Month: March 2014

Self-employment on the rise in the Caribbean – World Bank

Posted on March 26, 2014 in Economics, Planning

Go Lean Commentary

Photo - Caribbean Commercial FishermenThere is the desire to make the Caribbean a better place to live, work and play. At the root, any serious attempt at this objective must start with the creation of new jobs. The book Go Lean … Caribbean is one such attempt. It presents the roadmap to implement the Caribbean Union Trade Federation (CU), and with this effort, create 2.2 million new jobs over a 5 year period. That is the summary of the roadmap. But the “devil is in the details”. How to create so many jobs in such a short interval?

In considering the lessons from other societies, it can be seen that one key is entrepreneurship.

The experiences of North America and Europe indicate that small firms are primary sources for new employment. While entrepreneurship is not new for the Caribbean, the CU strategy of focused incubators is new. This requires support services to ignite and spur start-up companies. The exact details of the commission to help entrepreneurship are spelled out on Page 28 of the book. The book relates that successful entrepreneurship requires a new community ethos; the most crucial help coming from government authorities in protecting property rights.

MIAMI, United States – The World Bank says while self-employment is on the rise in the Caribbean, quality jobs remain elusive.

The Washington-based financial institution, which launched a new report here, said almost 70 per cent of employees in the Caribbean work for businesses with five or fewer employees, compared to 60 per cent in Latin America.

But while entrepreneurship is often considered to be a driver of development, the World Bank said the resulting companies grow at a much slower rate than in other middle-income regions.

Furthermore, the high percentage of small businesses reflects a lack of quality jobs in the region’s larger or multinational businesses, the bank said.

Declaring that “this should ring warning bells,” the report notes that, in the Caribbean, almost 70 per cent of business owners have opened a business out of fear of losing their job or because jobs were not available.

The report notes that, in the past 10 years, Latin America and the Caribbean have “benefited significantly from favourable economic tailwinds”.

But it said, as these tailwinds die “growth has to come from within” adding that innovation was “key if the Caribbean is to build upon the social gains of recent years”.

The report notes that Caribbean firms develop new products less frequently than their counterparts in other developing regions.

It said in Jamaica, for example, the rate of product development is less than half than that of Thailand or Macedonia, adding that while Grenada topped the region for new product development, six of the “worst offenders” also hailed from the Caribbean.

The report did not identify these “worst offenders” but cites four possible reasons for the less frequent development of new products in the Caribbean – Human capital, intellectual property, risk taking and logistics.

It said while science, technology and engineering graduates are at a premium, it’s a scarcity that has a direct effect on innovation.

Closely related to the quality of education the report recognises this will be a major challenge for the region.

The report notes that with separate laws govern-ing copyright in every country “the complicated panorama lends less protection to the product creators, deterring much-needed investment for new product research and development”.

It said a “deep cultural shame of failure is hindering innovation by dissuading entrepreneurs from taking risks”.

The report states that this was evident as much in “individual reticence at a business level as in the low levels of investment in research and development, especially from the private sector” and that modernising ports, transport and customs can add a competitive edge to products from the region.

Currently, it said poor public services, communication links and transport infrastructure are hindering efforts to boost production capacity in the region.

The report states younger firms “far outshone” more established ones in terms of job creation.

“The key is identifying and supporting those startups, which have the most potential through start up programmes, subsidies or policy.”

Patricia Ferreira from getAbstract, a company which provides training to those looking to start their own business, told the World Bank that “everyone has identified that innovation is definitely the way to move forward. Now, how to take this concept of innovation, break it down into microlearning moments so they can move this innovation train forward”.

It pointed to a young Barbadian entrepreneur Justin Quinlan, who is the chief executive officer of a successful start-up, “but that wasn’t always the case”.

Encouraged to focus on an existing career path like law or medicine, the World Bank said he “frequently came up against obstacles to his entrepreneurial dream”.

Quinlan said he remembered pitching to one of the bigger lending firms in Barbados, which was geared to finding innovation for youth.

“So I walk into this boardroom, and everyone there is about 50 bordering on 60 plus. When people don’t understand ideas or comprehend ideas, they are afraid.

“Investment is all about leveraging risk, so why would you try and invest in something that you don’t know or understand,” he added.

Source: Caribbean360.com – Caribbean Online Magazine (Retrieved 03/25/2014) –http://www.caribbean360.com/index.php/news/1090246.html#ixzz2x0N1aQii

DMSThe Go Lean roadmap asserts that entrepreneurship needs stimuli to be successful. That in addition to incubators, the book further calls for help to entrepreneurs with venture capital funds, angel investors, small business loans, Self-Governing Entities, cloud computing, and coaching.

Though “necessity is the mother of invention”, the Go Lean roadmap does not limit its job creation functionality to the realm of the small business. There are stimuli and growth strategies for large multi-national corporations and even government civil services. But perhaps the greatest impetus for growth will be in the fostering of intellectual property, as the book describes Internet Communications Technologies (ICT) as the great equalizer between big economy states (US, Japan, Germany, etc.) and small states, like in the Caribbean – See 10 Ways to Promote Intellectual Property (Page 29).

Considering the mathematics for creating 2.2 million new jobs, there needs to be the focus on additions and subtractions. Human flight or brain drains have depleted a lot of the Caribbean workforce in the past. So the effort to grow the number of new jobs must keep an eye on expatriation rates among the Caribbean youth. In this vein, education options would prioritize local institutions and online “e-Learning” as opposed to the previous model of studying abroad – where far too often the students never returned. This directive is embedded in the opening Declaration of Interdependence at the start of the book (Page 13) as:

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.

All in all, the roadmap Go Lean … Caribbean proposes rebooting the entire economic eco-system of the region. This is the only way to usher in the change the Caribbean desperately needs. The book posits that the problems of the Caribbean homeland are too big for any one state to solve, but rather a regional solution, the Caribbean Union Trade Federation, is the most viable option to fulfill the hope for a vibrant future for the 30 member-states and 42 million people of the region.

