Labour Turns 90 in A Depressing Atmosphere

And it's not difficult to understand why. We wrote a post on several aspects of the greatest party in Mauritius yesterday. Navin Ramgoolam should seize the opportunity to restore the BRP at 60 and clear the air a little bit. 

Let Uver a Promye Minis

Promye Minis,

Striktir taksasyon li pa en badinaz. Flat tax fin tuy buku Morisyin dernye 15 an. Dan en pandemi li tuy buku buku plis dimun. 310 an Oktob si nu fer en analiz konservater ban sif leta sivil ek la si pa fer nanye 744 an Novam. Total pu vin 1,448 la semen prosen. Suinvestisman dan nu system lasante piblik depi 2006 li par dizen de milyar rupi. U pe viv probableman ban moman pli determinan u karyer politik. U bizin fer de zafer tudswit:

1. Met en lokdawn de semen. 

2. Prezant en mini-bidze kot u remet taksasyon korporatif a 30% dan la semen. 

Sinon nu pwal perdi partu la.

Mersi.

Sanjay Jagatsingh

How a PM Can Leave a Strong Legacy

Recent Evolution of Mauritius Has Been Unhealthy

Five Key Ingredients For a Vibrant Democracy

1. First-past-the-post (FPTP) system to have strong and stable governments that form fast after general elections and don’t collapse after partner(s) leave winning alliance. Temporary lopsided results we got a few times can be mitigated with prudent tweak without making bloated Parliament bigger or suppressing dissent with stupid anti-defection legislation. 

2. Progressive taxation (PT) and top tax rates at the right level (35%) instead of a ruinous flat tax (FT) of 15% for better economic growth and distribution after savings culture resuscitated, good drains, 24/7 water, halving of road fatalities fast, preservation of our world-famous views and harmony and respect of nature.

3. Recall elections (RE) to get rid of incompetent politicians within months and not five years. Cheap. Only Rs30m. The cost of a by-election. Expect better behaviour after we use it a couple of times. Think of it as excellent meksin laryaz. 

4. Statute referendums (SR) to reverse toxic policies or anti-patriotic ones and to get rid of Presidents. Relatively cheap. Rs300m. Would have prevented Rs300bn government revenue shortfall and GDP gap of Rs1.5tn at the end of 2018. And tense celebrations of Mauritius@50.  

5. Initiated constitutional amendment (ICA) to get rid of the BLS, allow kreol in our Parliament, prevent holders of constitutional posts from leaving with hefty benefits in all cases and impose term limits on PM and other important posts.

Second ingredient will allow us to resume a much better development path like between 1968 and 2005. Ingredients three and four will improve the situation further and will be infinitely better than what we’ve experienced after ultra liberal policies were implemented thirteen years ago. Their combined use may make ICA redundant as common sense would have made an interesting return. 

Berenger (PB), Ramgoolam (NR), Jugnauth (PJ), Sithanen (RS), Subron (AS) and Boolell want proportional representation (PR) to push us into an autocracy. That’s a situation where they implement toxic policies and it’s a lot harder to keep them out of parliament. But it’s wonderful for political dynasties. We don’t want this. 

How You Know the BLS is Not Subsumable

That's easy. Just check the democracy-shrinking bill on electoral reform that the PM will be bringing to parliament tomorrow. If a party doesn't line up at least 1/3 of women or men (see p6) it will lose its party status and will therefore not get any proportional representation (PR) seats. If a PR-MP crosses the floor his or her seat may be declared vacant under certain conditions. Clearly these are sanctions. But look for one if you don't line up candidates from more than one community and you will find none. Are there sanctions if names on the party lists don't reflect some of our diversity? Nope. Any sanctions if the best loser seats as defined in the dangerous proposal are attributed to members of one community? Ziltch.

We know that the BLS has deprived us of some really good oppositions. And that 50 years of progress is enough proof to do away with it because the best protection for any minority is policies that makes sense: progressive taxation, respect for the environment and solving national problems. But that's not what happening. Attempts are being made to fool us into believing that an autocracy will make us a united country. This is also what Rezistans ek Alternativ has effectively been doing for several years.

