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Bermuda in 2017: Economic Test Tube to the World


Real GDP 115 Japan’s “Lost Decade” 1991-99

110 105

US Great Depression 1929-37

100

Spain 2008-16

95 90 85

Bermuda 2008-16

80 Greece 2008-16

75 70

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8


Greece Is Not the Only Economic Basket Case in the Western World – Our Long Term Jobs Record Is Even Worse Than Greece 145 140

But the Greeks have the Germans and the arrested development of pan-European institutional integration to account for their economic catastrophe.

Greece - Total Jobs

135 130

Bermuda - Bermudian Jobs

125 120 115

In Bermuda, we have nothing but ourselves to blame.

110 105 100 95

1978

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012


Offshore Real GDP 2008-2016

130.0

Isle of Man 127

125.0 120.0 115.0 110.0

Guernsey 109

105.0

Cayman 102

100.0 95.0

Jersey 94

90.0 85.0 80.0 2008

Bermuda 83 2009

2010

2011

2012

2013

2014

2015

2016


Canonical Attributes of Neoliberal Economic Policymaking

I.

Small Government Revenues Relative to GDP

II.

Relative Favouritism in the Fiscal Treatment of Capital over Labour

III. Regressivity in Tax Incidence Across Household Income Distributions


Key Dimensions of Economic Policymaking Consumption Taxes

Gov't Revenues/GDP

Progressivity

10 9 8 7 6 5 4 3 2 1 0

Labour Taxes

Capital Taxes


Key Dimensions of Economic Policymaking Consumption Taxes

Gov't Revenues/GDP

Progressivity

10 9 8 7 6 5 4 3 2 1 0

Neoliberal Extremist Economic Model

Labour Taxes

Capital Taxes


Government Revenue as a Share of GDP 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0%

Bermuda

US

Switzerland

Trinidad

Ireland

Sources: OECD, World Bank, Bermuda Budget Statement

British Virgin Islands

World Average

OECD Average


35%

Offshore Government Revenues As a Share of GDP in 2014

30%

25%

20%

15%

10%

Bermuda Andorra

Jersey

Cayman

Isle of Guernsey Man

BVI


Bermuda Government Revenues 2015/16 Telecommunication Licences (1.3%) Aircraft & Shipping Registry (3.4%) Hotel & Cruise Ship Taxes (5.4%) International & Local Company Licences & Fees (6.9%) All Other (7.3%)

Work Permits (1.1%) Corporate Service Tax (0.6%)

Payroll Tax (37.8%)

Non-Bermudian Real Estate Sales (1.1%) Foreign Currency Sales (2.2%) Stamp Duties (2.5%) Vehicle Licenses (2.9%) Land Tax (6.8%)

Customs Duties (20.7%)


Distribution of Tax Burden by Economic Function in 2014 100%

Stocks of Capital

90% 80%

Capital & Business Income

70% 60%

Labour Taxes

50% 40% 30%

Consumption Taxes

20% 10% 0%

Bermuda

Cayman

UK

Ireland

Luxembourg Germany

EU-28


Bermuda Dollars Millions

Bermuda Government Revenues 1990-2017

1200 1000

Capital Taxes

800 600

Consumption Taxes

400 200 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Labour Taxes


100%

Bermuda Government Revenues 1990-2017

90%

Capital Taxes

80% 70% 60%

Consumption Taxes

50% 40% 30% 20% 10% 0% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Labour Taxes


Bermuda’s Tax Structure By Income Group in 1998 $0-22 72

$22-38 129

Household Groups by Annual Income (in Thousands of 1998 dollars) $38-82 $82-113 $113-151 $151+ 276 126 74 69

$14,880

$30,513

$57,825

$95,747

$130,090 $239,022

Taxes Paid to Customs Duties: Total (BD$) $6,051 $2,095 % of Income 7.1% 14.1%

$3,255 10.7%

$4,975 8.6%

$7,619 8.0%

$9,138 7.0%

$13,385 5.6%

Taxes Paid to Payroll Tax: Total (BD$) $5,596 % of Income 7.1%

$2,548 8.4%

$4,862 8.4%

$7,339 7.7%

$9,165 7.0%

$12,154 5.1%

$866 1.5%

$1,232 1.3%

$1,868 1.4%

$2,793 1.2%

Tax Incidence Number Of Households Average Income In Group (BD$)

