With the Island’s economy more dependent on international business than ever before, continued reliance on the industry will prove to be a precarious high-wire act local economist Craig Simmons would prefer not to watch.

“That’s the problem with our economic model,” said Mr Simmons. “The ratings agencies tell us this, they say that Bermuda could have a higher rating but we have a narrow economic base. That was being said even before we got into international business. In the 1980s tourism was 80 percent of the economy. Now that we’re into the 2000s, it’s IB that’s 80 percent of the economy. We’ve gone from standing on one leg to standing on the other. Nothing has really changed. We still have a very narrow economic base.”

Chief among those preventing a broadening of Bermuda’s economic base are international business and the civil service, said Mr Simmons, which are stymying growth and innovation at a time it’s needed most.

While it’s hard to argue that IB — the industry which has grown Bermuda’s economy the most — is actually inhibiting growth, it’s possible the allure of the highest salaries in the land is diverting talented Bermudians away from burgeoning industries that would otherwise help produce a more stable economic base. Additionally, determining the success of IB is how the Government treats and reacts to a sector under increasing global scrutiny, whose companies are known to re-domicile overnight. This means IB has the most power when it comes to influencing policy and legislation at a Government level, explained Mr Simmons, the result of which will be hard to assess.

“We have an insurance advisory council that has the ear of the Government, and the Government takes [what they say] and drafts legislation to aid and abet the development of insurance,” said Mr Simmons.

“Unfortunately [not everyone has] that kind of political clout, [they] don’t have the ear of the government, and I think that’s probably the reason why local business isn’t thriving. I have to believe business acumen isn’t limited to international businesspeople, it also applies to Bermudians.”

The public sector may also be to blame for a lack of market diversity, and for much of the same reasons.

The faltering economies of countries with large public sectors in Europe, such as Greece, show that job seekers will often prefer the security of high-paying employment within Government over the risk of new business ventures. Furthermore, the public sectors in Europe — and to a lesser extent in Bermuda — have become the most vocal opponent of the labour-market reforms many argue are needed to reduce structural unemployment. Creative destruction — that is, the failure of one business to innovative competition — is thus minimised, narrowing economic depth.

The result locally, said Mr Simmons, is a “gerontocracy”; a group of political elites that are burdening the next generation with an inordinate amount of debt.

“The largest debt obligations that the government has right now is coming from people who look like me — the super annulation fund, and the pension fund — these are debts that top $3b, so at some point in time people like me are going to have to give some. We’ll have to say: ‘Well, look. I know I’m owed these pension obligations under the old law, but really and truly it’s a bit much, and in fact it’s going to be very difficult for younger people to honour those pension obligations.

The answer, he said, is for the generation that is in power now to step aside, and let the younger generation do what they do best: take risks.

But the immediate and sustained success of IB, argued Mr Simmons, has lead to complacency and a fear of failure, which in turn is stymying market development and the ambition of entrepreneurs.

The irony is not lost on the economist, who pointed out that Bermuda’s economy is at risk of total collapse as long as it remains totally reliant on the international business sector, and will remain so until Bermudians themselves are willing to fail in order to succeed.

“Because of our success, we seem not to have an innovative spirit. We’re so afraid of losing that we’re not willing to take risks. I think we’re all dealing with the fallout of that.”

But with no capital markets on the Island, and banks loans slowing to a drip, the opportunities for young, risk taking entrepreneurs in Bermuda are almost non-existent. To encourage that, said Mr Simmons, the Government must begin listening to local businesses in the same way it listens to international business.

“When you look at the Government’s approach toward facilitating international business, it’s great. It’s a great model for growing business. I would just like to see that same courtesy and privilege be given to local business.

“The ability to start up a business in a matter of weeks, get it up and running, the ability to get tax exemptions, are so important for developing new business. I think what we need now in this post-recession period are incentives that would apply to start-ups — local start-ups — not just international start ups.”

How the younger generation responds to these two groups will be key, said Mr Simmons, and it starts with increased politicisation. With the powers of social media at their fingertips, he said, the youth must outflank the old in the realms of political prowess, and perhaps one day in the future be willing to put national-interest before self-interest.

“In many ways, the old people need to just get out of the way and allow young people to do their thing. Of course, what role does this gerontocracy have in the future of Bermuda? We’re going to be gone. It’s unfortunate, and I worry that you guys are going to be just like us, once you get in the control seat. Will you be willing to give up the reins of power? I hope you learn that from my generation.