Category: Economics

European Reckoning – Reconciling the IMF’s Past, Present and Future

Posted on January 17, 2019 in Economics, Ethos, Government, Strategy

Go Lean Commentary

If you had a benefactor – think scholarship for your college education – and your benefactor files for bankruptcy, should you be concerned, weary and/or pessimistic that future monies will continue to flow?

That would be stupid!

It is only logical that you would be expected to find another benefactor. (This is not just academic – in 1991 when the Soviet Union dissolved, the Caribbean country of Cuba was left out in the cold).

Europe, the continent, the countries and the people have been the Caribbean’s benefactor for many years in our history. It is time now to reckon with that! We must review, reflect and reconcile this past, present and our future interactions, especially when it comes to economic crises, escalations and bailouts.

When we refer to reconciling Europe’s past, we refer to the Imperial Conquests, Slave Trade, Slavery, Colonialism and Post-Colonialism.

When we refer to Europe’s present, we refer to all the recent developments in modern day Europe, as in the events of the recent economic crises; think Sovereign Debt Crisis with Greece and others.

When we refer to Europe’s future, we are referring to the tenuous status in their integration movements – think European Union (EU), IMF, and the resultant unrest on the European mainland.

This commentary opens a 5-part series on European Reckoning. This entry is 1 of 5 in this series from the movement behind the book Go Lean … Caribbean in consideration of root history of Caribbean colonialism and how modern reconciliation developments are exacerbating our communities. We are all mostly independent and sovereign countries in the Caribbean, so it is expected that we would now be mature and responsible; we must now be protégés not parasites of the European world. The other commentaries in the series are cataloged as follows:

  1. European Reckoning: IMF Apologies
  2. European Reckoning: China seeks to de-Americanize the world’s economy
  3. European Reckoning: Settlers -vs- Immigrants
  4. European Reckoning: Christianity’s Indictment
  5. European Reckoning: Black “Greco-Roman” Wrestler victimized for his hair

In this series, reference is made to the Great Powers of the Western Hemisphere, sometimes called the Western Alliance. This refers to the White/Christian European nations and North America (US & Canada). In fact, sometimes the Western Alliance is cross-labeled with the North Atlantic Treaty Organization (NATO) also called the North Atlantic Alliance; this is an intergovernmental military alliance between 29 North American and European countries.

While none of the 29 NATO members include any Caribbean independent states, 16 Caribbean Overseas Territories are thusly aligned as dependents of the American (2), British (6), Dutch (6) and French (4) imperial powers. Plus with the Caribbean Basin Security Pact, the full Caribbean – except Cuba – is aligned with NATO members: United States and Canada.

The reference to Europe in this series of commentaries is to “White Westerners”. This special sub-group had wielded absolute power on the planet. It is time now to look back at that history and “call a spade a spade”!

In this first submission of this series, the overt favoritism of economic bailouts toward White Westerners was exposed and commiserated. This reflects the need for reconciliation. For the Caribbean, considering our European history, presence and future, we need to participate in this reconciliation. See this article here addressing the flawed favoritism of the International Monetary Fund (IMF), (the intergovernmental financial institution composed of 189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world”[1]). It appears that the ‘International’ in the brand IMF has not been as global as they claimed. The full article is presented here:

Title: IMF admits disastrous love affair with the euro and apologises for the immolation of Greece
By: Ambrose Evans-Pritchard
The International Monetary Fund’s top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory.

This is the lacerating verdict of the IMF’s top watchdog on the fund’s tangled political role in the eurozone debt crisis, the most damaging episode in the history of the Bretton Woods institutions.

It describes a “culture of complacency”, prone to “superficial and mechanistic” analysis, and traces a shocking breakdown in the governance of the IMF, leaving it unclear who is ultimately in charge of this extremely powerful organisation.

The report by the IMF’s Independent Evaluation Office (IEO) goes above the head of the managing director, Christine Lagarde. It answers solely to the board of executive directors, and those from Asia and Latin America are clearly incensed at the way European Union insiders used the fund to rescue their own rich currency union and banking system.

The three main bailouts for Greece, Portugal and Ireland were unprecedented in scale and character. The trio were each allowed to borrow over 2,000pc of their allocated quota – more than three times the normal limit – and accounted for 80pc of all lending by the fund between 2011 and 2014.

In an astonishing admission, the report said its own investigators were unable to obtain key records or penetrate the activities of secretive “ad-hoc task forces”. Mrs Lagarde herself is not accused of obstruction.

“Many documents were prepared outside the regular established channels; written documentation on some sensitive matters could not be located. The IEO in some instances has not been able to determine who made certain decisions or what information was available, nor has it been able to assess the relative roles of management and staff,” it said.

The report said the whole approach to the eurozone was characterised by “groupthink” and intellectual capture. They had no fall-back plans on how to tackle a systemic crisis in the eurozone – or how to deal with the politics of a multinational currency union – because they had ruled out any possibility that it could happen.

“Before the launch of the euro, the IMF’s public statements tended to emphasise the advantages of the common currency,” it said. Some staff members warned that the design of the euro was fundamentally flawed but they were overruled.

“After a heated internal debate, the view supportive of what was perceived to be Europe’s political project ultimately prevailed,” it said.

This pro-EMU bias continued to corrupt their thinking for years. “The IMF remained upbeat about the soundness of the European banking system and the quality of banking supervision in euro-area countries until after the start of the global financial crisis in mid-2007. This lapse was largely due to the IMF’s readiness to take the reassurances of national and euro area authorities at face value,” it said.

The IMF persistently played down the risks posed by ballooning current account deficits and the flood of capital pouring into the eurozone periphery, and neglected the danger of a “sudden stop” in capital flows.

“The possibility of a balance of payments crisis in a monetary union was thought to be all but non-existent,” it said. As late as mid-2007, the IMF still thought that “in view of Greece’s EMU membership, the availability of external financing is not a concern”.

At root was a failure to grasp the elemental point that currency unions with no treasury or political union to back them up are inherently vulnerable to debt crises. States facing a shock no longer have sovereign tools to defend themselves. Devaluation risk is switched into bankruptcy risk.

“In a monetary union, the basics of debt dynamics change as countries forgo monetary policy and exchange rate adjustment tools,” said the report. This would be amplified by a “vicious feedback between banks and sovereigns”, each taking the other down. That the IMF failed to anticipate any of this was a serious scientific and professional failure.

In Greece, the IMF violated its own cardinal rule by signing off on a bailout in 2010 even though it could offer no assurance that the package would bring the country’s debts under control or clear the way for recovery, and many suspected from the start that it was doomed.

The organisation got around this by slipping through a radical change in IMF rescue policy, allowing an exemption (since abolished) if there was a risk of systemic contagion. “The board was not consulted or informed,” it said. The directors discovered the bombshell “tucked into the text” of the Greek package, but by then it was a fait accompli.

The IMF was in an invidious position when it was first drawn into the Greek crisis.  The Lehman crisis was still fresh. “There were concerns that such a credit event could spread to other members of the euro area, and more widely to a fragile global economy,” said the report.

The eurozone had no firewall against contagion, and its banks were tottering. The European Central Bank had not yet stepped up to the plate as lender of last resort. It was deemed too dangerous to push for a debt restructuring in Greece.

While the fund’s actions were understandable in the white heat of the crisis, the harsh truth is that the bailout sacrificed Greece in a “holding action” to save the euro and north European banks. Greece endured the traditional IMF shock of austerity, without the offsetting IMF cure of debt relief and devaluation to restore viability.

A sub-report on the Greek saga said the country was forced to go through a staggering squeeze, equal to 11pc of GDP over the first three years. This set off a self-feeding downward spiral. The worse it became, the more Greece was forced to cut – what ex-finance minister Yanis Varoufakis called “fiscal water-boarding”.

“The automatic stabilisers were not allowed to operate, thus aggravating the pro-cyclicality of the fiscal policy, which exacerbated the contraction,” said the report.

The attempt to force through an “internal devaluation” of 20pc to 30pc by means of deflationary wage cuts was self-defeating since it necessarily shrank the economic base and sent the debt trajectory spiralling upwards. “A fundamental problem was the inconsistency between attempting to regain price competitiveness and simultaneously trying to reduce the debt to nominal GDP ratio,” it said.

The IMF thought the fiscal multiplier was 0.5 when it may in reality have been five times as high, given the fragility of the Greek system. The result is that nominal GDP ended 25pc lower than the IMF’s projections, and unemployment soared to 25pc instead of 15pc as expected. “The magnitude of Greece’s growth forecast errors looks extraordinary,” it said.

The strategy relied on forlorn hopes that the “confidence fairy” would lift Greece out of this policy-induced nose-dive. “Highly optimistic” plans to raise $50bn from privatisation sales came to little. Some assets did not even have clear legal ownership. The chronic “lack of realism” lasted until late 2011. By then the damage was done.

The injustice is that the cost of the bailouts was switched to ordinary Greek citizens  – the least able to support the burden  – and it was never acknowledged that the true motive of EU-IMF Troika policy was to protect monetary union. Indeed, the Greeks were repeatedly blamed for failures that stemmed from the policy itself. This unfairness – the root of so much bitterness in Greece – is finally recognised in the report.

“If preventing international contagion was an essential concern, the cost of its prevention should have been borne – at least in part – by the international community as the prime beneficiary,” it said.

Better late than never.

Source: Posted July, 29 2016 ; retrieved January 10, 2019 from: https://www.telegraph.co.uk/business/2016/07/28/imf-admits-disastrous-love-affair-with-euro-apologises-for-the-i/

The foregoing article highlights: “Asian and Latin American stakeholders are clearly incensed at the way European Union insiders used the [IMF] fund to rescue their own rich currency union and banking system”. Maybe just maybe, Europeans are not as egalitarian and pluralistic as they claim. Maybe just maybe, when push comes to shove they first look after their own before supporting others, even though they are contractually obligated to do so.

This is Tribalism 101…

Tribalism is the state of being organized by, or advocating for, tribes or tribal lifestyles. Human evolution has primarily occurred in small groups, as opposed to mass societies, and humans naturally maintain a social network.
In popular culture, tribalism may also refer to a way of thinking or behaving in which people are loyal to their social group above all else,[1] or, derogatorily, a type of discrimination or animosity based upon group differences.[2]

This ‘Tribalism’ is the reckoning that Europe is doing right now regarding the IMF. They are reconciling their past, present and future and recognizing that they now have to build trust, anew – see the Appendix VIDEO below.

This is also the reckoning that we, in the Caribbean, must do. How should we deal with fiscal/monetary escalations – rescues of our currency and banking systems? The conclusion from this commentary is that we need to do the heavy-lifting ourselves and facilitate our own solutions for economic and fiscal management. The proposed solution: the Caribbean Central Bank (CCB) as a formal “cooperative” among the region’s Central Banks. The CCB will be the sole controlling agent of the monetary policies of a regional currency union: Caribbean Dollar. When there is economic dysfunction and a need for “receivership”. That role would be assumed by the CCB, not the IMF.

This theme of technocratic monetary stewardship aligns with previous Go Lean commentaries; see a sample list here:

https://goleancaribbean.com/blog/?p=16210 In Defense of Trade – Currency Assassins: Real Threat
https://goleancaribbean.com/blog/?p=15796 Lessons Learned from 2008: Righting The Wrong
https://goleancaribbean.com/blog/?p=15787 Lessons Learned from 2008: Too Big to Fail –vs- Too Small to Thrive
https://goleancaribbean.com/blog/?p=14248 Leading with Money Matters – Almighty Dollar
https://goleancaribbean.com/blog/?p=13744 Failure to Launch – Economics: The Quest for a ‘Single Currency’
https://goleancaribbean.com/blog/?p=6563 Lessons from Iceland – Model of Banking Recovery
https://goleancaribbean.com/blog/?p=3858 European Central Bank unveils 1 trillion Euro stimulus program
https://goleancaribbean.com/blog/?p=3814 Lesson Learned from the Swiss unpegging their currency: Franc
https://goleancaribbean.com/blog/?p=3582 For Canadian Banks: Caribbean is a ‘Bad Bet’
https://goleancaribbean.com/blog/?p=833 One currency, divergent economies
https://goleancaribbean.com/blog/?p=467 Barbados Central Bank records $3.7m loss in 2013

Now is the time for the Caribbean region to lean-in for this roadmap described here-in the book Go Lean … Caribbean. The benefits of this roadmap are too alluring to ignore: emergence of an $800 Billion economy, with solid technocratic management of a regional currency union. Finally, we will have the opportunity to stand-up as a protégé to our North American and European counterparts. We will not be looking to them to bail-us-out; we will forge our own growth and clean-up and own mess. We will be mature … finally.

Yes, we can … make the Caribbean, our homeland, a better place to live, work and play. 🙂

About the Book
The book Go Lean…Caribbean serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU) and the aligning Caribbean Central Bank (CCB), for the elevation of Caribbean society – for all member-states. This CU/Go Lean roadmap has these 3 prime directives:

  • Optimization of the economic engines in order to grow the regional economy to $800 Billion and create 2.2 million new jobs.
  • Establishment of a security apparatus to ensure public safety and protect the resultant economic engines.
  • Improve Caribbean governance to support these engines, including a separation-of-powers between the member-states and CU federal agencies.

The Go Lean book provides 370-pages of turn-by-turn instructions on “how” to adopt new community ethos, plus the strategies, tactics, implementations and advocacies to execute so as to reboot, reform and transform the societal engines of Caribbean society.

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

Who We Are
The movement behind the Go Lean book – a non-partisan, apolitical, religiously-neutral Community Development Foundation chartered for the purpose of empowering and re-booting economic engines – stresses that reforming and transforming the Caribbean societal engines must be a regional pursuit. This was an early motivation for the roadmap, as pronounced in the opening Declaration of Interdependence (Pages 12 – 13):

xi. Whereas all men are entitled to the benefits of good governance in a free society, “new guards” must be enacted to dissuade the emergence of incompetence, corruption, nepotism and cronyism at the peril of the people’s best interest. The Federation must guarantee the executions of a social contract between government and the governed.

xii. Whereas the legacy in recent times in individual states may be that of ineffectual governance with no redress to higher authority, the accedence of this Federation will ensure accountability and escalation … for good governance, justice assurances, due process and the rule of law. As such, any threats of a “failed state” status for any member state must enact emergency measures on behalf of the Federation to protect the … member states and the Federation as a whole.

xxiii. Whereas many countries in our region are dependent Overseas Territory of imperial powers, the systems of governance can be instituted on a regional and local basis, rather than requiring oversight or accountability from distant masters far removed from their subjects of administration. The Federation must facilitate success in autonomous rule …

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.

xxv.   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 and 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 member-states.

Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation.

—————–

Appendix VIDEO – IMF’s Christine Lagarde: Truth and transparency are key to rebuilding trust – https://youtu.be/0Iia6FUzVc4


CNBC International TV
Published on Apr 22, 2018 – The International Monetary Fund (IMF) welcomed calls from the U.S. that it should push for more transparency in global trade and lending, the Fund’s boss said Sunday.

IMF Managing Director Christine Lagarde said she’s “delighted” U.S. Treasury Secretary Mnuchin wants the Fund to increase transparency on trade imbalances and debt sustainability in countries like China, an effort she said is already underway. “It’s clearly a project that we have been working on, that we will continue to work on, and I’m delighted that he’s supporting us,” Lagarde said in an interview with CNBC’s Elizabeth Schulze at the IMF Spring Meetings [2018] in Washington.

—–

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In Defense of Trade – Currency Assassins: Real Threat

Posted on November 27, 2018 in Economics, Government, Strategy

Go Lean Commentary

Want a good return on your investment? How about 45 percent? People have enjoyed these returns in the Foreign Currency Exchange (Fx) Markets.

Sounds appealing, right?!

This is why “they” do what “they” do. Currency Speculators & Vulture Capitalists that is! They can work their “Black Magic” and exploit vulnerable countries-currencies. Imagine the crime: “they” lend or borrow ill-advised monies requiring repayment in a foreign currency; then “they” manipulate supply and demand of the domestic currency against that foreign currency so as “to buy low and sell high”, at the expense of the foreign reserves maintained by a nation-state. Imagine hoarding the supply or artificially inflating the demand of the currency to manipulate a price increase. Boom! Instant profits.

This is the unrighteous work of Currency Assassins, Manipulators and/or Speculators. There are so many dangers of Speculative Attacks. Learn more here (in addition to the Appendix B VIDEO below):

In Economics, a speculative attack is a precipitous acquisition of some assets (currencies, gold, emission permits, remaining quotas) by previously inactive speculators. The first model of a speculative attack was contained in a 1975 discussion paper on the gold market by Stephen Salant and Dale Henderson at the Federal Reserve Board. Paul Krugman, who visited the Board as a graduate student intern, soon [1] adapted their mechanism[2] to explain speculative attacks in the foreign exchange market.[3] – Source.

These ones, who practice these exploits are indeed Bad Actors.

The book Go Lean…Caribbean warns the region to be On Guard for Bad Actors … like these:

… history teaches that with the emergence of new economic engines, “bad actors” will also emerge thereafter to exploit the opportunities, with good, bad and evil intent. – Go Lean book Page 21.