Download the Book- Go Lean Caribbean Now!!!

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Jamaica to receive World Bank funds to help in crime fight

Posted on March 26, 2014 in Economics, Government, Implementation, Social, Tactical

Go Lean Commentary

images-Caribbean-jamaica_police_498560223The publisher of the book Go Lean … Caribbean commends the Government of Jamaica and the Washington DC-based World Bank institution for their diligent effort to forge solutions to some of the crucial challenges of Jamaica. Crime has proceeded to cast such a “dark cloud” on Jamaica that the country is near the assessment of a “Failed-State”. The societal problems in Jamaica are so bad that many different advocacies from the Go Lean book can be applied to bring much needed improvements to the island. The book thusly serves as a roadmap for the implementation of the Caribbean Union Trade Federation (CU), a regional entity projected to also forge solutions for the Caribbean region as a whole and Jamaica in particular.

WASHINGTON D.C. – The World Bank says more than 80,000 Jamaican citizens will benefit from improved services, basic infrastructure and targeted crime and violence interventions in 18 vulnerable inner-city communities as a result of a US$42 million project for integrated community development.

The Washington-based financial institution said the new project is a continuation of the partnership between the Jamaica government and the World Bank on upgrading some of the country’s most vulnerable and volatile communities.

It said the project builds on the success of the “Inner City Basic Services for the Poor Project” to address accelerating urban decay and declining citizen security.

“The project aims to foster a more inclusive society in Jamaica by improving the quality of life of marginalized city dwellers,” said Sophie Sirtaine, World Bank country director for the Caribbean.

“It also aims to prevent crime and violence by engaging youth in public safety initiatives and providing them with job skills training,” she added.

As a result of the funding, Sirtaine said more than 50,000 people will benefit from improved solid waste management services, street lighting, paved roads and drainage.

She said residents in the 18 communities would “feel safer” and that 1200 families will have their piped water connection repaired and 4,500 residents receiving educational and skills training.

“As we strive to advance the targets of the Vision 2030, where access to reliable services and adequate infrastructure is the norm, enhancing community safety and security is a priority,” said Scarlette Gillings, managing director of the Jamaica Social Investment Fund.

“And these communities are places of choice to live, work, raise families and do business,” she added.

In the Kingston Metropolitan Area, the World Bank said poverty has doubled in two years from seven per cent in 2008 to more than 14 per cent in 2010.

It also said youth unemployment is on the rise, with more than 50 per cent of young people unemployed, adding that homicides and other violent crimes rates are among “the highest in the Latin America and Caribbean region”.

Source: Caribbean360.com – Caribbean Online Magazine (Retrieved 03/20/2014) http://www.caribbean360.com/index.php/business/1107320.html#ixzz2wvpxCnMA

While the foregoing article identifies these 3 objectives of the announced project: improved services, basic infrastructure and targeted crime & violence interventions, the Go Lean roadmap depicts 144 missions for the CU to engage, and provides the turn-by-turn directions on how to implement and ensure their success. At the outset of the book (Page 12), public safeguards are identified as prime directives in the Declaration of Interdependence:

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. The Federation must employ the latest advances and best practices of criminology and penology to assuage continuous threats against public safety.

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 antecedence of this Federation must equip the security apparatus with the tools and techniques for predictive and proactive interdiction.

In addition to crime, the roadmap targets delivery of government services, identifying best practices in agile methodologies to guarantee fewer defects and more efficiency; (Pages 109 & 147). In fact, the name Go Lean refers to the commitment to lean project management methodologies in the structure of the CU; this is defined in the book’s Preface (Page 4).

Lastly, the book also details investments and the impact of pipelines in the region, recognizing that this field is an “art and a science”. These investments are identified as strategic, tactical and operational in their Caribbean deliveries (Page 43). This synchronizes with the World Bank and Jamaica’s initiatives to help the municipalities to better provide quality services with their Vision 2030 plan.

The book Go Lean … Caribbean is an economic empowerment plan for the Caribbean first and foremost. This means addressing the underlying issues that mitigate poverty: jobs, education and economic growth; (Page 222). The CU projects the creation of 2.2 million new jobs regionally while growing the economy to $800 Billion. This roadmap, once executed, should help Jamaica (and equally all 30 Caribbean member-states) shed this “Failed-State” eventuality.

Download the book Go Lean … Caribbean – now!

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Bahamas Debate: Was Prime Minister Behind On Tax?

Posted on March 26, 2014 in Economics, Government, Implementation, Tactical

Go Lean Commentary

Photo - Perry Christie in ParliamentThe news article below is from The Tribune, a daily newspaper that covers the Bahamas. The story touches on a critical mission and motivation of the Caribbean Union Trade Federation (CU):

To re-boot the revenue systems that the region’s member-state governments depend on.

The book Go Lean … Caribbean, which serves as a roadmap for implementing the Caribbean Union Trade Federation, commences with an opening Declaration of Interdependence. In Verse XIV (Page 12) it pronounces:

Whereas government services cannot be delivered without the appropriate funding mechanisms, “new guards” must be incorporated to assess, accrue, calculate and collect revenues, fees and other income sources for the Federation and member-states. The Federation can spur government revenues directly through cross-border services and indirectly by fostering industries and economic activities not possible without the Union.

The below article crystalizes a debate. The country is mid-stream in implementing a new eco-system for assessing – collecting a Value-Added Tax (VAT). The proponents of the VAT are convinced that this is the panacea for the failure of real property tax collection, where even prominent politicians admit to not complying with the current taxing requirement. The foregoing debate is that maybe even the Prime Minister, Perry G. Christie, is delinquent, or may have been in the past. See the article here:

By: Khrisna Virgil, Tribune Staff Reporter (kvirgil@tribunemedia.net)

FNM (Bahamian Opposition Party) Deputy leader Loretta Butler-Turner is calling on Prime Minister Perry Christie to fully disclose whether he at some point fell behind in paying his real property taxes, and, if so, the years involved.

