Since the moronic World Bank’s Doing Business rankings were put on a pedestal by a couple of bean-counters and our taxation structure flattened starting in 2006. See the promised 8% growth over the last 13 years should have produced a little over six trillion rupees of national output. But as chart 1 shows Mauritius generated only about four and half trillion rupees of GDP. The difference – the Sithanen toohrooh – should cross the trillion-and-a-half-rupee mark by the time you play a famous U2 song a couple of minutes after 23h58 on the last day of 2018. Breaking down this shortfall yields important political insights.
As chart 2 indicates Navin Ramgoolam’s share of 533 billion rupees was enough to help him lose power and his seat in 2014. Less money means less get done. The trouble for PJ is that his total has already exceeded that amount but instead of taking nine years like NR he did it in two. This is not an indication that PJ is a worse PM than NR. It simply reminds us of the stark fact that a bomb is more likely to explode the longer you take to defuse it – in this case by adding enough top tax brackets. That doesn’t mean that it’s going to be easy for Ramgoolam to get elected in the next general election let alone form the next government. A careful analysis indicates that voters have never been smarter and more fed up with the traditional parties – so don’t act too surprised if you see some Lalit candidates getting through within about twelve months. Which is kind of bad news for the seventy-one-year-old NR who seems to be in a hurry to sink Mauritius further with more tax cuts and bore us again with fake and endless stories about his father.
Are the DB Rankings Worth Anything?
Very little. An index that puts Mauritius at the 20th spot while Germany and Japan are ranked 24th and 39th should be a good reason to take everything in it with the biggest grain of salt you can lay your hands on. Plus it’s kind of a misnomer. Which would explain why a tagline – measuring regulations – was added at one point in time to prevent it from being marketed for something it isn’t. Even a review by the Independent Evaluation Group of the World Bank had found serious problems with the index. These included too few informants, lack of transparency and high volatility of the rankings. While there now seems to be more informants for Mauritius it’s still too volatile to be taken seriously.
For example we were at position 49 in 2017 but had decreased to 25 in 2018. What could explain such a progress? Shooting thousands of bats or one VPM almost shooting the leader of the opposition? All of this of course was before the apologies of their chief economist, Paul Romer, to Chile in the Wall Street Journal at the beginning of the year as he suspected political motivations might have crept in. Mr. Romer stepped down less than two weeks later. And won a Nobel prize a couple of weeks ago.
Besides if the DB rankings were that important and tout va according to Bodha, it would be stupid for the PM not to call a snap election. But before he dissolves the Parliament in a hurry he might want to consider a final fact. Sithanen announced our best ranking ever of 17th in the last budget he presented in November 2009. Six months later he not only was the first outgoing Finance Minister not to be granted a ticket but he had messed the economy so badly that he couldn’t switch parties in 24 hours or stand as an independent candidate.