This subject matter is not just academic; this happened for real, even to the large country of Great Britain/United Kingdom; this was the experience of the notorious Black Wednesday:

An example of this can be seen in the United Kingdom prior to the implementation of the Euro [currency] when European countries used a fixed exchange rate amongst the nations. The Bank of England had an interest rate that was too low while Germany had a relatively higher interest rate. Speculators increasingly borrowed money from the Bank of England and converted the money into the German mark at the fixed exchange rate. The demand for the British pound dropped so much that the exchange rate was no longer able to be maintained and the pound depreciated suddenly. Investors were then able to convert their German marks back into pounds at a significantly higher rate, allowing them to pay off their loans and keep large profits.

In a previous Go Lean Commentary, the dangers of currency speculation was identified and qualified:

Venezuela sues black market currency website in US
The Central Bank of Venezuela has filed a lawsuit in US courts against Miami-based entity DolarToday, alleging that this website undermines the Venezuelan bank, currency and economy by falsifying the country’s exchange rates.

Also, in another Go Lean Commentary, the dangers of Economic Assassins – Vulture Capitalists – were identified & qualified:

Beware of Vulture Capitalists
The term “vulture fund” is a metaphor, which can be considered a pejorative term, used to compare hedge funds to the behavior of vulture birds “preying” on debtors in financial distress by purchasing the now-cheap credit on a secondary market to make a large monetary gain, in many cases leaving the debtor in a worse state. …

This dire disposition of debt is … applies to many other communities, in North America, Europe (think Greece), Latin America and even in the Caribbean. …

The better the Credit Rating … the less of a chance to be limited to Vulture Capitalists.

Holy Cow! Economic Assassins; Vulture Capitalists; Currency Speculators; these are truly Bad Actors and a serious threat! Trade & economic stewardship is hard!

In truth, the book Go Lean…Caribbean calls this effort heavy-lifting, as it presents the strategies, tactics, implementations and advocacies to shepherd the Caribbean economy. The book serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU) and the aligning Caribbean Central Bank (CCB). Considering the branding, the emphasis is on trade . The CU/CCB will serve as integrated entities to shepherd the complexities for the region’s currency affairs.

This commentary is the final of a 5-part series (5 of 5) from the movement behind the Go Lean book in consideration of the subject “In Defense of Trade“. A discussion on currency is a discussion on trade. The focus is that for a new economic regime, Trade optimization must be coupled with optimization in monetary governance. The commentaries in the series are as follows:

  1. In Defense of Trade: China Realities
  2. In Defense of Trade: Macy’s Thanksgiving Parade Model – ENCORE
  3. In Defense of Trade: India BPO’s
  4. In Defense of Trade: Bilateral Tariffs – No one wins
  5. In Defense of Trade: Currency Assassins – Real Threat

No doubt, despite the identified dangers, there is the need to grow the Caribbean economy. We need the jobs, entrepreneurial opportunities, better educational and healthcare options that would arise because of the embrace of trade. So we must have “Guards at the Gate” to protect our homeland from all Bad Actors. This is the quest of the Go Lean movement. In fact, the books states this quest as prime directives. The prime directives are pronounced as the following statements:

  • 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 and mitigate challenges/threats to ensure public safety for the region’s stakeholders.
  • Improvement of Caribbean governance, including a separation-of-powers with member-states, to support these economic/security engines.

These prime directives reflect the best practice for managing Caribbean societal engines – economy, security and governance –  with an interdependent focus. This was pronounced at the outset of the book in the opening Declaration of Interdependence (Pages 10 – 13):

Preamble: … when a long train of abuses and usurpations, pursuing invariably the same object evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security.

x. Whereas we are surrounded and allied to nations of larger proportions in land mass, populations, and treasuries, elements in their societies may have ill-intent in their pursuits, at the expense of the safety and security of our citizens. We must therefore appoint “new guards” to ensure our public safety and threats against our society, both domestic and foreign. …

xvi. Whereas security of our homeland is inextricably linked to prosperity of the homeland, the economic and security interest of the region needs to be aligned under the same governance. Since economic crimes … can imperil the functioning of the wheels of commerce for all the citizenry, the accedence of this Federation must equip the security apparatus with the tools and techniques for predictive and proactive interdictions.

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.

There must be New Guards to mitigate the Caribbean advance into trade. This is the charter of the CU Trade Federation. The vision is to provide the stewardship for the region’s economic engines, to optimize trade for intra-region and also extra-regional. This vision details some sound principles for adoption; consider this nugget from Page 129:

Caribbean Dollar
The Caribbean Dollar will be the medium of exchange for trade between CU member-states. There is no need to trade in any foreign currency (i.e. US$). In fact, the Caribbean Central Bank will control the monetary policies of the CU region. Any mis-management of US fiscal policies, often the case with Congress’ deficit spending, would not impede on the necessary trade of one Caribbean state to another.

The CCB will be empowered to intervene in the currency affairs of the region. This constitute the New Guards that will be watching the Caribbean regional marketplace. This is what Central Banks do – should do – and now there will be one for our region:

Currency intervention is a monetary policy operation which occurs when a government or central bank buys or sells foreign currency in exchange for their own domestic currency, generally with the intention of influencing the exchange rate and trade policy. Policymakers may have different reasons for currency manipulation, such as controlling inflation, maintaining international competitiveness, financial stability, etc. – Source

In the Caribbean we have a crisis that stems from our high societal abandonment rate. Every time we have had currency devaluation episodes, a consequence has been citizens fleeing away from their homelands. What is the cause of these episodes? Number 1 reason/answer: Currency Speculators … trying to exploit our vulnerabilities. See this evidence-sample:

  1. Barbados
    Like many small developing countries, Barbados’ capital markets are comparatively unsophisticated and protected by legislative and non-legislative barriers to capital flows. However, by imposing a simple Uncovered Interest Parity (UIP) condition, the counterfactual situation of free capital movements and efficient capital markets can be simulated. It is shown that in these conditions successful speculative attacks on the currency anchor would have occurred in times of macroeconomic disequilibrium. This paper is, therefore, supportive of those who, in the wake of the 1990s’ major financial, balance of payments and currency crises, have argued for a more cautious approach to financial and capital account liberalisation, particularly for those countries that have chosen to maintain a fixed currency arrangement.
    Source: Caribbean Development Bank Staff Working Paper May 2000; retrieved November 27, 2018 from: http://www.caribank.org/uploads/publications-reports/staff-papers/wkgppr_2_exchange_rates[1].pdf
  2. Jamaica
    This paper attempts to generate an empirical model aimed at predicting the timing and magnitude of currency depreciation forced by speculative attacks on Jamaica’s managed exchange rate system. The paper is grounded within a first generation approach (‘fundamentals approach’) to speculative attack modeling, which stresses the role played by weak economic fundamentals in inducing currency crises. –
    Source: Bank of Jamaica White Paper; “Estimation of Speculative Attach Models and the Implications for Macroeconomic Policy – 1990 to 2000“; published January 2001; retrieved November 27, 2018 from: http://www.boj.org.jm/uploads/pdf/papers_pamphlets/papers_pamphlets_Estimation_of_Speculative_Attack_Models_and_the_Implication_for_Macroeconomic_Policy.pdf
  3. Dominican Republic
    This paper examines the determinants of speculative attacks that occurred recently in the Dominican Republic, and proposes a series of indicators to serve as an early warning system for identifying vulnerable periods. The estimates were made using monthly data covering the period between January 1996 and June 2008. The results show that the proposed indicators have the ability to reasonably explain and predict the existence of a speculative attack.
    Source: Academic Paper – Pontificia Universidad Católica Madre y Maestra; “Pressure and speculative attacks on the foreign exchange market of the Dominican Republic“; published November 2008; retrieved November 27, 2018 from: https://www.researchgate.net/publication/254443014_Pressure_and_speculative_attacks_on_the_foreign_exchange_market_of_the_Dominican_Republic

Here in the Caribbean, we must learn …

Fool me once, shame on you; fool me twice same on me.

This Go Lean/CU roadmap is designed to address all of this societal engines: economic (monetary), security and governance. The Go Lean book – within its 370 pages – describes how a new Caribbean regime can be empowered to promote and protect trade. The solutions include adopting new community ethos; plus the execution of new strategies, tactics, and implementations to impact the regional economy.  Consider this one advocacy from the book, for optimizing Foreign Currency management. See the specific plans, excerpts and headlines on Page 154 under the title:

10 Ways to Better Manage Foreign Exchange

The Bottom Line on Foreign Exchange Markets

The foreign exchange market is the most liquid financial market in the world. [This is a recent history compared to international commerce in general, with most of the market structure being developed since World War II and after the abandonment of the gold standard. After WWII, the Bretton Woods Accord was signed allowing currencies to fluctuate within a range of 1% to the currencies par; then this structure was eclipsed in the 1970’s, ending fixed rates of exchange and bringing about eventually a free-floating currency system. After 40 years and more iterations, we now have the status quo].

Today, currency traders include large banks, central banks, institutional investors, currency speculators, corporations, governments, other financial institutions, and retail investors. The average daily turnover in the global foreign exchange and related markets is continuously growing. According to the 2010 Triennial Central Bank Survey, coordinated by the Bank for International Settlements, average daily turnover was US$3.98 trillion in April 2010 (vs $1.7 trillion in 1998). Of this $3.98 trillion, $1.5 trillion was spot transactions and $2.5 trillion was traded in outright forwards, swaps and other derivatives. Foreign exchange trading increased by 20% between April 2007 and April 2010 and has more than doubled since 2004.

A foreign exchange market is closest to the ideal of perfect competition, notwithstanding currency intervention (capital controls) by central banks. Totally free markets spurn the development of complex products like derivatives. The 2007 – 2009 Global Financial Crisis demonstrated that free-radical derivative markets do bring systemic threats. (Appendix ZA on Page 315).
1 Lean-in for the Caribbean Single Market & Economy

This treaty allows for the unification of the region into one market, thereby expanding to an economy of 30 countries, 42 million people and GDP of over $800 Billion (circa 2010). A mission of the CU is to empower the economic engines in the region. The Caribbean Central Bank (CCB) will manage the monetary policy and reserves, taking a long view to the region’s economic vibrancy. The Governors of the CCB will be appointed for 14-year terms, thus insulating them from political alignments. This strategy is necessary for the management of advanced exchange products affecting the region’s capital controls (derivatives will be managed in a controlled environment to assuage against systemic risk).
2 Mixed-Basket of Foreign Reserves

The Caribbean Central Bank will control the money supply of the region with new monetary tools (i.e. Open Market Operations not available before), and using a mixed-basket (modeled after the IMF) of foreign reserves assuage the risk tied to any one Super Power, (a la the US dollar). The tool-kits for capital controls (see Appendix ZA) expand under this management approach. The US decisions are made by and for Americans, the Caribbean gets no vote.
3 Overcome Fear of Math
4 E-Payments Neutralizations
5 Apply Lessons-Learned in Region
6 Currency Manipulators / Speculators

The Caribbean Central Bank will enforce monetary control for amounts exceeding a moderate limit, to assuage currency manipulators from “gaming” and abusing the system for illicit gains. This was a lesson-learned from Jamaica.
7 Realities of Dual Currencies

The CU Treaty does not nullify local currencies, rather the C$ is designed to replace the US Dollar default dominance in the region. As such all regional casinos (except in PR & USVI) will game in C$, not US$. This nullifies “black markets”.
8 Diaspora Realities
9 Euro Zone Model for CU and CCB
10 Add the British Pound Sterling to CCB Basket

Do you want to grow the economy?

Trade … more!

Do you want to trade more?

Be prepared to buy-and-sell foreign currency; and be prepared for foreigners to buy-and-sell your domestic currency.

They will be strangers; some will be nice; some will be Bad Actors – “Currency Assassins”.

This is the reality of global trade and foreign currency: Bad Actors will always merge … some with evil intent.

Currency Assassins … are real!

But we can be better and do better. We can trade with the globe and be On Guard for Bad Actors.

Yes, we can …

Mastering globalization, trade and foreign currency is how we must compete in today’s trade battles. This is the quest of the Go Lean roadmap.

Everyone in the Caribbean is urged to lean-in to this roadmap to make the Caribbean a better place to live, work and play. 🙂

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

Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation.

——————-

Appendix A – Understanding the Foreign Exchange Market

Lesson summary

The foreign exchange market is like any other market insofar as something is being bought and sold. However, the foreign exchange market is unique in two ways:

  1. A currencyis being bought and sold, rather than a good or service
  2. The currency being bought and sold is being bought with a different currency.

See remainder of lesson at source here:

Source- Khan Academy e-Learning retrieved November 26, 2018 from: https://www.khanacademy.org/economics-finance-domain/macroeconomics/forex-trade-topic/macro-the-foreign-exchange-market/a/the-foreign-exchange-market

——————-

Appendix B VIDEO – Speculative attack on a currency | Foreign exchange and trade | Macroeconomics | Khan Academy – https://youtu.be/P2IWGlR1SHs

Khan Academy
Published on May 8, 2012 – Macroeconomics on Khan Academy: Topics covered in a traditional college level introductory macroeconomics course.

About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We’ve also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.

For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Macroeconomics channel: https://www.youtube.com/channel/UCByt…
Subscribe to Khan Academy: https://www.youtube.com/subscription_…

Original Source: https://www.khanacademy.org/economics-finance-domain/macroeconomics/forex-trade-topic/macro-the-foreign-exchange-market/v/speculative-attack-on-a-currency

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In Defense of Trade – Bilateral Tariffs: No one wins

Posted on November 25, 2018 in Economics, Government, Strategy

Go Lean Commentary

Trade giveth; trade taketh away …

This has now been established: trade can transform a society, elevating masses of people out of poverty to a middle-class life.

We have seen this formula succeed and repeated time and again – Great Britain, United States, Germany, Japan, Asian Tigers (Singapore, Hong Kong. South Korea and Taiwan). The formula also works in the reverse: stopping trade and people become more improvised.

We are seeing this actuality now as well.

This is the assessment in the US where the current American Federal government (under President Donald Trump) has a new penchant for tariffs. This is also en vogue with the experiences in the UK; London is negotiating a new trade deal with the European Union as they leave – Brexit – that Single Market. Both of these developments appear to be inviting doom for the perspective economies.

This commentary is the fourth submission of a 5-part series (4 of 5) from the movement behind the book Go Lean…Caribbean in consideration of the subject “In Defense of Trade“. The focus here is that Trade must be prioritized in the Caribbean region if we want a new economic regime. The other commentaries in the series are cataloged as follows:

  1. In Defense of Trade: China Realities
  2. In Defense of Trade: Macy’s Thanksgiving Parade Model – ENCORE
  3. In Defense of Trade: India BPO’s
  4. In Defense of Trade: Bilateral Tariffs – No one wins
  5. In Defense of Trade: Currency Assassins – Real Threat

No doubt, we want growth, so this means we must embrace the strategies, tactics and implementations related to trade. This is how we can succeed with the quest for jobs, entrepreneurial opportunities, better educational and healthcare options, a safer homeland and more efficient governmental services. We must pay more than the usual attention to these discussions, especially related to tariffs.

A tariff is a tax on imports or exports between sovereign states. Trade deficits mean that consumers buy too much foreign goods and too few domestic products. According to Keynesian theory, trade deficits are harmful. Countries that import more than they export weaken their economies. As the trade deficit increases, unemployment or poverty increases and GDP slows down. And surplus countries are getting richer at the expense of deficit countries. Keynes thought that surplus countries should be taxed[1].The tariff is used to equalize the trade balance in order to protect domestic workers. It is a policy that taxes foreign products and encourages home industry. – Source: Wikipedia.

Right now the US is doubling-down on a tariff strategy so as to force their will on the international community – especially targeting China. But the experts are asserting that a tariff strategy is not the solution.

Experts? The Economists … and Wall Street Titans. See this one Wall Street Titan prognosticate the vision of trade realities in this November 2018 VIDEO:

VIDEO – Ray Dalio on U.S. – China Trade Tensions, Markets – https://youtu.be/ZTJkNDlHB3s

CNBC
Published on Nov 15, 2018 – Ray Dalio, hedge fund giant Bridgewater Associates, joins ‘Squawk Box’ to discuss markets, interest rates, the debt market and U.S.-China trade tensions.

The dispute between the U.S. and China over trade deficits and surpluses is rather trivial compared to the broader philosophical differences between the world’s two biggest economic superpowers, Bridgewater Associates founder Ray Dalio told CNBC on Thursday.

“The trade war, I think, can be worked out,” the billionaire investor Dalio said in a “Squawk Box” interview on CNBC. But he argued the conflict goes “way beyond the trade war.”

Dalio, co-CIO and co-chairman at Bridgewater, said the two nations’ polar opposite methods of governing is the broader, more difficult issue to reconcile. “It goes back to Confucius in 500 B.C.,” he said.

“It’s basically a top-down versus a bottom-up type of approach,” said Dalio, whose China unit of Bridgewater last month launched its first onshore Chinese investment fund.

“When you look at the 2025 plan in China, the government believes that they should have a plan for making China great” and will coordinate all aspects of public and private enterprise to achieve their goals, he said. “That type of activity is objectionable to the United States” in its free market economy.

