Thursday, May 10, 2012

Perception and reality (austerity in Cayman)

Chancellor Angela Merkel is so ordinary-looking that she is not recognised by a Greek Immigration officer. “Nationality?” “German.” “Occupation?” “No, no, just for a few days.”

Those of us who follow the financial news (just to check on how much of our retirement money has been stolen by the banksters each week) know that most European nations are heading for bankruptcy, beginning with the desperately over-borrowed nations of the south. German banks are Greece’s main creditors, and are bitterly blamed for the austerity-measures levied by the last Greek Government. Hence the anti-German rioters, warning that “the Germans” are planning to come down in force to collect the money owed.

The Greeks’ perception is that German banks forced Greek politicians to borrow more than could comfortably be repaid out of tax revenues. The reality is that Greece’s corrupt politicians voluntarily borrowed all the money, in full awareness that it could not be comfortably repaid; the German banks no doubt bribed the crooks, but that’s what banks do. Much of the borrowed money was spent on weapons of war, manufactured by German companies. Sigh. We’ve been here before, haven’t we?

Whatever goes wrong is always somebody else’s fault, politicians say; and they sell that perception to their constituents. Here in Cayman our recent ruling cliques have borrowed beyond the limits of comfort, while craftily keeping unfunded Civil Service pensions obligations off the Territory’s Balance Sheet, and making no provision for them in the annual Expenditure Budgets. That way, they can pretend Cayman is not insolvent; where could they have gotten that idea from, but news reports from Europe?

When austerity comes to us – and come it must – who will be blamed? The opposition politicians, naturally, and the British FCO clerks as well. When the Civil Service layoffs come, and the pension-defaults, and when the taxes increase, it will be everybody’s fault but the rulers of the day. Those rulers will not blame themselves for the shambles; they will hope to sell us the perception that the fault lies elsewhere.

We (the general public) perceive the extravagances and waste all right, but we aren’t always sure precisely whose fault they are. After all, we haven’t seen audited Government Financial Statements since 2004, so how can we know? Is it all our politicians’ fault? Well, yes and no. It’s our perception that they make all the decisions. But what many of us fail to recognise is that our British colonial constitution strictly limits our elected MLAs’ authority to borrow. In effect, our MLAs are Britain’s indentured servants – and we all know how that works...

The FCO can suspend any part of our Constitution at any time, and can block any borrowing attempt by our MLAs. The MLAs are headstrong and wilful, but they aren’t in any position to bully the British Government. Our MLAs see themselves as the leaders of our little community, but what they are is representatives, not leaders. The reality is that we don’t need leaders. (Check this blog’s archives for my post on this topic in December 2010 called “Leaders and followers”.)

Britain has made a rod for its own back by encouraging our representatives to perceive themselves as important. Our “leader” – a parish-council chairman in any other context – is called a Premier, for goodness sake. He has a full-time bodyguard and a chef and a Protocol Office with a staff of ten, and gets free First Class travel to anywhere in the world. The FCO clerks in Whitehall consented to the creation of our comic-book Ruritania, so they can’t pretend the fault isn’t theirs.

However... incompetent as the FCO clerks have been in the administration of Cayman, an independent Cayman might be fifty times worse. Let’s cling to that thought, when times get tough.