Tuesday, March 31, 2009

BOI Misses Targets

The Rs15 billion of foreign direct investment target that Raju Jaddoo has set for 2009 is in fact the target Sithanen had for 2008 (see paragraph 9 of the 2008/09 budget). As only Rs11.4 billion poured in last year, the BOI fell short by about a quarter.

The other target that Sithanen/Jaddoo had was to rank Mauritius in the Top 10 places of the oversold (see here) World Bank's Doing Business survey in 2009. That didn't happen either: Mauritius clocked only a 24th place. In fact the best ranking we ever achieved in that survey was a notch higher and it happened, as the table above shows, before the bean-counting reform of Mansoor/Sithanen.

Finally, why do we have to borrow Rs600 million in USD from the World Bank for some dumb project called Mauritius Economic Transition Project when Government has been awash with cash from overtaxing us for so long? Who exactly benefits from Mauritius being saddled by Sithanen and Mansoor with all these billions of rupees worth of loans in foreign currency?

Saturday, March 28, 2009

An Expert's Take on "Experts"

After assessing 2,000 predictions by 284 experts on subjects of their specialties and on subjects that they knew little about over two decades, Philip Tetlock, a professor at the University of California, Berkeley wrote in his 2005 book, “Expert Political Judgment”:

“It made virtually no difference whether participants had doctorates, whether they were economists, political scientists, journalists or historians, whether they had policy experience or access to classified information, or whether they had logged many or few years of experience”.

Mr.Tetlock referred such "experts" to hedgehogs with ideological leaning and a black and white view of the world and compared them to foxes who are more likely to get things right because they are not dogmatic and are more inclined to see complexity and nuance.

So next time you see Dr in front of a policymaker's name, you better check whether she or he is more of a Dr Hedgehog or a Dr Fox!

Wednesday, March 25, 2009

Western Looters Go South

What is the link between Africa's ever-elusive quest to make poverty history and its own natural resources? Political writer Lord Aikins Adusi seems to be pointing his finger where it hurts more in Should Africa Trust the Western Media?: Western banking institutions, property development companies, defence companies and defence contractors, oil and mining corporations.

Growth Rate Numbers Have Serious Limitations

And so do people who keep on using them in isolation. Take the 4.79% average GDP growth rate of Sithanen from July 2005 till December 2008 for example. What does that number mean? Nothing much besides the fact that the national pie got bigger by that amount on average. It doesn't say a single word about how that pie has been divided.

For instance, both graphics above have an average growth rate of 4.79% but the distribution, unless you're wearing Bretton-Woods goggles, is not exactly the same. We know for sure we didn't get equally-distributed growth because otherwise Ramgoolam would have presented a candidate in the last bye-election. We also have additional clues that's telling us that the growth while benefiting only a few people has sent a majority of the population into an 'L-shape' type of recession since July 2006: a very robust average inflation rate of 8.53%, elimination of a progressive tax structure, FDI flows in speculative real-estate projects and depreciation of the rupee to name just a few.

And now more and more people are taking to the streets to say no to Sithanen.

Monday, March 23, 2009

Any Resemblance With Our Local Situation is Anything But Purely Coincidental

Obama on The Tonight Show

Mirror, Mirror Upon the Wall, Who is The Fairest of All?

That would be Singapore and not Sithanen. Let us say we started with a 100 in September 1991 (the month the bean-counter became Minister of Finance for the first time) and grossed up that amount with the growth rates achieved by the two countries until December 1995 before resuming the calculations in July 2005 and stopping in December 2008. You can think of it as the career performance of Dr. Sithanen as far as growth rates go.

Singapore comes in ahead by a staggering 21.1% as at the end of 2008 (it was ahead by over 26% in December 2007). This is a mind-boggling performance by the South-East Asian Tiger because it still managed to progress so much despite being on top of the world and an appreciating currency while Mauritius slid into increasing international economic insignificance. More on this later.

Given that you've behaved so well, let me now take you for a quick peek at the world's busiest port.

Friday, March 20, 2009

The Birth of a Sister Island

What's in it For Me?

You don't have to be terribly intelligent to guess that whatever Navin Ramgoolam may answer to such a question asked by Pravind Jugnauth will not be as enticing for our parliament's newly elected MP as what the MMM will offer him as political option in 2010: a sharing of the land's top job. Especially when you look at the results of the last bye-election and apply an extraordinarily complicated analytical tool on which reputations have been built: arithmetic.