ALL 746 $79,297

$759 5.1%

Taxes Paid to Direct & Indirect Land Tax: Total (BD$) $1,111 $424 $560 % of Income 1.4% 2.8% 1.8%

All Taxes: Total (BD$) % of Income

$12,757 16.1%

$3,278

$6,363

$10,703

$16,250

$20,171

$28,332

22.0%

20.9%

18.5%

17.0%

15.5%

11.9%

Source: Report on the Bermuda Tax System by Harry L. Gutman and Eric J. Toder (1999)


Incidence of Bermuda's Customs Duty by Income Group in 1998 (Taxes Paid as a Share of Income) 16% 14%

Source: Gutman & Toder

Customs Duty

12% 10% 8% 6% 4% 2% 0%

Lowest

Second

Third

Fourth

Fifth

Bermuda’s Income Distribution

Highest


Incidence of Bermuda's Payroll Tax by Income Group in 1998 (Taxes Paid as a Share of Income) 9%

Source: Gutman & Toder

Payroll Tax

8% 7% 6% 5% 4% 3% 2% 1% 0%

Lowest

Second

Third

Fourth

Fifth

Bermuda’s Income Distribution

Highest


Incidence of Bermuda's Land Tax by Income Group in 1998 3%

Land Tax* 2%

Source: Gutman & Toder

* Land tax raises the cost of housing services thereby increasing the cost of actual or imputed rents for tenants and owner occupied residences. The progressivity of Bermuda’s land tax rates are greatly reduced in terms of their incidence by the fact that lower income households spend far greater portions of their income on rents.

1%

0%

Lowest

Second

Third

Fourth

Bermuda’s Income Distribution

Fifth

Highest


Incidence of Bermuda Tax Revenues by Category and Income Group in 1998 25%

22.0%

Bermuda’s low 20% income households pay 15% almost twice as much in tax as the island’s 10% high income 5% privileged elite

Land Tax

20.9%

Payroll Tax

18.5% 17.0%

Customs Duty 15.5% 11.9%

0% Lowest

Source: Gutman & Toder

Second

Third

Fourth

Fifth

Highest


UK Tax Incidence by Category and Income Group Financial Year Ending 2015 40%

37.4%

35%

Indirect Taxes 30.6%

30%

32.6%

Direct Taxes 34.0%

34.4%

To date, the British Government is the world’s only government to provide the public with an annual tax incidence analysis of British tax payments by household income group.

25% 20% 15% 10% 5% 0% Lowest

Second

Source: Britain’s Office for National Statistics

Third

Fourth

Britain’s tax structure may not be very progressive, but at least its not regressive….Or is it?....

Highest


French Tax Incidence by Category and Income Group in 2010

Source: Landais, Piketty and Saez

60%

Indirect Taxes

50% 40%

46%

48%

48%

Direct Taxes 49%

40%

49% 48% 47%

44% 37%

30% 20% 10% 0%

France’s Income Distribution

More refined research by academics reveals tax incidence in France to be highly regressive at the very highest levels of income


Economic Policymaking Matrix in 2014

Cayman

Consumption Taxes

Gov't Revenues/GDP

✽Neither Bermuda nor

10 9 8 7 6 5 4 3 2 1 0

EU-28

Labour Taxes

Cayman publish tax incidence analyses.

Progressivity

Bermuda

Capital Taxes


Economic Policymaking Matrix in 2014

Ireland

Consumption Taxes 10 9 8 7 6 5 4 3 2 1 0

Gov't Revenues/GDP

✽The British Government is the world’s only government to provide an annual tax incidence analysis but their public have nothing to compare it with internationally. Progressivity

UK

EU-28

Labour Taxes

Capital Taxes


Economic Policymaking Matrix in 2014 Consumption Taxes

Gov't Revenues/GDP

âœ˝Neither the German nor French government produce tax incidence analyses.

