February 9, 2015
I am queuing in the cavernous aisle of Right Priced, a wholesaler in George Town, the capital of the Cayman Islands. Around me, poor black Caymanians are stocking up too, served by Filipino immigrants. These are not the people you see in the glittering strip of bars and hotels that service the massive ex-pat population here. These people are different. They are close to the bottom of a society, which has become extremely wealthy over the years by being a tax shelter for rich people’s money.
Why am I in a wholesaler – a sort of Musgraves in the sun?
I am buying soap, deodorant and toothpaste for Cuban friends ahead of my flight to Havana. If anything underscores the difference in outcomes between the two systems in these neighbouring Caribbean islands, it is this.
One is the home to the most freewheeling, tax avoiding, beggar-my-neighbour capitalism on earth. It has opened its doors to foreign capital and has created a society that plays host to thousands of professional expat service workers. They grease the wheels of this offshore banking and tourist haven. The locals don’t appear to mix too much with the ex-pats, but the co-existence is made all the more tolerable by the soothing balm of other people’s money.
In contrast, Cuba has done the very opposite, creating a socialist paradise in the sun where the health and education system may be the envy of many first world countries but where the cracks in the edifice are evident everywhere. Yes, things are changing, and there is little doubt that the people in the other Caribbean islands – dependent, as they are, on tourism – are very worried about the opening up of Cuba.
Cuba is a giant in the region. It is hard to overstate just how much bigger and culturally richer Cuba is than many of the other Caribbean islands. Yet still today, Cuba remains a place where friends have to ask other friends to bring over soap. Even the most committed idealist has to question this state of affairs so many years after the revolution.
The outcomes of both economic models – one beggar-my neighbour capitalism, the other beggar-myself socialism – is so stark that it could be a made-up textbook economic experiment carried out here in the Caribbean, if it didn’t happen to be true.
Interestingly, reading some of the commentary on Greece in the past few days, you could be forgiven for thinking that the choice Greece faces is between a Cuban or a Caymanian future. The hyperbole with which the legitimate democratic mandate of the Greek people has been received in Europe is quite shocking. Syriza and their (elected) leaders are being portrayed as wannabe Fidel Castros about to push Greece headlong into the abyss of collectivism.
In order to save the euro and the rights of creditor banks, the EU top brass are in danger of destroying the EU, because the EU is based on solidarity, for all. It is an extraordinary sight that the ECB will try to cut off liquidity to the banking system of a member country and in so doing, precipitate a bank run. What does that say about European solidarity?
Yes the Greeks have made mistakes and yes the country is corrupt, but everyone knew this and still lent to them. The onus when lending is on the lender, not the borrower, to suss out whether the borrower is delinquent or not. If you were going to lend to someone wouldn’t you want to do at least a credit check? And if the person had debts greater than their income and no real way of paying the cash back, other than borrowing more from someone else to pay you, wouldn’t you think twice? Surely the chance of bankruptcy might have struck you as possible?
After all capitalism without bankruptcy is like Catholicism without hell. You need the deterrent to make the whole thing work. So when Greece says, we don’t have any money – which is true – who is to blame? And does prompting a bank run make it more or less likely that the Greeks will pay?
Debts that can’t be paid won’t be paid. A broken balance sheet is made better by less debt, not more. The way you get to less debt is by doing deals, so that the country can pay and grow at the same time. If you turn the country into a debt-servicing agency for foreign creditors, what hope does it have of being a stable society?
Threatening the Greeks now just proves in whose interests Europe is run. It is not a democracy but a bankocracy – still run for the interest of creditors. This can’t last. Greece is no angel in this drama, but neither is it exclusively culpable.
The story of debtors and creditors is as old as the hills. It is biblical and it is about financial morality.
Here in the Caribbean, the bible is everywhere. There are churches of all sorts here and religion is extremely strong, particularly evangelical faiths.
Today would have been the 70th birthday of the Caribbean’s most famous son, Bob Marley. And although a committed Rasta, Marley wrote lyrics infused with the verses of the scriptures with talk of redemption and exodus. These were the words, language and symbols of his Christian youth in Jamaica and his knowledge of the Old Testament – a book the Orthodox Greeks subscribe too as well.
In both Leviticus and Deuteronomy, extensive reference is given to the concept of the debt jubilee, which is a period of time after which excessive debts of a neighbour should be forgiven. The reasoning is that if a neighbour is crushed with the burden of excessive debt payment, he is unlikely to remain a peaceful, well-behaved neighbour indefinitely.
As I head to Cuba – a country whose isolation has been lifted due to the intervention of the Pope, on the birthday of Bob Marley – I wonder what morality lessons inform our friends in Berlin.
Germany, the serial defaulter of the 20th century, is now enforcing impossible conditions on Greece and dressing it up as left versus right or efficiency versus sloth or North versus South.
It is none of these. It is about too much money lent and borrowed. It is about morality and ultimately, it is about the future of Europe.
As I listen to the Bob Marley celebration on the radio here, I wonder how will this all end: with redemption or exodus