Bob Stewart
Bob Stewart

The new OBA Government is to be congratulated for ending the financially destructive policy of term limits.

This was probably the worst of many poor financial decisions made by the former the PLP Government and even I underestimated the damage it wreaked on our economy.  

Its principal authors should be nominated for the Nobel Prize in chemistry, having converted a Rolls Royce economy inherited in 1998 into a piece of stinking seaweed, with the consequent unemployment and children being brought up in poverty.  Such conditions have not been seen in Bermuda since the 1930s.

Let me backtrack a little.

There are many economic ideas that are both logically wrong and unsupported by historical facts, and which have been known to be wrong for 250 years, but are still widely held and acted on by politicians. They are usually grouped together under the heading of mercantilism — a rag bag of inconsistent and incorrect economic ideas.

Many mercantilist ideas still dominate local understanding of economics.  Examples are:

• The wealth of the rich has been earned at the expense of the poor. The rich get richer, the poor get poorer;

• A bigger population means that there will be fewer goods and services for others;

• There are only a limited number of jobs, therefore existing jobs need to be protected.

Such ideas persist, despite them having been refuted for so long.  Another mercantilist notion in vogue in Bermuda was that the former Bermuda Government, like many other governments, believed that the accomplishment of winning an election meant that they could override the settled propositions of economics.

This is the mercantilist mentality in motion, and it is impervious to economic logic, and to historical understanding. It is the mindset of financial fools.

It is admittedly true that in the short term, politics can trump economics, but in the long term, economics always triumphs over politics.

Just ask the Russian dictator Joe Stalin (no you cannot because he is dead) or even better Robert Mugabe, the Premier of Zimbabwe who won election after election but has left his country’s economy in a shambles.

Soup kitchen lines

There are rational limits to politics, and these limits nearly always begin with the laws of economics. This is something the former PLP Government never understood hence we have hundreds of people without jobs, without prospects of prosperity that we geezers have enjoyed for years, and even soup kitchen lines straight out of the 1930s movies.  

Economic principles and rules can only be frustrated for so long.  In the end, they come up and bite you – just like a monster in a black and white B grade horror movie.  Term limits was one of these policies that was believed to trump the rules of the financial game.  

If ever a policy was worthy of the old Greek proverb “Those whom the Gods will destroy they first make mad”, this was it. Envy and resentment of expatriate workers lay behind these ideas.

Whilst it is, rightly, illegal to discriminate against people by race, the Bermuda Government created an environment whereby it was fashionable to discriminate against work permit holders by arbitrarily terminating their work permits, and throwing them off the island like so much trash.   

It is well known that power corrupts; what is less well known is that it breeds folly — the folly of cutting off your nose to spite your face. It is no crime to be ignorant of the principles of economics but it is the epitome of irresponsibility to implement policies, the consequences of which are not fully understood. 

What was not understood, although it should have been, was that immigrants, unlike children, start working and paying taxes the moment they set foot on Bermudian soil, without requiring expensive schooling and health care.

Windfall of human capital

They typically come in their peak working years, when they are young and healthy, and hence contribute to Social Security and for medical care for years, and they rarely collect. As immigrants, many bestow for us Bermudians a windfall of human capital, and their energy and inventiveness provide drive, economic vitality, and growth. 

It was really a simple matter to look back at the history of Bermuda to see the contribution that non-Bermudians made to our economic development. And in the second part of this column, that’s what I will do.

Part Two of this column will run in next Wednesday’s Bermuda Sun.