Progressivity

10 9 8 7 6 5 4 3 2 1 0

Germany France EU-28

Labour Taxes

âœ˝

Capital Taxes


50% 48% 46% 44% 42%

Top Tax Rate on Personal Income EU-28 Neoliberal biases have influenced economic policymaking in continental Europe as well as the Far East, South American & Anglo-American worlds.

40% 38% 36% 34% 32% 30%

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015


Top Tax Rate On Corporate Income EU-28 40%

Neoliberal biases have influenced economic policymaking in continental Europe as well as the Far East, South American & Anglo-American worlds.

35%

30%

25%

20%

15%

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015


Bermuda’s Perverse Tax Structure Is Not Only Patently Unjust, It Undermines the Efficiency and Resiliency of Our Economy and Promotes a Number of Negative Economic Outcomes • Misallocation of the Island’s Resources • Widening Income Inequalities Across the Island • Even Greater Inequalities in Accumulated Wealth • Extreme Levels of Poverty • Systemic Erosion of Equality of Opportunity....


Jobs Held by Bermudians 1978-2016 29,000 28,000 27,000 26,000 25,000 24,000 23,000

1978 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015


Bermuda's Poverty Over Time

(Proportion Below 50% of Median Household Income)

25% 20%

23% 19%

20%

15% 10% 5% 0% 1991

2010

Our economic problems started well before 2008. Poverty in Bermuda has always been unacceptably high.*

2017


* The preceding poverty rates were calculated from data published in Bermuda’s national census. The elasticity of equivalency scale used in such calculations is 0 when a more appropriate elasticity measure would be closer to 0.5. Such estimates most likely overestimate poverty by 3% to 4%. A more accurate estimate of poverty in Bermuda would require an analysis of Bermuda’s household income source data, data Bermuda’s previous government was unwilling to release to private researchers. In order to increase public knowledge and awareness of poverty on the island and allow researchers to use Bermudian poverty data in more meaningful cross-sectional and longitudinal studies, an attempt is being made to work with Bermuda’s new government to use data collected in Bermuda’s seven household income surveys conducted since 1991 to produce more accurate estimates of the island’s poverty and its changes over time.


Bermuda 1991 Census Data Poverty is defined as the percentage of households living below 50% of median household income. (Most commonly used definition for international comparisons favoured by the UN, World Bank, OECD and the EU.)

50% of Median Income 50%

1991 Median Income 50%

Bermuda’s 1991 Poverty: 6% + 5% + 8% = 19%


Global Poverty Rates Bermuda versus the OECD (Proportion below 50% of Median Household Income) 25%

23% 20%

15%

15.2% 10.5%

10%

5.4% 5%

0%

17.5%

18.6%


Bermuda’s Estimated Distribution of Income, Consumption & Savings By Household Income Group in 1998 Household Groups by Annual Income (in Thousands of 1998 dollars) ALL 746

$0-22 72

$79,29

Number Of Households

$22-38 129

$38-82 276

$82-113 126

$113-151 74

$151+ 69

$14,880

$30,513

$57,825

$95,747

$130,090 $239,022

$12,064 85%

$25,538 84%

$47,481 82%

$77,319 81%

$100,048 $160,666 77% 67%

23,029 154%

33,002 108%

51,991 90%

73,539 77%

96,411 74%

127,284 53%

-54%

-8%

10%

23%

26%

47%

Average Income: In Group (BD$)

Wages & Transfers: In Group (BD$) $61,058 Ratio to Income 77%

Consumption: In Group (BD$) 61,096 Ratio to Income 77%

Estimated Savings Rate:

23%

Estimated Portion of Bermuda’s Population Living Paycheck-to-Paycheck in 1998: Probable Portion Living Paycheck-to-Paycheck in 2017 following our crisis:

50%

30%


Substantial Annual Flows Add Up Over Time Bermuda Dollars Billions

Public/Private Savings Acquired 2008-2015

16 Private Sector Savings

14 12 10 8 6 4 2 0 -2 -4

Bermuda Government Debt


Bermuda’s Neoliberal Extremism: Defining Hallmarks of the “Bermuda Model” (The World’s Most Extreme Neoliberal Economic Model)