Kuma Fin Dekoloniz Moris

Ek trwa zafer. Nu sistem elektoral FPTP, taksasion progresif e sutenab ek talan. Sa li ti vre promye 37 banane apre lindepandans – ladan 14 an ti top parski nun regle ban problem difisil kuma bom demografik ek fin mont welfer steyt. Me depi 2005 nun rant dan en period de rekolonizasion ek flat tax Sithanen kin kas nu lekonomi. La ena enn deziem tantativ pu ranplas FPTP ek en sistem otokrasi ki pwena PR ek la lwa anti-transfiz ek si pa ki lot gonaz. Fer tan u lavwa. Ek diman en referandum lor sa zafer fondamantal la kuma Lepep ti mete dan pwin nimero 9 kontra de konfians dan so manifes elekroral – tiek paz 7. 

Arvin Fares Very Poorly On Labour DNA

Let's consider three core values of the Labour Party which have helped produced extraordinary results specially between 1968-82.

1. The use of an excellent constitution and the FPTP system. He is for proportional presentation (PR) which is something the LP has always been against. Arvin was also very quiet in 2014 when the MMM and the LP tried to transform Mauritius into a banana republic. Not taking a stand did not prevent him from seeing a 6-term winning streak in riding no. 11 come to an end. Besides our FPTP system has provided us with stable government after government. Something which is less likely to prevail with another dose of PR. Ask Rodrigues and Angela Merkel.

2. Progressive taxation. He is for low-taxes. Boolell doesn't seem to understand the difference between low and progressive taxes like they were before Sithanen messed them up and the 15% flat tax. The latter had already caused a GDP gap of over a trillion rupees -- that's 1,000 billions -- by the end of last April. And record inequality. It's also kind of contradictory for him to say that trickle-down economics doesn't work and at the same time be for it.

3. Building strong teams. While he mentions currency depreciation as one of the failings of the Lepep government one might believe that if he was given the chance he would appoint a progressive Governor at the BoM. But he seems to like the sugar industry way too much. A very regressive attitude. He penned an article recently where he asked for help for that sunset industry. There is only so much government can do. If it is going to throw money after a dead industry how will it roll back problems like the lack of opportunities for our youth and tackle other national priorities? And this will in no way put Mauritius in a position to have a stronger currency which is a great wealth lever.

Overall Mr. Boolell seems to have little in common with the kind of values of the Labour Party that have produced legendary results. The funny part is that he is trying to get elected in riding no.18 on the strength of past acheivements of the Labour Party. Voters are no fool.

Kinn Mars Pli Byen?

Flat tax TINAnen ek volontaria depi 2006 uswa taksasyon progresif ek benevola avan 2006?

La School is Latest Victim of Flat Tax

In two ways. As a country trickle-down economics has made us seriously short of cash. The other is that the focus has changed. Culture, beaches and national priorities have taken a backseat to a concrete invasion.

We've become retarded in way too many fields. At a time when the pace at which the World is getting smarter is increasing.

Private Sector Behind by 740 Billion Rupees

Over the last eleven years compared to the average robust growth rate of 8% that was promised when the highest tax brackets were eliminated starting in 2006. The almost three-quarter trillion rupee GDP gap -- the 80% estimate of Business Mauritius times the Sithanen toohrooh -- clearly tells us that our private sector did not create value anywhere near the levels needed to justify the 15% flat tax. That was kind of expected when we consider the stupid ways it was financed and the kind of massively unproductive FDI we've been chasing. Or if we were familiar with the damage done by Reaganomics. We shouldn't also forget that the Sithanen flat tax was implemented on the basis of three alternative facts: the infamous triple external shocks.