Branding him as the worst Prime Minister the Bahamas has seen to date, Mrs Butler-Turner criticised Mr Christie following his admission that he was unaware of which PLP parliamentarians, if any, were in arrears with their taxes.

The comments came amid a wave of backlash sparked following VAT advisor Ishmael Lightbourne’s confession that he had not paid real property taxes over the last decade. He owe’s the government more than $7,000.

The Christie administration has been heavily criticised since news of Mr Lightbourne’s delinquent account went public, especially as the government struggles to make its case that VAT is a suitable revenue-generating system.

It was Mrs Butler-Turner’s opinion that Mr Christie was “the most incompetent and irresponsible Prime Minister and Minister of Finance since the advent of Cabinet government in the Bahamas. He is very good at pleading ignorance and very poor at accepting responsibility.

“For the sake of accountability and responsibility might Mr. Christie advise if there were years when he did not pay his real property taxes in a timely manner and how many years this involved?

“If Mr Christie failed to ask (PLP parliamentarians), he is even more incompetent and slacker as Prime Minister than previously thought.

“He now says, ‘I will in fact review that with a view to seeing those of us who are in arrears of the various requirements in terms of taxes and with a view to advising them to meet the payments.’

“Why is he just doing this now, nearly two years after returning to office and on the eve of introducing legislation on VAT, legislation that has been postponed on three occasions by an incompetent government?

“He wants the Bahamian people to pay taxes and wants to raise taxes on law-abiding citizens, including the poor, but doesn’t know who in his own ranks are paying taxes? Is there one standard for the Bahamian people and another standard for PLP parliamentarians?”

Mrs Butler-Turner accused the Christie administration of being one of double standards, made clear, she said, by the actions of some PLPs. She added that seemingly it does not matter if taxes are raised or lowered because there are members of the government who simply do not pay.
Source: The Tribune – Daily newspaper online site (Retrieved 02/26/2014) –http://www.tribune242.com/news/2014/feb/26/fnm-deputy-was-prime-minister-behind-tax/

There are countless anecdotes in the Bahamas, and other countries with similar tax schemes and regimes, where property taxes had not been paid for decades, and only when there is a need for property title transfer (sale or inheritance), does the issue of tax collection become relevant. Does that anecdote also apply to the current Bahamian Prime Minister? This is not known here and now! Nor is it considered in the Go Lean book. The charge in the foregoing article seems to be more of a sensational political volley, rather than a statement of fact.

The CU, on the other hand, takes an apolitical, non-partisan stance. Further the Go Lean book asserts  that even the originator of Christianity, Jesus Christ, advised his followers to “pay Caesar’s things to Caesar”. This is found in a Chapter entitled:

10 Lessons from the Bible (Page 144).

(Note: the Bahamas claims to be a Christian nation).

The CU mission is to implement the complete eco-system for property tax assessment, registration and collections. The roadmap advocates an optimized tactic where the CU operates as a technocratic deputized agency and acquires “Receivables” for a country’s property taxes, in advance, and then subsequently facilitates collections and servicing. Imagine the Bahamas, and other similar member-states, under this new regime, receiving a warrant (securitized payment) of 80% of the amount of tax revenues that should be collected in a “perfect scenario” – 10 Ways to Pay For Change (Page 101). It then becomes the job of the CU’s technocratic professionals to complete the collection cycle – removing any political prejudices from the process – 10 Ways to Improve Credit Ratings (Page 155).

Without a doubt, this approach is far better than the status quo.

Download the book Go Lean … Caribbean – now!

 

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Guadeloupe, Martinique, St Maarten Join the ACS

Posted on March 26, 2014 in Implementation, Locations, Tactical

Go Lean Commentary

French Caribbean MapThe SFE Foundation, publishers of the book Go Lean … Caribbean welcomes these French Caribbean states into this brotherhood of Caribbean states. We embrace the idea of regional integration, as described in the below article, and push for an even “deeper dive into waters” of confederation, collaboration and convention.

The book Go Lean … Caribbean serves as a roadmap to navigate the integration and consolidation of all 30 member-states into the Caribbean Union Trade Federation (CU). The CU will equally represent these French-speaking Caribbean member-states along with their Dutch, English and Spanish counterparts. The Go Lean roadmap posits that the region is ill-prepared to compete on the world’s stage without this proposed integration. The book declares interdependence among these member-states to form a single market & economy of 42 million people and the potential for an $800 Billion GDP. The end-result will furnish a Caribbean Union that our young people can saddle their dreams to for a consequential future.

For this movement we welcome Guadeloupe, Martinique & St Maarten, and encourage this embrace by other French territories. See news article here:

By the Caribbean Journal staff:
Guadeloupe, Martinique and St Maarten have all joined the Association of Caribbean States (ACS) as associate members.

The three Caribbean territories acceded to the ACS during the regional group’s Ministerial Council meeting in Trinidad last week.

“It is important that we remain a player in the region and that we strengthen the bonds between us and the Nations of the Caribbean,” St Maarten Prime Minister Sarah Wescot-Wiliams said following the move. “One of the things I have been stressing is regarding our responsibilities and roles that we have to take on as a country. One of those is participation in regional and international organizations. Now we have the capacity to meet with the ACS which [gives] us a voice in the region.”

Serge Letchimy, President of Martinique’s Regional Council, said regional integration had been a priority of his tenure, with a view toward “anchoring Martinique in its geographical environment.”

The territories’ accession to the ACS was first announced [at the outset of this 19th Ordinary Meeting of the Ministerial Council].

Martinique and Guadeloupe’s relationship with the sovereign territories of the Caribbean, and how it should develop, continues to be a question for the region.