• Extreme Regressivity of Tax Structure • Labour Severely Penalised Over Capital by Tax Code • Internationally Extreme Low Levels of Government Revenues • Freedom of Private Sector to Export 100% of Domestically Derived Savings to Foreign Countries • No Fundamental Oversight of Domestic Banks, Insurers & Investment Companies • De Facto Freedom to Employ Foreign Labour Over Suitably Qualified Locals


Theoretical Economic Assumptions Explicitly or Implicitly Embodied by the “Bermuda Model” • Low levels of taxation on high income earners lead to higher levels of domestic investment and more local jobs • No taxation of Capital leads to higher levels of domestic investment and more jobs • Low levels of Government Revenues lead to greater efficiencies and more productive investments by the private sector • Foreign workers in Bermuda are inherent job creators and lead to greater employment of Bermudians


Actual Economic Outcomes of Long Term Application of the “Bermuda Model” •

Little to No Public or Private Reinvestment in Domestic Economy

Significant Attraction of High-Income Foreign Workers

Persistent Job Losses Amongst Local Work Force

Excess Accumulation of Idle Capital

Extreme Difficulty in Attracting Foreign Investment

Hollowing Out of “Middle Class” Income Earners

Rate of Poverty Higher Than Turkey, Mexico and the US

Over Half the Population Living Paycheck-to-Paycheck

Economic Decline


Historical Support for Bermudian Tax Reform Bermudians Surveyed in 1978 with the Following Question: “Bermuda’s tax structure should be changed in order to put the greatest burden on those who are most able to pay?” Survey Question Met with Widespread Support throughout Bermuda: PLP Blacks – 94% UBP Blacks – 88%

Source: Frank Manning, Professor of Anthropology, in Bermudian Politics in Transition (1978).

UBP Whites – 73% Amongst Basic Democratic & Economic Recommendations for Bermuda made in the Pitt Report, the Royal Commission Charged with Investigating the Underlying Causes of Bermuda’s 1977 Riots: Progressive Reform of Bermuda’s Tax Structure


The Inconvenient Truth Bermuda was set up first and foremost as a tax haven for the island’s high-income, privileged elite “For a hundred years a small group has made Bermuda its own paradise by controlling legislation and by seeing that tax policy kept all but themselves in strict economic subjugation. While they accumulated fortunes subject to no taxes whatsoever.” - American Vice Counsel to Bermuda in 1941

Bermuda’s origins as a tax haven long predate the arrival of international business


Support for Bermudian Tax Reform Exists at the Very Origin of Modern Economic Analysis “The subjects of every state ought to contribute to the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expense of government to the individuals of a great nation, is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate.� - Adam Smith, The Wealth of Nations, 1776


And While We’re Cleaning House… A Post-factual World? Total profits shifted through Bermuda by Google since they incorporated here: US$ 58 Billion Source: Bloomberg Businessweek In 2012, total corporate profits shifted through Bermuda by US multinationals: US$ 76 Billion Source: Tax Justice Network Additional tax revenues earned by the Bermuda Government in permitting such business: US$ 0 Denials Bermuda is being used as a corporate tax haven from both Bermuda’s political parties and the island’s business development representatives make the entire island look like buffoons.


Rather than a conscious programme of systematic economic coercion and oppression, in Bermuda the “Bermuda Model” is more likely the unintended culmination of ad hoc, poorly designed and implemented economic reforms. Nonetheless, Bermuda’s experiment with the “Bermuda Model” is the world’s most extreme experience with Supply-Side, Trickle-Down, Voodoo Economics


The Bermuda Model is not only socially unjust, it is inherently bad economics and leads to inefficient outcomes. Arguably, more than any other economic development in the past 35 years, it has been the conscious or unwitting pursuit of the “Bermuda Model� by countries large and small that has most threatened the stability and resiliency of the entire global economy.


Bermuda as Test Tube to the World We are now the world’s poster child for what is wrong with this model. Bermuda is a cautionary tale of what to expect in the long term if countries pursue similar policies.