The China 2025 plan is a state-backed industrial policy that’s provoked alarm in the West, and is core to Washington’s complaints about Beijing’s technological ambitions.

Dalio appeared on CNBC from the Greenwich Economic Forum in Connecticut where he later spoke to the elite gathering of “investment thought leaders“.

So Wall Street experts like Ray Dalio are urging caution for national governments implementing trade tariffs. In fact, an editorial by the iconic Wall Street Journal is strongly urging the trump administration to tread lightly with their new found affinity for tariff. The reason is simple:

No one wins a Trade War fought with the weapons of tariffs. It’s a fallacy and defective reasoning to think that tariff’s can be used to win a Trade War in this modern age of globalization.

This is the conclusion of the below Opinion Commentary in the Appendix: See the excerpt-summary here:

Mr. Trump has instead employed a unilateral tariff policy that lets him boast about being tough without a clear goal. The tariffs will hurt Chinese exporters, though many will move production to other countries. But tariffs also damage American producers and consumers, as does the $60 billion in new retaliatory tariffs that Beijing announced Tuesday.

The Caribbean needs to take note. We need effective strategies, tactics and implementation for trade. This is the quest of the book Go Lean…Caribbean.

The Go Lean book serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU). The CU seeks to optimize the region’s economic systems to better deliver on the prime directives of the Go Lean roadmap. The prime directives are pronounced as the following statements:

  • 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 and mitigate challenges/threats to ensure public safety for the region’s stakeholders.
  • Improvement of Caribbean governance, including a separation-of-powers between member-states and CU federal agencies.

So the CU Trade Federation vision is to provide the stewardship for the region’s economic engines, to optimize trade, so as to succeed in the goals of the roadmap.

The Go Lean/CU roadmap is designed to drive change among the economic, security and governing engines of the Caribbean member-states. The Go Lean book – within its 370 pages – describes how a new Caribbean regime can better exploit the benefits of trade – thereby avoiding the pitfalls of faulty trade reasoning. Among the new community ethos the book urges the region to adopt and the strategies, tactics and implementations the book urges the region to execute is this one advocacy to double-down on trade. Consider the specific plans, excerpts and headlines from this advocacy on Page 128 entitled:

10 Ways to Improve Trade

1 Lean-in for the Caribbean Single Market

This treaty allows for the unification of the region into one market, thereby creating a single economy of 30 member-states, 42 million people and a GDP of over $800 Billion. The CU will function as a proxy organization of the governments of all 30 member-states … . The similar exclusivity of roles and responsibilities will allow the CU to deploy and then empower the economic engines of this region. The profits from this new Trading Company, the CU, also go back to its stockholders; in this case, the member-states.

In addition, the treaty will call for a homeland security pact, with emergency management provisions, to assuage regional threats and risks. The CU gets to apply the lessons-learned from … experience to pursue the Greater Good, ensure that its powers are always authorized and deputized by the sovereign states, and proper governance, transparency and accountability accompany all activities.
2 Adopt Trade SHIELD

The CU will adopt the Trade SHIELD principles (see APPENDIX D on Page 264) to foster and optimize domestic and international trade.
3 Caribbean Dollar (C$) Currency Stabilization Derived from Learned Lessons
4 Electronic Commerce to Streamline a Bigger Better Domestic Trade Market
5 CU Citizens as Foreign Guest Workers
6 Diaspora Trade

The presence of a Caribbean Diaspora in North American and EU cities furnishes an export market to profit from trade. Since most often, the Diaspora live in “pockets” in their foreign lands, the logistics of exporting products (food supplies and intellectual property) has been efficient, but the CU envisions an even more optimized trade process with Free Trade provisions, collaborated customs processing, pre-approved inspections, and electronic commerce in C$ Dollars.
7 Intellectual Property – Media, Music
8 Tourism Enhancers
9 Strategic Priorities (Food, Fisheries)

One mission of the CU is to facilitate the food supply so that the region can feed itself, more from local production and less from trade; this includes yields from domestic agriculture and fisheries. Even if the opportunity cost is too high for domestic food production compared to foreign trade, the CU must supplement with subsidies. Food is non-negotiable!
10 Trade Missions

The CU will foster a stronger foreign policy by “speaking on one accord” for all the member-states. The CU will therefore open/staff foreign Trade Missions to not only perform diplomatic services, but economic ones as well. This will extend beyond the current Trade Negotiations (OTN), so as to add the functions of a Group Purchasing Organization (GPO).

Tariffs are bad by the country imposing them, but by any competing entity – you hurt yourself.

Imagine the absurdity of this analogy: A Bad Actor robs a bank and instead of targeting the innocent hostages in the bank, he threatens to harm himself – “Give me the money or I will shoot … myself”.

Now that the Great Recession (2008) is over in the US, the country is enjoying a full recovery. But as warned in the foregoing editorial, faulty trade reasoning can jeopardize this disposition:

Strong U.S. growth after tax reform and deregulation is so far dwarfing the overall economic harm from tariffs, as Tuesday’s market nonchalance indicates. But the tariffs are doing arbitrary harm to innocent Americans, and a policy of hurting yourself until the other guy changes his behavior is hard to sustain.

This Go Lean movement has addressed Good -vs- Bad Trade Policies in the past. This consideration has reviewed the business prospects of chattel items (raw materials and finished goods), intelligent property (music and media products) and services (tourism, medical, outsourcing, etc.). Consider this sample of previous blog-commentaries:

https://goleancaribbean.com/blog/?p=15346 Industrial Reboot – Shipbuilding 101
https://goleancaribbean.com/blog/?p=13184 Industrial Reboot – Frozen Foods 101
https://goleancaribbean.com/blog/?p=15310 Industrial Reboot with Trauma Centers
https://goleancaribbean.com/blog/?p=13138 Industrial Reboot – Prisons 101
https://goleancaribbean.com/blog/?p=12230 Commerce of the Seas – Extraction Realities
https://goleancaribbean.com/blog/?p=12126 Stupidity of the Jones Act on PR, USVI Trade
https://goleancaribbean.com/blog/?p=7789 An Ode to Detroit – Good Luck on Trade!
https://goleancaribbean.com/blog/?p=6867 How to address high consumer prices? Better Trade
https://goleancaribbean.com/blog/?p=5648 New Trade Regime for Music Industry
https://goleancaribbean.com/blog/?p=4767 Welcoming WTO? Say Goodbye to Nationalism
https://goleancaribbean.com/blog/?p=479 PetroCaribe approach to Regional Trade & Social Advocacy

The Caribbean can be a better homeland to live, work and play with a better execution of trade policies. Trade is more about “brains than it is about brawn”. We need to think smart and work smart to reform and transform our society.

Let’s do this!

This is the Go Lean quest.

We urge everyone in the Caribbean to lean-in to this roadmap. It is conceivable, believable and achievable. 🙂

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

Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation.

—————-

Appendix – Title: The Missing China Trade Strategy
Sub-title: Trump imposes new tariffs but what he wants from Beijing isn’t clear.
By: WSJ Editorial Board

President Trump on Monday imposed a long-threatened 10% tariff on $200 billion of Chinese imports, effective next week, with the rate set to increase to 25% at the end of the year. More than half of Chinese imports now face punitive taxes, so it’s remarkable that the U.S. still hasn’t spelled out what it wants from Beijing. The lack of a strategy makes it hard to secure meaningful gains and resolve a trade war that is damaging both economies.

The Administration is on solid ground when it says China’s behavior threatens the global trading system. A study by the U.S. Trade Representative found “numerous unfair policies and practices relating to United States technology and intellectual property.” There is bipartisan U.S. support to address China’s violations of its promises to respect market forces.

But Mr. Trump also continues to rail against China for its large bilateral trade surplus with the U.S., and this is clearly motivating his escalation of tariffs. The surplus is driven largely by Chinese comparative advantage in low-end manufacturing and global capital flows to the U.S. Prioritizing a goal that flies in the face of market forces sends a mixed message to Beijing on what the U.S. wants, and it allows China to pose as the defender of free trade.

Cabinet members have tried to negotiate deals that would satisfy Mr. Trump’s obsession with the trade deficit, only to have him reject them as insufficient. Commerce Secretary Wilbur Ross struck a compromise last year on steel production that was discarded after he returned from Beijing. In May Treasury Secretary Steve Mnuchin reached a tentative deal to put tariffs on hold if the Chinese bought more soybeans and natural gas, but the White House resumed its tariff threats in June.

Mr. Trump is correct on many points, including his complaints that his predecessors failed to address changing Chinese behavior. China’s accession to the World Trade Organization in 2001 assumed the country was committed to what it then called “reform and opening” and would honor its promises to let foreign companies compete and protect intellectual property. The agreement largely treated China like other trading nations and relied on WTO arbitration to resolve disputes.

But China’s economic reforms stalled after its WTO entry. Beijing responded to the global financial crisis by directing credit to state-owned enterprises, which led officials to discriminate against foreign companies. After President Xi Jinping took power in 2012, he continued this trend and created the “Made in China 2025” plan requiring foreign companies to turn over intellectual property in return for access to China.

If China were a small country, the U.S. could afford to absorb surplus goods and let American consumers benefit. China’s effort to leapfrog into the ranks of developed economies by forcing companies to relocate their most valuable processes and pervert the law of comparative advantage will ultimately fail.

But when the world’s second-largest economy goes rogue, the collateral damage is huge and has undermined political support in the U.S. and the West for free trade. More ominously, China’s mercantilism is part of a larger Xi Jinping strategy to establish a new military and commercial hegemony in Asia.

The U.S. goal now should be to negotiate a deal with Beijing that sets new rules of the trading road. That agreement should seek to change Chinese practices, not reduce the trade deficit per se. This may require superseding current WTO rules, and that is best accomplished with a united front that includes the world’s other major trading powers.

Mr. Trump has instead employed a unilateral tariff policy that lets him boast about being tough without a clear goal. The tariffs will hurt Chinese exporters, though many will move production to other countries. But tariffs also damage American producers and consumers, as does the $60 billion in new retaliatory tariffs that Beijing announced Tuesday.

Strong U.S. growth after tax reform and deregulation is so far dwarfing the overall economic harm from tariffs, as Tuesday’s market nonchalance indicates. But the tariffs are doing arbitrary harm to innocent Americans, and a policy of hurting yourself until the other guy changes his behavior is hard to sustain. Mr. Trump’s political support will erode if he can’t deliver the new trade deals he promises.

If Mr. Trump wants to change Chinese behavior, he should first finish a new NAFTA, drop his blunderbuss steel tariffs on allies, forget new auto tariffs, negotiate a zero tariff deal with Europe, and re-enter the Trans-Pacific Partnership. Then lead a coalition to confront Xi Jinping from a position of strength with targeted trade enforcement rather than scattershot tariffs. The real worry is that Mr. Trump supports tariffs for their own sake, and he may not want a China deal. With Donald Trump and trade, you never know.

Source: Posted September 18, 2018; retrieved November 25, 2018 from: https://www.wsj.com/articles/the-missing-china-trade-strategy-1537313246

—————-

Related Media – Foreign Edition Podcast

Asia Avoids a Crisis; Britain Falls Into One – http://traffic.megaphone.fm/WSJ6726301554.mp3

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In Defense of Trade – India’s Business Process Outsourcing

Posted on November 23, 2018 in Economics, Industries, Strategy

Go Lean Commentary

Pay more than the usual attention to Trade …

… this is the urging of this series of commentaries. Why?

Trade may be the panacea (cure all) for the ills of the Caribbean. Let’s consider one example, BPO.

BPO = Business Process Outsourcing

Individually, these 3 words are very common in our daily life: Business, Process and Outsourcing. Put together and most people … have no clue.

BPO is not just an informal association of these 3 letters. Rather it’s a formal business model; see this encyclopedic reference:

Business process outsourcing (BPO) is a subset of outsourcing that involves the contracting of the operations and responsibilities of a specific business process to a third-party service provider. Originally, this was associated with manufacturing firms, such as Coca-Cola that outsourced large segments of its supply chain.[1]

BPO is typically categorized into back office outsourcing, which includes internal business functions such as human resources or finance and accounting, and front office outsourcing, which includes customer-related services such as contact center (customer care) services.[2]

BPO that is contracted outside a company’s country is called offshore outsourcing. BPO that is contracted to a company’s neighbouring (or nearby) country is called nearshore outsourcing.

Often the business processes are information technology-based, and are referred to as ITES-BPO, where ITES stands for Information Technology Enabled Service.[3] Knowledge process outsourcing (KPO) and legal process outsourcing (LPO) are some of the sub-segments of business process outsourcing industry.

Benefits
The main advantage of any BPO is the way in which it helps increase a company’s flexibility. However, several sources have different ways in which they perceive organizational flexibility. In early 2000s BPO was all about cost efficiency, which allowed a certain level of flexibility at the time. Due to technological advances and changes in the industry (specifically the move to more service-based rather than product-based contracts), companies who choose to outsource their back-office increasingly look for time flexibility and direct quality control.[4] Business process outsourcing enhances the flexibility of an organization in different ways:

  • … transforming fixed into variable costs.[7]
  • … focus on its core competencies, without being burdened by the demands of bureaucratic restraints.[9]
  • … increasing the speed of business processes.
  • … allows firms to retain their entrepreneurial speed and agility, which they would otherwise sacrifice in order to become efficient as they expanded.

Source: Retrieved November 23, 2018 from: https://en.wikipedia.org/wiki/Business_process_outsourcing

The most common BPO in the US is payroll-processing. Most companies have specific missions, they are not in the payroll business, but payroll – every week, bi-week, fortnight, or monthly – is a necessary evil for operations. BPO for this HR-Accounting functionality allows the firm to concentrate on its mission and enjoy greater functionality and sometimes better cost savings.

Here’s another: have you gotten a Passport lately? Then chances are you are familiar with the subject. You show up with a completed application and a photo; a clerk receives you and inspects your form for completeness; they package your submissions into a bundled folder and send it off for processing (Black-box). 2 weeks, 3 weeks or 5 weeks later (according to the Service Level Agreement or SLA), a finished passport is ready for pick-up. That Black-box is classic BPO.

Worldwide, the BPO market is estimated at about US$140 billion for 2016 – from the BPO Services Global Industry Almanac 2017.[27]  One country has double-down on this strategy that they can provide jobs, entrepreneurial opportunities and economic growth to their citizens by pursuing more and more BPO.

This is India. See the related VIDEO in Appendix B below.

The foregoing encyclopedic reference continues:

India, China and the Philippines are major powerhouses in the industry. In 2017, in India the BPO industry generated US$30 billion in revenue according to the national industry association.[28] The BPO industry is a small segment of the total outsourcing industry in India. The BPO industry and IT services industry in combination are worth a total of US$154 billion in revenue in 2017.[29] The BPO industry in the Philippines generated $22.9 billion in revenues in 2016.[30] In 2015, official statistics put the size of the total outsourcing industry in China, including not only the BPO industry but also IT outsourcing services, at $130.9 billion.[31]

Lessons learned from India is not unfamiliar to this movement behind the book Go Lean…Caribbean. Here we go again!

We can benefit from the consideration of trade with other countries; we previously considered China and now we are looking at India. This commentary is the 3rd of the 5-part series (3 of 5) from the movement behind the book Go Lean…Caribbean in consideration of the subject “In Defense of Trade“. The focus here is that Trade must be prioritized in the Caribbean region if we want a new economic regime. The other commentaries in the series are cataloged as follows:

  1. In Defense of Trade: China Realities
  2. In Defense of Trade: Macy’s Thanksgiving Parade Model – ENCORE
  3. In Defense of Trade: India BPO’s
  4. In Defense of Trade: Bilateral Tariffs – No one wins
  5. In Defense of Trade: Currency Assassins – Real Threat

The Go Lean movement asserts that Trade is pivotal for Caribbean growth. It does not only affect the region’s economics, but the security and governing engines as well. In the case of BPO, the trade product is intellectual: human services. India has benefited greatly from Wall Street’s BPO jobs; this Asia region now boasts 10 percent of all the jobs servicing Wall Street banks; see Appendix A below for a full article of how Wall Street firm Goldman Sachs employ professional functions in their Bangalore BPO facility, including Quantitative Analysts. We need to pay more than the usual attention to this model. We can copy some of the BPO functionality and bring jobs here to the Caribbean.

The Go Lean book serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU). The CU seeks to optimize the region’s economic systems to better deliver on the prime directives of the Go Lean roadmap. The prime directives are pronounced as the following statements:

  • 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 and mitigate challenges/threats to ensure public safety for the region’s stakeholders.
  • Improvement of Caribbean governance to support these economic/security engines, including a separation-of-powers between member-states and CU federal agencies.

So the CU Trade Federation vision is to provide the stewardship for the region’s economic engines, to optimize trade so as to succeed in the goals of the roadmap.

The Go Lean/CU roadmap details how to drive change for the 30 member-states and their economic, security and governing engines. The Go Lean book – within its 370 pages – describes the new community ethos, strategies, tactics, implementations and advocates that must be executed to manifest this roadmap.