You may not fully grasp how big a number 740 billions is. Well that's more than the combined GDP of Mauritius for 2006, 2007 and 2008. More than half of that gap happened on Ramgoolam's watch. That took nine years. It will take Lepep less than three to match that if the finance minister doesn't bring back some sanity to our tax regime. A la Bill Clinton. That's because -- as the above chart shows -- the annual shortfalls have been increasing constantly. Thanks to an impressive string of low growth rates. By our historical standards or what we would have been able to achieve. Had the incompetent Mr. Sithanen not badly messed up our economy. For example had we continued growing at an average of 5.5% with our progressive taxation, healthy savings rate and a slightly improved management the private sector would have generated an extra two hundred billion rupees of GDP over the last decade. Which is roughly the GDP of Mauritius for 2006. Just imagine if that was combined with a stable or slightly appreciating currency. We'd all be very looking forward to Mauritius @50. More on this soon.

Mauritius Surprised to Be Told That Labour History is More Than a Tale of Two Ramgoolams

Indeed its leader mentioned a list of about 20 people a few days ago. I have no idea where he got that list. Could it be a bad case of alternative facts? Or maybe because we don't have someone at the MBC with a clause of conscience -- which is really a wonderful way of making sure that facts are not subjected to too much violence.

Ramgoolam the Second also mentioned that the Labour Party has always fought against social injustice. Always? Come on. Everybody knows that's not true. The LP only started to roll back poverty as from 2005 when it made a break with its regressive past.

What an Average Performance Would Look Like

For Mauritius. 5-6% real GDP growth, a stable currency of Rs25/USD and progressive taxation. Energy costs sensitive to decreases and increases in international prices. Unemployment brought down to 6-7% once it is measured properly. Underemployment heading south too. Savings reverting to average pre-Shaitanomics levels of 25%. Productive investments encouraged. Speculative investments discouraged. Reducing national frustration with some basic policies. Like proclaiming beaches as public spaces. Not deproclaiming any beaches. Preserving the views of Mauritius. Waging total war against diabetes. Not doing anything blatantly stupid like signing TISA. That too behind our backs.

And what would an economic miracle look like? I guess lowering the retirement age to 55 or less. Definitely a surging currency: a good start would be an average 2% annual appreciation against the USD from the base above. Along with higher growth rates. Plus an infinite number of thoughtful little things.

Miracle not happening for sure. In fact an average performance looks increasingly out of reach. There's too much ambient stupidity. But that can be reduced. Like by releasing the water sector reform report of the World Bank. For a start.

Flat Tax Did Worse Than Not Delivering Robust Growth

The trickle-down economics implemented by the Labour Party as from 2006 on the back of a string of lies -- triple external shocks --  did not, as expected, generate the average growth rates of 8%. In fact the growth trajectory over the past decade has been worse than the one Mauritius achieved with progressive taxation over the preceding 10 years. No wonder then that compared to the robust growth targets we've accumulated a GDP shortfall of around 925 billion rupees, 80% of which or 740 billion should have been generated by the private sector.

Welcome to the flat-tax trap. 

How Long It Takes To Eradicate Poverty

Back in October 2007 Sithanen, as Minister of Finance, declared that it was possible to eradicate poverty within seven years that is by 2015. This hasn't happened. Last week he made another prediction: that poverty could now be eradicated by 2026 or 2031. Why didn't we make poverty history last year? Is it because Sithanen was not Finance Minister after 2010? Not really. Because the main plank of his reforms -- the flat tax -- was still in place after he had left. And because his other toxic half who was not sacked before October 2013 kept himself quite busy with their agenda of screwing up Mauritius. Besides, some of the damage done by the bean-counting duet will take a lot of time to fix. Just look at our domestic savings. In any case as the above chart shows Statmu reported that an additional 22,000 people became poor over five years of his reforms. That's forty-four times more people than after Navin Ramgoolam's first term.

So how long does it take to eradicate poverty? You can start your stopwatch once you bring back policies that make sense. Income distribution will improve overnight with progressive taxation. We can also look back at our history for clues. Krugman told us that the American middle-class was built in seven years. We should aim to make the economic system dynamic enough so that poor people can move up the social ladder fast. Like it was before 2006.

