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Charlotte Amalie
Sunday, June 26, 2022
HomeNewsArchivesSource Manager's Journal: Assumptions, Planning and the V.I. Future

Source Manager's Journal: Assumptions, Planning and the V.I. Future

As government and business respond to the financial and economic crisis, their actions are premised on a set of assumptions about the immediate future. The first of these assumptions is that the problems we face are severe and require dramatic action. With the exception of a few free-market ideologues, just about everyone agrees with both parts of this assumption — the severity and the need to act in a forceful manner.
The second assumption is that the problems that we face are cyclical and, while severe, not unlike past recessions. From this assumption flows the idea of a massive stimulus package and the willingness to sustain huge deficits for a limited period of time. Business will take a hit, but after a period (we hope) of months, "recovery" will begin, consumers will again begin spending and things will return to some semblance of pre-crisis normality.
We obviously don't know what is going to happen in the future. But we do know what has happened in the past, and, therefore, these assumptions are comforting. There is another set of assumptions that is far less comforting and that should prompt leaders at every level to do some contingency planning. These assumptions start with the premise that the problem is not cyclical but structural. That the game is up with respect to the United States consuming and China producing and patiently holding huge amounts of debt. That there is no way, given our levels of income inequality, for consumers to start buying again because they don't have — and will not have — either the cash or access to credit to do it. And finally, that we are a poorer country than we have thought and face a difficult period of adjustment to new realities.
The pessimistic set of assumptions carries the danger of being a self-fulfilling prophecy. But it is also somewhat like climate change. If we ignore it, by the time everyone is convinced it is real, it may be too late to act. If these assumptions are even partly correct, there is a powerful need to do contingency planning, to begin to think systematically about possibilities and probabilities.
For small places like the Virgin Islands, it is worth testing a set of local assumptions based on the question, "What happens to our economy in the face of a long-term United States or global downturn?" The obvious answer is that tourism measurably declines, with direct impacts on business viability, employment, tax revenues and income transfers such as pensions. And, relative to tourism, while this slump may not mean the end of shopping, it could well be the end of shopping as we have known it — that is, the constant buying of things that people do not need.
Doing contingency planning as early as possible is important because we have learned, often the hard way, that the further into a crisis or downturn we get, the worse the choices become. And as choices become worse, social divisions and tensions rise, making it more difficult to get commitments to any course of positive action.
To think in terms of a long-term and potentially very deep slump means confronting the kinds of basic social, political and economic issues that we generally like to avoid. We avoid them mostly because they are contentious and difficult, and life is hard enough when we are just dealing with the easy day-to-day ones.
Then there is the problem that so many of these core concerns are seemingly beyond our control. It is a shame that the cliché, "think globally, act locally" has become … well, a cliché, because it is exactly the right framework for what we need today. Even small places are not powerless to affect their destiny.
In planning for contingencies for what may be a very rough ride, tinkering around the edges is not going to help much. There is a need to look at big, difficult issues and contemplate the kinds of changes that are mostly unthinkable in "normal" times. All of them will require a lot of heavy lifting, but that lifting starts to look a lot easier when we consider the alternatives.
Let's start with two assumptions: First, that the V.I. economy will continue to be tourism-based, and, second, that it must become more competitive to get a bigger share of a shrinking pie. If those assumptions are valid, here is a contingency agenda for the future:
— Think green and focus on the environment, climate-change impacts and a specific set of principles that will guide future actions. The fact that it is not on the evening news every night does not mean that global warming has stopped being humanity's number-one challenge.
— Use every source of investment possible and convert the territory into a showcase for renewable energy.
— Find ways to end the adversarial dead-end relationship between government and business and build a true partnership that advances a shared vision.
— Change labor laws and practices in ways that will make the territory more competitive: greater investment in people, more flexibility in shedding unproductive workers and a focus on service excellence and quality.
— Commit to major improvements in the quality of education, especially higher standards, uniformly good teachers and supports for children living in poverty.
— Work to openly address inter-group and inter-island tensions and factionalism, based on the assumption that long-term success will require everyone pulling in the same direction.
These are all big-ticket items. They are also all achievable. When one looks at our current predicament, it is in part the result of a failure of imagination. It didn't take a genius to figure out that our bubble- and debt-driven economy was not sustainable. But most people didn't see it because they couldn't imagine an alternative reality. Well, that reality is here now, and those who can best imagine a better future within this new reality and define a path to getting to it are likely to be the long-term winners.
Back Talk Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.