Last year, a report recommended that Martinique and Guadeloupe integrate economically with the Organization of Eastern Caribbean States – (www.caribjournal.com/2013/04/08/report-urges-oecs-economic-integration-for-martinique-guadeloupe/).

Source:  Caribbean Journal Online News Source; retrieved 02/21/2014 from: http://www.caribjournal.com/2014/02/21/guadeloupe-martinique-st-maarten-join-association-of-caribbean-states/

The Caribbean needs all hands on deck for the region’s societal elevation goals. Consider these organizational dynamics of the ACS and the OECS:

ACS

The Association of Caribbean States (ACS) is a union of nations centered on the Caribbean Basin. It was formed with the aim of promoting consultation, cooperation, and concerted action among all the countries of the Caribbean. The primary purpose of the ACS is to develop greater trade between the nations, enhance transportation, develop sustainable tourism, and facilitate greater and more effective responses to local natural disasters – Wikipedia.com.

It comprises twenty-five member states and four associate members. The convention establishing the ACS was signed on July 24, 1994 in Cartagena de Indias, Colombia. The secretariat of the organization is located in Port of Spain, Trinidad and Tobago.

Antigua & Barbuda Cuba Guyana Panama Venezuela
Bahamas Dominica Haiti St. Kitts & Nevis Aruba
Barbados Dominican Republic Honduras St. Lucia Curaçao
Belize El Salvador Jamaica St. Vincent & Grenadines France
Colombia Grenada Mexico Suriname Turks & Caicos Islands
Costa Rica Guatemala Nicaragua Trinidad and Tobago

Caribbean Sea Agenda
One agenda adopted by the ACS has been an attempt to secure the designation of the Caribbean Sea as a special zone in the context of sustainable development; it is pushing for the UN to consider the Caribbean Sea as an invaluable asset that is worth protecting and treasuring. The organization has sought to form a coalition among member states to devise a United Nations General Assembly resolution to ban the transshipment of nuclear materials through the Caribbean Sea and the Panama Canal.

OECS

The Organization of Eastern Caribbean States (OECS), created in 1981, is an inter-governmental organization dedicated to economic harmonization and integration, protection of human and legal rights, and the encouragement of good governance between the countries/dependencies of the Eastern Caribbean states of Antigua & Barbuda, Dominica, Grenada, Montserrat, St. Kitts & Nevis, St. Lucia and St. Vincent & Grenadines. Anguilla and the British Virgin Islands are associate member states.
Source: Wikipedia.com.

The Go Lean roadmap aligns with the ACS and OECS agenda – all hands on deck – with the implementation plan of an Exclusive Economic Zone for the Caribbean Sea. This plan is therefore conceivable,believable and achievable. 🙂

Download the book Go Lean … Caribbean – now!

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Fed Releases Transcripts from 2008 Meetings

Posted on March 26, 2014 in Economics, Government, Planning

Go Lean Commentary

Photo - US Federal reserve Bank Building (1)This foregoing article is part of the process of post-mortem analysis, sometimes referred as “Monday Morning Quarterbacking” or “Armchair Quarterbacking”. This can be a helpful process as it allows for lessons-learned of previous episodes and the mitigation of future risk. This is the premise of the book Go Lean … Caribbean. This book, serving as a roadmap for change in the Caribbean region, posits that the effects of the 2008 Great Recession continue to linger. Therefore the book advocates lessons from 2008 and the implementation of reforms, re-boots and turn-arounds to steer the region to a better outcome.

The book is inspired by the words of famed American Economist Paul Romer, who coined the phrase: “A crisis is a terrible thing to waste”. The above article shows that this philosophy was also incorporated in the undertakings of many of the stakeholders battling the challenges of 2008 – they did not waste the crisis. Many things that were blatantly wrong in the macro economy before 2008 were corrected by this crisis. The “easy money” policies and NINJA (No Income No Job or Assets) loans of the 2000’s decade were abated. The financial industries have now moved back to more sound, fundamental lending principles.

By Dunstan Prial:

Transcripts from 2008 Fed meetings divulge publicly, for the first time, details of decisions made by the central bank during the height of the financial crisis. [US Federal Reserve Chairman Ben] Bernanke proposed two options: an emergency term securities lending facility and to expand and extend the currency swap lines with struggling European banks.

By late October, after the collapse of Lehman Brothers and the fire sales of several other large banks on the brink of collapse, the Fed had dropped interest rates to about 1% and introduced a host of other emergency measures. And Fed policy members were apparently quarreling over whether those measures and how they were communicated to the public were helping or harming.

At the Fed’s Oct. 28-29 meetings, Timothy Geithner, then president of the New York Fed, scolded some colleagues for suggesting the Fed’s bold moves were hurting broader confidence in the economy: “Now, a lot of things happened over the last three months and the last year, and a lot of things happened in terms of policy over the last six weeks. There is no doubt that communication about policy by all the arms of the U.S. government and the uncertainty created by the actions by all the arms of the U.S. government contributed in ways to uncertainty about the policy response going forward,” Geithner said.

“There is also no doubt that inevitably in a crisis like this, when policy moves forcefully, it is scary because a lot of people are not yet at the point of assessing or understanding the forces driving our decisions. But I think it’s just unfair to suggest that the actions by the Chairman and this Committee were a substantial contributor to the erosion in confidence and to uncertainty about further policy actions, even though it’s true that when we move with force and drama it has the risk of adding to uncertainty.”

Geithner was a key supporter of the activist measures taken by the Fed before being named Treasury Secretary after Barack Obama was elected in November 2008. The transcripts, which run into the hundreds of pages, reveal that this was the beginning a series of unprecedented measures taken by the Fed in an effort to stave off another Depression.

The 14 transcripts are from eight scheduled meetings and six emergency meetings of the policy setting Federal Open Market Committee, which sets the central bank’s monetary policy, including the level of short-term rates.

