“The Finance Curse is a story about ‘country capture’, where an oversized financial sector comes to control the politics of a finance-dependent country and to dominate and hollow out its economy…”

— The Finance Curse (Nicholas Shaxson and John Christensen)

“IB represents about 60 per cent of our GDP but only roughly 10 per cent of our workforce — and the employment footprint per company has been declining incrementally over the last 25 years”

— a friend in the international business sector

Some weeks ago Jason Hayward, with the full approval of David Burt and his Cabinet, went before the House of Assembly and delivered the news that his ministry and their government are committed to what I describe as the great economic underdevelopment plan for Black Bermuda.

Bearing in mind that effectively we now have no Opposition, the One Bermuda Alliance celebrated the news with raucous support. But it did not end there because shortly thereafter we all would witness the comeback to the political stage of Michael Fahy, who obviously returned to take a long-overdue bow upon hearing the news.

Why? Because essentially what Hayward declared publicly was his government’s commitment to its own version of Pathways to Status but without the messy status bit ... for now.

Pathways 2.0?

Of course, there was great fanfare in the House of Assembly, including over-the-top rhetoric and superficially self-serving analysis from Jamahl Simmons and Kim Swan — both former United Bermuda Party MPs who should have known better. Maybe they were reminiscing for the good old days.

What exactly was the key premise of the proposed “underdevelopment” plan? Distilled to its essence, it advanced the following:

• Open the floodgates of immigration into the island to the tune of 8,000-plus migrants

• Convey long-term residency upon hundreds of persons who are mostly on work permits, including their dependents, I presume

High-level and respected Black Bermudians in the international business/financial services sector are already concerned about how this will impact opportunities within international business for younger, highly qualified Black Bermudians whose parents have spent well over $100,000 in pursuit of master’s and doctorate degrees. A significant number of those who will now obtain permanent residency are already working in the industry, but on work permits. They will also have the same rights when it comes to employment as any Bermudian. The only difference is that they will not be able to vote. Messrs Burt and Hayward are working on that part.

This does not represent our salvation, just as it did not for our parents and grandparents in the 1960s. Rather, it represents the direct opposite of what it proposes to achieve. Buyer beware. And the status bit is not off the table at all. That by-election candidate Mischa Fubler floated it only a few weeks after Mr Hayward’s “pathways” presentation indicates that Mr Burt is still determined to deliver on his promise to the new foreign-born oligarchs.

Far more important for the country is that this is not the conversation we should be having — certainly not from a Progressive Labour Party government on the question of human development. More than 8,000 new residents over the next few years? You have to be kidding! What we really need to focus on is not that damnable initiative of Messrs Burt and Hayward, but a real development plan for all of us that is designed for more than the new breed of foreign-born oligarchs.

And it starts right here

Let me pose the following question. Why after at least three decades have we been unable to diversify our economy? Every party during that period, including the UBP, its OBA stepchild and the PLP has promised to diversify this economy. So what has happened? Well, the answer has been staring us in the face and goes to the heart of a paradox, the solving of which still eludes us and will do so until we face the harsh facts before us.

The answer? Simply it has been the international business/financial services sector itself that has made it virtually impossible to diversify this economy because for decades it has been the chief driver/culprit behind the phenomenal rise in the cost of doing business in Bermuda — to such an extent that it has been primarily responsible in the hollowing-out of our economy.

Let me put it this way: it has created a very nice oasis for itself, for those who own those assets on the oasis, for those who manage those assets, and for those Bermuda companies that provide goods and services to that very lush and lucrative oasis. All of this while creating a desert as it relates to the rest of the economy that most Bermudians live in. And that headwind has ensured that it is virtually impossible to create other economic sectors that could provide decent, well-paying jobs for our beleaguered Black working poor and the low to middle-income groups, which are eroding as Sir John Swan often reminds us.

In addition, it has produced increasingly these adverse impacts:

• A massive rise in income and wealth inequality

• A significant rise in the cost of doing business

• A phenomenal rise in the cost of living — long before “Covid” or “Belco fuel adjustment rates” became part of our vocabulary

• Ever-growing racial disparities on the income and wealth side of the equation

Remember, Blacks are woefully underrepresented in the most lucrative sector in the overall economy – it has contributed to a growing gender disparity in the Black community as well, with Black men being even more underrepresented.

Just to rub it in, the new oligarchs have been laughing all the way to the bank without even carrying their fair share of the tax burden, while the Black working poor, in particular, catch hell.

That’s all?

The Finance Curse also addressed this via a look at a very similar offshore jurisdiction, which happens to be a Crown Dependency of the United Kingdom. That island territory is called Jersey.

The authors wrote: “A research paper looking at the British tax haven of Jersey, where finance now makes up over 50 per cent of GDP summarises — tourism has been crowded by the island’s OFC [Offshore Financial Centre]. This process is revealed by several indicators, including a dramatic reversal between tourism and financial services since the 1970s as in contribution to GDP, share of direct employment and contribution to government revenues.

“Moreover, the macroeconomic consequences of such crowding out in a small-island economy include labour cost inflation, widening income disparity, chronic labour shortages, and severe pressure on the island’s land and real estate markets. In other words, financial capital appears to be able to out-compete other industries, particularly tourism, to gain dominance within the local political economy.”

In Bermuda, we are already at the 60 per cent threshold — and that may be a conservative estimate. If not, we will soon be over that threshold with the assistance of those full, incoming British Airway flights from London. Over the past quarter-century, while that sector’s percentage of our GDP has grown, it continues to produce less and less in terms of jobs in contrast with the 1980s and 1990s.

All of this has resulted with respect to “some smaller tax havens and financial centres where financial services’ dominance has led to an almost ‘monoculture’ economy, as tourism and other sectors are decimated alongside the rise in finance [IB in the Bermuda vernacular]”.

Cheryl Pooley some months ago asserted that Bermuda’s international business, with the insurance sector being the alleged jewel in its crown, represented approximately 80 per cent of all economic activity in Bermuda — reflecting the knock-on effect of spending. Even if that figure is off by 10 per cent or 20 per cent, that would be disturbing. But when I shared that figure with a major player and veteran in the international business industry from the 1980s in Bermuda, he asserted that it may be higher than that by responding in wry British style with “that’s all?”

Trained seals

Am I saying that international business has not brought benefits since its first spate of extraordinary growth in the 1980? Or that it and the accompanying significant growth of financial services need to go? Of course not. But what I am saying is, let’s stop being trained seals here and acknowledge that there has been a growing number of social harms within that sector of our economy that have compounded in tandem with the extraordinary growth post-Hurricane Andrew, post-Hurricane Katrina and post-9/11 — and it has been the least of us who have been most affected.

The more it continues to hollow out our economy, the more its oligarchal power grows — and thus its dominance over our government and Bermuda’s chief regulatory agencies, along with all of the ills described above. That also includes the ever-present and growing threat as represented by the hollowing-out of our democracy.

End of Part 1 ...

• Rolfe Commissiong was the Progressive Labour Party MP for Pembroke South East (Constituency 21) between December 2012 and August 2020, and the former chairman of the joint select committee considering the establishment of a living wage