BPO’s are affiliated with Contact Centers …

… this commentary had previously identified the economic benefits that can come to a community that invest in BPO’s:

With modern Internet Communications Technology (ICT) – think Voice-over-IP – a phone call can originate or terminate around the globe, but feel/sound like it is next door. The premise of this business model for the Caribbean is simple: Why not make those calls / answer the phone here in the Caribbean?

Jobs are at stake.
…

Direct and indirect jobs at physical and virtual call centers: 12,000.
…
In addition to these industry jobs; there is also the reality of indirect jobs – unrelated service and attendant functions – at a 3.75 multiplier rate would add another 45,000 jobs.

The subject of banking jobs have been thoroughly elaborated upon in these previous Go Lean blog-commentaries:

https://goleancaribbean.com/blog/?p=15923 Industrial Reboot – Payment Cards 101
https://goleancaribbean.com/blog/?p=15479 ‘Lean Is’ as ‘Lean Does’ – Good Bank Project Management
https://goleancaribbean.com/blog/?p=14242 Leading with Money Matters – Follow the Jobs
https://goleancaribbean.com/blog/?p=11184 JPMorganChase spent $10 billion on ‘Fintech’ for 1 year

In summary, while the Caribbean is arguably the best address on the planet, we have a deficiency in job creation. We need more trade. There is the opportunity to double-down on trade … in services – BPO’s await us – this will create more jobs.

India did this – mastering trade and globalization – so can we.

This is the Go Lean roadmap. This plan is conceivable, believable and achievable.

We urge everyone in the Caribbean – bankers et al – to lean-in to this roadmap to make the Caribbean a better place to live, work and play. 🙂

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

Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation.

———————-

Appendix A – Title: The new back office: inside Goldman Sachs’ Bangalore hub 
Sub-title: Quants are hired in India as economics, politics and tech shape the banking industry
By: Andrew Hill

When Goldman Sachs opened its wholly owned Bangalore operation in 2004, it was a typical back office. Just under 300 full-time staff supported a front line of revenue-generating bankers worldwide. They worked in limited areas such as information technology, finance and accounting.

The group put no cap on Bangalore’s ambitions, says Bunty Bohra, who heads the office, but “we didn’t envisage anything like the scale and complexity” of the current operation — let alone what is now planned for the group.

Goldman now employs about 5,000 staff in Bangalore, 4,000 of them full-time, across almost every division of the bank, including revenue-generating “front office” roles. In 2019, it expects to open a $250m campus on Bangalore’s traffic-clogged outer ring road that will be able to accommodate 9,000 people in two buildings, across 1m sq ft.

The evolution of Goldman’s presence in Bangalore is one example of how economics, technology and politics have shaped the back office over the past 15 years. Companies have started to look at back offices not just as low-cost support centres, but sources of skills for the rest of the organisation. At the same time, they have learnt to flex the mixture and location of their own staff, and of outsourced teams, to meet customer needs.

In the mid-1990s, multinationals strove to cut the cost of support functions such as handling payroll, or dealing with customer queries. Moving them to cheaper countries such as India was the obvious solution. Since then, however, the response to the question of how, where and with whom to carry out back-office functions has become more complex, and more strategic.

Goldman is a case in point. Its Bangalore-based staff now represent 14 activities — from compliance and legal services to investment banking, though the most senior client-handling vice-presidents still operate out of Mumbai. “It really is a talent story, not ‘Where are there people and office space that’s inexpensive?’” says Mr Bohra. Last year, for instance, the bank hired 150 “quants” in Bangalore. These mathematicians and scientists work on the bank’s quantitative investment strategies, but also analyse big data in areas such as risk management or human resources.

The bank’s plans for its new campus would allow it to expand to become the biggest office outside New York. But at the same time, the bank does not have to take up the option to lease the second of two buildings. At the moment, it expects headcount to remain flat. Mr Bohra uses an analogy with a potentially uncontrollable family pet: “We don’t want to have a ‘golden retriever’ problem. We want the intellect, maturity and seasoning to exist at the same time.”

This is only one way in which companies are reviewing their back-office strategy. For instance, growth in the use of “captive” centres, serving the whole company, has accelerated. Ilan Oshri of Loughborough University found that between 1990 and 2009, the world’s largest 250 companies established 367 captive centres worldwide. There are now an estimated 2,000 such hubs.

Outsourcing companies have also become more agile. Susir Kumar, chairman of Intelenet Global Services, says outsourcers have moved from carrying out processes to making more judgments for clients. Intelenet’s agents have long had the responsibility for deciding, say, whether to grant a loan or approve an insurance claim. “The ability to manage change in a fast-changing environment is the key,” he says. Often, contract workers are used in a blend with in-house back-office staff.

Even Goldman’s Bangalore operation, which prides itself on propagating a “Goldman culture”, now outsources certain functions — such as accounting — to multiple contractors.

Prof Oshri says the trend of companies moving their offshored back offices to the next cheapest location as labour costs increase has also changed.

One factor for large companies that have expanded overseas is political pressure to “bring jobs home”. That could be a particular issue for US retail banks. They are potentially in president Donald Trump’s line of fire, although they argue they need to support front offices round the clock, and therefore round the world.

Other sectors have, over the past five years, also started to trim earlier policies to offshore customer service operations. In the UK, Santander, the bank, United Utilities, the water company, and BT all “reshored” call-centre work from India in 2011. Vodafone UK recently announced it would create 2,100 jobs across the UK, essentially by relocating customer service roles currently carried out, via an external agency, in South Africa. Last year’s Brexit vote could accelerate the trend, as outsourcers and insourcers adapt to a more nationalistic popular tone.

In the case of call centres, location is highly dependent on customers’ perception of quality — bluntly, whether they can understand the call-centre staff. But there are other advantages to having support staff closer to headquarters, including control over recruitment, rewards and training. Strategic support functions, like risk management, may be better handled by a “middle office”, based closer to the main revenue-generating activities.

The cost and skills combination needed for back offices still tilts the choices heavily towards emerging markets, though. Vodafone UK’s IT shared services are still in Bangalore and Pune in India, where it uses a blend of captive operations and third parties, often dealing with enterprise customers.

Campbell Harvey of Duke University’s Fuqua School of Business says cost is still companies’ main motivation and technology will be a more important influence than politics on future back-office decisions. “People traditionally doing back-office functions in New York and London were disrupted by offshoring and that’s a sideshow compared with what’s coming,” he says.

That said, while the rise of machine learning sounds like a threat to back-office jobs, when Prof Oshri asked 150 corporate buyers of outsourced services how much they had spent on cognitive computing, the answer averaged out at £350,000 per enterprise over the past five years — barely enough to cover a pilot project.

Leslie Willcocks of London School of Economics says he is “staggered how slow” big organisations are to introduce basic automation, let alone artificial intelligence.

Intelenet’s Mr Kumar is equally sanguine, both about the US political pressure, to which he thinks the industry will adapt, and the rise of the robots. He believes the same number of employees will work with machines to do more sophisticated jobs for clients. But Prof Harvey has a warning for institutions that do not plan ahead. “It’s a race to the bottom and the bottom is not a human, it’s a machine.”

Source: The Financial Times – Posted April 13, 2017; retrieved November 23, 2018 from: https://www.ft.com/content/6c1481ea-185d-11e7-9c35-0dd2cb31823a

———————-

Appendix B VIDEO – The Transformation Of India’s BPO Industry – https://youtu.be/44RlATt7S2w


NDTV
Published on Nov 19, 2017 – India’s BPO industry first caught our imagination over a decade ago with its world-class offices and relatively high starting salaries. But with the downsides of strange shift timings and stranger accents. How has it changed since then? As it lost its novelty value, the BPO world fell out of the headlines. Is the industry still flourishing in India or have protectionism, automation and competition from other countries hurt the famous Indian outsourcing industry?

NDTV is one of the leaders in the production and broadcasting of un-biased and comprehensive news and entertainment programmes in India and abroad. NDTV delivers reliable information across all platforms: TV, Internet and Mobile.

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In Defense of Trade – Macy’s Thanksgiving Parade Model – ENCORE

Posted on November 22, 2018 in Economics, Industries, Strategy

Today is the Thanksgiving Holiday in the US. It’s a Public Holiday, that the government has set-aside for the population to Give Thanks … to whomever …

This is a civic holiday more so than it is a religious holiday.

It is also a commercial holiday – lots of Trade activities; lots of Trade Inspirations.

The Trade Inspiration applies to us in the Caribbean. There is one event associated with the American Thanksgiving tradition that gives us pause – as observers and reporters of the America eco-system – that is the Macy’s Thanksgiving Parade. This subject has been detailed in a previous Go Lean Commentary from November 25, 2016; it is appropriate to Encore that now; see below.

This commentary is the 2nd of the 5-part series (2 of 5) from the movement behind the book Go Lean…Caribbean in consideration of the subject “In Defense of Trade“. The focus here is that Trade must be prioritized in the Caribbean region if we want a new economic regime. The other commentaries in the series are cataloged as follows:

  1. In Defense of Trade: China Realities
  2. In Defense of Trade: Macy’s Thanksgiving Parade Model – ENCORE
  3. In Defense of Trade: India BPO’s
  4. In Defense of Trade: Bilateral Tariffs – No one wins
  5. In Defense of Trade: Currency Assassins – Real Threat

No doubt, there is the need to grow the Caribbean economy; we need jobs, entrepreneurial opportunities, better educational and healthcare options, a safer homeland and more efficient governmental services. Since trade policies (chattel goods and intellectual property) affect all of these deliveries, we need to pay more than the usual attention to these discussions. Truthfully, we do NOT have a lot of chattel goods in our region; we do not manufacture much; but we can thrive in the intellectual property arena. This is where we need successful role models to show us how we can better exploit the opportunities with trade.

Let’s look-listen-learn from the Macy’s model. See the Encore here:

—————————————

Go Lean Commentary – Model of the Macy’s Thanksgiving Day Parade – By The Numbers

“We are giving this for free as a gift to America” – CNBC Newscast: Amy Kule, Executive Producer, 2014 Macy’s Thanksgiving Parade*.

Free?

Hardly! There is nothing free about American Thanksgiving. This is just another example of American Crony-Capitalism. Consider the facts in this VIDEO here of the Macy’s Thanksgiving Day Parade, by the numbers:

VIDEO – Macy’s Thanksgiving Day Parade by the Numbers – http://www.aol.com/video/channel/news/582e4599134aa15f420ded1a/

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Click on the Photo to Play VIDEO 

This discussion is promoting the idea of the Caribbean modeling the best-practices of American commerce – there are a lot of economic returns from events. The Macy’s Thanksgiving Day Parade, in the foregoing, is an event – one of the biggest on the calendar for New York City. So the focus of this commentary is the impact that one event can have on the societal engines of a community: economics, security and governance.

One person – or company – can make a difference.

Notice how this parade is mostly administered by one private company: Macy’s Department Stores.

Reference Title: Macy’s Department Store
Macy’s, originally R. H. Macy & Co., is a department store owned by Macy’s, Inc. It is one of two divisions owned by the company, with the other being Bloomingdale’s. As of January 2014, the Macy’s division operates 789 department store locations in the continental United States, Hawaii, Puerto Rico, and Guam, including the prominent Herald Square flagship location in Midtown Manhattan, New York City.[2]:35

cu-blog-macys-thanksgiving-day-parade-by-the-numbers-photo-2Macy’s has conducted the annual Macy’s Thanksgiving Day Parade in New York City since 1924 and has sponsored the city’s annual Fourth of July fireworks display since 1976. Macy’s Herald Square is the largest department store in the world. The flagship store covers almost an entire New York City block, features about 1.1 million square feet of retail space, includes additional space for offices and storage, and serves as the endpoint for Macy’s annual Thanksgiving Day parade. It is estimated that the value of Herald Square is under $3 billion to more than $4 billion.[3]

As of 2015, Macy’s is the largest U.S. department store company by retail sales and is the 15th-largest retailer in the United States for 2014 in terms of revenue.[4][5]
Source: Retrieved November 25, 2016 from: https://en.wikipedia.org/wiki/Macy%27s

The focus of the book Go Lean…Caribbean is to elevate the Caribbean economic disposition, based on the existing infrastructure and new implementations. So we would want to look-listen-learn from this American model and then apply the lessons here in the Caribbean. Events are integral to the touristic experience; this is why the Go Lean book, serving as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU), details so many dimensions of eco-system for events. The book prominently highlights that even small towns can get in on the economic buoyancy of events by detailing the role model of the City of Sturgis (population 6,600) in the US State of South Dakota – Page 191. Their annual event – Sturgis Motorcycle Rally in August – generates about $800 million in community revenues.

Successful management of events is a mission of Go Lean roadmap. The region needs the jobs. These events – think Carnival or Junkanoo in the Bahamas – create permanent and temporary jobs. This is part-and-parcel of the Go Lean/CU prime directives, as identified with the following 3 statements:

  • Optimization of the economic engines in order to grow the regional economy to $800 Billion & create 2.2 million overall new jobs; 9,000 jobs are attributed to Events.
  • Establishment of a security apparatus to protect the resultant economic engines.
  • Improve Caribbean governance to support these engines.

The Go Lean book presented the roadmap to imbrue the Caribbean region with new community ethos, plus new strategies, tactics, implementation and advocacies to improve event-job creation in the region. The following is a sample of these specific details from the book:

Community Ethos – Deferred Gratification Page 21
Community Ethos – Economic Principles – People Choose Page 21
Community Ethos – Economic Principles – People Respond to Incentives in Predictable Ways Page 21
Community Ethos – Economic Principles – Economic Systems Influence Individual Choices Page 21
Community Ethos – Economic Principles – The Consequences of Choices Lie in the Future Page 21
Community Ethos – Governing Principles – Lean Operations Page 24
Community Ethos – Governing Principles – Cooperatives Page 25
Community Ethos – Ways to Impact the Future Page 26
Community Ethos – Ways to Foster Genius – Consider Artists, Musicians and Performers Page 27
Community Ethos – Ways to Help Entrepreneurship Page 28
Community Ethos – Ways to Promote Happiness Page 36
Community Ethos – Ways to Impact the Greater Good Page 37
Strategy – Vision – Confederate 30 Member-States Page 45
Strategy – Mission – Celebrate the Music, Sports, Art and Culture of the Caribbean Page 46
Tactical – Confederating a Permanent Union Page 63
Tactical – Fostering a Technocracy Page 64
Tactical – Separation-of-Powers – CU Federal Agencies versus Member-State Governments Page 71
Implementation – Ways to Pay for Change Page 101
Implementation – Ways to Deliver Page 109
Planning – 10 Big Ideas for the Caribbean Region Page 127
Planning – Ways to Make the Caribbean Better Page 131
Planning – Lessons from New York City Page 137
Planning – Lessons from Omaha – College World Series Model Page 138
Advocacy – Ways to Grow the Economy Page 151
Advocacy – Ways to Create Jobs Page 152
Advocacy – Ways to Enhance Tourism Page 190
Advocacy – Ways to Impact Events Page 191
Advocacy – Ways to Promote Fairgrounds Page 192
Advocacy – Ways to Preserve Caribbean Heritage Page 218
Advocacy – Ways to Improve Sports – Fairgrounds as Sport Venues Page 229
Advocacy – Ways to Improve the Arts Page 230
Advocacy – Ways to Promote Music Page 231

The empowerments in the Go Lean book calls for permanent change to ensure that Caribbean people have opportunities; they only want to be able to provide for their families and preserve their unique Caribbean culture.

The Go Lean roadmap offers the technocratic execution of these deliverables. Imagine the expansion of the existing events in the region. Plus, imagine the artistic expressions and entertainment (singers, dancers, musicians, performers, etc.). Just like for the Macy’s Parade in the foregoing, economic gains await. This is the business model of “events”. From the outset, the Go Lean book recognized the significance of events and festivities in the roadmap with these statements in the opening Declaration of Interdependence (Page 12 & 14):

xxi.  Whereas the preparation of our labor force can foster opportunities and dictate economic progress for current and future generations, the Federation must … recognize and facilitate excellence in many different fields of endeavor, including sciences, languages, arts, music and sports. This responsibility should be executed without incurring the risks of further human flight, as has been the past history.

xxxii. Whereas the cultural arts and music of the region are germane to the quality of Caribbean life, and the international appreciation of Caribbean life, the Federation must implement the support systems to teach, encourage, incentivize, monetize and promote the related industries for arts and music in domestic and foreign markets. These endeavors will make the Caribbean a better place to live, work and play.

There are many other communities that have flourished in this strategy – business model of fun and festivities – as depicted with the example of the Macy’s Thanksgiving Parade. Success is possible; we need only to look, listen and learn.

Many previous Go Lean blog-commentaries have focused on the business of events. See samples-examples detailed in these previous blogs:

https://goleancaribbean.com/blog/?p=9712 Forging Change: Panem et Circenses
https://goleancaribbean.com/blog/?p=5251 Post-Mortem of Inaugural Junkanoo Carnival
https://goleancaribbean.com/blog/?p=4879 Model of a Sports Event: Martinique Surfing
https://goleancaribbean.com/blog/?p=3292 Model of an Artistic Event: Art Basel Miami
https://goleancaribbean.com/blog/?p=2152 Model of a Sports Event: Little League World Series
https://goleancaribbean.com/blog/?p=1341 College World Series Time – Lessons from Omaha
https://goleancaribbean.com/blog/?p=1214 Landlord of Temporary Stadiums
https://goleancaribbean.com/blog/?p=535 Event Security: Remembering and learning from Boston
https://goleancaribbean.com/blog/?p=318 Collegiate Sports in the Caribbean

Now is the time for all of the Caribbean, the people and governing institutions, to lean-in for the empowerments in the book Go Lean … Caribbean. This is a Big Idea for the region; that of expanding Caribbean events for greater economic throughput. We have the foundations in place already, the many artistic, cultural and sporting events for locals and visitors.