The transcripts do not include other meetings at which smaller groups of Fed officials, working with the Treasury Department, arranged the bailouts of bankrupt Bear Stearns, the American International Group (NYSE: AIG), and housing service entities Fannie Mae and Freddie Mac.

Nor do the transcripts include notes from the meetings at which policy makers decided to let investment bank Lehman Brothers fall, which occurred in September 2008 and proved a key event at the outset of the crisis.

Fox Business News Online (Retrieved 02/21/2014) –http://www.foxbusiness.com/economy-policy/2014/02/21/fed-releases-transcripts-from-2008-meetings/

How about the Caribbean? Has the lessons been learned in and for this region? Have the blatantly wrong policies been abated? Has the markets returned to fundamentally sound policies?

Unfortunately, with the ever-expanding brain drain/human flight crisis in the Caribbean, the economic problems persist. Is it fair to conclude that when people move from the Caribbean to the US mainland, Canada or EU member-states, that there is some failure on behalf of Caribbean society? The Go Lean roadmap so declares, identifying “push-and-pull” underlying factors.

What qualifies the writers of this book to make these assessments?

Simple! They have lived the issues depicted in this foregoing news article and the Go Lean roadmap. The book is published by the SFE Foundation, a Community Development Corporation constituted by members of the Caribbean Diaspora. These are people who love their homeland, and would rather live, work and play there, but instead, find themselves toiling as alien residents in foreign lands. Principals of this foundation were also there in 2008, engaged with major stakeholders of the Global Financial crisis: Lehman Brothers, BearStearns. JPMorganChase, CitiGroup, etc. They were on the inside looking out, not the outside looking in. They were movers-and-shakers of the macro economy, not just armchair quarterbacks.

 

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Dominica raises EC$20 million on regional securities market

Posted on March 25, 2014 in Economics, Government

Go Lean Commentary

imagesThe forgoing news article synchronizes with the book Go Lean … Caribbean in that it advocates the alternative financing scheme for government debt; that of treasury bonds in the region’s security markets. The news article further describes the success using the existing monetary union for the Eastern Caribbean states. The Go Lean roadmap extrapolates that monetary union for all 30 member-states and the stronger currency of the Caribbean Dollar. This approach exceeds the current regime for many Caribbean states, that of foreign debt, which has to be repaid in foreign currency.

This book therefore promotes independence (Page 120), by being less beholden to foreign powers and foreign banks. Yes, independence by means of interdependence.

Roseau, Dominica – Dominica raised EC$20 million (One EC dollar = US$0.37 cents) on the Regional Government Securities Market (RGSM) on Monday with with Prime Minister Roosevelt Skerrit saying it represents confidence in the policies of his administration.

The money was raised at a record low 1.999 per cent through the first of a series of three 91-day Treasury Bill offerings.

“Many countries in the developed world especially in Europe have had difficulty in raising monies at concessionary rates. The discount rate achieved in Monday’s Treasury bill offering means that government can now raise the financing it needs at a lower cost to the taxpayers of Dominica,” said Skerrit, who is also finance minister.

He said his administration has had to grapple with Dominica’s own challenges “but we have worked actively to build a strong platform for sustained economic growth.

“Our prudent fiscal and economic policies have insulated the country from the more severe effects of the global recession,” Prime Minister Skerrit added.

A government statement said that the rate of 1.999% is 50 basis points below the previous record of 2.49%.

“Investors view the purchase of the 91 day Treasury bill as a low-risk investment opportunity. The low Treasury bill rate demonstrated the ability of the Government of Dominica to raise money at relatively low cost,” the statement said.

It said that as a result, the government will seek to raise an additional EC$65 million on the RGSM through the remaining two, 91 day Treasury bills and one five year, EC$25 million bond.

“This is to finance part of government’s operating budget and refinance existing government debt, the interest rate on which is much higher than the interest rate government obtains on its Treasury bills. Treasury Bills present an avenue to invest outside of the normal banking system,” the statement added.
Source: Caribbean360.com – Caribbean Online Magazine (Retrieved 03/21/2014)http://www.caribbean360.com/index.php/business/1107319.html#ixzz2wcE8gxHl

This book serves as a roadmap for the implementation of the Caribbean Union Trade Federation (CU), and the Caribbean Central Bank (CCB) to issue the regional Caribbean Dollar currency. This CCB institution is projected as an independent, yet technocratic federal agency to administer the region’s monetary affairs. Thus ushering a change in funding options available to the 30 member-state governments. At the outset, the roadmap identified this urgent need, stating this clause in the Declaration of Interdependence (Page 14):

xxix. Whereas all Caribbean democracies depend of the free flow of capital for municipal, public and private financing, the institutions of capital markets can be better organized around a regional monetary union. The Federation must institute the controls to insure transparency, accounting integrity and analysis independence of the securities markets, thereby shifting the primary source of capital away from foreign lenders to domestic investors, comprising institutions and individuals.

The foregoing news article depicts how much cheaper this funding approach is compared to alternatives, as Grenada was able to raise so much short term money at a low rate of 1.999%. This is much cheaper than any bank loan option. But with this alternative financing scheme, come new risks and threats. The Go Lean roadmap anticipates the many consequential impacts on Caribbean society, allowing for best-practice mitigations, such as credit ratings and reporting, investigations and prosecutions at the federal level, monitoring for systemic threats and racketeering crimes that can undermine the entire system.

