Tuesday, May 30, 2017

Currency Policy Incompatible With Feline DNA

GDP per capita for Mauritius was only $9,142 at the end of 2015. That placed us at spot 68. We would have done a lot better had we not adopted a policy of 'competitive depreciation' for the better of thirty years. If we had kept our currency fixed at its 1985 level -- which was not too much to ask from a Tiger -- then we'd be 32 spots higher. Or just above the Arabia of the Sauds. And in the company of other high-income countries.

We were also stuck below the $10,000 threshold because the Sithanen flat tax has broken our economy. Had we kept on growing at 5.5% since 2006 we'd be seven notches higher. Fourteen if the 8% growth rates promised by the bean-counter had materialised.

In the meantime another Tiger has confirmed her stripes. A combination of high growth rates and systematic currency appreciation -- 60% over the thirty-year period -- has pushed Singapore ahead of Germany, Sweden and even Denmark.

Only dimwits will believe that 'competitive depreciation' is painless.

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