Is Wall Street's Meltdown a Blessing in Disguise?

As China, and to a lesser extent India and Latin America, continue to flex their muscles, the American financial debacle is very likely to hasten the demise of the unipolar world that rose from the ashes of the Cold War. However refuseniks of unfettered capitalism elsewhere should refrain from rejoicing too soon. They should instead keep an eye on the response of their local political, business and opinion leaders.

Wall Street’s meltdown has clearly exposed the flaws and fallacies of the anti-regulatory ideology. Ironically, it could also provide a lifeline for the aid industrialists from the International Monetary Fund (IMF) and the World Bank (WB) whose “expertise” has never been so widely the source of contempt, with the exception of few countries like Mauritius, where the WB has even been welcomed to set up office.

Leaders who invariably outsource their thinking unwittingly reveal their incompetence. Alternatively, the words, however presumptuous, of Singapore's Lee Kuan Yew aired on CNN – I am not following any prescription given to me by any theoretician … I work from first principles, what will get me there – typically underpin the leadership behind any iconic country, business or institution for that matter.

To put it bluntly, if a country is really willing to cope with global capitalism, neither the IMF/WB drivel nor any other “adviser” will help. The best consultants may be required for technical assistance, but never for strategy development or a turn around. Vision, foresight and capacity to implement regularly updated policies “will get us there”. Sound macroeconomics (monetary stability and fiscal discipline) are key but without smart microeconomics (synergy between households, businesses and markets) to complement, everything is nothing.

Toxic policies driven by crony capitalism and greed merely inflate bubbles that are bound to burst. Capitalism itself is not the problem but, left unchecked, its excesses can be devastatingly contagious.

It's corruption, stupid!

According to Fernando Lugo, the new President of Paraguay, the fight against poverty goes hand in hand with the fight against corruption. To put it bluntly, GDP growth and job creation alone, no matter how upbeat, do not provide "an antidote to poverty". Why? Because poverty is created, or exacerbated, when "national" prosperity is diverted massively and subtly into the pockets of the "chosen few". How? Through "privatisation" of policies and lullabies filled with distorted data. Should the legislation proposal submitted by the Independent Commission against Corruption to query dubious asset ownership and prosecute offenders be enforced, it could potentially turn out to be a critical disincentive against graft. To be even more effective overseas purchases should also be scrutinised.

Labour's Think-Tank Mostly Tanks

Indeed, the several MMM and MSM diehards conveniently turned Labour cling-ons only a few years ago just dealt SAJ a trump card for free. The latter can now accept or refuse to celebrate Halloween at Le Reduit next month. He can, for instance, stay on as President and then resign sometime next year to head a MSM-MMM coalition and possibly return as PM in 2010 for 5 years. Or he can stay on as the Head of State until 2013 and happily welcome the Federation III government for its swearing in. He can also refuse a new mandate and throw Mauritius right into an election campaign overnight.

This a major blunder because Ramgoolam could have nominated one of the many loyal Labourites still around instead. And quite surprising too given all the steam he let off, as pictured above, on July 10, 2005. Too bad the think-tank did not have a turbine besides him then. That would surely have brought our electricity prices to more reasonable levels.

Tourists Target Not Blazing New Trails

The 2015 target of 2 million tourists means increasing the 761,063 arrivals we got in 2005 by a factor of 2.63 or if you prefer by a little over 10% annually for 10 straight years. This has happened in 5 of the last 22 10-year periods ending December 2007 with the last one occurring for the decade ending December 1996. The average of these 10-year growth factors is 2.27 so that if an average history were to repeat itself we would hit that 2 million mark a little later, sometime in 2017. A few seconds after 13h45 on Friday October 11 to be more precise.

Have We Fallen on Our Heads?

Almost fell off my chair when I heard one unconstitutional DPM saying that he was prepared to downgrade his official car from a BMW 540 to a 530 following the recent ruling of the Supreme Court. While he should of course comply with the law (and we hope that he will now rapidly comply with article 5.2a of the Bank of Mauritius Act 2004), I find it totally unacceptable for public funds to be wasted on luxury items like this.



If the Minister wants to buy himself a super car with his own money that's his problem. But he should have gone a little easier with our money. Especially after having imposed a policy of ser sintir on us. Gone are the days, I guess, when the guy who envisioned and implemented free education would hop to his office in his little Hyundai.

Ladies and Gents, We Have Arrived!

Have we? But for sure we have missed the boat... again! I'm talking about the 2009 OECD’s PISA (Programme for International Student Assessment). I had drawn the attention back in April 2006. That was 11 months before the cutoff date. The next one is in 2012.

It would have be fun for our education system to be compared to those of 67 other countries more than half of which are outside of the OECD (including Singapore, Indonesia and Tunisia). And the results would have provided an independent perspective as to whether signs like the one above should stay where they are. Nevertheless, just in case we have MPs who are also teachers, please start here.

LBOI: Rings A Bell?

Probably not. That was part of the disorientation plot along with the 100+ measures presented in the last three budgets that produced little more than robust poverty and acute frustration. LBOI stands for Land-based Oceanic Industry. Now you remember, don't you?

I have to admit that when I heard Sithanen talk about this project for the first time almost three years ago on the radio I was completely mesmerised. Just imagine. He was promising air-conditioners running with cold deep sea water. I even remember dreaming about hordes of unemployed people donning their gear and proudly diving to Stella Maru to place those pipes or whatever you call them.