I mean, just subtract the, let's say, 6% of the MSM votes from the 51% Jugnauth Jr. got and add that to the 41% his uncle scored. And that's before considering that a chunk of the voters didn't turn up because there was no way they could send a clear signal to the government about Sithanen's mismanagement of the economy and because the stakes are not as high as in a general election.

Ramgoolam has also kind of boxed himself in. He can't even benefit from a snap election as Federation III can probably be set up in 24 hours or less, win the next polls and then show us why we will have to vote them out after five years. Then again, history doesn't always evolve in such a predictable fashion, does it?

US Congress Brings Back Shameless Bonuses to Earth

The outrageous $165 million in bonuses that A.I.G, after receiving $40 billion in bail-out money under TARP alone, paid to employees who played a part in blowing up the company will be returned to the taxman thanks to special 90% levy passed in the House yesterday.

Now here's something Ramgoolam could do to break the back of those infamous and apparently rock solid IPP contracts and bring our electricity prices to more competitive levels. That would at the same time prove to us that he is at least able to get the basics right.

The same principle should apply to money disbursed under the stimulus package. And it's not at the discretion of the Minister of Finance to give out the names of the companies receiving government funds. Unless of course if he sees no difference between taxpayers' money and his own.

Tuesday, March 17, 2009

Dodoland's Banker

Here is a great book to get a good perspective on one of the two controversial Bretton Wood sisters and on economic development in general. The more so given the billions of rupees which we've been borrowing from it since July 2005 at a time when countries like Brazil and Argentina had paid back their debt in advance and when our government was awash with cash.

The must-read chapter 7, The Cancer of Corruption, will probably lead you to find stunning parallels between how Indonesia was messed up by the World Bank in 1997 and how our country has been screwed up by that institution's ultimate puppet who seem to have forgotten that the voters who sent him to parliament are from independent and sovereign Mauritius.

This masterfully written book which was recommended to me by a World Banker for its even-handedness and which I truly enjoyed is available for less than USD12 from Amazon.com.

Why are they so elusive?

The founders of Dodoland must be hailed for one thing: the art of delivering hot air non stop. Exit "economic democratisation", enter "Maurice Ile durable". For anything solid, better look elsewhere. Unless one confuses "batte-batté" with vision and strategy.

What would you identify as the key impediments?

I tend to see mostly leadership deficit and crony capitalism or réseaucratie in lieu of democracy. Am I going bonkers?

Monday, March 16, 2009

Green Mauritius: Cut Down Flights

According to Greenpeace Chief Scientist, Doug Parr, air travel is the world fastest growing source of greenhouse gasses. Citing the much-respected group of scientists, the UN’s Intergovernmental Panel on Climate Change, he writes (Airline Business, April 2008) that aviation is responsible for 3.5% of climate change. For industrialized nations, the proportion is much higher. According to UK Government estimates, aviation alone contributes 13% of the greenhouse gas emissions, and keeps on rising. Our decision-makers should think about it and stop approving unnecessary foreign trips when the mission can be accomplished using modern communication networks. But can they fight the obsession to catch a plane for trivial trips using public funds while the going is good?

Sunday, March 15, 2009

Why Sithanen's Stimulus Package is Just A Flash in the Pan

One reason obviously has to do with its tiny size: 0.16% per year for the two-year period until December 2010 -- that's about 16 times smaller than the US package and five times less than the British one. Another is continuity: come end of next year Sithanen would have been out of office for close to a year. Which kind of gives you some perspective to his claim that he's doing more than the 2% prescribed (he's in fact doing about 7 times less) by one of the Bretton Woods sharks and if he's able to spend such a large amount it's because of the success of his reforms and not because he's been taxing us to death and not spending the billions that he's been budgeting for the past three years.

So I guess you want to know how I came up with my numbers? Simple. Of the Rs10.4 billion (3.8% of GDP) announced as additional stimulus package, we have to subtract Rs6 billion because that amount was part of last June budget (6 funds of Rs1 billion each which we've covered here). The remaining Rs4.4 billion (1.6% of GDP) have to be discounted because we know Sithanen's notorious reputation of being an intellectually dishonest bean-counter. What kind of discount should apply here?

A good estimate would be 20% because that's the proportion of the budgeted amount the Empowerment Fund spent in the first two years of its existence. So that gives me 0.32% for the two years or 0.16% per year.

Not Exactly What Karl Had in Mind

A year after the power-sharing deal had ended in 2005 the poorest 20% households had 0.3% less while the top fifth saw their share of total income increase by 1.6%. Drill down the data and you will find that in fact the top 10% got 1.8% more. Drill it some more and it turns out that 1.6% is twice what the poorest 5% households got in 2006/07 as share of the national pie. Naturally, it's absolutely fine to view the above table while listening to Soldat Lalit Militant.