The book details this oversight in these advocacies and anecdotes, embedding lessons from other jurisdictions like Wall Street in the US:

  • 10 Ways to Impact Wall Street (Page 200)
  • 10 Lessons from 2008 (Page 136)
  • 10 Ways to Improve Credit Reporting (Page 155)
  • 10 Ways to Better Manage Debt (Page 114)
  • 10 Revenue Sources for Caribbean Administration (Page 172)
  • Appendix GC – Credit Ratings Agencies Role in 2008 Financial Crisis (Page 276)

The CU/CCB solutions are designed to make the Caribbean a better place to live, work and play. This roadmap starts with an economic focus, but it also facilitates optimization of the governance processes. To maintain good governance, there must be a steady stream of revenues. The Go Lean roadmap calls for member-state governments availing more benefits from the capital & securities markets; for example, public sales of property tax liens. This strategy will be a “win-win” for all, elevate the social contract between the governments and the governed: more revenues drive more services; more services drive more opportunities to benefit the citizens (and all other stakeholders: investors, visitor, diaspora, etc.) of the Caribbean.

Download the book Go Lean … Caribbean – now!

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Time Value of Money

Posted on March 25, 2014 in Economics, Planning

The time value of money is a fundamental concept in finance – and it influences every financial decision a person makes, whether they realize it or not. Learn the basics here, from this video:

httpwww.investopedia.comvideoplayunderstanding-time-value-of-money

The book Go Lean … Caribbean serves as a roadmap for the introduction and implementation of the Caribbean Union Trade Federation (CU). This CU is proffered to provide economic, security and economic security solutions for the 30 member Caribbean states. This mandate is detailed early on in the book’s Declaration of Interdependence, as follows (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.

The roadmap posits that retirement is a community issue, and that the mandate for the CU to manage economic security issues must encompass retirement planning as well.

Currently in the region there are no Capital/Security markets that offer the liquidity options of Wall Street. However the book describes an optimization of the existing financial markets that can still take place with the introduction of the Caribbean Dollar – managed by a technocratic Caribbean Central Bank – and elevation of the current 9 Stock Exchanges.

Further the Go Lean roadmap portrays the need for public messaging to encourage savings/investments, describing deferred gratification as a community ethos that is required to forge permanent change in the Caribbean homeland. (Of course, administratively, failed policies like hyper-inflation and currency devaluation can undermine any positive savings habits; and thus the Go Lean roadmap starts first with rebooting the governing engines).

Investopedia Online Magazine (Retrieved 03/06/2014) –
http://www.investopedia.com/video/play/understanding-time-value-of-money/

 

The following advocacies in the book speak towards this Go Lean mission of optimizing financial/retirement planning:

10 Ways to Impact Retirement- Page 231

10 Ways to Impact the Future- Page 26

10 Ways to Impact Wall Street- Page 200

10 Ways to Control Inflation- Page 153

10 Ways to Better Manage Foreign Exchange- Page 154

10 Reforms for Banking Regulations- Page 199

10 Ways to Better Manage Debt- Page 114

10 Reasons to Repatriate- Page 118

10 Lessons from 2008- Page 136

10 Ways to Improve Elder-Care- Page 225

 

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How to Create Money from Thin Air

Posted on March 25, 2014 in Economics, Implementation, Industries, Planning, Strategy, Tactical

money-magic-rival-logoGo Lean Commentary

“Money does not grow on trees”, according to the old adage.

If it did then the tree would be special, it would be producing a chattel good that is designated as monetary currency. Even still, this scenario would not be “thin air”, it will be trading goods for goods. This can be illustrated with a barter exchange of fruit for some other merchandise, say silver. If the silver is viewed as money, then the process of growing and harvesting the fruit will result in money (silver) being acquired based on the fruit from the tree. So money can grow on trees!

Something more amazing happens in our modern economic system, money is created out of “thin air” – no trees, no fruit, no silver. How is this possible? This is accomplished through the Commercial/Central Banking system.

First of all, banks are financial institutions that take in deposits from people and use their money to give out loans to others. The reason why banks provide this service [to the community] for free is because they earn a profit by letting people deposit their money. Banks charge higher interests rates on the money they lend out compared to the money deposited. All in all, banks are both borrowers and lenders. People trust banks to store their money. The deposits allow banks to lend out money with higher interest rates with the expectancy that the loans will be paid back.

Banks have something called a required reserve ratio, mandated by the Central Bank; (the “Fed” in the US). This is the ratio of reserves to total deposits that banks are supposed to keep as reserves. Banks also have the right to increase the reserve ratio. They lend out the remaining percentage. For example, the bank has a 10% reserve ratio meaning it reserves 10% of its total deposits. It will then lend out the remaining 90%. When a person deposits $100, the bank is able to lend out $90 and keeps $10 for reserves. The $10 does not count as money since it is used as a reserve and may not be used for lending. So far, the bank has $100 and $90 currency loaned out. This is a total of $190 created as opposed to $100 before. Currency held by the public is money.

Of course, the borrower doesn’t simply keep the $90 but he will spend it. For instance, he will spend his money for a pair of soccer cleats at the Nike store. Now the Nike store has $90 but it will then deposit it back into the bank. The cycle then repeats itself. If the bank has more borrowers, it will certainly make a profit. If it lends again, it will lend out $81 and keep $9 on reserves.

The way banks create money is a cycle and over time, the profit compounds on top of each other and the original $100 can be [extended] potentially [to as high as] $1,000.[a]

So the new $900, compared to the original $100, is created from “thin air”.

“To whomever much is given, of him will much be required” – Luke 12:48 (World English Bible)

This scripture is quoted in the book Go Lean … Caribbean, in the advocacy “10 Ways to Improve Leadership” (Page 171) showing the great responsibility and accountability of leaders managing monetary affairs; they can create money out of “thin air”. This power, however, has often been abused by Caribbean officials and has resulted in tragic cases of hyper-inflation, currency devaluation and ultimately: human flight – people’s money lost value overnight due to no fault of their own. The same as money can be created, it can also disappear into “thin air”– Anecdote (Page 149) & Appendices (Pages 315 – 7).