We can employ the strategies, tactics and implementations from models like the Macy’s Thanksgiving Parade to make our Caribbean region a better place to live, work and play. 🙂

Download the book Go Lean … Caribbean – now!

———

Appendix * – Source References:

https://youtu.be/61kyIsEBuUA posted Published on Nov 26, 2014; (retrieved November 25, 2016).

Executive producer of the Macy’s Thanksgiving Day Parade, Amy Kule, provides insight to the numbers behind tomorrow’s big parade and reveals some new characters.

———

Appendix VIDEO – 7 Macy’s Thanksgiving Day Parade Facts You Never Knew! – https://youtu.be/zOtWeyh1aRs

 

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In Defense of Trade – China Realities

Posted on November 21, 2018 in Economics, Strategy

Go Lean Commentary

Here’s the challenge:

You have 1.3 billion people; you must facilitate economic growth to provide them with jobs, basic needs and the pursuit of happiness. Where do you go? What do you do?

Answer: Trade, trade, trade …

This is what the experts say.

The experts? Economists …

These economists say the best practice to grow an economy is to double-down on trade and market-based economics.

Voluntary Trade Creates Wealth: People specialize in the production of certain goods and services because they expect to gain from it. People trade what they produce with other people when they think they can gain something from the exchange. Some benefits of voluntary trade include higher standards of living and broader choices of goods and services.

This urging was proclaimed in the book Go Lean…Caribbean which presents the strategies, tactics, implementations and advocacies for growing the Caribbean economy. The book serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU). Yes, the emphasis is on trade . The CU will serve as an integrated entity to shepherd progress and optimization among the region’s societal engines for economics, security and governance.

This best practice for societal growth is a lesson learned from the study of other communities – ancient and modern – that have done “this” successfully. The book presents the role models of the Great Britain, United States, Germany, Japan, Asian Tigers (Singapore, Hong Kong. South Korea and Taiwan).

So China doubling-down on trade is just another iteration of the accepted best practice of market-based economics. In fact in a previous blog-commentary about China’s motive – their end game – for Caribbean investments, the following points were detailed:

If this Golden Rule is true: “he who has the gold makes the rules”, then we will be held to account to stakeholders in China, as their many state-own companies are definitely “bringing gold” to the table. This was vividly communicated in a previous (2014) China-Caribbean Trade/Business Summit:

“Latin America has much to gain from deepening its relationship with China, just as China has much to gain from our region,” said Luis Alberto Moreno, president of the Inter-American Development Bank (IDB). “For our governments, this is a strategic priority. But much of the day-to-day building of those links will fall on the private sector.”

China joined the IDB as a shareholder in 2009, and is now the top trade partner for several countries in the region, including Brazil and Chile.

Trade between Latin America and the Caribbean and China is expected to double in the next decade. … Source: http://caribjournal.com/2014/09/15/china-holds-business-summit-with-latin-america-caribbean/
…
This is the same playbook of the United States of America in building the world’s largest Single Market economy. (Remember, with the Army Corp of Engineers, the US built the Panama Canal, but with more strings attached). China is simply following the same American script – minus the cronyism and militarism – of promoting trade of their products, services and capital.

Capital? Yes, many of the projects highlighted … are being financed by China’s state-owned banks and lending institutions. They are “putting their money, where their mouth is”. These are economic battles only!

This commentary is the first of a 5-part series from the movement behind the Go Lean book in consideration of the subject “In Defense of Trade“. The focus here is that Trade must be prioritized in the Caribbean region if we want a new economic regime. The other commentaries in the series are cataloged as follows:

  1. In Defense of Trade: China Realities
  2. In Defense of Trade: Macy’s Thanksgiving Parade Model – ENCORE
  3. In Defense of Trade: India BPO’s
  4. In Defense of Trade: Bilateral Tariffs – No one wins
  5. In Defense of Trade: Currency Assassins – Real Threat

No doubt, there is the need to grow the Caribbean economy; we need jobs, entrepreneurial opportunities, better educational and healthcare options, a safer homeland and more efficient governmental services. Since trade policies (chattel goods and intellectual property) affect all of these deliveries, we need to pay more than the usual attention to these discussions. Trade has also been prominent in the news as of late, with the current American Federal government’s (under President Donald Trump) new penchant for tariffs and the UK negotiating a new trade deal as they leave the European Union (Brexit).

So there is the need for a 360 degree view of trade: the good; the bad; and the ugly. The Caribbean status quo is ugly, in terms of trade, there is the need to reform and transform, so as to reboot our society. But we are not the first, (and will not be the last). Let’s see the lessons we can learn from the trade strategies, tactics and implementations of others. We can all benefit!

Let’s start with China; there are parallels to consider. They need to provide for 1.3 Billion people, and so they are embracing market-based economics. In the Caribbean we only need to provide for 42 million, but we are like a fish in the pond; it does not matter how big the ocean is, we are limited to our pond. This is the definition of scope; our time, talents and treasuries must be designed to impact just these 30 island-nations and coastal states. Despite the size, there is the need for efficiency and effectiveness with market-based economic concepts. This is defined in the Go Lean book as technocratic/technocracy:

The term technocracy was originally used to designate the application of the scientific method to solving social & economic problems, in counter distinction to the traditional political or philosophic approaches. – Go Lean book Page 64.

The CU seeks to optimize the region’s economic systems – to make more efficient and effective – to better deliver on the prime directives of the Go Lean roadmap. The prime directives are pronounced as the following statements:

  • 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 and mitigate challenges/threats to ensure public safety for the region’s stakeholders.
  • Improvement of Caribbean governance, including a separation-of-powers with member-states, to support these economic/security engines.

So the CU Trade Federation vision is to provide the stewardship for the region’s economic engines, to optimize trade (chattel goods and intellectual property), so as to succeed in the goals of the roadmap. The focus on trade is intra-region so as to minimize the expenditure of foreign reserves and also extra-regional so as to grow the economy. This vision was pronounced at the outset of the book in the opening Declaration of Interdependence (Page 13):

vi. Whereas the finite nature of the landmass of our lands limits the populations and markets of commerce, by extending the bonds of brotherhood to our geographic neighbors allows for extended opportunities and better execution of the kinetics of our economies through trade. This regional focus must foster and promote diverse economic stimuli.

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.

According to the following article-commentary from Canada, expanding trade with China –  a willing partner – is a good strategy for improving the economic engines of a community – trade is that important:

Title: We need a China trade strategy, so let’s get it right
By: Edward Greenspon and Kevin Lynch

With exports over 30 per cent of GDP, Canada’s economy would be much smaller and its citizens considerably poorer if not for trade and investment with other countries. That three-quarters of that trade relies on ready access to the increasingly self-absorbed, aggressive and fickle United States is cause for serious deliberation, beyond indignation.

Canada’s special relationship with the United States has served us both well. It is always a risky proposition to have so many eggs in a single basket, but those risks were mitigated by Canada’s embrace of predictable rules to govern both bilateral trade, beginning with the Auto Pact, which morphed into the Canada-U.S. free-trade agreement (FTA) and NAFTA, and the international-trading system through the General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO).

Even in the best of times, there were breakdowns, such as the repeated U.S. attacks over softwood lumber or former president Barack Obama’s rejection of the Keystone pipeline. Unfortunately, we’ve now entered a world where it’s softwood lumber all the time. So, what are we to do?

Some answers are clear enough. The long-held and oft-ignored objective of diversifying our trade relations must be pursued with urgency and vigour. Canada has done well by its recent agreements with the European Union and with Japan and others in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Business leaders must now put commercial meat on the bones of these agreements.

Secondly, if a trading country such as Canada wants to grow, by definition it needs to trade with countries with both fast growth and with sufficient scale to make an appreciable difference to our export volumes. By and large, these are Asian – and you can’t speak of Asia without including China in the conversation. China’s annual growth is roughly two to three times that of Canada and the United States – off a base of 1.3 billion people. Any government seeking to represent the national interests of Canadians in the time of Donald Trump must be in possession of a long-term strategy that includes China, and not, as for more than a decade, a hodgepodge of inconsistent and reactive decisions.

Canadians don’t seem troubled by the proposition of an Asian diversification strategy with China at its core. Despite concerns about Chinese authoritarianism, human-rights violations and the perceived behaviour of some state-owned enterprises, polling shows support for a free-trade agreement trending up over the past few years. Qualtrics places the number at about 70 per cent and the Asia-Pacific Foundation about 10 points lower. No poll puts it below 50 per cent.

This shift in Canadian attitudes began even before Mr. Trump’s immodest arrival on the scene. His words and deeds have merely added impetus. Canadians get that American economic and geopolitical power is declining in relative terms and that China is an emerging force to reckon with. In the Asia Pacific Foundation’s recent annual survey, 59 per cent of respondents believe trade with Asia, led by China, will outweigh trade with the United States in the future. Canadians essentially are asking: “How can we not have a clear engagement strategy with a country that within the next 10 years will be the world’s biggest economy, largest exporter of capital, goods and services, largest emitter of [greenhouse gases] GHGs, a technology superpower and the world’s largest source of tourists and expatriate students?”

As co-chairs of the Public Policy Forum’s Consultative Forum on China, we have spent the past 14 months consulting on what a made-in-Canada strategy for future Canada-China relations should look like. Our blueprint will be released in the fall.

It is strikingly clear from our discussions that more value-added trade in sectors such as agri-food, forestry, resources, educational services, tourism and clean-tech is unambiguously beneficial for Canadians. Selling lobsters and lumber raise no national security flags, real or imagined, but they do create lots of jobs all across Canada. A case in point today is the 180 fishing fleet jobs and 304 processing plant positions in Atlantic Canada directly flowing from Clearwater Foods’ seafood exports to China.

Interestingly, both Canada and China have diversification agendas – we seek greater security of demand for our exports while China wants greater security of supply through trade arrangements with a broader range of exporting countries. Canada appeals because it is a highly developed, rule-of-law based, G7 country that poses few geopolitical risks, unlike many other global exporters.

Meanwhile, China, having raised hundreds of millions from poverty to middle-class status since it embraced a market-based economy, is now learning this middle class comes with expanding expectations for a better life – starting with livable cities, healthy food, safe workplaces, reliable pensions and available eldercare. Beyond traditional exports, China knows it can benefit from Canada’s long experience designing policies and services for the middle class.

China elicits a wide spectrum of passionately held views, of that there is no doubt. Whatever one may think, however, the question is whether a balanced engagement strategy with an economically dynamic China serves our national interests at a time when the President of the United States is pursuing a beggar-thy-neighbour policy. Risk management and prudent diversification certainly suggest yes. Time to decide how best.

———

Edward Greenspon is president and CEO of the Public Policy Forum. Kevin Lynch is co-chair of PPF’s Consultative Forum on China.

Source: The Globe & Mail – Toronto, Canada’s Largest Daily – Posted June 18, 2018; retrieved November 21, 2018 from: https://www.theglobeandmail.com/business/commentary/article-we-need-a-china-trade-strategy-so-lets-get-it-right/

This article stresses how important it is for Canada to trade with China, with this quotation:

… if a trading country such as Canada wants to grow, by definition it needs to trade with countries with both fast growth and with sufficient scale to make an appreciable difference to our export volumes …

We want this kind of growth right here in the Caribbean. Therefore we must also want market-based trade with China.

The underlying motivation of the Go Lean book is to reform and transform the Caribbean member-states. Therefore we need to embrace market-based economics, the way China has. They only shifted to a market-based economy since the 1970’s, and now they have the 2nd largest single market economy … in the world – it works that fast. While America – the champion of market-based economies – is the largest trading partner for Caribbean member-states, we cannot just be parasites; no, we must be protégées.

The CU roadmap seeks to drive change among the economic, security and governing engines. The Go Lean book – within its 370 pages – describes how and when a new Caribbean can emerge using market-based economic principles. These solutions are as new community ethos, strategies, tactics, implementations and advocates designed to grow the regional economy to $800 Billion.  Consider how and when in the specific plans, excerpts and headlines from the book on Page 67 entitled:

$800 Billion Economy – How and When? – 10 Reasons and Tactics

Quotation: The whole is worth more than the sum of its parts.
The CU is a confederation treaty to unify the region of 30 countries and 42 million people into a single market, an integrated economy with a GDP of $800 Billion, even though the sum of its parts amount to $378 Billion, (per 2010  World Bank ratings).
.
Why and how will this number grow to $800 Billion? For the 10 reasons and tactics provided below; this includes samples and examples of hyper growth scenarios in specific times and places from around the world, from the past to the present. When will the meter reach $800B? Not at first, but steadily over a 5 year period. This harmonizes with the economic “Catchup” principle of “convergence”. This establishes that emerging economies experience hyper-growth (7 to 20%) for a limited period, and then normalizes into standard growth patterns of 2 – 3% [180]. This has been the documented cases of the BRIC countries (Brazil, Russia, India & China) and the Caribbean Union Trade Federation (CU) asserts that this Trade Federation will experience the same. This growth rate, from $378 Billion, would experience compounded GDP growth as follows:

  • Year 1 @ 20% = $454 Billion
  • Year 2 @ 20% = $544 Billion
  • Year 3 @ 15% = $625 Billion
  • Year 4 @ 15% = $720 Billion
  • Year 5 @ 12% = $806 Billion
1 Louisiana Purchase – US Experience
2 California Gold Rush to the Gilded Age
3 Post WW II Germany – Marshall Plan / Free Market
4 Post WW II Japan – No Marshall Plan
5 Convergence of East Asian Tigers
6 Economic Bubbles – $11 Trillion Burst / $13.5 Trillion Recovery
7 New High Multiplier Industries
8 Trade and Globalization
9 Repatriation
10 Education

The foregoing article details how beneficial trade with China could be, and how Canadians are not afraid of Chinese interactions:

Despite concerns about Chinese authoritarianism, human-rights violations and the perceived behaviour of some state-owned enterprises, polling shows support for a free-trade agreement trending up over the past few years.

See the related news VIDEO in the Appendix below.

The growth that China has shown is remarkable … and repeatable. We can model their successes here in our Caribbean region; the foregoing article conveyed their growth:

China, having raised hundreds of millions from poverty to middle-class status since it embraced a market-based economy.

The Caribbean is arguably the best address on the planet, but there are many deficiencies, as in jobs and economic empowerments. With the previous North & West (American) focus we have suffered. Our deficiencies has led to societal abandonment so bad that the region has lost a large share of our human capital, one estimate of 70% of the college-educated population to the brain-drain.

Yes, the Caribbean region needs the type of growth than can come from a progressive trade policy and market-based economics. We need to embrace Trade; this is the panacea for what ails our societal engines. Yes, we can improve with trade among ourselves and trade with foreigners. We cannot only look to the North & West – that strategy has worn thin – we must now look East and South; like China.

Mastering trade and globalization is how we must compete in today’s trade wars. This is the Go Lean roadmap.

Everyone in the Caribbean is urged to lean-in to this roadmap to make the Caribbean a better place to live, work and play. 🙂

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

Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation.

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Appendix VIDEO – Trudeau outlines new Canada-China trade deals – https://youtu.be/-OTb6JqXGLw

Published on Sep 22, 2016 –  Prime Minister Justin Trudeau outlines the results of trade discussions with Chinese Premier Li Keqiang which include a new deal on canola. To read more: http://cbc.ca/1.3773699

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Retail Apocalypse and Sears – Another One Bites the Dust – ENCORE

Posted on October 16, 2018 in Economics, Industries, Strategy

Another one bites the dust …

Sears has filed for Bankruptcy protection. This may be more than just reorganization; this might be complete dissolution.

See the VIDEO and excerpt of the news article here:

VIDEO – Sears files for Chapter 11 bankruptcy protection – https://www.usatoday.com/videos/news/nation/2018/10/15/sears-files-chapter-11-bankruptcy-protection/38160609/

—————–

Title: Sears files for Chapter 11 bankruptcy protection, to close 142 more stores
By: , USA TODAY

October 15, 2018 – Sears Holdings, whose presence permeated American life for generations, filed for Chapter 11 bankruptcy protection early Monday in a last-ditch attempt to avoid entombment in the graveyard of once-great retailers that failed to adapt to the digital age.

For Sears — which was the largest retailer in the nation before the rise of Walmart and, later, Amazon — bankruptcy marks the culmination of years of decline defined by store closures, sales declines, cost cuts and borrowing.

The company, which also owns discount retailer Kmart, has fallen into disrepair amid a perilous retail landscape in which customers increasingly shop online or seek out more-appealing alternatives.

