crime and terror awareness movement in the US. This involves the verticals from crime watch to public CATV.
The Go Lean roadmap provides comprehensive anti-crime and anti-terror measures, both the systems, personnel and funding to effectuate this change.
Criminal Organizations – RECO
The US is the single largest economy in the world. As a result of this success, “bad actors” have also emerged.
The CU recognizes that the history of US organized criminal organizations running rampart in Cuba is a risk to be mitigated for future Caribbean societies. The roadmap is to monitor and assuage all enterprise criminal activities.
American Imports (cont’d)
10 Things We Want from the US
10 Things We Don’t Want from the US
7
Melting Pot Societies
The Latin term “E pluribus unum” or “Out of many, one”is a phrase on the official Seal of the United States. Though this was never codified by law, this phrase is a de facto motto of the US. This corresponds with actual history as immigration was always a constant feature. The US always benefited with empowering immigrants impacting the economic engines of the country. There are many industries where the “best of the best” try to work their way to the US; consider the broad examples of Wall Street or Hollywood and the specific example of German aero-space engineer Wernher von Braun, who inspired & aided US Space efforts and the quest for a man on the Moon.
The CU represent 30 member-states and 4 languages so any hope for a successful union depends of successful “melting pots” in our region.
Discrimination of Immigrants
Hazing and discrimination seem to have been a rite of passage for every immigrant group’s experience as they have emerged in the US. This was the experience for the Irish, Italian, Jewish, Puerto Rico, Cuban, and other communities, no matter the time frame (1800’s, 1900’s and 2000’s). Why should hazing be experienced, when there is economic value to immigrant populations?
The CU posits that empowering immigrants should be invited and accommodated; the local communities should plan and facilitate the impact of changes: language translations, Diaspora retailing and cultural sensitivity training. There is also the inevitable refugee inclusion that all successful societies must allow for, though not planned nor invited. These can be distributed among the region.
8
Family Holiday Re-unification
The busiest travel day of the year in the US is the Wednesday before Thanksgiving; the 2nd busiest day is the following Sunday. Obviously American families place a high priority on coming together for holiday festivities. Though not as extreme, this pattern is repeated for other holidays like Christmas, Easter and family reunions.
The CU advocates “push and pull” factors of family reunification throughout the Go Lean roadmap. Plus, the transportation solutions enable more easy access.
Family Abandonment
Senior Living Facilities are a big industry in the US. This is due to the family habit of abandoning elderly parents to the care of professional strangers. The Caribbean way traditionally is to house their Senior Citizens with families, whether the economics apply or not.
The CU has a prime directive to encourage repatriation back to the Caribbean homeland and assuage societal abandonment. Frankly, senior citizens should avoid the cold climates of North American and EU Diaspora cities.
9
Media Arts – Film, TV, Stage, Music, e-Games
While prospects for many traditional 20th Century industries (factories, auto, steel, mining) have declined in the US due to the competitive imbalance of globalization, media continues to flourish. In 2011 the global box office amassed $32.6 billion in revenues. Hollywood continues to be a growing and impactful economic engine. Broadway saw $11.2 billion that year, while music and other media continued to enjoy strong numbers. US Media Arts have become more than just past-time, it’s a sustainable lifestyle.
The CU roadmap posits that art and music can drive big economic returns as long as the complete eco-system is there to identify, foster & compensate stakeholders.
Cultural Neutralizations – Domination of airwaves
There are other cultures than just American. If not abated, the American media will dominate and neutralize the airwaves. Caribbean culture should be preserved and promoted. With American media comes American values, and these may not always advocate what’s best for Caribbean life. Consider consumerism, proliferation of guns and drugs, societal abandonment, language assimilation and other social ills.
The CU roadmap makes comparison to cultural protectionism as employed in France versus the free market approach in the US. While France doesn’t lead many of the world’s media output, they have maintained their unique culture. This propels their tourism – 25 million visitors to Paris.
10
Sports Professionalism
The American leagues for Baseball, Football, Basketball, Hockey, Soccer and even their Olympic models inspire athletes that they can earn a living based on their talents, disciplines and abilities. There are many levels for the American sports world, so even if money is not the object, other benefits, like educational scholarships and civic pride, can often provide positive impacts on society. The quadrennial Olympics are more successful today because of the Americanization of the business models of these events; which is heavy on media, sponsorships and free-market ticket sales.
The Go Lean roadmap includes a comprehensive sport promotion and administration apparatus within the CU Cabinet level State Department.
Win at all costs ethic
There is a worldwide movement to curb the sport world of performance enhancing drugs. Many of the recent advances in the “outlaw” industry have emerged from the US (i.e. BALCO, HGH, PEDS, etc.). This scourge is part of the “win at all costs” ethos that American sports seem to foster. This attitude also relates to the treatment of the retired athletes; this refers to the abandonment of expended athletes, once they are perceived to offer no further contributions.
The Go Lean roadmap calls for rebooting sports administration, including the establishment of an Anti-Doping agency within the CU Trade Federation to elevate regulation and enforcement to the federal level. Other benefits of the regional focus will include better oversight of sports academies, agents and leagues.

