What's the Deal About Pesticides?

We sometimes hear that way too much is used in Mauritius. And that doctors in Singapore know we are from that cute Indian Ocean island just by looking at our blood tests. Friends will often recommend that we don't buy vegetables which appear to have been photoshopped. Or that we wash them thoroughly. But is that all we can do?

I don't think so as we are aware that an overuse of these chemicals will have more people developing cancer. And ruin our habitat. It shouldn't be difficult to at least have an audit trail. And start producing great vegetables on an appropriate scale. That will not hurt our trade relationships with the rest of the world.

Any thoughts on this?

15% Flat Tax is Enemy of Good Growth

Bean-counters' answer to their own manufactured lie was a promise of robust growth rates if we reduced taxes by 50%. That -- as expected -- didn't happen. They said well it's because of the financial crisis. Not really, the mess we're in was hatched in Mauritius: our economy didn't rebound in 2010 when the rest of the world did. Besides 57 countries had better growth rates than us in the first three years of the reforms -- which include, by the way, the years of 'early harvest' and 'bumper crop'.

But government has collected more revenue they say. Its revenue can increase if you have higher growth rates, better collections or if you are ripping us off with unreal prices. There has been better collections -- this can happen irrespective of tax rates -- but they did not make up for the shortfall caused by the string of ridiculously low growth rates of the reform vintage. Which is in any case what the PBB circulars have been telling us year after year. One is mostly a one-off thing, the other a cancer that spreads rapidly. You can find that out by recomputing the revenue government collected minus the stupid things (hedging billions, abusive energy prices, making SMS more expensive, high internet prices, wider-than-necessary interest rate spreads, etc). And have a look at the servicing of our debt and its structure for some additional clues that we need to add a couple of higher tax brackets on budget day. Having a good look at recent shutdowns of the US government is also not a bad idea.

And if unemployment has stayed stuck above 10% since the reforms began is it because our people don't have any good skills or is it because there are too many poverty-pay jobs on offer? And because the floodgates of stupidity have been opened? And no, we cannot increase productivity forever in one activity. We need to do other stuff. And use a range of tax rates to make intelligent bets.

Finally if our trade relationship with the rest of the world is unbalanced is it because we're not exporting enough or because we are importing things that we don't really need?

Meet The ABS

In this drawn-to-scale chart, B is the fraction of Mauritius under sugar cane. A is the rest of our island. The corresponding squares in the lower half of the diagram are the contributions of these sectors to our economy: sugar is expected to account for only 1.4% of GDP in 2012.

And S which is barely greater than what we have under sugar cane is Singapore. I've put a question mark there to represent its off the charts economy -- roughly twice the size of our passport.

Clearly there is way too much land under sugar cane. We could start by following Lalit's advice of bizin plant manze lor later tablisman. This will make us more resilient because it will ease pressure off our trade relationship with the rest of the world and improve food security at the same time. And having more of A and less of B will significantly boost the rate at which decent jobs are created in Mauritius. Without the galloping inflation bean-counters are so fond of delivering.

We should also restore progressiveness in our tax laws so that the claim that our PM is a socialist starts to ring true. And to put our fiscal house back on a sustainable path. Finally if we replace sugar cane with trees on a sufficient scale this could help us secure some extraordinary bragging rights: having the world's best air quality. Which will provide Mauritius with a killer tagline: Go Ahead, Take a Deep Breath!

What Manou and Rama Agree On

That would be the crucial importance of savings for our economy. Read us. Makes kind of sense right? That's what left over after we make our purchases. The Governor's views are currently on display in the media for consumption so no need to repeat them here. What you may have forgotten are how close they are to those that Sithanen held when he became Finance Minister for the second time back in 2005. Here's what he said:

CSO is forecasting a very low savings rate of 19.5 per cent for 2005. Here again, we must be utterly concerned. Firstly, because as a nation we are consuming at a faster rate than we are producing. Secondly, because the savings rate is below the investment rate. This will exert demand pressures on prices and will have an adverse impact on the current account of the balance of payments [emphasis mine].

Which gives us a beautiful benchmark to evaluate the so-called reforms he initiated. I guess.

What the IMF Does

It's a one-product institution according to Sebastian Mallaby: help countries having balance of payments (BOP) problems. Well at least in theory. Mauritius for example had to go knock on their doors in 1979 for a structural adjustment programme when economic hell broke loose on our mostly monocrop island.

The MMM, Berenger and Sithanen have used this episode as an indication of apparently typical Labour mismanagement. And an important section of the press has successfully drilled that in the heads of many of our fellow citizens over a couple of decades. They have also tried, this time rather unsuccessfully, to broadcast the lie that external factors are unfavourable only when Paul and Rama are in government. We've called this bluff recently.

It is interesting to note that when the Mauritian flag was raised for the first time sugar represented about 95% of our export earnings. While that was reduced by 20% over the next 7 years as the economic diversification program got underway our economy was still pretty much vulnerable when Gervaise visited us a week before Valentine's day in 1975 wiping out 30% of that industry's output (sugar represented 24% of our GDP in 1975 and 65% of export earnings in 1979).

Neither do we ever hear the fact that the UK was, as per Krugman, forced to accept loans and advice from the IMF -- a humiliation usually reserved for Third World nations. And they took that bitter pill in 1976, that is three years before Mauritius.

How to Fix our BOP Problems

That's kind of simple and, no, we don't need to depreciate our rupee as one ex-Governor has again been suggesting. We just need to reduce imports and increase exports. First, imports.

In 2008, we imported for Rs8.5 billion of fish and fish preparations, Rs3 billion of milk, Rs2 billion of vegetables and fruits, Rs1.5 billion of meat, Rs6 billion of road vehicles and Rs24 billion of petroleum products. That just doesn't sound right. If you recall, our exclusive economic zone is more than a 1,000 times larger than our land area or if you prefer each Mauritian can be supported by 1 square kilometre of sea (although it would make more sense to speak in terms of cubic kilometres, right?). So am positive we can cross that one out in a few years. There is a milk project underway so imports should decrease there too. As far as vegetables go we could adopt a few of Kreppalloo Sunghoon's recommendations: subsidise fertilizers, remove VAT on agricultural machinery and create a land bank to optimise the use of arable land. Likewise I am sure we can do something about all the meat we're bringing over from abroad by getting Rodrigues into the loop. Finally, we can reduce both the amount of fuel and road vehicles we import by having a sufficiently comfortable public transportation system. Having it run till 2 a.m. everyday will also make our economy more dynamic.

As far as exports go we should favour those that will provide meaningful jobs to a maximum of our fellow citizens. We don't need entrepreneurs of the sweat-shop variety whose greed knows no bounds.

Mr. Speaker, Sir, I now commend the Bill to the House.

P.S: BOP = Balance of Payments.