Tuesday, March 10, 2009

Poverty Analysis 101

Lutchmeenaraidoo managed to make Mauritius a bit more equal when the poorest 20% of households ended up with 6.4% of total income in 1991 which was a good 0.8% more than they had 5 years earlier. The top 20% also saw their share shrink by 0.7% in the same year.

Enter the bean-counter in 1991 and 5 years later the latter had a massive 2.7% more while the poorer group had 0.5% less. In fact with le p'tit cousin, the top-earning households got their biggest share of total income over the 15 years reviewed above while the lowest 20% saw their brightest days with cousin grande.

And finally, when Ramgoolam left he had managed to give 0.3% back to the lower-earning 20% while clawing back about half the reverse robinhoodness of Sithanen. See, I told you Navin's first government was mediocre but not toxic.

To be continued...

Lula, Sa Zom!

Brazil is tipped by many as one of the few countries that will ride out the global economic downturn the least dazed. Such a feat would not have been possible without an enlightened leadership embodying vision, sovereignty and empathy as opposed to nincompoops who outsource their thinking to say the World Bank. Here is how Lula proves his mettle in the Financial Times:

" We could not grow, it was said, without threatening economic stability – much less grow and distribute wealth. We would have to choose between the internal market and the external. Either we accepted the unforgiving imperatives of the globalised economy or we would be condemned to fatal isolation.

Over the past six years, we have destroyed those myths. We have grown and enjoyed economic stability. Our growth has been accompanied by the inclusion of tens of millions of Brazilian people in the consumer market. We have distributed wealth to more than 40m who lived below the poverty line. We have ensured that the national minimum wage has risen always above the rate of inflation.

We have democratised access to credit. We have created more than 10m jobs. We have pushed forward with land reform. The expansion of our domestic market has not happened at the expense of exports – they have tripled in six years. We have attracted enormous volumes of foreign investment with no loss of sovereignty.

I hope for a world free of the economic dogmas that invaded the thinking of many and were presented as absolute truths. Anti-cyclical policies must not be adopted only when a crisis is under way. Applied in advance – as they have been in Brazil – they can be the guarantors of a more just and democratic society.

I do not give much importance to abstract concepts. I am not worried about the name to be given to the economic and social order that will come after the crisis, so long as its central concern is with human beings."

Dream, dream dream dream...

Friday, March 6, 2009

Reform or Rebound?

Ramgoolam bragged quite a bit about that 9.7% growth rate while he was the now-we-know loyal Leader of the opposition. Nothing spectacular really happened in 2000 except perhaps the most foolish way for any of our Prime Ministers to lose power. For something out of the ordinary we need to backtrack one year when a 1-in-every-40-years drought showed us how inadequate infrastructure could cut our usual 5% average growth by 60%. In other words the impressive clip at which the economy surged back in 2000 had nothing to do with Ramgoolam: it just rebounded.

In 2006, we similarly returned to an average performance mostly because the textile industry started to grow again after contracting and consolidating for a few years (more than 25,000 jobs were shed during that period). In fact the rebound in that particular industry accounts for over 50% of the 2.7% increase in the GDP growth rate. So that has nothing to do with the so-called reform of Sithanen: the economy simply bounced back.

Thursday, March 5, 2009

The Perils of Mitigated Speech

That would explain why Korean Air planes crashed relatively often until recently. It could also remind us why Meade was proven wrong and why there is no guarantee that Mauritius will be able to weather the current global recession as well as it should have. Demographic luck will get you ahead in life. Poor kids fade behind because their holidays do not provide the same mind-expanding opportunities as those of their richer friends. A hedging program could benefit enormously from learning how rice is grown in the Pearl River Delta.

That's some of the stuff I am taking away from finishing Malcolm Gladwell's latest book Outliers. Great book to read for anybody interested in policy-making along with Freakonomics and The Conscience of a Liberal and can be ordered cheapest from the earth's biggest bookstore by clicking on the picture below.

Wednesday, March 4, 2009

Rating Our Celebrities

I invite you to a test.

According to Stephen J.Dubner, who co-authored Freakonomics with Steven D. Levitt, being smart is expressing "a lot of mental horsepower, to be sure, but also nuance, precision, conceptual and practical elements combined in the same sentence, and psychological astuteness".

Try rating the "experts" and "elites" celebrated by our mainstream media on a scale of 0 to 10 and you would not be far from solving half of Dodoland's enigma!