A large number of Caribbean people live abroad, in the Diaspora. They live in places like the US, Canada, the UK and Europe. This commentary is Part 1 of 4 in a series examining the destinations of this Caribbean Diaspora. The full series is as follows:

  1. 10 Things We Want from the US and 10 Things We Do Not Want
  2. 10 Things We Want from Canada and 10 Things We Do Not Want
  3. 10 Things We Want from the UK and 10 Things We Do Not Want
  4. 10 Things We Want from Europe and 10 Things We Do Not Want

Everyone is urged to lean-in to the roadmap to introduce and implement the Caribbean Union Trade Federation (CU).

Download the book Go Lean … Caribbean – now!

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The Erosion of the Middle Class

Posted on March 21, 2014 in Economics, Ethos, Planning, Social

Go Lean Commentary

Middle ClassAs for the direct issues in this article, the experience has been the same in the Caribbean. The high-end tourist resorts have flourished since the Great Recession, while properties catering to the general middle class have floundered. The one exception being the emergence of the cruise industry as a viable vacation option for the general American population. The CU therefore plans to empower the industry directly, and to elevate the cruise industry’s impact on Caribbean society.

New York Times, February 2, 2014 – In Manhattan, the upscale clothing retailer Barneys will replace the bankrupt discounter Loehmann’s, whose Chelsea store closes in a few weeks. Across the country, Olive Garden and Red Lobster restaurants are struggling, while fine-dining chains like Capital Grille are thriving. And at General Electric, the increase in demand for high-end dishwashers and refrigerators dwarfs sales growth of mass-market models.

As politicians and pundits in Washington continue to spar over whether economic inequality is in fact deepening, in corporate America, there really is no debate at all. The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away.

If there is any doubt, the speed at which companies are adapting to the new consumer landscape serves as very convincing evidence. Within top consulting firms and among Wall Street analysts, the shift is being described with a frankness more often associated with left-wing academics than business experts.

“Those consumers who have capital like real estate and stocks and are in the top 20 percent are feeling pretty good,” said John G. Maxwell, head of the global retail and consumer practice at PricewaterhouseCoopers.

In response to the upward shift in spending, PricewaterhouseCoopers clients like big stores and restaurants are chasing richer customers with a wider offering of high-end goods and services, or focusing on rock-bottom prices to attract the expanding ranks of penny-pinching consumers.

“As a retailer or restaurant chain, if you’re not at the really high level or the low level, that’s a tough place to be,” Mr. Maxwell said. “You don’t want to be stuck in the middle.”

Although data on consumption is less readily available than figures that show a comparable split in income gains, new research by the economists Steven Fazzari, of Washington University in St. Louis, and Barry Cynamon, of the Federal Reserve Bank of St. Louis, backs up what is already apparent in the marketplace.

In 2012, the top 5 percent of earners were responsible for 38 percent of domestic consumption, up from 28 percent in 1995, the researchers found.

Even more striking, the current recovery has been driven almost entirely by the upper crust, according to Mr. Fazzari and Mr. Cynamon. Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent.

More broadly, about 90 percent of the overall increase in inflation-adjusted consumption between 2009 and 2012 was generated by the top 20 percent of households in terms of income, according to the study, which was sponsored by the Institute for New Economic Thinking, a research group in New York.

The effects of this phenomenon are now rippling through one sector after another in the American economy, from retailers and restaurants to hotels, casinos and even appliance makers.

For example, luxury gambling properties like Wynn and the Venetian in Las Vegas are booming, drawing in more high rollers than regional casinos in Atlantic City, upstate New York and Connecticut, which attract a less affluent clientele who are not betting as much, said Steven Kent, an analyst at Goldman Sachs.

Among hotels, revenue per room in the high-end category, which includes brands like the Four Seasons and St. Regis, grew 7.5 percent in 2013, compared with a 4.1 percent gain for midscale properties like Best Western, according to Smith Travel Research.

While spending among the most affluent consumers has managed to propel the economy forward, the sharpening divide is worrying, Mr. Fazzari said.

“It’s going to be hard to maintain strong economic growth with such a large proportion of the population falling behind,” he said. “We might be able to muddle along — but can we really recover?”

