A Clash of Economic Models for the Bahamas
by Larry Smith
bahamapundit
"As I watch these students and their families, all so proud of their accomplishments, I cannot help but feel sorry for them...How will they feel about themselves in this tourist industry, playing the role of servant so clearly constructed as being part of the nature of Bahamian culture." -- Dellareese Higgs, 2008 doctoral dissertation
“It is clearly the case that, as a result of tourism, the Bahamas is chronically dependent.” -- Felix Bethel, College of the Bahamas lecturer
“Tourism is a form of ‘leisure imperialism’ and represents ‘the hedonistic’ face of neocolonialism." - Malcolm Crick, British anthropologist
"While direct travel services generated $1.8 billion in export earnings, the economy spent $1.9 billion on the purchase of merchandise imports. it could be suggested that in the (Stafford Sands) model, the state of foreign reserves is in fact the economy’s ultimate monetary target." -- Gabriella Fraser, researcher at the Central Bank of the Bahamas, 2001
"Because of our addictive reliance on foreign investment our appreciation for Bahamian genius is negligible and in so doing we are oppressing Bahamians....Our economic model perpetuates an economic apartheid." -- Olivia Saunders, College of the Bahamas lecturer
"One can argue that Bahamian national pride is to a degree a product of brochure discourse, of touristic marketing; that much of what Bahamians love about their country is what travellers and the tourist industry claim is worth loving." -- Ian Strachan, College of the Bahamas lecturer
"The world seems to be divided between people who predict rain and people who build arks. We know which one is easier. Let them continue to predict rain in the face of these opportunities. We will work with those who are in the business of building arks." -- Vincent Vanderpool-Wallace, Minister of Tourism
The preceding series of quotes (except for the last one) is fairly representative of the intellectual discourse over tourism, economics and identity that rages from time to time in the academic and cultural world, both here and abroad.
Interestingly, this normally esoteric debate was thrown into sharp relief last week when Tourism Minister Vincent Vanderpool-Wallace and College of the Bahamas lecturer Olivia Saunders delivered diametrically opposing views at the Bahamas Business Outlook conference on Cable Beach. The theme of the conference was economic diversification.
This discussion began with a description of our current economic model. What is often described as the "Stafford Sands model" for ease of reference, is really just an updated version of the oppressive 19th century colonial system, critics say. It is a typical dependency model, which was fashioned long before Sands was born. And it needs to be overthrown.
Olivia Saunders said the creation of the Development Board in 1914 formalised earlier promotional efforts by paying foreigners to bring tourists into the colony and to develop hotels. In the 1930s, promoters like Harold Christie started selling Bahamian land to wealthy foreigners for second homes and other investments. The influx of foreign capital was driven by the absence of taxes on earnings. And all this set the country largely on the course it travels today.
Although Sands was not the originator of this model, he did take advantage of the global economic recovery after the Second World War to dramatically expand tourism and financial services. Rapid economic growth in the 1950s and 60s was partly due to unprecedented promotional spending to position The Bahamas as a year-round tourist destination.
Saunders summed it up like this: "The Bahamian economic model is designed for the country to relinquish responsibility for its resources and the commanding heights of its economy. It is one where the role of the residents is to provide labour and to be consumers while the owners of the economy, foreign nationals and a small minority of locals, amass great wealth.
This was a model that ensured underdevelopment of our human resources, she said. "We maintain a tax and incentive regime that not only favours the foreign investor but oppresses Bahamians...An economy so designed does not have much need for a local intelligentsia...It is disastrous for us to continue using the present economic model of dependence and economic apartheid."
Saunders offered a vague three-point plan to address these issues. First, leverage the abilities of Bahamians who have the aptitude and expertise to own and operate anything that is vital to nation-building. Second, ensure that Bahamian capital and resources benefit Bahamians rather than foreigners. And third, accept that our current economic model is dysfunctional and incapable of producing the results we need.
"Human beings are more than workers and consumers, and policy makers should not measure how well the nation is doing by how many jobs arise from this or that project or how many cars are purchased," she said to standing ovations from some in the audience. "My advocacy is for a new economy so fashioned that it portrays and liberates Bahamian brilliance; an economy that is congruent with healthy and sustainable communities, and an economy that extends wealth to Bahamian citizens."
Vincent Vanderpool-Wallace offered a different approach. While acknowledging that tourism was facing "stiff headwinds" due to a longer than expected recession, "what is often forgotten is that the most diversified economies on earth are not only going through the same troubles we are, these highly diversified economies are in fact the source of our troubles. And several American states and European countries are now in deeper trouble than The Bahamas has ever seen in recent times."
According to the minister, "any initiatives to grow our economy in the short and long term must be grounded in activities that arise from making existing and accepted strengths stronger, because we know that any effort that requires massive training and retraining of our population, while noble, is for the medium and longer term and is less certain. So yes, I believe in diversification, but not necessarily diversification in the way that consumes so much debate."
