Why expat money is worth more to all of us

WEDNESDAY, JAN. 4: I take a beer from time to time, but it’s not the same beer that expats drink — at least not those in international business. Expats drink better beer.

That’s because they buy beer with money they and their non-Bermudian companies bring into Bermuda. It’s fresh money, added to Bermuda’s overall fortune. 

Expat beer-drinkers are like full-time year-round tourists: Their money is brand new to the island, dropped on us fresh from the outside.

I don’t use the same money. My beer is paid for with Bermuda dollars that mostly came from other Bermudians. (Don’t worry, Bermuda Sun subscribers – I’m not drinking premium).

My beer money has been sloshed around Bermuda hundreds of times. This is good for the economy, but it’s not the kind of net gain for the island that expat beer money brings.

Chunks of money

A few years ago, Bermuda’s international business and accounting groups devoted a huge amount of their time to preaching on this kind of thing.

They wanted every Bermudian to understand that a big chunk of the money they used for education, home buying, travel and everything else came from international business.

Even if they weren’t employed in international business, it all came down to the same thing: These guys were bringing huge amounts of money into Bermuda, using it to buy whatever they needed and wanted, and the money got spread around Bermuda

There were government employees living off the taxes, construction workers off new office buildings, landlords off rentals, restaurant workers off business dinners, lawyers, accountants, retailers, utility workers … well, the list goes on forever.

It seemed like the growth and wealth that international business brought would never stop.

The big question wasn’t how to make it last, but how to share it better. Bermuda had it. Bermuda boasted of it. Bermuda depended on it.

It wasn’t the only way to live, but you get used to it pretty quickly.

Alas, this whole system works in reverse as well.

As international business shrinks, (not to mention tourism), as it has fewer people spending less money in Bermuda, all those tentacles pull back.

The lawyers and accountants and retailers make less money, Government collects less in taxes, construction workers have less work, restaurants have empty tables, charities have fewer donations, and landlords have empty houses and apartments.

... Well, that list goes on forever too. Good times trickle down to almost everyone in Bermuda, but so do bad times.

Casualties

Every day we read of the economic casualties. Sometimes more than a hundred in one fell swoop, sometimes just one or two. Each one is significant and, of course, there are many, many more that go unreported.

Each person or company that stops coming to Bermuda strips us of the money they used to bring. Each job loss reduces the money circulating through our country.

To make things worse, people and companies who are doing just fine start cutting back because they are worried things might go downhill for them in the future.

This is why concern about Government borrowing is rational, but often misdirected.

In the last few years, the Government has been able to help the economy in the short term — and maintain its own lifestyle — by increasingly borrowing from overseas.

In the short term, Bermuda has benefited, as this money helped make up for lower income from international business and tourism.

It’s not as good as expats buying beer (and housing, and office space, and restaurant meals, and cars and everything else).

But in the short term, it serves the same purpose: It provides money to keep our economy alive, to keep our infrastructure intact, and to provide services to Bermuda.

The problem isn’t the borrowing itself. The problem is how the borrowed money is used or misused.

If it used to relieve suffering, it is well used.

If it used to help get the economy moving again, it is well used.

If it is used in a responsible and monitored kind of way to improve tourism, international business or other source of outside income for Bermuda, it is probably well used.

If it doesn’t improve our chances of thriving without depending on loans in the future, though, it is digging us deeper into a hole.

Borrowing can only work in the short-term. There’s no way around it: We need foreigners coming to Bermuda bringing or earning money, spending it, and coming back and doing it again because they’re happy.

We have to make them want to be here.

So next time you see an expat, be nice to him. Make him happy. Take him out for a beer.

But make him pay: It’s better for Bermuda.