Biting The Hand That Feeds

Did anyone else in addition to Clameur de Haro pick up on the snide little dig from the Jersey Evening [sic] Post’s Elaine Byrne in her reporting of the winners of the Christmas Lottery?

In her “you have to be in the finance industry to win anything in Jersey” intro, La Byrne couldn’t resist, could she, doing a little resentful biting of the hand that feeds, conveniently forgetting which sector of the economy it is that predominantly generates the tax revenues needed to fund public services. Perhaps she needs reminding that governments on their own can provide nothing without first extracting the financial wherewithal from private citizens and firms through taxation.

Possibly she’s one of those who likes to propagate the myth that Jersey suffers from a class divide between the finance sector and the rest. Unfortunately, this fallacy is more widely held than it should be.

What it does is to deflect attention from the real class divide in Jersey, which is the divide between those employed in the public sector – enjoying salaries in many cases on a par with private sector counterparts carrying more responsibility, plus the added benefits of job protection, security of employment and taxpayer-funded pension arrangements which the private sector can only dream about – and those in the productive, wealth-generating private sector of the economy struggling to cope with the downturn, and having to accept pay cuts and job losses as the price of survival.

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And The Public Sector Gravy Train Just Keeps On A-Rollin'………

Yet another example reaches Clameur de Haro's in-box of questionable workforce expansion done with a cavalier disregard for its impact on the public finances.

This time it's in Harbours, and involves the recent recruitment, apparently, of an assistant to the so-called Development Director, Myra Shacklady.

Clameur de Haro has not met the lady in question, but his friends in diverse parts of the maritime community assure him that throughout their particular world the prevailing view of Ms Shacklady's demonstrated expertise and competence is one of near-total derision: "complete waste of space" being the phrase most often employed (and also, it has to be said, the politest).

In the current straitened condition of the public finances, one might have thought that with precious little States-funded development likely to be undertaken in the Harbours in the next few years, the need for a full-time so-called development director was debatable, and that the responsible course of action would have been to reduce the role to a 3-day week, with a 40% salary cut. That, after all, is the kind of measure that many businesses in the hard-pressed private sector, both here and in the UK, are being forced to take as they struggle to survive.

But, of course, this is the public sector, and Jersey. Where not only has it been decreed that this kind of cost-saving in the public interest is unthinkable, but that moreover Ms Shacklady actually requires an assistant director, no less. And where Harbours' business case for the additional post was allegedly signed off by a Treasury Minister otherwise exhorting (not too forcefully, it has to be said) curbs on spending.

It gets worse. Clameur de Haro's source reveals that the preferred candidate found the maximum salary for the post's advertised grade to be insufficient and unacceptable, whereupon the salary offer was raised by about 10% to secure the candidate's services.

No doubt all those people affected by the redundancies announced so far this year in the private sector will be comforted by the knowledge that the direction of Harbours development is at no risk of being under-resourced.

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It's Another World Out There On Planet Public Sector

Clameur de Haro notes with exasperation that, while Jersey's wealth and tax revenue generating, but currently hard-pressed, private sector continues to shed staff as it struggles with reduced profitability and business volumes, the public sector in contrast appears to remain blissfully recession-proof - certainly as far as ongoing recruitment to the public payroll is concerned.

A quick look at the jobs vacancies section of the http://www.gov.je/ website reveals that "States of Jersey" is the second highest category for current vacancies, including this one -

Apart from the obvious irony inherent in upping headcount by recruiting a "workforce planner", CdeH wonders why, in a time of financial stringency, this isn't a function automatically required of Departmental Chief Executives and/or their existing senior staff as part of their core management role, and why it's necessary to hire an additional resource to undertake it, particularly when, assuming the part-time nature amounts to, say, a 25-hour week, the total employment costs are likely to approach at least an additional £35k on to the public payroll.

Why is no politician questioning this seemingly relentless expansion of public sector employment?

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Privatise Jersey Post – Now!

Over at Jersey 24/7, Clameur de Haro’s fellow-blogger made the point a couple of days ago that it’s time Jersey Post was sold off. His reasoning was based specifically on the potential damage likely to be inflicted on the local retail sector by Jersey Post’s new Ship2Me service, but he is undoubtedly right in the wider context as well. The case for the full privatisation of this business and its disposal out of public sector ownership and control entirely is overwhelming.

Initially, the economic philosophy argument. Generally, being naturally less efficient than private enterprise, government should restrict itself to providing only those services which the private sector is unable or unwilling to provide. Throughout Europe, mail and postal services are increasingly shown to be capable of being willingly delivered by the private sector at reasonable cost and to an acceptable return. Where is the compelling evidence that Jersey is an exception?