Mr. Fazzari also said that depending on a relatively small but affluent slice of the population to drive demand makes the economy more volatile, because this group does more discretionary spending that can rise and fall with the stock market, or track seesawing housing prices. The run-up on Wall Street in recent years has only heightened these trends, said Guy Berger, an economist at RBS, who estimates that 50 percent of Americans have no effective participation in the surging stock market, even counting retirement accounts.

Regardless, affluent shoppers like Mitchell Goldberg, an independent investment manager in Dix Hills, N.Y., say the rising stock market has encouraged people to open their wallets and purses more.

“Opulence isn’t back, but we’re spending a little more comfortably,” Mr. Goldberg said. He recently replaced his old Nike golf clubs with Callaway drivers and Adams irons, bought a Samsung tablet for work and traded in his minivan for a sport utility vehicle.

And while the superrich garner much of the attention, most companies are building their business strategies around a broader slice of affluent consumers.

At G.E. Appliances, for example, the fastest-growing brand is the Café line, which is aimed at the top quarter of the market, with refrigerators typically retailing for $1,700 to $3,000.

“This is a person who is willing to pay for features, like a double-oven range or a refrigerator with hot water,” said Brian McWaters, a general manager in G.E.’s Appliance division.

At street level, the divide is even more stark.

Sears and J. C. Penney, retailers whose wares are aimed squarely at middle-class Americans, are both in dire straits. Last month, Sears said it would shutter its flagship store on State Street in downtown Chicago, and J. C. Penney announced the closings of 33 stores and 2,000 layoffs.

Loehmann’s, where generations of middle-class shoppers hunted for marked-down designer labels in the famed Back Room, is now being liquidated after three trips to bankruptcy court since 1999.

The Loehmann’s store in Chelsea, like all 39 Loehmann’s outlets nationwide, will go dark as soon as the last items sell. Barneys New York, which started in the same location in 1923 before moving to a more luxurious spot on Madison Avenue two decades ago, plans to reopen a store on the site in 2017.

Investors have taken notice of the shrinking middle. Shares of Sears and J. C. Penney have fallen more than 50 percent since the end of 2009, even as upper-end stores like Nordstrom and bargain-basement chains like Dollar Tree and Family Dollar Stores have more than doubled in value over the same period.

Competition from online giants like Amazon has only added to the problems faced by old-line retailers, of course. But changes in the restaurant business show that the effects of rising inequality are widespread.

A shift at Darden, which calls itself the world’s largest full-service restaurant owner, encapsulates the trend. Foot traffic at midtier, casual dining properties like Red Lobster and Olive Garden has dropped in every quarter but one since 2005, according to John Glass, a restaurant industry analyst at Morgan Stanley.

With diners paying an average tab of $16.50 a person at Olive Garden, Mr. Glass said, “The customers are middle class. They’re not rich. They’re not poor.” With income growth stagnant and prices for necessities like health care and education on the rise, he said, “They are cutting back.” On the other hand, at the Capital Grille, an upscale Darden chain where the average check per person is about $71, spending is up by an average of 5 percent annually over the last three years.

LongHorn Steakhouse, another Darden chain, has been reworked to target a slightly more affluent crowd than Olive Garden, with décor intended to evoke a cattleman’s ranch instead of an Old West theme.

Now, hedge fund investors are pressuring Darden’s management to break up the company and spin out the more upscale properties into a separate entity.

“A separation could make sense from a strategic perspective,” Mr. Glass said. “Generally, the specialty restaurant group is more attractive demographically.”
Source: Retrieved March 21, 2014 from: https://www.nytimes.com/2014/02/03/business/the-middle-class-is-steadily-eroding-just-ask-the-business-world.html

This issue of income inequality has been covered widely in the book, Go Lean … Caribbean. The reality of the middle class is that their numbers represent too many of the population to ignore. To foster growth in the economy, there must be growth for the middle class, or something amazing happens: people leave. This is the experience of so many in the Caribbean Diaspora. If despite the adherence of best practices (education, law-abiding, savings-and-investments), the average middle class family cannot obtain societal progress and contentment, they will simply relocate. For the Dutch and French Caribbean, this relocation eventuality has resulted in emigration to The Netherlands and France; for the American Caribbean territories, the emigration has resulted in the abandonment of the islands for the US mainland. For example, Puerto Rico has 4.7 million people living in the US mainland (compared to 3.9 million on the island) identifying themselves with a Puerto Rican heritage. The ratio is the same for the US Virgin Islands. The English-speaking Caribbean has many expatriates that have abandoned their island homes for foreign shores, often in England, Canada and the US. The region’s Diaspora is estimated at 10 million.