US economic reforms and changes to accepted corporate practice since 1980 have moved the United States much closer to “The Bermuda Model” • Regressivity at High End of Tax Structure • Low Revenue-to-GDP qualifying as low tax jurisdiction if not tax haven • Effective tax rate of many large US corporations is 0% • “Light Touch” Regulation • Increasing Concentration of Corporate Power & Monopolistic Pricing


G-10 Government Revenues to GDP in 2014 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

Source: OECD


US Outcomes in Pursuing The Bermuda Model In 2015, the US middle class fell below 50% of the population for the first time on record. Source: Pew Research Center

America’s rate of poverty has risen to the second highest of the 34 countries in the OECD. Source: OECD

US life expectancy amongst middle-aged white Americans is declining for the first time on record. Declining life expectancies did not occur even in the 1930’s during the US Great Depression. Source: US Centers for Disease Control and Prevention


Workers of the World So are the Bermudian and American experiences with voodoo economics anomalies, or do countries running similar models provide evidence that corroborates trickledown economics is an ideology on the way out? In fact, there’s plenty of corroborating evidence. Bermuda and the United States are not the only countries where the middle class is shrinking as the ranks of the poor grow‌..


The Poverty-Small Government Nexus The Rise of Rich World Poverty 25% 20%

Poverty

21.0%

Tax Revenues/GDP 19.7%

16.7%

17.2%

15% 10% 5% 0%

Singapore Hong Kong


The Rise of Rich World Poverty Singapore’s government refuses to accept a definition of poverty. With no definition, there’s no official poverty rate. The 21% estimate of Singapore poverty was produced in an academic study from 2008. The Singapore Government discontinued publishing data required to update this measure of poverty in 2012. More recent estimates using alternative measures place poverty in Singapore as high as 26%. Hong Kong never produced poverty statistics until 2012 in response to civil advocacy pressure from Oxfam. Since then, the Hong Kong Government has admitted poverty is a real problem and committed itself to reducing its incidence over time. Poverty amongst the elderly in both Singapore and Hong Kong is a particular problem. Hong Kong’s statistics estimate poverty within its over 65 population at 45%. Atypically for rich countries, poverty amongst Singapore’s elderly is so prevalent, its visibility is noticeable to the general population.


More Evidence of Relatively Small Governments with Big Poverty Problems 35%

Poverty

Tax Revenues/GDP 30.3%

30%

25.3%

25% 20%

14.4%

16.1%

15% 10% 5% 0%

Korea Japan


Supply-side Economics Sowing the Seeds of Rich World Poverty 35%

Poverty

30%

Tax Revenues/GDP

31.9%

27.8%

25% 20% 15%

14.0% 12.6%

10% 5% 0% Australia Canada

As in Singapore, the Canadian Government refuses to accept a definition of poverty, and hence Canada has no official poverty rate.


Small Governments Are Bad for Poverty

50%

(Or Are Small Governments Proxying for Regressive Tax Regimes?) Denmark

Correlation – 71%

45%

R-Squared – 50%

Finland

Tax Revenues/GDP

40% Iceland

35%

Japan

UK

Israel

30% Canada

25%

US

Australia Ireland

20%

Chile

Singapore

Korea Mexico

15%

Hong Kong

10%

In the global race to the bottom, we’re it.

0%

5%

10% Poverty Rates

15%

20%

Bermuda 25%


The World’s Greatest Economic Paradox & the 21st Century’s Foremost Economic Challenge It’s not just the offshore world that has been lurking in the global shadows…...

Paradox:

We are living in the “Information Age”, and yet many of the world’s governments have suppressed the production of our most important economic data – detailed analyses regarding:

Poverty & Taxes Challenge: Enforcing greater government and corporate transparency will eventually be viewed as the defining global economic and political challenge of the 21st century.


French Tax Incidence in 2010 60%

Why is Mr. Piketty rather than the French government producing this?

50% 40%

46%

48%

48%

49%

40%

49% 48% 47%

44% 37%

30% 20% 10% 0%

France’s Income Distribution Indirect Taxes

Direct Taxes


The United Nations’ Guiding Principles on Extreme Poverty and Human Rights “…States should take into account their international human rights obligations when designing and implementing all policies, including international trade, taxation, fiscal, monetary, environmental and investment policies. The international community’s commitments to poverty reduction cannot be seen in isolation from international and national policies and decisions, some of which may result in conditions that create, sustain or increase poverty, domestically or extraterritorially. Before deciding whether to adopt any international agreement, or whether to implement any policy measure, States should assess whether the decision they are about to make is compatible with their international human rights obligations to their own citizens as well as to those of foreign countries…”


Three general conclusions for Bermuda’s tax reform suggested by the analysis:


Offshore Government Revenues As a Share of GDP in 2014 35%

30%

We need to raise substantially greater tax revenues over time.

