Development of Island Economies

Dr. Wolff, First let me thank you for the work that you do. Since "discovering" you on Youtube, I have voraciously consumed every video I can find about the ills of capitalism, and more importantly, the alternatives that must be developed to save the economies of the world from those that would "kill the goose that lays the golden eggs". I am a native of the Virgin Islands of the United States, an unincorporated territory, owned and controlled by the US of A. We are located approximately 90 miles east of Puerto Rico. Although migrants from Puerto Rico and their offspring, represent about 20%, if not more, of the population, we and the island of PR itself, find ourselves at odds as we compete in an effort to develop our struggling economies. This is like children of the same parents, fighting for crumbs off the dinner table, while the parents actively encourage the contentious relationship. In fact, not too long ago, the international rum corporation, Diageo, pitted us against each other, basically saying they would move to the one that gave them an offer they could not refuse. The Virgin Islands outdid itself, as compared to its usual submissive tendencies towards corporations, by making such a conciliatory deal with the company, that shockwaves emanated throughout the USA, as even Congress people noticed, and actually argued the potential dangers of the precedent that was set by our government. Diageo was promised almost half of the excise taxes that are returned to the Virgin Islands from the USA, the molasses purchases would also be subsidized by the local government, and the plant would be built by the local government, largely due to the floating of bonds by the Virgin islands government, to the tune of 250 million dollars. Not long before that, a similar deal with John Hess(Hess Oil), that was similarly one-sided, came to an end when Hess chose to leave the VI after being told by the EPA, to retrofit their polluting refinery. Rather than doing right by the people of the territory that had been poisoned by them since 1964, they chose instead to leave, as their company shifted its focus to natural gas exploration rather than refining. The economy was devastated as our biggest employer summarily abandoned the territory. Schools and businesses closed, government workers had their salaries cut, and others were laid off altogether, as austerity came to our shores. I say all this to give you a sense of what small economies have to deal with when they do not produce anything of their own. Those in power even refuse to pursue the development of agriculture, even if only to feed their own population. The economy is based on tourism and the ability to attract corporate investment. The problem is that when investors do come, they are able to squeeze every concession imaginable from brainwashed(and/or corrupt) local leaders, usually in the form of tax exemptions. We have virtually made ourselves a legal tax haven, where companies receive sometimes 100% exemption from corporate taxes, in exchange for a few jobs to locals. Now to my question. How should small island economies seek to diversify and develop their economies, to move in a direction of self-sufficiency and stability? I see ourselves heading down the same road as Puerto Rico, Argentina, Greece, and other places. The "vultures" are already circling! I try to inform as many of my fellow citizens as possible, but while I can clearly articulate the problem, I am not an economist, and am not quite as flowing with ideas to put forth as an alternative, to our present mode of operation. I look forward to your response. Rael Sackey

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  • published this page in Ask Prof. Wolff 2016-11-04 12:14:36 -0400


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