Understanding Resilience: Part 4

To maintain or improve the lot of as many people as possible you need a progressive taxation system and some growth. If you lower taxes by too much the finances of the government will become overdependent on the realisation of higher growth rates. As we've seen happen with the policies put in place by the toxic bean-counting duet.

This cannot make Mauritius more resilient for sure.

Shammi Kapoor Passes Away at 79

In Mumbai a few hours ago. He was a very popular face in the 1970s -- I often got tired seeing him so much on TV instead of Amitabh -- along with his two other brothers, Shashi and Raj. And a remarkably versatile actor too. R.I.P Shammi.

Ramgoolam Has A Challenge for MSM MPs: Resign From Parliament

So he said at a lengthy press conference which ended a little while ago. He did not think too much of their political weight either suggesting that they might have downgraded from a little party to bagasse.

The Prime Minister also said, in reply to a question about Ali Mansoor's controversial circular, that the Financial Secretary is a technical guy but that it's the politicians who craft policy because they consider more dimensions than the bean-counter. Really? Can he substantiate this?

71% of Poll Expected PM To Eject MSM

Interestingly as days passed after 6 ministers resigned more people concluded that the MSM would not be accommodated (which has 2 'm's). Which is what happened.

For Paul and Pravind, It's Still Love At First Sight

When they met today in room 616 at the Labourdonnais Waterfront Hotel. They apparently discussed about electoral reform which is a thorn in their side. This doesn't look too serious because when they had an opportunity and the supermajority to do something about it -- between 2000 and 2005 -- they didn't go beyond babbling.

We also haven't heard the MMM on the crazy circular issued by the Financial Secretary last week. When are our politicians going to get serious?

Maybe they don't love us anymore?

Eski Kiltir Nu Bann Parti Politik Diferan?

Saem pe tande la. Sanla ena kiltir, sanla pena. Ki zot pense lor la?

Who Says The Next Rainy Season Gonna Be Better?

Nobody. In fact, if global warming has modified rain patterns it would be silly to stay put and expect Mare-aux-Vacoas to fill up with the same regularity as it used to. So that we may be better off building smaller reservoirs in the places where rainfall has been more generous in the recent past. And give phase two of the Midlands dam the go-ahead. In other words we need a good plan. The snag is that no ministry has been taking care of planning for a while now. This hasn't changed either with the latest permutation in the cabinet.

Despair not. We still have a direct line to God.

Mansoor Wants Mauritius To Pay For Bean-Counting Mess, Again

That's what I conclude from skimming through his latest PBB circular No 7. In it, he is saying that the economy is not growing as fast as expected so that he now wants to introduce and/or raise user fees. Because, he adds, there is limited scope for raising taxes if we don't want to scare off private domestic investment and FDI. Well, we know for a fact that the Rs 40 billion of FDI we received after taxes were slashed by 50% didn't make a difference in the lives of a supermajority of Mauritians. For five straight years. So that's a spurious argument at best.

Also, the average growth rates of 4% he's expecting for the next three years is not that bad by itself but too low to get us out of the toxic debt dynamics his flat tax has thrown us into. And recall we were told back in 2005 that two years of belt-tightening combined with the potent new medicine of Dr Kontu would send us orbiting into economic nirvana. That did not happen either. In fact Mauritius missed one of the strongest world recovery last year and could miss more. A lot more.

The dismantling of our welfare state which incidentally established the reputation of our country worldwide by providing exceptional social mobility to countless thousands will also have severe repercussions on the political chessboard. Ramgoolam has already seen his majority dwindle from 38 at the the time of result proclamation in 2005 to a current 36 after best losers and turncoat. The stage could now be set to seriously frustrate his attempts to stay in power after 2015.

MSM Leaves Government Without Delivering Second Miracle

After Pravind Jugnauth has been Finance Minister for 15 months. I am really surprised because I thought that the the Universe had conspired to make the first one happen as soon as the MSM was created back in 1983. And that after the then Labour Party had left the economy in shambles.

So what's different now? Economic conditions are worse than in 1983? The magic formula is not working anymore? Or maybe there was never any magic formula and the MSM of SAJ mostly got quite lucky?