For Kmart, known for its one-time “blue-light specials,” catchy jingles, and collections created by celebrities, the case marks a second brush with death. Kmart merged with Sears in 2005 after surviving bankruptcy once before.

Sears Holdings will close another 142 stores by about the end of the year, on top of a recently announced round of 46 store closures, as part of the bankruptcy. The company has 687 stores and about 68,000 employees.

See the remaining news story here (retrieved from this source on October 16, 2018):https://www.usatoday.com/story/money/2018/10/15/sears-bankruptcy/1595399002/?csp=chromepush

This was predicted. This is the dreaded, feared Retail Apocalypse. Truth be told, this is relevant for the Caribbean as well. This assertion was made in a prior commentary on April 18, 2017. See an Encore of that submission here-now:

=====================

Go Lean Commentary – Retail Apocalypse – Preparing for the Inevitable

Remember the dream … of 7 Fat Cows and 7 Skinny Cows?

The articulation of the dream was that the 7 Fat Cows represented 7 prosperous years while the 7 Skinny Cows represented 7 years of famine with poverty and distress. – The Bible; Genesis Chapter 41.
CU Blog - Retail Apocalypse - Preparing for the Inevitable - Photo 0

In that Bible drama of Joseph in ancient Egypt, those circumstances were more than just in a dream; it was a prophecy of prosperity and famine. It came true!

Joseph was able to use the foresight to prepare that kingdom for adversity, after first exploiting the opportunities.

Here it comes again.

There is feast and famine “in the cards” as related to the retail eco-system. On one end of the spectrum , there will be prosperity for electronic commerce stakeholders, but on the other end, for brick-and-mortar establishments, there will be a Retail Apocalypse.

Will be? Actually, the threat has already manifested!

This is the assertion in this news article by the financial-economic magazine Business Insider:

CU Blog - Retail Apocalypse - Preparing for the Inevitable - Photo 1

Title: The retail apocalypse has officially descended on America
By: Hayley Peterson

Thousands of mall-based stores are shutting down in what’s fast becoming one of the biggest waves of retail closures in decades.

More than 3,500 stores are expected to close in the next couple of months.

Department stores like JCPenney, Macy’s, Sears, and Kmart are among the companies shutting down stores, along with middle-of-the-mall chains like Crocs, BCBG, Abercrombie & Fitch, and Guess.

CU Blog - Retail Apocalypse - Preparing for the Inevitable - Photo 2

Some retailers are exiting the brick-and-mortar business altogether and trying to shift to an all-online model.

For example, Bebe is closing all its stores — about 170 — to focus on increasing its online sales, according to a Bloomberg report.

Some are going out of business altogether, like The Limited which recently shut down all 250 of its stores.

Others, such as Sears and JCPenney, are aggressively paring down their store counts to unload unprofitable locations and try to stanch losses.

CU Blog - Retail Apocalypse - Preparing for the Inevitable - Photo 3Sears is shutting down about 10% of its Sears and Kmart locations, or 150 stores, and JCPenney is shutting down about 14% of its locations, or 138 stores.

According to many analysts, the retail apocalypse has been a long time coming in the US, where stores per capita far outnumber that of any other country.

The US has 23.5 square feet of retail space per person, compared with 16.4 square feet in Canada and 11.1 square feet in Australia, the next two countries with the most retail space per capita, according to a Morningstar Credit Ratings report from October.

Visits to shopping malls have been declining for years with the rise of e-commerce and titanic shifts in how shoppers spend their money. Visits declined by 50% between 2010 and 2013, according to the real-estate research firm Cushman & Wakefield.

And people are now devoting bigger shares of their wallets to restaurants, travel, and technology than ever before, while spending less on apparel and accessories.

As stores close, many shopping malls will be forced to shut down as well.

When an anchor store like Sears or Macy’s closes, it often triggers a downward spiral in performance for shopping malls.

Not only do the malls lose the income and shopper traffic from that store’s business, but the closure often triggers “co-tenancy clauses” that allow the other mall tenants to terminate their leases or renegotiate the terms, typically with a period of lower rents, until another retailer moves into the anchor space.

To reduce losses, malls must quickly find a replacement tenant for the massive retail space that the anchor store occupied, which is difficult — especially in malls that are already financially strapped — when major department stores are reducing their retail footprints.

That can have grave consequences for shopping malls, especially in markets where it’s harder to transform vacant mall space into non-retail space like apartments, according to analysts.

The nation’s worst-performing malls — those classified in the industry as C- and D-rated — will be hit the hardest by the store closures.

The real-estate research firm Green Street Advisors estimates that about 30% of all malls fall under those classifications. That means that nearly a third of shopping malls are at risk of dying off as a result of store closures.
Source: Business Insider e-Zine. Posted 03/21/2017; retrieved 04/17/2017 from: http://www.businessinsider.com/the-retail-apocalypse-has-officially-descended-on-america-2017-3

CU Blog - Retail Apocalypse - Preparing for the Inevitable - Photo 4

Related:

1. Monday Market Mayhem – The Retail Apocalypse – Look out Wall Street

2. Dollar General is defying the retail apocalypse and opening 1,000 stores

See the related AUDIO Podcast below here:

———–

AUDIO Podcast – Wal-Mart battles Amazon with discounts for online ordering and store pickup – https://www.marketplace.org/2017/04/14/business/its-battle-amazon-walmart-offers-discounts-ordering-online-and-picking-store

Published April 14, 2017 – Big Box giant Wal-Mart battling e-Commerce giant Amazon for New Economy fulfillment.

As noted in the foregoing, the Retail Apocalypse is affecting the news in the United States. It’s only the news today, tomorrow will be jobs, the next day the finance apparatus holding the debt (mortgages and security instruments on Wall Street) for the many shopping malls and then soon, the rest of the economy will be impacted.

This is so familiar. Remember the housing-real estate bubble in 2003 to 2010. This previous blog-commentary identified the following 5 steps of a bubble:

1.   Displacement

2.   Boom

3.   Euphoria

4.   Profit Taking

5.   Panic

Here we go again! Sounds like a crisis is imminent.

The book Go Lean…Caribbean serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU) and Caribbean Central Bank (CCB); it declares that a crisis is a terrible thing to waste – quoting famed American Economist Paul Romer. Though the impending crisis is slated for the US, the actuality of economic contagions mean that the Caribbean member-states will be affected as well.

Where do the tourists come from that drive the Caribbean region’s primary economic driver?

The question is rhetorical; the answer is obvious!

The Go Lean book seeks to prepare the Caribbean region for the change dynamics impacting the world. The “Agents of Change” at play in the foregoing news source are as follows:

  • Technology
  • Globalization

The underlying issue with the Retail Apocalypse is not the demand for retail products, it is the supply. Consumers are still demanding and consuming fashion and commodities, just not at shopping malls; e-Commerce is “all the rage”.

Consider the experience of this commentator:

I went to buy 3 pairs of slacks.

I was only able to find one – with the brand, make, size and color – at a Big Box retail store. So then I went home and matched the brand, model, size with the e-Commerce merchant Amazon.com and acquired the same pants in 2 divergent colors that the Big Box retailer did not have in inventory. 3 days later, the whole shopping expedition was over; I acquired 3 pairs of slacks, primarily from the online merchant and delivered by the shipping company United Parcel Service (UPS).

The quest of the Go Lean/CU roadmap is to elevate the Caribbean’s societal engines – not the US – starting first with economics (jobs, commercial developments and entrepreneurial opportunities). In fact, the following 3 statements are identified as the prime directives of the CU:

  • 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 – as e-Commerce alters sales & border taxes – to support these engines.

The changes taking place in the US with the Retail Apocalypse will eventually traverse the Caribbean member-states as well. This is the parallel with the opening Bible Drama. A crisis is coming and we have the opportunity to exploit the prosperous years and prepare for the famine. The Caribbean region – all 30 member-states – needs to better exploit e-Commerce. There are so missing ingredients, fully detailed in the Go Lean book; see  this sample advocacy on Page 198:

10 Ways to Foster e-Commerce

1 Leverage the full population – 42 million people in all 30 member-states to deploy the CU and the CCB.
2 Regional Currency (Caribbean Dollar or C$)
3 Card Culture
The CU will seek to foster the eco-system for e-payments beyond government activity. To assimilate this change, a card culture, on Main Street, will entail utilizing debit/credit cards, benefits pay cards, and even smart cards on cruise ships.
The CU will collectively bargain with the cruise lines to deploy C$ electronic “purses” to facilitate port-side and onboard retail commerce. All of these changes will garner a better monetary multiplier on the CU economy, by expanding M1.
4 CU Social Media
The CU web portal www.myCaribbean.gov will grant free access, email, IM, and profile pages for CU stakeholders, even normalizing communications thru social media sites. This will facilitate internet commerce activities in the region, as the CU will have hot data on profiles, habits and previous activities, thereby creating opportunities for measured marketing.
5 A Market for the Downloads of Intellectual Properties
6 Remittance Methods (Card & Email)
7 Mobile Apps – Hi-Density Wi-Fi
8 Regional Postal Services – CPU
The CU will assume the responsibility for mail services in the region; (all member-state postal employees will become federal civil servants). The embrace of the Caribbean Postal Union allows for parcel mail to be optimally shipped and delivered throughout the region, with Customs considerations in place. The CPU will therefore ensure the fulfillment side of e-commerce, even allowing for computer applications for printing electronic stamps/barcodes for value savings.
9 Turnpike Logistics
10 Customs and Import Optimizations

The missing ingredients for this new marketplace – electronic commerce – are not just banking-related, the full eco-system must be enabled: electronic (technology), commerce (trade) and fulfillment (logistics). The implementation of these provisions will constitute a New Day for the region. Overall, the Go Lean book stresses the community ethos, strategies, tactics, implementations and advocacies to reboot, reform and transform the economic engines of Caribbean society, so as to benefit from changes coming due to the Retail Apocalypse, this New Day.

Though not directly mentioned in the Go Lean book, this Retail Apocalypse is planned for in the roadmap. A comprehensive view of  the technocratic stewardship for the region’s economic engines, including the banking eco-system, is presented early in the book with these opening pronouncements in the Declaration of Interdependence (Page 13 and 14):

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.

xxvii. Whereas the region has endured a spectator status during the Industrial Revolution, we cannot stand on the sidelines of this new economy, the Information Revolution. Rather, the Federation must embrace all the tenets of Internet Communications Technology (ICT) to serve as an equalizing element in competition with the rest of the world. The Federation must bridge the digital divide and promote the community ethos that research/development is valuable and must be promoted and incentivized for adoption.

The points of effective, technocratic banking and retail stewardship were further elaborated upon in previous blog/commentaries. Consider this sample:

https://goleancaribbean.com/blog/?p=11184 Big Bank investing $Billion on ‘Fintech’ for e-Commerce positioning
https://goleancaribbean.com/blog/?p=8823 Lessons from China – WeChat: Model for Caribbean Social Media
https://goleancaribbean.com/blog/?p=8704 Lesson from MetroCard
https://goleancaribbean.com/blog/?p=7991 Transformations: Caribbean Postal Union – Delivering the Future
https://goleancaribbean.com/blog/?p=7034 The Future of Money
https://goleancaribbean.com/blog/?p=6635 New Security Chip in Credit Cards Unveiled
https://goleancaribbean.com/blog/?p=5668 Move over Mastercard/Visa – Time for Local Banking Cards
https://goleancaribbean.com/blog/?p=4425 Cash, Credit or iPhone …
https://goleancaribbean.com/blog/?p=3889 Royal Bank of Canada’s EZPay – Ready for Change
https://goleancaribbean.com/blog/?p=3881 The Need for Regional Cooperation for Cyber-Security & e-Security
https://goleancaribbean.com/blog/?p=3858 Model of Central Banking Technocracy: ECB 1 trillion Euro stimulus
https://goleancaribbean.com/blog/?p=2488 Model of an E-Commerce Fulfillment Company: Alibaba
https://goleancaribbean.com/blog/?p=1416 Model of an E-Commerce Fulfillment Company: Amazon
https://goleancaribbean.com/blog/?p=1350 PayPal’s model to pay for e-Commerce
https://goleancaribbean.com/blog/?p=906 Bitcoin model to pay for e-Commerce
https://goleancaribbean.com/blog/?p=528 Facebook to pay for e-Commerce

Warning to all retail stakeholders – buyers, sellers and governments: Change is coming!

This is a familiar stance – preparing for the inevitable – for the Go Lean movement; there have been previous warnings of disruptive changes; see this sample here:

https://goleancaribbean.com/blog/?p=7847 To the Personal Computer industry: Cloud Computing, Smartphones and Tablets are making actual laptop and desktop computers inconsequential.
https://goleancaribbean.com/blog/?p=6151 To the regional government’s Revenue Officials: 3-D Printing is coming and will change fabrication to local rather than import. This will disrupt border taxes revenue expectations.
https://goleancaribbean.com/blog/?p=6016 To the Infrastructure Planners: Climate Change is making Caribbean summers hot-hot-hot and northern winters milder; there must be cooperative refrigeration to provide relief, otherwise people will leave for northern destinations.
https://goleancaribbean.com/blog/?p=5784 To Jamaica’s Public Safety Officials: Human Rights protections must be extended to people who identify as LGBT. Whether you agree or not, the international community will force you to respect their rights for life, liberty and the pursuit of happiness.
https://goleancaribbean.com/blog/?p=5210 To the Cruise Line industry: The Caribbean region’s collective bargaining will extract greater benefits and protections for port city commerce.
https://goleancaribbean.com/blog/?p=5155 To the Caribbean Power Grip: Home-based batteries will allow for successful deployments of solar/wind power generation and require less power from the grid.
https://goleancaribbean.com/blog/?p=4767 To the regional government’s Revenue Officials: Under the WTO regime, customs duties must eventually be eliminated; same too with conditional property taxes. VAT or Sales Taxes are OK.

As for the Retail Apocalypse, now is the time for all stakeholders of Caribbean banking, retail and governments to lean-in for the empowerments for e-Commerce described here-in and in the book Go Lean … Caribbean. This is where the marketplace is going, not just tomorrow, but already here today. We can do this; we can elevate our communities and our retail eco-systems. We can be a better place to live, work and play. 🙂

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

Sign the petition to lean-in for the roadmap for the Caribbean Union Trade Federation.

 

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Paul Romer – Congrats to the New Nobel Laureate

Posted on October 13, 2018 in Economics, Ethos, Strategy

Go Lean Commentary

Some people make great accomplishments, to the point that they are recognized … globally.

Sometimes, a person greatest accomplishment is that they inspire others.

Every now and then, one person does both.

The world is celebrating the accomplishment of American Economist and University Professor Dr. Paul Romer; he has just been awarded the Nobel Prize for Economics.

Congratulations!

This is a Big Deal for him … and for us in the Caribbean.

Wait, what?

Dr. Romer gets this award today in 2018, but back in 2013, he inspired an important movement in the Caribbean. His writings inspired the book Go Lean…Caribbean. He coined the following phrases, as recorded in the Go Lean book (Page 8):

“A crisis is a terrible thing to waste”

“Economic growth occurs whenever people take resources and re-arrange them in ways that are more valuable”

Before examining this inspiration and motivation, we must first give Dr. Romer his “props”. See the aligning news article here from the Economist Magazine:

Title: Paul Romer and William Nordhaus win the economics Nobel
Sub-title: Both have studied the causes and consequences of growth
October 11, 2018 – WHY do economies grow, and why might growth outstrip the natural world’s capacity to sustain it? There are few more important questions in economics. The answers require a working grasp of the mechanisms underlying growth. For the progress that the profession has made towards that understanding, it owes a particular debt to Paul Romer and William Nordhaus, this year’s winners of the Nobel prize in economic sciences.

Although both scholars have long been talked of as potential winners, they are not an obvious pairing for the prize. Mr Romer tends to be described as a growth theorist; Mr Nordhaus’s work is in the field of environmental economics. The Sveriges Riksbank, which awards the economics Nobel, found a common thread in their work incorporating two crucial processes—knowledge creation and climate change, respectively—into models of economic growth. But what most links their work is that they have improved the way the profession thinks about impossibly complex systems, while also revealing the extent of its ignorance.

The influence of both men extends beyond their most noted scholarly achievements. Mr Romer’s career has been especially varied. He left academia in the early 2000s to found an educational-software company. More recently he served as the World Bank’s chief economist (his tenure ended abruptly when staffers bridled at his management style, which included an insistence on more crisply written reports). But it is his analysis of economic growth that has had the greatest impact.

Economists used to think that sustained long-run growth depended on technological progress, which in turn relied on the creation of new ideas. They struggled, however, to explain convincingly how markets generated and propagated those ideas. When Mr Romer came into economics, most prominent models of growth relied on “exogenous” technological progress: it was simply assumed, rather than generated by the models’ equations.

Dissatisfied by this state of affairs, he sought answers by probing the non-rivalrous nature of knowledge: the fact that ideas, once created, can be endlessly exploited. The firms or individuals that come up with new ideas can only ever capture a small share of the benefits arising from them; before long, competitors copy the original brainwave and whittle away innovators’ profits. In Mr Romer’s work, markets are capable of generating new ideas. But the pace at which they are generated, and the way in which they are translated into growth, depends on other factors—such as state support for research and development, or the protection of intellectual property.