The Go Lean roadmap does not just state the problems but provides solutions as well. Those solutions are proposed in the implementation of the Caribbean Union Trade Federation (CU) and the adjoined technocratic Caribbean Central Bank (CCB), as an independent agency. The mandates in the Go Lean roadmap focus on inflation (Page 153), foreign exchange (Page 154), interest rates/credit ratings (Page 155) & debt management (Page 114). The CCB is to be led by professionals who are well trained to execute the leadership roles for a unified Caribbean currency. They will be “given much”; because the CU is modeled after the European Union and the European Central Bank (ECB) – see (Page 130). The CCB leaders will be schooled in the arts and sciences of monetary affairs by the ECB. In addition, the leaders of the existing Central Banks of each member-state will serve as Governors of the CCB with appointments for 14 years, thus insulating them from political influences and persuasions – see “10 Reforms for Banking Regulations” (Page 199). This is the hallmark of a technocracy!

The book Go Lean … Caribbean serves as a roadmap for Caribbean economic optimization. It posits that the creation of money will be enhanced when all Caribbean member-states integrate their currencies into a single currency, the Caribbean Dollar (C$), and also their economies into a “Single” Market. The economic initiatives will create new services, jobs, investments and opportunities.

Yes, the end result will be money created out of “thin air”, but more so because of a vibrant economy than just the deposit-loan-commercial banking paradigm.

The originating activity, as defined in the roadmap, is the stimulus for economic gains. The roadmap projects an $800 Billion economy (GDP) after the 5-year implementation, up from $278 Billion. These numbers will be manifested with the creation of 2.2 million new jobs, and a better place to live-work-play.

🙂

Download the book Go Lean … Caribbean – now!

——-

Appendix – Reference:

a. Wiki-Answers; retrieved on 03/19/2014 from http://wiki.answers.com/Q/How_are_banks_able_to_create_money.

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Book Review: ‘How Numbers Rule the World: The Use & Abuse of Statistics in Politics’

Posted on March 25, 2014 in Economics, Government

Go Lean Commentary

How Numbers Rule the WorldThe below news article is a Review of the above-cited book; it highlights many of the same approaches being used in the publication Go Lean … Caribbean for the introduction and implementation of the Caribbean Union Trade Federation (CU). This book embraces the concepts of agile or lean methodologies to measure and manage progress in the region. Thus the name Go Lean. The Federation will lean-in to best-practices for capturing, computing, and measuring good economic and consumption data.

The source book by Lorenzo Fioramonti focuses on the use and abuse of statistics in the field of economic measurements, or econometrics. He asserts that the aggregate numbers are so critical that they “rule the world”. Due to this power, there is a basis for abuse, and far too often bad numbers have been used to exploit good intentions. The Go Lean book serves as a roadmap for the 5-year implementation of the CU. This requires exact econometric measurements from the outset, and thusly organizational structures will be embedded with the capabilities to facilitate this mandate. See the review here:

Book: How Numbers Rule the World: The Use and Abuse of Statistics in Global Politics. Lorenzo Fioramonti. Zed Books

Review by: Stuart Astill

GDP drives our economies. Stock market indices flood our media and national debates. Statistical calculations define how we deal with climate change, poverty and sustainability. But what is behind these numbers? In this book, Lorenzo Fioramonti sets out to show how numbers have been used as a means to reinforce the grip of markets on our social and political life, curtailing public participation and rational debate. Stuart Astill finds it to be a well written book, blending together knowledge from different fields into a coherent and readable whole. Of interest to economists, statisticians and especially those studying all aspects of power and politics.

During my time as a government statistician I had literally no idea that I was not, as many people thought, an oxymoron, but rather I was a tautology. I have discovered amongst many other things, thanks to Lorenzo Fioramonti‘s book, that statistics were originally created for the express purpose of governing and reforming the state, hence the ‘stat’ part of the name.

However, the title of the book, “How numbers rule the world”, is much closer to describing the content than is the subtitle, “the use and abuse of statistics in global politics”. Fioramonti’s main concerns are economists and, perhaps even more, the people who ask questions of economists and statisticians. He intelligently explains how he despairs of people who abuse their technical

knowledge or their advantageous position to turn the world to their own ends rather than the common good. This is not surprising: the author holds a Chair in Governance at the University of Pretoria and applies governance thinking through his work on topics around development, alternative economies and social progress measurement.

This book is consequently largely about power, rather than numbers: it illustrates a subset of abuses of power that have numbers at their heart. It is in some ways a psychopath’s guide to bullying the world by numbers – pretending that everything is ‘rational’, ‘independent’ and ‘objective’ and building fortresses of power around these intentional misrepresentations. In a provocative and fascinating first introductory chapter Fioramonti outlines his take on the world of ‘official’ numbers – perhaps best summed up where he says “Experts who use numbers have become the guardians of [this] social trust… citizens, elected representatives and other stakeholders… are held hostage by experts…”

The main chapters are quite specific techno-politico-historical investigations into four areas; ‘New global rulers: the untameable power of credit rating’, ‘Fiddling while the planet burns: the marketization of climate change’,

‘Measuring the unmeasurable: the financialization of nature’ and ‘Numbers for good? The quest for aid effectiveness and social impact’. He concludes with ‘Rethinking numbers, rethinking governance’. The whole is well written, blending together knowledge from different fields into a coherent and readable flow with a good number of ‘light bulb’ moments.

As a slight criticism from a purist, Fioramonti occasionally blurs the undeniable neutrality of mathematics and the more qualitative issues that necessarily sit around it. Economics and, to a slightly lesser extent, applied statistics consist of assumptions first and foremost, plus mathematics. I would have preferred to have seen clearer isolation of elements that are unquestionably objective and true – there is only one way for a statistician to calculate where the 90th percentile lies and only one way for an economist to carry out a simple linear regression. What Fioramonti is discussing is not just mathematics, but numbers in the real political world that sit as the filling in a sandwich. On either side of the pure mathematical filling is the sometimes rotten bread. In statistics we have on one side the definition of the statistics under consideration and the selection of the methodology that will be used – on the other side a slice of presentation and selective highlighting (or subtle downplaying). In economics, even more crucially, the fundamental assumptions that define the model (the most famous of which is the General Equilibrium, or ‘free market’ model) make one slice of the bread, while the presentation and choice of weighting empirical evidence with pure theory form the other.