Subsequently, the practical points. A Jersey Post continuing in even partial public sector ownership is undesirable on at least three counts: firstly, it’s a monopoly, which is bad enough; secondly, it’s a public sector monopoly, which is even worse; and thirdly, it’s a unionised public sector monopoly, which virtually guarantees sub-optimal operation and unresponsive customer service.

Any reader who doubts the latter should try visiting Broad Street on a busy lunchtime and noting what proportion of total counter positions are actually open. Rarely does the ratio exceed 50% (even during the long queues of the annual pre-Christmas rush): presumably this is mainly because of union resistance to instituting shift patterns which would deploy the greatest numbers of customer-facing staff precisely at the times of peak customer demand, exacerbated by an inherent management disincentive, stemming from the business’ position as a semi-state-owned monopoly with guaranteed protection from competition, to even tackle this issue.

Does anyone really imagine that this degree of insensitivity to customer demand could be sustained if Jersey Post was a 100% private sector enterprise accountable to multiple shareholders, and forced moreover to compete with other mail service providers on price and service levels? As many of CdeH’s acquaintances have remarked, it was only the arrival of Sure and the ending of Jersey Telecoms’ monopoly which forced JT to provide a retail facility in the main shopping precinct.

And then, to add insult to injury, in recent years the wealth-creating private sector has had to endure the sight of Jersey Post executives both publishing excessively self-congratulatory annual statements and paying themselves handsome bonuses commensurate with private sector out-performance in the face of stiff competition; totally unjustified in the case of a protected, esentially public sector monopoly.

It’s a fairly openly-expressed opinion in the Island’s financial and business community that when the full disposal of Jersey Post was looked at a few years ago, potential buyers were scared off by the size and extent of the potential future liabilities represented by the (typically for the public sector) exceptionally generous but under-funded employees’ pension scheme. And that only by promising that the taxpayer, rather than the purchasers, would retain these liabilities could the States even get potential buyers to pursue their initial interest.

Neither that particular issue, nor the strength of the conceptual argument for full privatisation, nor the opportunity cost to the Island of the States’ non-realisation of this asset at a time of financial stringency, are going to go away at any time in the foreseeable future. And transferring Jersey Post to private ownership in its entirety would also blunt the criticisms from retailers about its (totally legitimate) expansion of fulfilment business on the grounds of its public sector component.

It’s vital therefore that the States develop the resolve to resist and defeat the inevitable specious arguments – which will be superficially predicated on fears of reduced customer service, but will actually be founded on ideological committment to state ownership and hostility to private enterprise – and move to end both Jersey Post’s increasingly indefensible monopoly and its protected, even quasi-public sector, status.

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A Clear Case of Black (Ian) and White (Wash)

It's not often that Clameur de Haro finds himself agreeing with Geoff Southern about anything, but CdeH stands four-square with Mr Southern in his condemnation of the glossing-over by a clearly embarrassed and defensive Establishment of the incompetence and dereliction of fiduciary duty to the taxpayer exhibited by States' Treasurer Ian Black (who, CdeH notes, reportedly attempted to deflect the blame on to the former TTS CEO) in failing to ensure that the incinerator contract was hedged against an adverse exchange rate movement.

This is such a basic requirement - in CdeH's private sector worlds, both past and present, even comparatively junior mid-level finance executives are aware of the need to hedge a substantial currency risk exposure - that its omission virtually defies belief.

Are we to assume that no-one at all, in either the Treasury or TTS, realised the need? Because if that really is the case, then the implications for the management of Jersey's public finances, politely describable as sub-optimal at the best of times, are truly frightening. And the proposal to place Treasury accountants in all departments suddenly looks like not a very good idea at all.

Catching up on the last couple of weeks' Jersey Evening [sic] Post's back numbers since returning to the fold, Clameur de Haro spied Christine Herbert's Business Focus of 28 July, revealing that the Treasury is to deploy more public funds into the markets: presumably this will involve Mr Black's professional oversight of the investment strategy and the investment advisers.

Time for Under The Mattress as a safer option, maybe?

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Back to Jersey – and Back to the Blogosphere

Clameur de Haro found it a stimulating and rewarding experience living and working again in the Far East for the past few months: but with his last-ever overseas assignment having come to an end, and now lately arrived back on the Blessed Rock for good, he feels it’s time to pick up once again the reins of rightwards-inclined posting, to balance a little the local blogosphere’s majority leftward slant.

