WEDNESDAY. SEPT. 26: “It’s the economy, stupid” was a catchphrase spawned in Bill Clinton’s successful 1992 run for the Oval Office.
Here at 32N64W, we’re slowly coming to grips with a declining economy. This decline is driven by two major economic facts and, on top, is affected by the ‘Great Global Recession’.
The first major economic fact is that our own Government is de-stimulating Bermuda’s national economy. No one has been screaming about this secret economic down-driver because part of us lot are really good at keeping secrets; and the other part tends not to ask questions.
From the Government’s own reports (see the June Bond Prospectus, for example), looking at Government overall spending and Government’s net spending in Bermuda after it has shipped out shekels to service National Debt, this is what we have been shown and this is what we need to recognize:
$1,242.7m minus $84.6m on DSC = $1,158.1m left for spending in Bermuda
$1,137.4m minus $95.7m on DSC = $1,041.7m left for spending in Bermuda
$1,081.1m minus $115.8m on DSC = $965.3m left for spending in Bermuda.
Obviously less money being spent in Bermuda in 2012/13 than in 2010/11.
Classical economic theory holds that in order to ‘stimulate’ an economy, Governments should print money or borrow money and spend that money into the national economy so as to create demand and help create more jobs. That process makes an economy grow. Perhaps only temporarily, but that may be all that’s needed to regenerate an economy.
The same classical theory admits that the reverse process — sucking money out of an economy — slows economic growth.
Because of flat-lining Government revenue and inexorably rising Debt Service Costs ($27,2m in 2008/09 and $115.8m in 2012/13) the Bermuda Government has been sucking money out of the economy. It is definitely and unarguably the case for the three consecutive years that I have shown.
So one major economic down-driver is the totally self-inflicted great ‘Suck’.
The other is that Bermuda is losing residential population. Although PLP Candidate Walton Brown claims that Bermuda’s residential population is growing, the ascertainable facts and all the available data shows otherwise.
All the data shows that between 2000 and 2008, Bermuda’s National Workforce grew from 38,017 to 40,213; the foreign workforce grew from 9,136 to 13,033 by adding 3,897 foreign workers who were laced throughout the national workplace; and that Bermuda’s residential population peaked somewhere between 66,000 and 68,000 in 2008.
Commencing 2009, Bermuda’s total National Workforce reduced by 2,824, falling to 37,399 by 2011; the foreign worker pool shrank from 13,033 to 11,212 losing 1,821 people; and allowing a very conservative 0.9 dependents per foreign worker, foreign worker dependents would have dropped by 1,679.
Because unemployed foreign workers MUST pack-n-go, some (1,821+1,679) 3,500 foreign people will have packed and gone.
Proof? Count the residential accommodation that has emptied — and not refilled — since 2008; note the reduced food sales to a reduced population; note the reduction in levels of import; the fall-off in retail sales, and so on…
Since peak population in 2008, Bermuda has lost at least 4,000 residents. But if better data was collected — and made available — we might easily find that the total residential population loss is closer to 5,000 – 5,500 since 2008. A population loss of at least six per cent since 2008.
Any sophisticated economy that suffers a population decline of that size will go into economic decline as internal demand dries up.
In Bermuda, since 2008, internal demand has been drying up. This drying up continues into 2012. This drying up is driven by the residential population loss. This residential population is entirely home-grown. It has nothing to do with the GGR.
This population loss is the Exodus.
So Bermuda’s two major economic down-drivers are the Exodus and the Suck. Both are local, on-island, Bermuda-centric realities.