The world is in an economic mess. All the experts are telling us that, and I guess they should know. We haven’t experienced much of a mess in Cayman yet; ours is more of a minor inconvenience. Count the monster-SUVs on our roads and you’ll see how well off we are. However, we can get a glimpse of what the future might hold for us by taking note of what is happening in the US and Europe.
Statistical unemployment in some places is at levels not seen since the Great Depression. Cayman doesn’t have statistical unemployment yet; all we can say is that our chronic OVER-employment has shrunk a bit. The boys and girls at our government Economic Statistics Office (ESO) are much too far out of their depth to give us useful comparative figures- or even relevant ones. Well, ours is a small dependent territory, and we can’t expect anything better than the statistics we get.
The ESO hasn’t a clue how to allow for the doubling of the citizenship base following the mass Status grants. Nor can it cope with the sudden halving of the proportion of migrants in the workforce. The statistics that are published are largely meaningless, so our planning process has to operate “by guess and by God”. When local property development slowed down, the pool of construction workers shrank because of the expulsion of migrants. Unemployed citizens go on the dole and continue to spend money in the community; unemployed migrants (and their savings) are deported pretty much immediately. I’m not sure the ESO is even aware that we have over-employment.
All during the Great Depression of the 1930s, Cayman’s boot was on the other foot. Most men of working age (women were rarely employed outside the home) were overseas sending their savings back to their families. There was no domestic unemployment; there never is in a subsistence economy. So there is no valid comparison to be made between the circumstances of then and now. Statistically (as well as economically), we are in virgin territory.
Our MLAs and senior Civil Servants can therefore be forgiven for being clueless about how to govern in hard times- though not for being irresponsible, reckless and arrogant. Or for pretending they aren’t any of those things. If you don’t know what’s going on around you, for God’s sake be humble about it and seek help. Fizzing around like a fart in a bottle is not the way to solve our imminent economic problems.
All our Pension Funds may well fail to provide enough money for our individual retirements. MLAs and Civil Servants who retired on the “defined benefits” scheme (a percentage of salary, index-linked) don’t worry about that, because their pensions will come directly out of taxes and government borrowings. It’s everybody else who will be in trouble.
Except for senior executives in the tax-haven sector, everybody’s wages probably won’t retain their purchasing power, when the US Dollar falls in value against many of the things we consume. Meat, eggs, and most other foodstuffs will likely cost more dollars to buy in the future than they do now. Rent and the price of houses might require fewer dollars. Jamaican dollars might become cheaper, Euros and Canadian Dollars might become dearer. It’s a gamble!
If you’re worried about a devaluation of The Cayman Dollar, don’t. It is a coupon currency (look up “local currency” in Wikipedia), and will go up and down with the US Dollar. There would be no point in devaluing it. It could conceivably go up- but only if we were governed prudently, and we know there’s not much chance of that.