So, catching up, to what extent have the numerous undesirable features of the Island’s politico-economic landscape which CdeH hitherto railed against improved in his absence? And despite keeping intermittently in touch with events from afar, what does CdeH find on his return the land of his birthright?

Many of the answers, sadly, are not encouraging.

A still-bloated public sector, where spending appears predominantly out of control, where budgetary discipline seems lax or non-existent, and where sufficient determination to tackle either to the large extent actually necessary (as opposed to some cosmetic tinkering at the margins) looks less likely than snowdrifts in August.

Terry the Taxer and Ozo the Bozo purporting to direct an economic strategy which announced an appallingly cynical curtailment of front-line patient services and public facilities, but retracted immediately when objections were made – if cuts were (wrongly) thought necessary in the first place, why were they not defended robustly, however unjustifiable they were? And their cohorts and satraps already musing about raising indirect tax rates.

A government which almost certainly will have neither the vision nor the courage to go through with implementing much-needed staffing cuts, an absolute pay freeze, and pensions reform in public sector employment, nor any inclination to contemplate shrinking the size of the state by withdrawing from activities better undertaken by private enterprise.

A policing function with an effectiveness reportedly all but paralysed by internal strife, but still retaining the ability to commit the unbelievably ham-fisted bungling of what ought to have been a low-key routine investigation, thereby giving that malignant pipsqueak Syvret a golden opportunity to revel in his much-loved but self-proclaimed martyr status.

How depressing too, to see that the vast majority of the local politics blogs remain firmly anchored at the left-green end of the spectrum: some still obsessing, ostrich-like, with conspiracy theories about cover-ups or justice-denial to the exclusion of all else (and goodness knows, there’s no shortage of other things to get worked up about in this mis-governed island), while others continue to proselytize pernicious eco-authoritarian greenery.

At least Ratleskutle, Tony’s Musings, and Jersey 24/7 are still out there, providing a bit of much-needed wider variety of subject-matter.

So Clameur de Haro looks forward to a resumption of both promoting the alternative free-market and liberal prescriptions of a smaller state, reduced public spending, lower taxes and enhanced individual freedoms, and rebutting the authoritarian collectivist fallacies peddled by the pink leftists and their green fascist allies of convenience. Just as a taster for the latter, CdeH spied, on his pre-departure sojourn in a certain Far East airport, this entertaining piece in the Jakarta Globe about a ceiling collapse in a virtually new school building in Cirebon, West Java. Do, please, note the last sentence –

“Dedi Windiagiri, the head of the Cirebon school board, denied that the contractor was to blame. Climate change, he said, was the true cause of the accident.”

Really, you couldn’t make it up, could you? Ridiculous? Of course. But as an example of the fundamental dishonesty of so many genuflectors before the altar of the green religion, and their desire desperation to attribute any misfortune at all, whatever its cause, to the great holy mantra of climate change, regrettably not untypical.

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Tax Avoidance, International Financial Centres, and Jersey – Part I: Neither Illegitimate Nor Immoral

Judging from several posts over the end of November / beginning of December, Clameur de Haro?’s fellow-blogger Jersey 24/7 seems to be somewhat confused both about modern banking and financial services themselves, and their contribution to what he or she clearly believes is the latent immorality of Jersey’s role as an international financial centre, namely helping – or presumably, in his view, influencing - overseas taxpayers to reduce their liability to taxation in their own jurisdictions.

Jersey 24/7, however, isn’t alone in this misconception – several recent election candidates from the leftist and green extremities of the political spectrum postulated much the same thing, adding in for good measure the alleged iniquities of depriving high-tax “home” economies and populations of taxation revenue (though, curiously, they failed to go on to advise electors to avoid a low-price Co-Op in favour of a high-price Checkers so as not to deprive the latter’s ultimate shareholders of profit). So CdeH? is grateful for the opportunity to counter their false arguments.

Clameur de Haro?’s basic philosophy on this starts from the premise that tax levied on the private citizen, whether an individual or a corporation, by the state, on pain of criminal sanction, is nothing less than the state’s self-legitimated appropriation for itself of that private citizen’s legally-acquired wealth, whether in the form of income, capital gain, inheritance, or whatever. [Note the phrase “legally-acquired” - and be in no doubt, incidentally, that CdeH? has no objection whatsoever to the confiscation, by the judicial arm of the state, of wealth acquired directly as the proceeds of crime]

CdeH? entirely accepts that some such appropriation is necessary, and does not, for example, espouse the extreme libertarian position of believing that the state has no role in society. CdeH? readily acknowledges that there are economic goods and public services needed by some or all of the population which only the state can or will fund (though there are many instances where such goods or services, while necessarily funded by the state, are not necessarily provided better or more cheaply by agencies of the state): and that taxation is both an acceptable and practical way of raising the revenue needed.