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As government and business respond to the financial and economic crisis, their actions are premised on a set of assumptions about the immediate future. The first of these assumptions is that the problems we face are severe and require dramatic action. With the exception of a few free-market ideologues, just about everyone agrees with both parts of this assumption -- the severity and the need to act in a forceful manner.
The second assumption is that the problems that we face are cyclical and, while severe, not unlike past recessions. From this assumption flows the idea of a massive stimulus package and the willingness to sustain huge deficits for a limited period of time. Business will take a hit, but after a period (we hope) of months, "recovery" will begin, consumers will again begin spending and things will return to some semblance of pre-crisis normality.
We obviously don't know what is going to happen in the future. But we do know what has happened in the past, and, therefore, these assumptions are comforting. There is another set of assumptions that is far less comforting and that should prompt leaders at every level to do some contingency planning. These assumptions start with the premise that the problem is not cyclical but structural. That the game is up with respect to the United States consuming and China producing and patiently holding huge amounts of debt. That there is no way, given our levels of income inequality, for consumers to start buying again because they don't have -- and will not have -- either the cash or access to credit to do it. And finally, that we are a poorer country than we have thought and face a difficult period of adjustment to new realities.
The pessimistic set of assumptions carries the danger of being a self-fulfilling prophecy. But it is also somewhat like climate change. If we ignore it, by the time everyone is convinced it is real, it may be too late to act. If these assumptions are even partly correct, there is a powerful need to do contingency planning, to begin to think systematically about possibilities and probabilities.
For small places like the Virgin Islands, it is worth testing a set of local assumptions based on the question, "What happens to our economy in the face of a long-term United States or global downturn?" The obvious answer is that tourism measurably declines, with direct impacts on business viability, employment, tax revenues and income transfers such as pensions. And, relative to tourism, while this slump may not mean the end of shopping, it could well be the end of shopping as we have known it -- that is, the constant buying of things that people do not need.
Doing contingency planning as early as possible is important because we have learned, often the hard way, that the further into a crisis or downturn we get, the worse the choices become. And as choices become worse, social divisions and tensions rise, making it more difficult to get commitments to any course of positive action.
To think in terms of a long-term and potentially very deep slump means confronting the kinds of basic social, political and economic issues that we generally like to avoid. We avoid them mostly because they are contentious and difficult, and life is hard enough when we are just dealing with the easy day-to-day ones.
Then there is the problem that so many of these core concerns are seemingly beyond our control. It is a shame that the cliché, "think globally, act locally" has become ... well, a cliché, because it is exactly the right framework for what we need today. Even small places are not powerless to affect their destiny.
In planning for contingencies for what may be a very rough ride, tinkering around the edges is not going to help much. There is a need to look at big, difficult issues and contemplate the kinds of changes that are mostly unthinkable in "normal" times. All of them will require a lot of heavy lifting, but that lifting starts to look a lot easier when we consider the alternatives.
Let's start with two assumptions: First, that the V.I. economy will continue to be tourism-based, and, second, that it must become more competitive to get a bigger share of a shrinking pie. If those assumptions are valid, here is a contingency agenda for the future:
-- Think green and focus on the environment, climate-change impacts and a specific set of principles that will guide future actions. The fact that it is not on the evening news every night does not mean that global warming has stopped being humanity's number-one challenge.
-- Use every source of investment possible and convert the territory into a showcase for renewable energy.
-- Find ways to end the adversarial dead-end relationship between government and business and build a true partnership that advances a shared vision.
-- Change labor laws and practices in ways that will make the territory more competitive: greater investment in people, more flexibility in shedding unproductive workers and a focus on service excellence and quality.
-- Commit to major improvements in the quality of education, especially higher standards, uniformly good teachers and supports for children living in poverty.
-- Work to openly address inter-group and inter-island tensions and factionalism, based on the assumption that long-term success will require everyone pulling in the same direction.
These are all big-ticket items. They are also all achievable. When one looks at our current predicament, it is in part the result of a failure of imagination. It didn't take a genius to figure out that our bubble- and debt-driven economy was not sustainable. But most people didn't see it because they couldn't imagine an alternative reality. Well, that reality is here now, and those who can best imagine a better future within this new reality and define a path to getting to it are likely to be the long-term winners.
Back Talk Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.