The “endogenous” growth models produced by Mr Romer, and by others influenced by him, were once hailed as a critical step towards understanding patterns of economic growth across the globe. They have not quite fulfilled that promise: knowledge may be necessary for growth, but it is clearly not sufficient. But their shortcomings have themselves raised important questions about the stubborn disparities in growth rates. Why are some countries able to exploit existing ideas and grow, while others are not? Should policymakers who want to boost growth focus on policies that support the creation of knowledge or on those that break down barriers to the exploitation of existing knowledge? Or does it make most sense to shift people and resources from the parts of the world that struggle to grow to those that do not? By provoking such questions, Mr Romer’s work identified a rich vein for other researchers to mine.

Mr Nordhaus, for his part, has been a towering figure in the debate about how to respond to one of the biggest challenges that humanity faces. When he was beginning his career in the early 1970s, awareness of the dangers of environmental damage and the threat posed by climate change was just starting to grow. Understanding the economic costs such damage imposes is essential to answering the question of how much society should be willing to pay to avert it.

Mr Nordhaus applied himself to solving this problem. That meant working out the complex interactions between carbon emissions, global temperature and economic growth. He combined mathematical descriptions of both climate and economic activity into “integrated assessment models”. This allowed him to project how different trajectories for the world’s carbon emissions would produce different global temperatures. That, in turn, allowed him to estimate the likely costs of these different scenarios—and thus what level of reduction in emissions would be economically optimal. He was the first to suggest that warming should be limited to no more than 2°C higher than the world’s pre-industrial temperature. Models like his have become the linchpin of most analysis of the cost of climate change.

The known world
As with Mr Romer’s work, Mr Nordhaus’s contributions are also notable for the lessons imparted by their shortcomings. Four decades after he began publishing research on climate change, the limits to scholars’ predictive abilities have become abundantly clear. Indeed, his work has prompted vigorous debate about how best to think through the huge uncertainties associated with global warming—from how emissions translate into higher temperatures to how well society can adapt to rapid changes in climate.

Policymakers prefer the comfort of hard numbers. But the often-unfathomable complexity of human society and natural processes may mean that other guides are sometimes needed to set policy, from the precautionary principle to moral reasoning. Ironically, Mr Nordhaus’s computations, like those of Mr Romer, made that awareness possible.

Above all, both of this year’s prize-winners tackled problems that the field both could not understand and could not afford not to understand. They blazed trails that scholars continue to follow—to the benefit of economics and humanity.

This article appeared in the Finance and economics section of the print edition under the headline “Greener pastures”

Source: Retrieved October 12, 2018 from https://www.economist.com/finance-and-economics/2018/10/13/paul-romer-and-william-nordhaus-win-the-economics-nobel

As for Dr. Romer’s sphere of influence:

Romer was named one of America’s 25 most influential people by Time magazine in 1997.[10]

According to this encyclopedic source, his trademark quotation was stated in 2004…

Romer is credited with the quote “A crisis is a terrible thing to waste,” which he said during a November 2004 venture-capitalist meeting in California. Although he was referring to the rapidly rising education levels in other countries compared to the United States, the quote became a rallying concept for economists and consultants looking for constructive opportunities amid the Great Recession.[17]

So when the movement behind the Go Lean book, came “under his spell”, he had a long and noble track record. Now he is a Nobel Laureate.

So this one man had made a difference in the world, and even in our Caribbean world. The movement behind the book Go Lean…Caribbean – available to download for free – has consistently asserted that one man or one woman can make a difference in society. Though Dr. Romer is not in the Caribbean, nor from the Caribbean, we can still look, listen and learn from his contributions. His pioneering principle of Endogenous growth theory is spot-on for the economic policy that we need to adopt for the Caribbean reboot. See the definition here:

Endogenous growth theory holds that economic growth is primarily the result of endogenous and not external forces [or exogenous].[1] Endogenous growth theory holds that investment in human capital, innovation, and knowledge are significant contributors to economic growth.

Now to learn and apply this lesson. In plain-speak, education directly elevates economics. The Go Lean book quotes this accepted fact on Page 258:

… both public and private returns to investment in education are positive—at both the individual and economy-wide levels

The Go Lean book developed the argument of one person making a difference (Page 122). It specifically relates:

An advocacy is an act of pleading for, supporting, or recommending a cause or subject. For this book, it’s a situational analysis, strategy or tactic for dealing with a narrowly defined subject.

Advocacies are not uncommon in modern history. There are many that have defined generations and personalities. Consider these notable examples from the last two centuries in different locales around the world:

  • Frederick Douglas
  • Mohandas Gandhi
  • Martin Luther King
  • Nelson Mandela
  • Cesar Chavez
  • Candice Lightner

The Go Lean book seeks to advocate and elevate the Caribbean, and the people who love our homeland. Yet still, we can learn lessons from the Nobel-prize-winning Economist and direct our regional stakeholders to a Way Forward based on best-practices of home-grown and home-targeted education. The book serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU), to move our society to a brighter future, by elevating our societal engines – for all member-states. This CU/Go Lean roadmap has these 3 prime directives:

  • Optimization of the economic engines in order to grow the regional economy to $800 Billion and create 2.2 million new jobs.
  • Establishment of a security apparatus to ensure public safety and protect the resultant economic engines.
  • Improve Caribbean governance to support these engines, including a separation-of-powers between the member-states and CU federal agencies.

The book stresses that reforming and transforming the Caribbean societal engines must be a regional pursuit – we must ensure that we have the best education option available to our people, but in a way that does not jeopardize their remaining in their Caribbean homeland. This challenge to guarantee our “brain does not drain” is too big for any one Caribbean member-state to contend with alone. This was an early motivation for the roadmap, as pronounced in the opening Declaration of Interdependence (Pages 12 – 14):

xi. Whereas all men are entitled to the benefits of good governance in a free society, “new guards” must be enacted to dissuade the emergence of incompetence, corruption, nepotism and cronyism at the peril of the people’s best interest. The Federation must guarantee the executions of a social contract between government and the governed.

xxi. Whereas the preparation of our labor force can foster opportunities and dictate economic progress for current and future generations, the Federation must ensure that educational and job training opportunities are fully optimized for all residents of all member-states, with no partiality towards any gender or ethnic group. The Federation must recognize and facilitate excellence in many different fields of endeavor, including sciences, languages, arts, music and sports. This responsibility should be executed without incurring the risks of further human flight, as has been the past history.

xxxiii. Whereas lessons can be learned and applied from the study of the recent history of other societies, the Federation must formalize statutes and organizational dimensions to avoid the pitfalls of communities like East Germany, Detroit, Indian (Native American) Reservations, Egypt and the previous West Indies Federation. On the other hand, the Federation must also implement the good examples learned from developments/ communities …

The Go Lean book provides 370-pages of turn-by-turn instructions on “how” to adopt new community ethos, plus the strategies, tactics, implementations and advocacies to execute so as to reboot, reform and transform the societal engines of Caribbean society.

The Go Lean movement calls on every man, woman and child in the Caribbean to be an advocate and a champion, or at least appreciate the championing efforts of previous advocates. Their examples can truly help us today with our passions and purpose. Consider this sample of prior blog/commentaries where advocates and role models have been elaborated upon:

https://goleancaribbean.com/blog/?p=14541 Viola Desmond – One Woman Made a Difference
https://goleancaribbean.com/blog/?p=14139 Carter Woodson – One Man Made a Difference … for Black History
https://goleancaribbean.com/blog/?p=11963 Oscar López Rivera – The ‘Nelson Mandela’ of the Caribbean?
https://goleancaribbean.com/blog/?p=11442 Caribbean Roots: Al Roker – ‘Climate Change’ Defender
https://goleancaribbean.com/blog/?p=10801 Caribbean Roots: John Carlos – The Man. The Moment. The Movement
https://goleancaribbean.com/blog/?p=10114 Caribbean Roots: Esther Rolle of ‘Good Times’
https://goleancaribbean.com/blog/?p=9948 Caribbean Roots: Sammy Davis, Jr.
https://goleancaribbean.com/blog/?p=9300 Edward Snowden – One Person Making a Difference
https://goleancaribbean.com/blog/?p=8724 Remembering Marcus Garvey: Still Relevant Today
https://goleancaribbean.com/blog/?p=8495 The NBA’s Tim Duncan – Champion On and Off the Court
https://goleancaribbean.com/blog/?p=8328 YouTube Millionaire: ‘Tipsy Bartender’
https://goleancaribbean.com/blog/?p=7682 Frederick Douglass: Role Model for Single Cause – Death or Diaspora
https://goleancaribbean.com/blog/?p=866 Bob Marley: The legend lives on!

Thank you Dr. Paul Romer, for your good role model. Congratulations on your Nobel Prize award. You deserve the recognition. (See the explanation VIDEO in the Appendix below).

In your role as a professor, you have not just taught your classes, but rather the whole world. We say to you as we do to all of our own Caribbean teachers; we say (Go Lean book Valedictions on Page 252):

Thank you for your service, for molding young minds.

The movement behind Go Lean book, the planners of a new Caribbean stresses that a ‘change is going to come’. We have endured failure for far too long; we have seen what works and what does not. We want to learn from Nobel Laureates and apply their lessons as mitigations, though it may be heavy-lifting.

Yes, our Caribbean society is in crisis right now, but as Dr. Romer enunciated:

A crisis is a terrible thing to waste.

We urged every Caribbean stakeholder to lean-in to this Go Lean roadmap to make the homeland a better place to live, work and play. 🙂

Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation.

—————–

Appendix VIDEO – The Nobel Prize to Paul Romer – https://youtu.be/JSQSei9XoaI

UniBocconi
Published on Oct 8, 2018 – Guido Tabellini, economist at Bocconi, explains why Romer has won the Nobel Prize for Economics.

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Industrial Reboot – Payment Cards 101

Posted on October 11, 2018 in Economics, Government, Implementation, Strategy

Go Lean Commentary

The purpose of any business is to earn a profit.

Profit is good!

We may be more familiar with a parallel version of this expression, as related in a previous blog-commentary:

… greed is good! In this case “greed” is not being defined as excess, but rather the natural desire to possess wealth, goods, or objects of abstract value with the intention to keep it for one’s self. The dreaded excess of “greed”, on the other hand, is a “vice” that must be cautiously monitored and curtailed, i.e. Crony-Capitalism.

When there is an opportunity for profit, people, companies and industries step-in and step-up for the chances to earn. This is the basis for capitalism and other market-based economies. So the profit motive is attached to any industrial landscape. Whenever economic engines become strained and stressed – devoid of profit – the industrial landscape should be revisited and rebooted.

This is the assessment of the Caribbean – our economic engines are in crisis – and this is the intent of the movement behind the book Go Lean…Caribbean – a crisis is a terrible thing to waste . This is why the book opens with a relevant pronouncement in the Declaration of Interdependence (Page 13):

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.

There is now the opportunity to transform the industrial landscape of Caribbean communities; we can install controls so as to better manage our economy and industrial landscape. Among the many strategies and tactics discussed by this Go Lean movement, there is this one irresistible prospect of introducing electronic money (e-Money) or Payment Cards through out the region.

So, instead of cash, industrial stakeholders will do most transactions … electronically. This changes everything!

With an e-Money/Payment Cards deployment, there would be so many benefits; consider these possibilities:

  • Functional – Payroll and Government Benefits can be easily loaded; credit programs can also be added.
  • Universality – whether its e-Money or Payment Cards, all financial transactions can be executed
  • Portability – e-Money can be used in Cyberspace and in the real world transactions (merchant POS, ATMs)
  • Security – Smartchips and PIN options can ensure against unauthorized use.
  • Resilience – card-to-card transactions can be conducted even with no online connection – think Block-chain.
  • Risk-aversion – The informal economy and Black Markets are mitigated, thereby fostering tax revenues.
  • Far-reaching – Benefits outside of the payment transaction; the scheme increases the money supply (M1), which increases available bank capital for community investments.

This is Payment Cards 101. See the exploratory VIDEO in the Appendix below.

The actuality of a country’s universal acceptance of e-Money/Payment Cards is not just academic, it is already in play … in model countries – think India. They, this emerging economy of 1.2 billion people, have rolled out numerous e-Money products for their “rupee” currency. They have learned-lessons – good, bad and ugly – for us to apply in our implementation. This summary was detailed in a previous Go Lean commentary; consider this excerpt:

Excerpt: What the U.S. can learn from India’s move toward a cashless society

Silicon Valley fancies itself the global leader in innovation. Its leaders hype technologies such as bitcoin and blockchain, which some claim are the greatest inventions since the Internet. They are so complex that only a few mathematicians can understand them, and they require massive computing resources to operate — yet billions of dollars are invested in them.

India may have leapfrogged the U.S. technology industry with simple and practical innovations and massive grunt work. It has built a digital infrastructure that will soon process billions more transactions than bitcoin ever has. With this, India will skip two generations of financial technologies and build something as monumental as China’s Great Wall and America’s interstate highways.
…
In 2009, the government launched a massive project, called Aadhar, to solve this problem by providing a digital identity to everyone based on an individual’s fingerprints and retina scans. As of 2016, the program had issued 12-digit identification numbers to 1.1 billion people. This was the largest and most successful I.T. project in the world and created the foundation for a digital economy.
…
And then India launched its Unified Payment Interface (UPI), a way for banks to transfer money directly to one another based on a single identifier, such as the Aadhar number.
…
With a system such as UPI, the billing processor is eliminated, and transaction costs are close to zero. …

Nobel Prize-winning economist Joseph Stiglitz said at the World Economic Forum meeting in Davos, Switzerland, that the United States should follow Modi’s lead in phasing out currency and moving toward a digital economy, because it would have “benefits that outweigh the cost.” …

Where as India’s e-Money deployment is for their rupee currency, the Caribbean’s plan is to introduce a regional integrated currency branded the Caribbean Dollar (C$). This was the stated intent of the book Go Lean … Caribbean, to serves as a roadmap for the introduction and implementation of the Caribbean Union Trade Federation (CU) and the aligning Caribbean Central Bank (CCB), the issuer of C$. This Go Lean/CU/CCB roadmap depicts e-Money and Payment Cards as a hallmark of technocratic efficiency, with the agility to manage this deployment. This will affect all aspects of Caribbean society – economics, security and governance. As a currency product, surely it affects the economic engines, but with the ubiquity of a government Payment Card system – the government is the largest employer – the universality of this reboot will have immediate impacted.

This reality fits in with the quest of the Go Lean roadmap, to optimize all societal engines, as stated with these 3 prime directives:

  • 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 ensure public safety and protect the resultant economic engines ; where there is economic successes, “bad actors” always emerge, so there must be a solution for predictive and reactive mitigations and interdictions.
  • Improvement of Caribbean governance to support these above engines. This include a separation-of-powers between the member-states and CU federal agencies, including the independent administration of the Caribbean Central Bank.

The Go Lean/CU/CCB roadmap anticipated e-Money and Payment Card schemes. The book detailed strategies as follows:

  • e-Government – The CU is prescribed as the regional administrator for ICT for the Single Market of 30 states and 42-million people. While the Caribbean Central Bank (CCB) will manage the region’s M1, they will embrace the e-Government mandate, calling for card-based, electronic payment options for all federal transactions and encouraging this mode for state/municipal/private facilitations as well. This means that the Caribbean dollar (C$) will be mostly cashless, an accounting currency much like the first years of the Euro. The CCB will settle all C$ electronic transactions (MasterCard-Visa style or ACH style) and charge interchange/clearance fees. – This scheme is fully defined on Page 198.
  • Cruise line passengers using smart-chips – the cruise industry needs the Caribbean more than the Caribbean needs the industry. But the cruise lines have embedded rules/regulations designed to maximize their revenues at the expense of the port-side establishments. The CU solution is to deploy a scheme for smartcards (or smart-phone applications) that function on the ships and at the port cities. This scheme will also employ NFC technology – (Near Field Communications; defined fully at Page 193 – so as to glean the additional security benefits of shielding private financial data of the guest and passengers. [This scheme will incentivize more spending among cruise line passengers.] – Defined fully on Page 193.
  • Electronic Commerce – This holds the promise of “leveling the playing field” so that small merchants can compete against larger merchants. To facilitate e-Commerce, purchased merchandise must get to their destinations as efficiently as possible. The CU’s implementation of the Caribbean Postal Union allows for better logistics for package delivery. – Defined fully on Page 201.
  • Internet Marketplace / Social Media – The CU‘s web portal, www.myCaribbean.gov, will grant free access, email, IM, and profile pages for CU stakeholders, even normalizing communications thru social media sites. This will facilitate internet commerce activities in the region, as the CU will have hot data on profiles, habits and previous activities, thereby creating opportunities for measured marketing. – Defined fully on Page 198.
  • Government Benefits / Electronic Benefits Transfer (EBT) – allows State welfare departments to issue benefits via magnetically encoded payment card, used in the United States and the United Kingdom. Common benefits provided (in the United States) via EBT are typically of two general categories: food and cash benefits. – Defined fully on Page 353.
  • Unemployment Benefits – The CU‘s mandate for e-Delivery and e-Payment will make the unemployment benefits process more effective and more efficient. Claimants will be able to apply online or on the phone, and payments will be disbursed to debit/payment cards, as opposed to paper checks. (Payments will be in Caribbean dollars, even in Puerto Rico and the US Virgin Islands). – Defined fully on Page 89.
  • Remittance Solutions for Diaspora – By pursuing the e-Government / e-Payment strategy, the Caribbean Diaspora will be able to remit transfers back home by just loading values onto C$ payment cards [for free]. This simplified system will minimize transfer fees and furnish [Foreign Currency] (Fx) controls. – Defined fully on Page 154.