And to top it all, I was planning to write an article about LBOI to ask whether it would be technically feasible to also place pipes all the way to La Fournaise and Karthala volcanoes. Hey, hey! Air-con and almost free hot water: what more could you possibly ask from life? Three years after we're realising that LBOI was nothing but hot air. This definitely doesn't look good, given that summer seemed to have arrived quite early this year.

Global Schizophrenia

In a bid to overcome a "handicap" as he puts it, French education minister Xavier Darcos is planning to increase school exposure to English language, which he claims is a "key to success". Ironically, Dodoland could claim yet another achievement as probably the only country in the world where the global lingua franca is receding and French language is flourishing. But who cares? We are more competitive than Chad after all. N'est-ce pas?

The Worst Enemy of the Poor

That would be inflation. And the best friend of inflation is definitely Rama Sithanen when you realise that he has created almost as much inflation as the previous government did in 4.75 years (23.90%) in 2.5 short years (20.15%).

The opposition can count on him to make the lives of Labour MPs excruciatingly painful once parliament will be dissolved by everybody's favourite uncle. And that's after his crappy policies pulled Federation II out of the grave Ramgoolam so poetically dumped them into three years ago.

By 2010 cumulative inflation would have reached around 40% with the corresponding rate for the poorest of the poor gyrating around 55% if we use South African estimates. Bring the average growth (4.62% for Sithanen first 30 months vs 4.33% for the 2000-05 government) and unemployment rates (9.08% for the bean-counter's first 2.5 years vs 7.69% for those politicians that apparently gave us the best managed country in the world) into the picture and you confirm that there is no trade-off between inflation and a generalised measure of economic activity.

Something that has always been known to anyone with at least 2 grams of leadership!

Maximising Disorientation

Only a crisis, real or perceived, produces real change.

Milton Friedman, 1982

Sithanen wanted to give 'a little shock to the system' by hiring Ali Mansoor as FS who hails from the shock-exploiting Bretton Wood Institutions. He then disoriented the people of Mauritius -- that includes our gullible PM -- with the fallacious Triple External Shock argument.

But his bluff was called more than two years ago and his plan of using shocks as a tool to thrust toxic bean-counting policies down our throats has backfired so that he is now living on borrowed political time. Having said this and given that it's Tuesday evening, let's go to the movies.

Stuck in the Colonial Model

First, there were slaves working the sugar cane fields and managed with Colbert's little human resource manual. When they were set free and went to hide in what has now become a World Heritage Site workers were imported from India and turned into slaves which, unsurprisingly, eventually led to another inscription on Unesco's list.

Fast forward about 150 years and that model is still very much alive: Mauritian workers in the textile industry have been replaced, but not before being stigmatised as being lazy, by foreign ones in some of the local sweatshops that want profit margins as high as LVMH's. We shouldn't, then, be surprised if 100 years from now we get a new inscription: the textile factory.

Sign Of The Times

Before the Mauritian "miracle", the "gentil" Mauritian used to stroll with a comb in his pocket and usually some coins too. Now among the many "gentils" Mauritians there are also some Branded Mauritians jaywalking with cutters in their pockets and, if blessed, maybe some coins, but with a dramatically reduced purchasing power, courtesy of a World Bank/IMF-sanctioned virus euphemistically dubbed "competitive" rupee. On a positive note, crime detection has improved considerably, probably with the help of, namely, the "portrait robot" device. We have yet to see a smart and holistic vision on the preventive side. A tag line like "nous voulons montrer que nous prenons soin de nos visiteurs" is far from reassuring. Worse, translated into Morisyen it reads: nu anvi montre nu bann rezidan kuma nu fer fut ar zot!

World Bank As Usual

How much more of the World Bank (WB)'s costly poison can Mauritius afford to take? I don't know about you guys but I find the WB's "stick" Port Louis toll aimed at the "carrot" bus way in line with its long tradition of disconnect from the real world. It's not mere drivel, it's drivel upon stilts!

Good Idea

I totally agree that there should be a commission of enquiry on the Bank of Mauritius. Absolutely. Rama Sithanen and Ramesh Basant Roi have to explain to us why they issued a fatwa on our rupee in the second half of 2006 and that in spite of the record FDI that the finance minister was bragging about.

It would also be a good occasion for them to tell lepep admirab what were their 'accepted range of the rate of inflation during a given period consistent with the pursuit of the price stability objective' as stipulated by the law since Sithanen started counting the beans again in July 2005.

And we can understand why MPs Bundhoo, Varma and Dayal are so insistent about all of this. Indeed, the unconstitutional DPM has created so much inflation during the past 3 years that they are already dreading the answer of their voters in 2010 to the question: 'Are you better off than you were five years ago?'.

Telling you Something you Know Already

One item on BBC's news bar this evening was that the World Bank has revised its estimate of how many people are poor in the world from 1 billion to 1.4 billion. That's only 400 million more people or 40% of the previous estimate. Compare that to Sithanen's announcement (paragraph 216 of the 2008-09 budget) that there are 7,157 families living in extreme poverty in Mauritius. Don't you just love the guy's precision? More seriously, to win the battle against poverty we first have to stop the advance of this plague. That's kind of easy: one of the 3 DPMs has to stop showing up at his office.

What Now

SAJ will not be offered another term as President by Ramgoolam because that will have little bearing on what is optimal for Pravind Jugnauth: share the post of PM with the MMM. Ramgoolam still has a few windows of opportunity of staying on as PM after 2010 left but Sithanen is in a hurry to close each one of them.