Who's the Better Cake-Cutter?

We can get an idea if we look at the Household Budget Surveys (HBS) that our highly-esteemed CSO publishes every five years. Let us proceed the same way that a clock ticks and start comparing the 1991/92 data with that of 1996/97.

Lutchmeenaraidoo vs. Sithanen

These are quite interesting years as they coincide approximately with the last year for Vishnu Lutchmeenaraidoo as Finance Minister and the end of the first mandate of Rama Sithanen. It gives an indication of how the cutting of the economic cake changed from Minister to Minister. In this case from cousin to cousin.

As Table 1 illustrates every single group saw their share of the national cake fall except the richest one. The poorest 10% -- that's the group which is more vulnerable in case you have forgotten -- had their share reduced by 13%. The other thing you want to note here is that the ratio of the share of the wealthiest to the poorest which was 12.09 when Mr. Lutchmeenaraidoo left increased to 15.40. Which means increased inequality and that's bad for growth -- just like keeping energy prices much higher than what is reasonable, flattening taxes or creating a major structural problem by making a multi-billion rupee gift to a dead industry -- and for the general well-being of our country. Please note that these were both ministers under SAJ. And I guess you will be hard-pressed to find even traces of a savat-leponz-gato-pima effect in the 1996/97 data.

Ramgoolam II takes over

After SAJ -- the second best PM of Mauritius after our team-builder extraordinaire -- gets to taste the worse of the two 60-0s of our history. The two finance ministers of Navin Ramgoolam -- Bheenick and Bunwaree -- do a pretty good job. They essentially reverse the damage caused by Sithanen: all groups except the richest see their share of national income increase. In fact the restoration -- see Table 2 -- is quasi-surgical as all the nine groups returned to within 0.2 percentage points of their 1991/92 Lutchmeenaraidoo levels. Not a bad performance for a government headed by a neophyte don't you think?

Pays le mieux géré du monde

Ramgoolam loses power partly because SAJ and Bérenger teamed up. Unsurprisingly there is no immediate miracle with Paul Bérenger and Pravind Jugnauth as Ministers of Finance and SAJ as PM. Abracadabra must have lost its shine. The only thing we got is one panicking minister who wanted us to believe that history has a funny habit of happening only when he is in government. The HBS for 2006/7 reveals that the best managed country in the world wasn't that good for 90% of the households which saw their share of national income contract. Only the share of the richest 10% increased by 6.4% as shown in Table 3. This will definitely get many people wondering what a downgraded version -- a pays phare -- will be like.

A historic victory

The performance of Bérenger was bad enough that Ramgoolam returns to power by beating an alliance of two of the three largest political parties. Something that was thought impossible by some people in the MMM. But to our dismay Ramgoolam's second term starts pretty bad. Essentially because Rama Sithanen wants to implement policies that have failed elsewhere. He abuses a fallacious argument -- Triple External Shocks -- and his modest origins to flatten taxes and to create a major structural problem. Savings collapse to a 25-year low when huge policy blunders are made one after the other. The damage is so extensive that Sithanen is the first Finance Minister to neither get a ticket in any of the major parties when Parliament is dissolved nor to run as an independent candidate. The HBS summarises -- as shown in Table 4 -- the situation pretty well. The poorest 10% see their share of GDP fall by 14.7% and for the first time in 20 years have less than 2% of the national cake. The next group see their share head south by 10.4%. In fact all groups except the top 30% of the households see their share fall and reach 20-year lows. And you have to remember that this is a five-year period that thankfully saw Manou Bheenick reduce double-digit inflation all the way to more reasonable levels. Again no savat-leponz-gato-pima effect to report in here too. But we can play with these data a bit more.

Sithanen vs. Sithanen

At the end of each one of his stints as Minister of Finance the have-less saw their shares contract while the top 10% got a bigger share. Plus the bad cake-cutting that we saw in 1996/97 actually got worse with the bean-counting reforms: the bottom 30% of Maurituan households saw their share -- check Table 5 -- shrink by another 5% to 10%. And these stints happened on the watch of two different PMs: SAJ and Navin Ramgoolam. Which would explain some of the huge feelings of apprehension that have seized our island nation as soon as he was picked as the Finance Minister of one of the two major political alliances. And why the Labour/MMM alliance is finding out that this election will not be a walk in the park.

Ramgoolam II.1 vs. Ramgoolam II.2

As noted above Ramgoolam's first mandate was not that bad. His second the worst in a long time as shares of national income for the most vulnerable groups of Mauritius shrank to levels not seen in a couple of decades. Because of an impressive string of policy blunders. Compared to his first mandate the next one -- as shown in Table 6 -- translated into a 18% fall in the share of the 10% poorest and a 15% decline for the 10% just above. While the share of the top group got bigger by 10.8%.

Lutchmeenaraidoo vs. Bheenick and Bunwaree

Pretty similar performances. With almost identical shares for all groups. Overall under Bheenick and Bunwaree -- see Table 7 -- the lowest 20% had a share that's about half-a-percent larger, the top 20% 1 percent more and the groups in between 0.5% and close to 2% less than under Lutchmeenaraidoo.

A number of conclusions

All 3 PMs had mandates which made the poorest even more vulnerable. But only Navin Ramgoolam -- with Bheenick and Bunwaree -- and SAJ -- with Lutchmeenaraidoo -- had governments which increased the share of the weakest members of our society. Rama Sithanen was pretty bad for the more vulnerable segments on both occasions he was FM and that too under two different PMs fourteen years apart. The wide outcomes that the different HBSs illustrate show how important it is to pick the right Finance Minister. So it is quite surprising that Bunwaree didn't get a ticket but that Sithanen did. While getting Lutchmeenaraidoo on board l'Alliance Lepep was more important for that political block than a lot of people understand.

© Sanjay Jagatsingh, 2014