Pope to Spend Day With Victim of Unbridled Capitalism

He will find a Mauritius that's a lot more vulnerable than when John Paul II visited us thirty years ago. The damage done by an extreme version of trickle-down economics — 'dung of the devil' as Francis quoted a fourth century bishop to his Santa Cruz, Bolivia audience back in 2015 (as reported by The Guardian) and which has been dubbed Shaitanomics here since 2010 — is extensive and captured in chart 1. 

Wong Had Little to Do With Massive Amount of Poverty Created

Because he was not Finance Minister (FM) during any of the past eleven years when by far the most backward policies -- top tax rates were set too low and this broke the economy -- our country has known were implemented. For sure he has been a member of Cabinet during the last two and half years and as such has to accept part of the responsibility of the mess we're in because he could have vehemently asked for the end of the worship of the golden calf. Or at least distanced himself from it. Besides he was until recently a member of a party which has two interesting words in its name: Social Democrate.

XLD, Less So

Of course Xavier-Luc Duval (XLD) has a lot more to do with all the poverty created over the last decade because he was in the driver's seat for quite some time -- close to three years. But before we look into this let us not forget that poverty and the fight against it is heavily dependent on two quantities: the size of the economic cake (GDP) and how it is shared. From the 2012 household budget survey (HBS) -- which tells us about the sharing -- we know for a fact that the poorest two-tenths of Mauritian households saw their shares shrink by 10% to 15%. That's their smallest shares in at least two decades if you care to know. So we don't exactly get bonus points here. And what about GDP?

Why Poverty is Winning

Because so much of it has been created over the past 10 years. Some people have been getting out of poverty for sure but a lot more have been falling into it. Of the pool of 126,200 poor people in 2012 a staggering 33,000 had joined it over the last decade. That's more than one in every four poor Mauritians. This has happened because our economy has not grown fast enough and whatever wealth was created has not been shared properly.

Massive Policy Failure

Which in turn has mostly been caused by dismal policy-making and the lack of dynamism of our economy. External events have certainly played a role but given that they were beyond our control we shouldn't have spent that much time crying over them. We should also acknowledge the fact that there has been a wide variation in the way poverty has expanded. Chart 1 captures that by looking at how it has progressed over a fifteen-year period. Which coincided roughly with three different governments and in one case with major policy changes.

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.

Thoughts on Electoral Reform (3)

There are a number of problems with the Constitution Temporary Provisions Bill and its Explanatory Memorandum.

Temporary Provisions Bill 

has at least three problems

I don't think it's right to say that you are presenting a bill that modifies our constitution for one election pending subsuming the best loser system into another system for at least three reasons: (i) there is no guarantee that the same government will be there after the next election; (ii) there is no guarantee that the next government will want or have the required numbers to modify the constitution again or that enough MPs will agree to do so -- which means that candidates may be obliged to declare a community again in subsequent general elections; and (iii) the proposed electoral system that the current government wishes to adopt does not subsume the Best Loser System (BLS) as we know it because this system is simply not subsumable.

Plus Bill flouts meritocracy

If there are additional seats they should be allocated to the most successful unreturned candidates as measured by the percentage of votes received because our ridings are not exactly of the same size. That is if Mrs. Robinson who hasn’t declared a community tops that list then she should get the first additional seat. And not someone who ranks a lot lower in the esteem of voters. After all MP is a job like any other – save the indefinite paid holidays this year – and nobody who has the blessing of the voters should be discriminated against. Besides, ethnicity is not a criterion which will enable an MP to do his or her job better.

Mauritius Edging Dangerously Towards Plutocracy

Have you ever really asked yourself why taxes were flattened to 15% between 2005 and 2010? Probably not. That was done because it made the wealthiest segment of the population a lot richer. Not because of some bogus Triple External Shocks argument. And some politicians would want to do this because the opaque financial contributions they receive would get larger. A lot larger. Even if it meant killing savings in the economy or throwing a lot more people into poverty. This is called a plutocracy. Not a democracy.

Indeed Household Budget Survey (HBS) data tells us that there were an extra 500 or so poor people in Mauritius after the first term of Navin Ramgoolam. But that by 2012 there were a record 22,000 more people that were thrown into poverty – bringing the total of poor Mauritians to 126,200 – compared to the preceding five years. Which coincides pretty much with his second term and the start of the reforms. That's like increasing the speed at which pockets of poverty are created by 44 times.