Mathematics is the neutral servant of the assumptions but the assumptions can and should be stated and debated independently. I have always argued that the crucial step in analysis is to come back to our clearly stated assumptions and test them in view of our results against the real world. We must embrace a qualitative depth even in the most apparently quantitative pursuits. Professor Fioramonti has shown in a passionate and convincing way the global importance of this aspiration. His unarguable clarion call is for clarity, transparency and widespread, gentle and constructive skepticism.

I would add that we must make a great push for wider numeracy and understanding of scientific philosophy. In our world it is possible for a senior public servant to say “I don’t do numbers”, despite ‘analysis and use of evidence’ being one of their core competencies. As long as the public and the politerati do not have the skills to engage with (note, not in) quantitative analysis we cannot escape the traps that are so vividly described by this book.

Another lesson illustrated clearly by Fioramonti in this book is to embrace ambiguity. From a practitioner’s point of view it is crucial to consider how integrity can go hand in hand with progressing the use of numbers in a beneficial way. I was particularly taken by the chapter ‘Numbers for good? The quest for aid effectiveness and social impact’ which illustrates Fioramonti’s theme particularly well, showing how the undeniable power of numbers to reduce the inconceivable reality of the world to manageable proportions can lead to dangers, especially when exercised in the realm of human behaviour. The sharpness of his argument is summed up when he says that “the complexity of social relations is lost through the cracks of mathematical algorithms”.

His dismay at models being ignorantly lifted from the world of business and planted in non-profit development sectors is clear and well evidenced. There is a wonderfully familiar feeling to a quote in the chapter on aid effectiveness where the author is commissioned by his development-sector client to “improve their impact assessment tools”. Fioramonti offers them a coherent and balanced strategy with a methodology that is sensitive to the needs of the client and, hopefully, inclusive and beneficial to those in the developing countries. The CEO of the commissioning organisation listens and then baldly states: “Dr Fioramonti, there must have been a misunderstanding… we want you to develop one number which can tell us if what we do works or doesn’t. As simple as that.”

To have integrity, practitioners must recognise the right of commissioners of work to voice such a demand, whilst to the best of their capability working to a conclusion that, at worst, does no harm. At best the practitioner’s conclusion improves the world, moves forward the client’s understanding and improves the shared body of knowledge. Not easy when there are practitioners out there with less integrity, ready to take money in exchange for work that may do harm.

The author shows us in the historical section of this chapter the devastating scale of the misguidedness (my polite phrase!) that can occur when poorly defined economic growth becomes the key measure of development; natural resources are over-exploited, countries grow, but fail to adequately develop democratically, in human capital terms or in the most basic health, poverty and human rights areas. Even when/if aid makes it to the correct destinations it may well merely be used to prove someone’s (flawed) economic theory. Philanthropic ventures, the author argues, are often backed by the kind of people (technocrats, those from the business world), who like their money to be spent according to simple methodologies with hard numbers that ought to be seen as widely discredited given the events of the last financial crisis.

However deep the numbers can take us they cannot take us to the true problem, which is also the heart of the solution: power. In the end it seems that most of the problems in this book come down to something simple and very human: desperation for certainty combined with a need for simplicity in a confusing world. The challenge then is to move forward constructively and honestly while responding to and understanding that impossible desire.

In the Go Lean book, there is an advocacy “10 Ways to Measure Progress” (Page 147), detailing how the CU will manage the mission to make the Caribbean a better place to live, work, and play. The roadmap posits that this effort is a journey, not just one act. Therefore this effort is to be optimized with advanced process management methodologies to ensure CU goals are being accomplished; the stakeholders must therefore measure the progress. The key to this effort will be the federal structure of a Commerce Department with the primary role of harvesting demographic and econometric data. The roadmap adopts a Trade philosophy branded as SHIELD (Strategic, Harvest, Interdiction, Enforcement, Logistics and Delivery). The CU will install Project Management Offices in every Executive Branch Department to ensure a lean culture of quality delivery and accountability. This mission is highlighted at the outset of the Go Lean book, in a Declaration of Interdependence, with the following statement:

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 are other numbers that are important in the management of the Caribbean regional economy, numbers that measure the capabilities of the economic engines and the quality of Caribbean life. In particular, these are the numbers that are compiled and evaluated by credit reporting agencies and “failed-state” assessors. The Go Lean roadmap details action plans to improve these metrics: “10 Ways to Improve Credit Ratings” (Page 155) and “10 Ways to Improve Failed-State Indices” (Page 134).

Now is the time for the Caribbean region to lean-in for the changes described in the book Go Lean … Caribbean. The benefits of this roadmap are very alluring, that with the measured progress, and appropriate course correction, the Caribbean region can emerge to a $800 Billion economy (up from $278 Billion based on 2010 figures). These are just numbers, yes, but as Lorenzo Fioramonti pointed in in the foregoing reviewed book, these ”… Numbers Rule the World …”

Download the book now Go Lean … Caribbean.

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

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

Go Lean Commentary

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

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

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

By: Anna Grodecka

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

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

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

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

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

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

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

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

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

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

xxi. Whereas the legacy of international democracies had been imperiled due to a global financial crisis, the structure of the Federation must allow for financial stability and assurance of the Federation’s institutions. To mandate the economic vibrancy of the region, monetary & fiscal controls and policies must be incorporated as proactive and reactive measures. These measures must address threats against the financial integrity of the Federation and of the member-states.

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

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

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

Go Lean References

 Page Number
[a] 10 Lessons Learned from 2008

136
[b] 10 Ways to Impact Wall Street

200
[c] 10 Reforms for Banking Regulations

199
[d] SFE Foundation

8

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

 

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