25%

20%

15%

10%

Bermuda Andorra

Jersey

Cayman

Isle of Guernsey Man

BVI


Economic Policymaking Matrix in 2014

We need to raise substantially Taxes greater sums from taxing Consumption 10 9 capital income or 8 7 6 capital stock (wealth) 5 Gov't Revenues/GDP

Progressivity

4 3 2 1 0

Bermuda

Labour Taxes

Capital Taxes


Incidence of Bermuda's Payroll Tax by Income Group in 1998

We need to adjust our payroll tax so its incidence is progressive across the income distribution.

9% 8% 7% 6% 5% 4% 3% 2% 1% 0%

Lowest

Second

Third

Fourth

Fifth

Bermuda’s Income Distribution

Highest


Bermuda Dollars Millions

25.0

Foreign Investor Confidence in Bermuda* Since the 2008 crisis, foreign investors have not been impressed with the performance of either of our two previous governments.

20.0 15.0 10.0 5.0 0.0

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 *Non-Bermudian Real Estate Sales Tax Revenues


The End of Bermuda’s Neoliberal Era Our Twelve-Step Programme to Recovery • Tax Structure Overhaul

• Corporate Competition Policy Reform

• Public Capital Spending Programme

• Poverty Alleviation Programme

• Land Use and Development Reform

• Urban Renewal Programme

• Foreign Investment Restrictions for Pension Accounts

• Judicious and Appropriate Enforcement of Bermudianisation

• Government Transparency & Accountability Reform

• Development of Strategic Plan and Official National Vision

• Bank Credit Regulatory Reform

• Education Reform


Too much for a small offshore island to accomplish? Not only have others managed it, they’ve already done much of the heavy lifting for us‌..


Jersey’s Reform Agenda 2003-2017 • Tax Structure Overhaul

• Corporate Competition Policy Reform

• Public Capital Spending Programme

• Labour Policy Reform (Not a problem in Jersey)

• Land Use and Development Reform

• Education Reform

• Pension Reform

• Bank Credit Regulatory Reform

(Not a problem in Jersey)

• Government Transparency & Accountability Reform

(Not a problem in Jersey)

• Civil Service Patronage, Privilege & Cronyism Reform (Not a problem in Jersey)

Development of Strategic Plan and Official National Vision for the island


“Hence, liberals also need to restore social mobility and ensure that economic growth translates into rising wages. That means a relentless focus on dismantling privilege by battling special interests, exposing incumbent companies to competition and breaking down restrictive practices. Most of all, the West needs an education system that works for everyone, of whatever social background and whatever age.” - “Liberalism After Brexit,” The Economist, July 2, 2016


Jared Diamond’s* Top Reasons Civilisations Fail to Recognise the Need to Change or Fail to Adopt Appropriate Reforms Prior to Collapse 1) Short term interests of decision makers or elites are in conflict with the long term interests of the civilisation, and (Regressive Tax Structure)

2) Factors once thought of as society’s virtues become vices. (Low Tax Revenues) * Author of Guns, Germs and Steel & Collapse: How Societies Choose to Fail or Succeed


Bermuda’s Enervating Lethargy Wedded to the Status Quo “…while the public overwhelmingly welcomes and supports the project, and sees it as essential to the future well-being of Bermuda, there is serious and significant public concern that vested interests, and the status quo will eventually prevail. There is also concern that any outcomes will remain unimplemented, that Cabinet will not make the hard decisions which many feel are necessary to sustain Bermuda into the future, and that the population will not be willing to undergo the necessary changes.” - Charting Our Course: Sustaining Bermuda, Sustainable Development Strategy and Implementation Plan for Bermuda, Government of Bermuda, June 2006.