However, because the state appropriates for itself, in the form of taxation, part of the private citizen’s legally-acquired wealth, CdeH? believes that the state then has an overwhelming, corresponding moral duty (1) to spend the resulting revenue prudently and not recklessly or wastefully, and (2) to extract from the private citizen no more than the absolute minimum of his legally-acquired wealth than is necessary for the state to fund or undertake those functions that it, and only it, can or will do.

But states everywhere either ignore or abuse (or in most cases both ignore AND abuse) this moral obligation [and Jersey is no different]. They waste, or otherwise deploy recklessly or imprudently, the taxation revenue they extract from the private citizen: or they employ it in undertaking activities which the state need not, or should not, undertake because the private, non-state sector of the economy would willingly undertake them itself (often better and cheaper). Most states are guilty on both counts [and again Jersey is no different].

In these circumstances, not the slightest degree of opprobrium or immorality can attach to the private citizen, whether an individual or a corporation, who so arranges his financial affairs as to legally minimise or avoid the appropriation of his wealth by the state. [Note the words “legally” and “avoid” – and the latter’s important distinction from the word “evade” – and again be in no doubt that CdeH? has no truck with the illegal evasion of obligations in contravention of the law of the land]

And by extension therefore, not the slightest degree of illegitimacy or immorality can be inferred to an economy or polity which chooses to provide services to meet a clear, substantial, and unsatisfied demand from the makers of such legal arrangements. So Jersey can and should continue to uphold and develop its prime industry with a clear conscience.

Clameur de Haro? has no doubt that the real immorality here lies with those high-taxing, excessive and wasteful-spending governments - notably the UK under the present administration and most EU countries under any administration - who impose systems and levels of taxation which extract unjustified proportions of their citizens’ wealth, thereby driving them to seek external alternatives.

Jersey need entertain no qualms whatsoever about benefitting its own population by supplying those citizens with an alternative to mere acquiescence in their governments’ rapaciousness.

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A New Direction of Travel

Welcome to this the opening post from Clameur de Haro?

CdeH? is angry: in fact positively seething with exasperation and frustration at the poor quality of both the political philosophies currently on offer to the people of Jersey – and echoing the cry of Mercutio in Shakespeare’s Romeo and Juliet.. “a plague a’ both your houses!”.

CdeH? is most definitely NOT an enthusiastic standard-bearer for Jersey’s current Council of Ministers and the present States’ Establishment, and believes that the wider electorate’s manifest disillusionment with both is amply justified. Yet, like so many of the Island’s silent majority, CdeH? shudders at the prospect of the potential damage should what may be called the Stuart Svvret Tendency and the JDA/Green Coalition gain political ascendancy.

CdeH? is convinced that there really does exist a radical alternative direction for the Island – one between, at the one extreme, the complacently inefficient, overly bureaucratic, excessively mercantilist, and fiscally irresponsible current government: and at the other extreme, the assorted collective of tax-and-spend egalitarian socialists, muddled-thinking talk-gooders, and mendacious eco-authoritarians, masquerading under a disparate variety of labels of the left, but all essentially wanting the same thing - a much more interventionist, enterprise-averse, anti-freedom and aggressively redistributive regime.

CdeH? contends that a significant number of Jersey’s current domestic problems stem from one thing – the sheer size, scale, and therefore cost of government and administration: that Jersey’s public sector is too large for the size of the population, and generally does too much: and that it compounds that error by doing so expensively and inefficiently – much, much more expensively and inefficiently than would private enterprise, because of government’s ability, and natural inclination, to increase the tax burden to cover expenditure, rather than control its activity and therefore its cost, so as to keep expenditure below the tax revenue achievable consistent with a flourishing, dynamic but also equitable society.

So – for CdeH? the direction of travel has to be to reducing the size and impact of the state, curtailing its remit, controlling its cost, and lowering its burden on the economy – by applying free-market and libertarian economic and social policy prescriptions, and eschewing the deceptively and superficially attractive solutions dangled by both persuasions.

From CdeH?'s position, poised in the Royal Square on the steps of the States' Assembly, this will be the approach put forward in the coming days, weeks and months.

Watch this space.

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