Seetaram Crosses Floor To Give Ramgoolam Breathing Space

He is one of four Ministers minted today which provides Ramgoolam with at least a majority of 3 (36-33) in Parliament. This could change as Ramgoolam could mint a few more to consolidate his numbers in our Assembly.  And those could still include Pravind Jugnauth. Other things of note is that Xavier Duval becomes Finance Minister while Anil Baichoo is promoted as Vice-Prime Minister.

So that's where the political chessboard stands as we speak.

Ramgoolam To Mint New Ministers

That's what he announced a few hours ago. The names will be made public at a televised press conference this evening. That's the right thing to do. Ministries should not be managed by part-time law-makers for an extended period of time.

In the meantime the MSM is pointing to other reasons for resigning from cabinet. While the latest events have sent a daily grinning.

US Loses Triple-A Rating

Indeed S&P lowered Uncle Sam's credits to AA+ citing reduced predictability of US policy-making and debt-levels dynamics that don't look too good. A lower-rating means higher interest rates must be paid for investors to purchase American debt. It also means a higher likelihood of default.

I wonder what are the recommendations of the toxic bean-counting duet for the United States: a flat-tax plus focus on the doing business rankings?

Advertising Watchdog Ditches Julia Roberts Ad

Because the UK authority thinks her picture has been digitally enhanced way too much. So they've got codes that govern the amount of exaggeration that can go in ads? Not. Bad.

Little escapes the alert British society.

Obama Turns 50

He's been one busy President. Jumped in the worst crisis since the Great Depression and barely managed to avoid the US defaulting. And the world is becoming increasingly multi-polar with Chindia to play a larger role in many spheres.

And Obama will seek re-election next year.

US To Vote on Debt Deal Hours Before Going into Default

The vote is due anytime now. But the intriguing possibility of Uncle Sam defaulting has eroded, albeit slightly, the safe haven status of American T-bills.

Make sure to check the interesting interactive graphic of the New York Times to find out how US debt progressed under different administrations. The Economist summed it as essentially the product of two tax-cuts, two wars and one stimulus package.

Mauritian Citizens Experience Their Excellent Constitution, Again

So six ministers resign while the Head of Government is abroad. No problemo. Latter makes up his mind and instructs the President, as per our Constitution, to flip the relevant ministries to other Ministers. And all of this happens seamlessly.

It's the same Constitution that presided at the four orderly changes of governments we've witnessed since Independence and established our reputation as a stable democracy.

God bless our Constitution!

Ramgoolam Should Mint New Ministers

And here's a suggestion from a comment on Kozelidir.

Nita D: Finance

Patrick A: Civil Service

Suren D: Tourism

Rihun H: Health

Looks good to me. And to you?

How To Calculate Economic Growth

We are not talking about average growth rates here. Nope we are instead looking at how to compute growth rate in any one period given the structure of the economy in the preceding period. And to make our point fun we're considering three cases. 

First, an economy with only one sector. Piece of cake: the growth rate of the economy is equal to the growth rate of the sector. 

Next an economy with 2 equal sectors. Here we just need to calculate the average of the growth rates of the two sectors to get the growth rate of the economy. 

But if we have 2 unequal sectors  -- as illustrated in the rightmost part of our chart -- we need to do the weighted average growth of the two sectors. For instance if the biggest sector is 4 times the smaller one and they grew by 5% and 10% respectively then the growth rate of the economy would turn out to be 4/5x5%+1/5x10%=6%. Naturally if the two unequal sectors grow at the same rate so will the economy. 

This explanation will become quite handy to discuss a number of interesting things. So stay tuned!

Ramgoolam Can Do Plenty With Paper-Thin Majority

He just have to take a look at what was achieved by the Labour Party between December 1976 and June 1982. Of course at that time the leadership of the MLP knew how to assemble strong and dissenting teams that could be trusted with a schedule.

Something which has eluded Navin Ramgoolam until now.

Hanoomanjee Resigns, Followed By Other MSM Ministers

With Pravind Jugnauth speaking to the press later in the day. Recall that the constitution provides the President with powers to nominate as PM the person who commands a majority in Parliament.

Ramgoolam is out of the country. I guess we should now expect him back soon.