He went on to cite statistics that may surprise some readers. For example, if Nassau and Paradise Island were a separate country, it would rank fifth in the number of stopover visitors, second in the number of total visitors and first in the number of cruise passengers in the entire Caribbean. Yet these two connected islands are less than 2 per cent of the total Bahamian land mass.
"Today, this 2 per cent 'country' would be the third wealthiest independent nation in the hemisphere," he said. "If fully developing only 2 per cent of our islands yields these results, imagine what could happen if we began to utilize more of our natural assets. If we want to diversify, why not diversify like Toyota did in extending their brands of cars? Why not diversify within one’s areas of strength and comparative advantage?"
As we all know, the Bahamas is right next door to the United States, which constitutes 25 per cent of the global economy - a proportion that is likely to remain relatively stable for the foreseeable future despite the growth of emerging economies like Brazil, Russia, India and China. Collectively, these nations account for less than 12 per cent of global GDP today.
Vanderpool-Wallace pointed out that despite our proximity to the world's largest economy, "it is much less expensive and takes less time to travel from most places in the US to most competing destinations in the Caribbean than it does to travel to any of our Family Islands. Reducing the cost and time for travel to our islands will most assuredly lead to explosive growth and can turn our economy from the wind in our face to the wind at our backs."
This will also make domestic travel for Bahamians much more appealing compared to the current cost advantages of a trip to south Florida, he said. "The power of low-cost, high-quality air and sea transportation is no longer a debate in our industry. Our Companion Fly Free programme has been the most successful promotion in history, selling nearly 300,000 room nights, and the growth of our cruise business by more than 18 per cent last year is adequate testimony to the value of low-cost access to a Bahamas vacation."
While Nassau and Paradise Island teeter on overdevelopment, Vanderpool-Wallace noted that we have failed to provide adequate inter-island transportation, and argued that "Infrastructure development in an archipelago depends as much on connections between islands as it does on infrastructure on islands."
He advanced a "mission to the moon" vision in which Bahamians living on nearby islands like Eleuthera or Andros would commute to work in Nassau as we begin to develop the other 98 per cent of the Bahamas more completely. "Such commutes are done every day around the world. Why not The Bahamas? Our overall mission must be to go back to the islands through the expansion of inter-island transportation and communications services."
He envisioned a future where containers arriving at the new port on Arawak Cay can roll off vessels and roll onto trucks for transportation to other islands to deliver goods to the resident population, returning to Nassau with farm produce. And passengers would be able to take their personal vehicles with them to travel through the archipelago. This will accelerate the use of first and second homes in the islands and "make that globally desired idea of living and loving the island life immensely more accessible and attractive."
Efforts are already underway, he said, to establish an electronic booking system for all of the air and sea transportation within The Bahamas so that residents and visitors can book and pay for their transportation from anywhere on the planet to anywhere in The Bahamas. Currently, visitors have to go to airports and seaports to make those arrangements in most cases.
"Imagine all of the land, sea and air transportation throughout The Bahamas owned and operated by Bahamians. Imagine the size of aircraft and volume of seats coming into Lynden Pindling International Airport if substantial numbers of those passengers are also connecting to other islands of The Bahamas."
He said the government's online initiatives and a robust telecommunications sector were essential ingredients of this “Back to the Islands” vision. And all that is required for Bahamians to be successful in tourism are “bed & breakfast” facilities that can be viewed and booked online from anywhere in the world along with the necessary air and sea transportation.
"When those difficulties are overcome, we can enable hundreds to enter the tourism business immediately all over the country. And incentives could be offered to Bahamians now living overseas or on New Providence to move to the Family Islands. The largest incentive thus far is the government’s declaration that it will tackle the problem of generation and commonage land," he said. "That will be the greatest distribution of wealth in our history."
While broader diversification of the economy is a wonderful mantra, Vanderpool-Wallace said the exploitation of our existing tourism assets will be more beneficial over the short term. "Tourism cannot grow without other sectors contributing to that growth and growing themselves. It needs agricultural, legal, accounting, medical, engineering and software services. The more useful mantra is that one must compete in one's area of comparative and competitive advantage. We have not come close to making maximum use of tourism."
Quoting motivational trainer Steven Covey's comment that “the main thing is to keep the main thing the main thing", Vanderpool-Wallace said our main thing was "100,000 square miles of the most salubrious waters in the world. If we continue to guard and protect that resource, it does not diminish in size or value over the course of time, unlike the natural resources of many other nations. We have more islands and more beaches than the rest of the Caribbean combined.
"We are now at the beginning of the biggest educational, transportation and electronic infrastructure development in our history," he said. "This is the beginning of the wave to move us all forward, upward and onward together. For the sake of our children and grandchildren, now is the time to give focused attention to the development of our islands."
The contrast between Vanderpool-Wallace's common sense vision of empowerment and the bitter, near Marxist, approach of academics like Saunders could not be more marked. We would urge policy makers to extrapolate this vision, and incorporate other sectors, to urgently produce a coherent national development strategy with opportunities for public input and debate.
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