There are countless examples of electronic money schemes facilitating more commerce (i.e. e-Commerce). The key is having an settlement / clearing entity. Under the Go Lean roadmap, that role is assumed by the CCB.

This changes everything … for everyone. Yes, we can!

The Go Lean book provides details of the community ethos to adopt, plus the strategies, tactics, implementations and advocacies that are necessary to executed in order to deliver the e-Money / Payment Card solutions to the Caribbean region. Within its 370-pages, the Go Lean book re-affirms the mantra that Internet & Communication Technologies (ICT) can be used as a great equalizer so that small nation-states can compete against large nation-states.

The points of effective, technocratic e-Money stewardship were further elaborated upon in previous blog/commentaries. Consider this sample:

https://goleancaribbean.com/blog/?p=14248 Leading with Money Matters – Almighty Dollar
https://goleancaribbean.com/blog/?p=10513 Transforming Money Countrywide – The Model of India
https://goleancaribbean.com/blog/?p=7034 The Future of Money
https://goleancaribbean.com/blog/?p=6635 New Security Chip in Credit Cards Unveiled
https://goleancaribbean.com/blog/?p=5668 Move over Mastercard/Visa, Time for Local Settlement
https://goleancaribbean.com/blog/?p=5210 Cruise Ship Commerce – Getting Ready for Change
https://goleancaribbean.com/blog/?p=4425 Cash, Credit or iPhone …
https://goleancaribbean.com/blog/?p=3889 RBC EZPay – Ready for Change
https://goleancaribbean.com/blog/?p=2074 MetroCard – Model for the Caribbean Dollar
https://goleancaribbean.com/blog/?p=1350 PayPal expands payment services to 10 markets
https://goleancaribbean.com/blog/?p=906 Bitcoin virtual currency needs regulatory framework to change image
https://goleancaribbean.com/blog/?p=528 Facebook plans to provide Fintech – Mobile payment services
https://goleancaribbean.com/blog/?p=833 One single currency, divergent economies – Europe’s Model

An e-Money transformation will mean rebooting the industrial landscape of the Caribbean. In general, rebooting the region’s industrial landscape is not a new subject for this Go Lean movement; this commentary has previously identified a number of industrial initiatives to launch a reboot in the region. See the list of previous submissions on Industrial Reboots here:

  1. Industrial Reboots – Ferries 101 – Published June 27, 2017
  2. Industrial Reboots – Prisons 101 – Published October 4, 2017
  3. Industrial Reboots – Pipeline 101 – Published October 5, 2017
  4. Industrial Reboots – Frozen Foods 101 – Published October 6, 2017
  5. Industrial Reboots – Call Centers 101 – Published July 2, 2018
  6. Industrial Reboots – Prefab Housing 101 – Published July 14, 2018
  7. Industrial Reboots – Trauma 101 – Published July 18, 2018
  8. Industrial Reboots – Auto-making 101 – Published July 19, 2018
  9. Industrial Reboots – Shipbuilding 101 – Published July 20, 2018
  10. Industrial Reboots – Fisheries 101 – Published July 23, 2018
  11. Industrial Reboots – Lottery 101 – Published July 24, 2018
  12. Industrial Reboots – Culture 101 – Published July 25, 2018
  13. Industrial Reboots – Tourism 2.0 – Published July 27, 2018
  14. Industrial Reboots – Cruise Tourism 2.0 – Published July 27, 2018
  15. Industrial Reboots – Reinsurance Sidecars 101 – Published October 2, 2018
  16. Industrial Reboots – Navy Piers 101 – Published October 9, 2018
  17. Industrial Reboots – Payment Cards 101 – Published Today – October 11, 2018

In summary, our Caribbean region needs a better industrial landscape to improve our economics, security and governance. While transforming to an e-Money / Payment Card economy may be heavy-lifting, it is worth all the hard work. This plan is conceivable, believable and achievable – India is doing it!

Let’s lean-in to the Go Lean roadmap to reboot our industrial landscape. Time to get going. There is only one destination for all of this effort: a better Caribbean homeland to live, work and play. 🙂

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

Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation.

——————-

Appendix VIDEO – How Credit Card Processing Works – Transaction Cycle & 2 Pricing Models – https://youtu.be/avRkRuQsZ6M

BancardSales
Published on Apr 4, 2014 –
How Credit Card Processing Works : http://www.bancardsales.com

This video explains how credit card payments are passed from the cardholder to the merchant bank account. Included in the video is the transaction cycle, and a detailed explanation of the two main pricing models. If you’ve ever wondered:
How Does Credit Card Processing Work?
How To Process Credit Cards?
How Credit Card Processing Works?
How To Accept Credit Card Payments At Your Business or Understanding the transaction flow?

Then you’ll want to watch this video. It’s part of a credit card processing basics video series so be sure to check back for more updates and additional videos in the series.
Additionally, you can check out http://www.bancardsales.com for more tips and tutorials on how merchant account processing works.

Category: Education

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Industrial Reboot – Navy Pier 101

Posted on October 9, 2018 in Economics, Government, Industries, Strategy, Tactical

Go Lean Commentary

From small investments (seedlings) come big harvests. Remember the “mustard seed” …

“… like a grain of mustard seed, which a man took, and sowed in his field; which indeed is smaller than all seeds. But when it is grown, it is greater than the herbs, and becomes a tree, so that the birds of the air come and lodge in its branches.” — Matthew 13:31–32, World English Bible

Imagine an industrial reboot that can take a small investment – seed money – but grow into huge returns for the community.

Yes, we can!

The book Go Lean…Caribbean related a community investment that should be made in each Caribbean member-state, that of Navy Piers, and described how BIG returns can be gathered from the resultant infrastructure. The book describes that such an implementation can impact many of the societal engines – think: economy, security and governance.

What is a Navy Pier?

In short, it’s a dock … and “then some”. The most famous one, and name sake is in Chicago, Illinois; see historic details here:

Navy Pier is a 3,300-foot-long (1,010 m) pier on the Chicago shoreline of Lake Michigan. It is located in the Streeterville neighborhood of the Near North Side community area. The Navy Pier currently encompasses more than fifty acres of parks, gardens, shops, restaurants, family attractions and exhibition facilities and is the top leisure destination in the Midwestern United States (“Midwest”), drawing nearly nine million visitors annually.[2] It is one of the most visited attractions in the entire Midwest and is Chicago’s number one tourist attraction.[3]
…
The Navy Pier opened to the public on July 15, 1916.[4] … Its original purpose was to serve as a dock for freights, passenger traffic, and indoor and outdoor recreation; events like expositions and pageants were held there.

In the summer of 1918 the pier was also used as a jail for draft dodgers. In 1927, the pier was renamed Navy Pier to honor the naval veterans who served in World War I.

In 1941, during World War II, the pier became a training center for the U.S. Navy; about 10,000 people worked, trained, and lived there. The pier contained a 2,500-seat theater, gym, 12-chair barber shop, tailor, cobbler shops, soda fountain and a vast kitchen and hospital.[6]
…
In 1989, the City of Chicago had the Urban Land Institute (ULI) reimagine uses for the pier. The Metropolitan Pier and Exposition Authority (MPEA) was created; its responsibility was to manage and operate Navy Pier as well as McCormick Place. The MPEA undertook the redevelopment, incorporating some of ULI’s recommendations.[8]

In 1995, Navy Pier was redesigned and introduced to the public as a mixed-use venue incorporating retail, dining, entertainment, and cultural spaces.

Starting in 2014, the redevelopment plan called The Centennial Vision was implemented. The purpose of this plan is to fulfill the mission to keep Navy Pier as a world-class public space and to renovate the pier so it will have more evening and year-round entertainment and more compelling landscape and design features.[9] The Centennial Vision was completed in summer 2016.
Source: Retrieved October 8, 2018 from: https://en.wikipedia.org/wiki/Navy_Pier

VIDEO – Navy Pier Ferris Wheel in Chicago – https://youtu.be/YVFx0FIb82g

Published on Nov 15, 2016 – Navy Pier’s ferris wheel, an iconic part of Chicago’s skyline, received a makeover this year for the pier’s 100th anniversary. Soaring nearly 200-feet high, the ferris wheel offers 360-degree views of the Windy City and is now taller and faster than ever.

The upgrades to the Navy Pier Ferris Wheel, AKA the Centennial Wheel, are part of a larger project to revitalize the pier, giving it a more modern, sophisticated feel. …

The new wheel is 50 feet taller than its predecessor. Each ride lasts about 13 minutes and rotates three times. A ride on the old ferris wheel was only seven minutes and rotated once. DAY/NIGHT; SUMMER/WINTER The new gondolas have air conditioning and heating systems. This improvement allows you to comfortably ride the Centennial Wheel in Chicago’s painfully cold winters and hot summers. The wheel operates during the day at after dark, offering two distinct experiences.

So where there is a coastline, there is an opportunity for a connecting pier. There are 3 types of piers that are common in the modern world: Working piers, Pleasure piers and Fishing piers. These do not need a lot of land; they are normally created as land-less structures into bodies of water. See this encyclopedic definition here:

A pier is a raised structure in a body of water, typically supported by well-spaced piles or pillars. Bridges, buildings, and walkways may all be supported by piers. Their open structure allows tides and currents to flow relatively unhindered, whereas the more solid foundations of a quay or the closely spaced piles of a wharf can act as a breakwater, and are consequently more liable to silting. Piers can range in size and complexity from a simple lightweight wooden structure to major structures extended over 1600 metres.

Coastlines abound throughout the Caribbean, as each of the 30 member-states is either an island or a coastal state (Belize, Guyana or Suriname). So this concept of a Navy Pier will be both a strategic and tactical implementation for the roadmap presented by the Go Lean book for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU). Consider the prime directives of the roadmap and how a Navy Pier can impact those directives:

  • Economics – The CU seeks to optimize the economic engines in order to grow the regional economy to $800 Billion and to create 2.2 million new jobs. Piers can be structured as event-entertainment destinations, even amusement parks abound. So a pier strategy can greatly impact tourism and recreation spending. Imagine new cruise ports-of-call.
  • Security – Navy Piers were originally designed for the Navy, an entity for national defense. Within the Go Lean roadmap, there is the plan for a comprehensive Homeland Security and Emergency Management apparatus to ensure public safety and protect the resultant economic engines. Imagine the quick roll-out of a floating pier after a hurricane for relief, recovery and restoration.
  • Governance – The CU seeks to improve Caribbean governance to support the above engines. This include a separation-of-powers between the member-states and CU federal agencies. Since ships can also be tendered at Navy Piers, many deliveries of the Social Contract can be built on these structures – imagine ferry access ramps, “pop-up” medical clinics, agencies for special administrative processing and kiosks. The CU plan for Self-Governing Entities allows for the piers themselves and any aligning easements to be a separate federal territory.

The Caribbean’s industrial landscape is in crisis. It must reboot! A Navy Pier can help … in every member-state. In fact the CU/Go Lean roadmap calls for a CU federal agency to build and operate – serve as landlord – the piers. Accordingly, the CU will facilitate this eco-system as Self-Governing Entities (SGE), an ideal concept for ports and piers, with its exclusive federal regulation/promotion activities. Imagine the construction equipment – dam walls, earth-moving machinery, dredging barges, etc – being used again and again as new Navy Piers are deployed through the region. Imagine the jobs …

Within the 370-pages of the Go Lean book are details of the job multiplier principle; this is how certain industries and infrastructures are better than others for generating multiple indirect jobs down the line for each direct job on a company’s payroll.

Here is a sample of references to the eco-system of piers through-out the Go Lean book:

Implementation – 10 Ways to Re-boot [Sample City] Freeport

# 7 – Cruise Ship Pier in Lucaya or Smith Point
Currently, cruise ships have to dock at the Freeport Harbor and the passengers transported to more amiable destinations, quite often the destination was the International Bazaar in the middle of a pine forest. By establishing a docking pier in the Port Lucaya vicinity, the cruise ship tourist destination will be all-encompassing in one geographic area and more value can be offered to the visitors. Cultural festivities (Gombay, Junkanoo, rake-n-scrape bands, etc.) can be a daily highlight; This would be modeling Walt Disney World’s 4 Parks and their afternoon character parades.

 Page 112
Advocacy – 10 Ways to Impact Public Works

# 2 – Union Atlantic Turnpike
The Union Atlantic Turnpike is a big initiative of the CU to logistically connect all member-states for easier transport of goods and passengers. There are many transportation arteries and facilities envisioned for the Turnpike: Toll Roads, Railroads, Ferry Piers, and Navy Piers. …

 Page 175
Advocacy – 10 Ways to Improve Homeland Security
# 4 – Naval Authority
Since any defense of the island and coastal states must be naval first, the Homeland Security efforts must work in conjunction with Naval operations. … The CU will build separate Navy Piers in the appropriate markets, aside from Cruise Ship docks.		 Page 180
Advocacy – 10 Ways to Promote Fairgrounds
# 9 – Transit Consideration – Turnpike – Navy Piers
The Union Atlantic Turnpike initiative fits ideally into the fairgrounds business plan, as passengers and cargo can move efficiently from island to island along rail lines, toll highways, tunnels & causeways and over-the-seas ferries. The CU facilitation of Navy Piers can accommodate naval vessel shore leaves and even cruise ship traffic. …		 Page 192
Advocacy – 10 Ways to Improve Fisheries
# 2 – Cooperatives
Fishery cooperatives allow fishermen and industry players to pool their resources in certain (non-competitive) areas of activity. This strategy is vital for sharing the cost and expense of installing piers/docks, locating systems (Loran-C & GPS), canaries, refrigerated warehouses and transportation solutions.		 Page 210

This is the vision of an industrial reboot! A transformation for how and where a new societal eco-system can be introduced and engineered.

This Go Lean book projects the roll-out of the Union Atlantic Turnpike and accompanying Navy Piers as Day One / Step One of the Go Lean/CU roadmap. Over the 5-year implementation for this roadmap, more and more of the features of piers will be deployed and their effect on the region will be undeniable: they will help to make the whole Caribbean a better place to live, work and play.

The Go Lean book stresses that reforming and transforming Caribbean engines must be a regional pursuit. These piers need to be  installed everywhere, every member-state, island and coastal state. But this effort is truly too big for any one member-state alone. This rationale, the need for interdependence, is the reason for the Caribbean Union. This interdependence was an early motivation for this roadmap; see these statements in the opening Declaration of Interdependence (Pages 12 – 13):

xvi. Whereas security of our homeland is inextricably linked to prosperity of the homeland, the economic and security interest of the region needs to be aligned under the same governance. Since economic crimes … can imperil the functioning of the wheels of commerce for all the citizenry, the accedence of this Federation must equip the security apparatus with the tools and techniques for predictive and proactive interdictions.

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… . In addition, the Federation must invigorate the enterprises related to existing industries … – impacting the region with more jobs.

Installing Navy Piers will mean rebooting the industrial landscape of the Caribbean. This is not a new subject for this Go Lean roadmap; this commentary has previously identified a number of industrial initiatives to launch a reboot in the region. See the list of previous submissions on Industrial Reboots here:

  1. Industrial Reboots – Ferries 101 – Published June 27, 2017
  2. Industrial Reboots – Prisons 101 – Published October 4, 2017
  3. Industrial Reboots – Pipeline 101 – Published October 5, 2017
  4. Industrial Reboots – Frozen Foods 101 – Published October 6, 2017
  5. Industrial Reboots – Call Centers 101 – Published July 2, 2018
  6. Industrial Reboots – Prefab Housing 101 – Published July 14, 2018
  7. Industrial Reboots – Trauma 101 – Published July 18, 2018
  8. Industrial Reboots – Auto-making 101 – Published July 19, 2018
  9. Industrial Reboots – Shipbuilding 101 – Published July 20, 2018
  10. Industrial Reboots – Fisheries 101 – Published July 23, 2018
  11. Industrial Reboots – Lottery 101 – Published July 24, 2018
  12. Industrial Reboots – Culture 101 – Published July 25, 2018
  13. Industrial Reboots – Tourism 2.0 – Published July 27, 2018
  14. Industrial Reboots – Cruise Tourism 2.0 – Published July 27, 2018
  15. Industrial Reboots – Reinsurance Sidecars 101 – Published October 2, 2018
  16. Industrial Reboots – Navy Piers 101 – Published Today – October 9, 2018

In summary, our Caribbean region needs a better industrial landscape to improve our economics, security and governance. We can make small investments – think mustard seeds – that can yield huge returns. This is too appealing to ignore.

Let’s get going!

We urge all Caribbean stakeholders to lean-in to this roadmap for industrial reboots, to make our region better islands and coastal states to live, work and play. 🙂

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

Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation.

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