Mauritius at 50: Getting Ready

Here are some of the things we should do:

1. Bring basic -- very basic -- management back. Like building another reservoir so we can catch more of all the water that falls on our head every year. And of course put more money into fixing leaking pipes. Instead of squandering billions into building new offices because one Minister wants more legroom.

2. Have an A380 fly over Champ de Mars at noon sharp. The peculiar thing about this plane is that it would not have any name. Only a few digits. 12.3.68.

3. New national logo and tagline. Which recognise that we can have the world's best air quality. This will help improve our management. Ask Southwest Airlines.

4. Significantly reduce the 450 amputations that are done every year. We could start by immediately taxing soft drinks more and increasing the number of weekly PE classes in our schools to three. Redesigning the curriculum with the 9-amputations-a-week statistic in mind and by going for noncumulative semesters will also produce a better learning experience. And say goodbye to obese parrots.

5. Reinstate progressive taxation so we grow faster again. And allow us to be more mindful.

6. Tweak our electoral system in a thoughtful way. Without introducing a dose of PR and the dangerous party lists that come with it. A few hysterical Marxists who want to do "autogestion" with our iPhone of constitution won't like it. But that won't prevent us from sleeping tight.

7. Allow kreol as an option in which debates in Parliament can happen. That's the language more than 8 out 10 Mauritians speak at home. Lalit can provide an initial list of unparliamentary words or add an entry on Wikipedia.

8. Schedule Zurnal Televize (ZT) on the first channel at 19h30. Have one reporter posted in each of these three cities: San Francisco, London and Tokyo to help cure navel-gazing.

9. Merge the CWA and CEB into a superutility. To protect us from severe Ministerial delusions. And to go back to our interesting 1996 carbon footprint.

Saving the rest for Mauritius at 500.

Top Three General Elections

No. 3. July 2005. Labour and allies do something which was thought almost impossible until then: one of the three main parties beating the other two. And that too by a comfortable margin. Ramgoolam is also the first political leader to stage a comeback as PM for 5 years. Without an exit clause. They double up a few months later by winning all five municipalities.

No. 2. December 2014. What a beauty! Against all odds -- and crappy simulations -- Jugnauth rides back to power on strong voter opposition to replacing our iPhone of electoral setup -- God bless our FPTP system -- with the dangerous Sithanen electoral stupidity. Voters collectively stun almost everyone with their intelligence by keeping Ramgoolam, Boolell and many others out of parliament. To also thwart Ramgoolam's silly fantasy of becoming President à la frenchie.

Can't be another one. August 1967. The elections to set Mauritius free. To get our national flag flying high seven months later. And an opportunity for a couple of mavericks to prove Meade wrong. And deliver unprecedented upward social mobility to tens of thousands through the mindful combination of the welfare state, progressive taxation, the FPTP system, the Westminsterian system of government and visionary policy-making.

How State Can Fight Brain Drain

By giving tax breaks to companies who provide Mauritians with decent and meaningful work. And by seriously limiting the number and type of jobs that can be filled by foreigners. Because Mauritius got talent. Lots of it. But first the Government has to restore enough progressiveness in our tax structure to regain potency.

Tax Reform Falls Flat On Its Face

That's what we need to conclude when we consider the solidarity levy of between 3.4% and 5% on profits and 1% and 1.5% on turnover that Sithanen has included in his recent budget. There is also the 2% CSR. And the higher-than-what-they-ought-to-be petrol pump prices. So the real tax rate for corporates and for individuals is getting closer to where it was before Sithanen dismembered our progressive tax system and screwed up our long-term financial plans. And when an independent study warned that he got his tax policy basics wrong he dismissed their findings with typical arrogance.

These new taxes also kind of puts into perspective one of the two pieces of wisdom he posited that anyone aspiring to become Minister of Finance should have: know the effect of taxation on growth rates. Things actually unfolded differently: he moved to a flat tax and the average growth rates of the current government will be the worst in decades. Li mem meyer!