State capitalism, or statism, is a reality when at least 30% of the economy is in hands of the government. Supposedly, a 30%- shareholder, has sufficient impact and power to steer economic development of the whole, like economic growth, etc..
Curacao is such a statist economy. Politicians and the larger public are complaining about the lack of economic growth of the island for more than ten years. Political leaders have tried, over and over, to steer the country back towards economic growth, but without success. To the public, they looked like unguided missiles, like blind drivers lost in the vast desert of the world economy. The only thing they failed to do, was using their drivers’ seat of more than 30%-shareholdership of the island economy to steer the economy vehicle back towards growth.
The present degree of political openness on the island, a pre-requisite for a thriving economy, supposedly, has not resulted in economic openness. Curacao has no level playing field for all parties in the economy.
A closed, obscure political elite, created an environment of great privilege and monopoly for State-owned enterprises. Corporate governance, eagerly promoted by a few renaissance leaders with great administrative integrity, has not rooted sufficiently to create a level playing field for the entire economy; this has become a strong disincentive to new foreign investment. The result is no growth or even shrinkage of the economy.
The reluctance to a liberalization of the economy, of its labor and capital markets, is intertwined with privilege, personal benefit, graft, tradition and plain ignorance.
On a practical level, you do not teach old dogs new tricks. Any change will be gradual, step by step, but a good start would be to allow a new generation of highly educated professionals, a chance. Ridding State companies of compromised executives who earned their appointment, not from what they know, but who they know, could be the first giant step forward.
The IMF and other international organizations urged, over and over, to liberate labor markets and allow immigrations of qualified workforces. Politicians moved in the opposite direction with a further stifling of already rigid markets, by closing immigration loopholes and creating legal Yu-di-Korsou racial labor preference.
Trade and investment delegations are sent out overseas, nevertheless, and coincidently for delegate participants neatly scheduled to enjoy the fringe benefit of travel and leisure for personal enjoyment. Like broken records, representatives repeat tandrums of sun-sea-samba and sex tourism, hub-and-spoke harbor distribution, and attractive fiscal offshore incentives. The social-economic straightjacket of immigration limitations, poor labor force and abysmal security, unresponsive government and lack of level playing field, are not even whispered in private; pretense prevails.
In spite of the stranglehold of established statism, the informal shadow economy managed to grow, year after year. Whether it is the illegal narco-economy by organized crime, or unregistered beauty salons, casinos and brothels by illegal immigrants, they all manage to survive and thrive.
Economic growth on the island could be realized by implementation of corporate governance in Curacao’s economy of statism, and integrating the shadow economy into normalcy. Within the present constellation, it is not likely to happen.
By Jacob Gelt Dekker
Opinion columnist for Curaçao Chronicle