Ruling the Waves and Waving the Rules Of course, while not as extreme, Britain itself suffers from many of the same economic problems as Bermuda and for much the same reasons. Moreover, as in Bermuda, Britain’s elite benefit from the international financial status quo between Britain and her Overseas Territories. Conversely, Britain’s working classes bear the brunt of public spending cuts necessitated by the loss of corporate tax revenue to overseas tax havens. Indeed, Theresa May implicitly recognised the international harm caused by such jurisdictions in threatening the EU with Britain moving even closer to the “Bermuda Model” if Britain is unsatisfied with their Brexit negotiations. Will it take yet another public drubbing of elites in Britain and her Overseas Territories before they accept the status quo is not an option?


“The ideas which are here expressed so laboriously are extremely simple and should be obvious. The difficulty lies not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.” - Preface to John Maynard Keynes’ The General Theory of Employment, Interest and Money - December 13th, 1935.


2008 Will Change Everything 2008 will eventually be recognised as a world event of greater historical significance than either: - The Fall of the Berlin Wall - The Birth of the Internet - The Invention of the Atomic Bomb - Both World War I & II The full consequences and implications of 2008 will take years to unfold‌.


2008 is… …changing our understanding of economics …revolutionising the practice of central banking …reforming governments’ tax structures worldwide …changing our relationships with markets …causing seismic shifts in political power globally …changing our values …changing our culture …changing our way of life …changing pretty much everything


Summary & Conclusions • Bermuda’s economic model represents a global extreme, • The imbalances, inequities and perverse incentives of Bermuda’s economic policymaking have caused: our current misallocation of the island’s resources our chronic experience with acute poverty; and our failure to sustain a meaningful economic recovery • Economic policymaking globally has moved substantially in the direction of the “Bermuda Model” in the past 40 years; evidence from around the world today supports the claim that the “Bermuda Model” is inherently flawed, • Every major policy reform adopted post-2008 by Bermuda’s closest competitors in the offshore world has reduced the extreme bias in their economic policymaking,


"This is a masterly critique of the neoliberal economics experiment in Bermuda by someone who loves the island and its people. Due to government policies, elites enjoy a luxurious lifestyle whilst inequalities, poverty and social squalor are on the increase. Trickle-down economics does not work and wealth is rapidly sucked upwards through regressive taxation and lax enforcement of financial laws. The shifting of profits to Bermuda by companies such as Google creates illusions of prosperity but they pay no tax to enable the government to build social infrastructure and create hardly any jobs. The bear-hug of global corporations and finance is slowly squeezing life out of Bermuda as its governments are more concerned about appeasing wealthy corporations rather than the welfare of its own citizens. The analysis is also a damning indictment of the UK government which has a legal and moral duty for ensuring good governance of its Overseas Territories. The lessons of Bermuda are directly relevant to the UK as the current Conservative government is embracing the same economic model which gives tax cuts to the rich and global corporations, shifts tax burdens to labour and consumption, and erodes hard-won welfare rights. Anyone concerned about the post-Brexit road to tax havens should read this analysis and ensure that the Bermudian nightmare does not become a reality in the UK.� - Prem Sikka, Professor Emeritus at the University of Essex


“We have an ongoing research project on something called the Finance Curse, which consists of six primary symptoms. We will be investigating this further in a range of cases and across a range of symptoms, so it is very interesting Robert Stubbs has found evidence of many finance curse type symptoms in the Bermudian case.” - Andrew Baker, Professor at the Sheffield Political Economy Research Institute

“Robert Stubbs has prepared a compelling, appropriate and economically robust analysis of the problems the Bermudian economy faces. His explanation of how it has reached this sorry state both fits with the facts and accords with any reasonable understanding of recent economic theory and history.” - Richard Murphy, Professor at City University

Bermuda in 2017: Economic Test Tube to the World - Robert J. Stubbs  

A presentation exposing the extreme neoliberal bias in Bermuda's economic policymaking and the deep inherent flaws in the island's fateful e...

Bermuda in 2017: Economic Test Tube to the World - Robert J. Stubbs  

A presentation exposing the extreme neoliberal bias in Bermuda's economic policymaking and the deep inherent flaws in the island's fateful e...

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