The Go Lean roadmap advocates a 10-Step approach to elevate the middle class of Caribbean society. This advocacy championed the belief that the “American” Dream is viable for other locations as well. So a balance must be carefully maintained for the CU efforts to impact an achiever class versus efforts of egalitarianism. We want to raise all the poor to middle class status (egalitarian in theory), and all the middle class to wealthy – One Percent – status, but that’s not what happens in reality. Achievers will always emerge ahead of their peers. The CU posits that there should be no impediments to this emergence, rather excellence should be fostered and even incubated. With this roadmap, the Caribbean can be a better place for all to live, work and play.

Download the free e-book of Go Lean … Caribbean – now!

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Egalitarianism versus Anarchism

Posted on March 21, 2014 in Economics, Ethos, Social, Strategy

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Go Lean Commentary

This book Go Lean … Caribbean presents the two sides of the debate on “egalitarianism”: catering to the Least Common Denominator (LCD) or elevating the achievers. Let’s expand that discussion here. For the first argument, an essay by Gary Hull (Ayn Rand Institute) in Capitalism magazine which stipulates:

Egalitarianism claims only to want an “equality” in end results, hates the exceptional man who, through his own mental effort, achieves that which others cannot… In an attempt to “dumb down” all students to the lowest common denominator, today’s educators no longer promote excellence and students of superior ability… Imagine the following Academy Award ceremony. There are no awards for best picture or best actor. Instead, every picture gets a certificate and every actor receives a prize. That is not an awards ceremony, you say? So it isn’t. But it is an egalitarian’s dream — and an achiever’s torment. Talent and ability create inequality… To rectify this supposed injustice, we are told to sacrifice the able to the unable. Egalitarianism demands the punishment and envy of anyone who is better than someone else at anything. We must tear down the competent and the strong – raze them to the level of the incompetent and the weak… What would happen to a Thomas Edison today? If he survived school with his mind intact, he would be shackled by government regulators. His wealth would be confiscated by the IRS. He would be accused of ‘unfair competition’ for inventing so many more products than his competitors.[a]

On the other hand, Alexander Berkman argued the contrast:

…equality does not mean an equal amount but equal opportunity… Do not make the mistake of identifying equality in liberty with the forced equality of the convict camp. True anarchist equality implies freedom, not quantity. It does not mean that every one must eat, drink, or wear the same things, do the same work, or live in the same manner. Far from it: the very reverse in fact… Individual needs and tastes differ, as appetites differ. It is equal opportunity to satisfy them that constitutes true equality… Far from leveling, such equality opens the door for the greatest possible variety of activity and development. For human character is diverse.[b]

urlThe Go Lean book serves as a roadmap for the introduction and implementation of the Caribbean Union Trade Federation (CU). The book embraces both sides of this debate; on the one hand, as a federal entity, the CU will ensure equal access to regional opportunities to any petitioner; this is Egalitarian in nature. On the other hand, this Go Lean/CU roadmap posits the community ethos that one person can make a difference, and can impact the region for the Greater Good. The CU will foster the unique contributions of the achiever. This meritocracy leaning comes down on the Anarchist side of the debate.

In this vein, the following missions, aligned by Anarchist and Egalitarian, are elaborated in the Go Lean book:

Anarchist – leaning advocacies
Egalitarian – leaning advocacies
Fostering Genius
Bridge the Digital Divide
Help Entrepreneurship
Manage Reconciliations
Promote Intellectual Property
Improve Sharing
Fostering a Technocracy
Impact the Greater Good
Delivering More with Less
Impact Social Media
– Lean Project Management methodologies
Impact Entitlements
Improve Leadership
Battles against Poverty
Impact Beauty Pageants
Protect Human Rights
Impact Lotteries
Help the Middle Class
Impact Retirement
Improve Elder-Care
Impact the One Percent
Promoting Independence
Improve Sports
Improve Education
Improve the Arts
Empower Women
Promote Music
Impact Youth
Impact Persons with Disabilities

The Go Lean book is published by a movement seeking to make the Caribbean a better homeland to live, work and play. There can be no strict adherence to either egalitarianism or anarchism; the optimal society must reflect a perfect balance of both.

All in all, the Egalitarian versus Anarchist debate may now be considered anachronistic. This may have been a valid 1913 argument, but for 2013 (publication date of the Go Lean book)  it is “null-and-void”, irrelevant even. After 100 years of bad history – 2 World Wars and a Capitalism-versus-Communism schism – we must simply apply the lessons learned.  Today, we must consider all best practices, and embrace all tools, techniques and talents for success. The people of the Caribbean deserve the best of the best, despite whatever philosophical leanings.

Download the book Go Lean … Caribbean – now!

—————

Appendix – Citations

a. Egalitarianism: The New Torture Rack, by Gary Hull, Ayn Rand Institute, January 11, 2004

b. Alexander Berkman- Prison Memoirs of an Anarchist. Mother Earth Publishing 1912 – What is Anarchism? pp. 164-5

 

 

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