Important Letters
The four essays on labour relations and the exchange rate define certain fundamental characteristics of Bahamian society. These characteristics determine how effective the country is and will be in its economic life.
For instance, the Bahamas is taking a leap into the world markets for share trading by creating a formal Stock Market. The birthing process has been long and difficult, but this “baby” will be born.
However, if the Market is to flourish…
The governing institutions must enforce private property rights, the obligation to honour contracts and “the rule-of-law”.
The government must maintain a stable financial environment. It has won international praise for its performance… but this has been relative to less disciplined less developed countries. In fact the country is committed to deficit spending through the end of this electoral period and continued exchange rate parity with the U.S. dollar may depend entirely on capital controls.
It needs modern unobstructed reliable telecommunication services.
Generally people live their lives and transact business by voluntary action in ways that avoid litigation and disputes. Informal and voluntary rules of behaviour evolve. This affects the “transaction costs” of doing business and as a result economic growth.
Exchange Controls and Stability
From this Review
The issue is not the right of workers to associate. It is the use of coercive union power. Every citizen and worker should clearly understand that the exercise of union power in the Bahamas is unusual and there are adverse economic consequences from that use.
…in any labour dispute the union can “close down” the country. The union may be breaking the law or its own labour contract; but it can hold the country hostage. In the end the customer and taxpayer pay for whatever deal results from this “union-government tango” and the economy loses funds for private capital investments.
Alvin Rabushka recommended that the government
Take several large and essential first steps toward a return to a Currency Board… balance the budget, privatize the utilities, use the privatization proceeds to pay down the debt and
Encourage foreign investment… concentrate on attracting altogether new international services so as to diversify the “export” base of the country.”
A country that found it impossible to live within its means over six years suddenly was impoverished… only those with unusual insight and financial dexterity escaped the “currency devaluation” tax.
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