EDITORIAL – Whither Cayman: Globalism or populism?

The world has never been more prosperous.

And yet, dissatisfaction with economic and social inequalities in a fast-changing global economy are engendering increasing division and social disruption throughout the world. “Country first” has been the rallying cry over the past few years as populist movements all over the globe have gained ground.

Brexit, the decision of the U.K. to leave the European Union, was only the latest but certainly most prominent expression of the populist movement. Brexit was borne out of frustration with economic stagnation, the dissolution of national boundaries, and the dissatisfaction with a bloated Brussels-based bureaucracy, all of which put into question the benefits of the free exchange of goods, services, capital and labor – all known collectively as globalism or globalization.

For many, if not most, economists, globalization is the main driver for economic growth, higher productivity, and the opening of new markets and opportunities. Populism as a movement is viewed as retrograde and retrogressive.

However, economists too often conveniently forget that, even if beneficial for an economy as a whole, the forces of globalization create unpalatable dislocations among their own people. That explains Brexit.

In times like these, populists always have greater appeal. In a debate between a populist and a “nationalist” on one side vs. an economist and a “globalist” on the other, bet on the populist side.

In politics, unlike economics, simplicity trumps (the word is chosen deliberately) complexity every time. Building a wall on the border of Mexico or suspending trade with China may not make macroeconomic sense, but such positions have propelled Donald Trump to one step away from the White House.

Cayman itself is not immune to the appeal of populist ideas, but having resisted them historically has been one of the reasons for its success.

Without sustaining deep divisions to its social fabric, Cayman is one of the few places in the world that is truly built on globalization, both through the financial services it offers and because its economy is founded on the combination of local infrastructure, skill and foreign workers, which itself requires an open labor market.

Because the benefits of the Cayman economy have been shared (if not equally, certainly substantially) throughout most of the population, disharmony and discord have not interrupted the forward progress of the country. Indeed, Cayman continues to enjoy the highest standard of living in the region, and one of the highest in the world.

Having said that, tensions do exist between the local population and foreign workforce (which now exceeds 24,000 for the first time since the financial crisis). Even so, unemployment among locals remains low.

Finding the right balance between local and foreign labor is an ongoing challenge, and it is one that is not always met successfully. The rollover policy, especially when combined with an immigration system that refuses to grant permanent residency, continues to cause businesses to lose their most valuable people to the detriment of everyone.

Just because there are some who arguably will not benefit directly, putting up barriers and restrictions for foreign labor needed by local businesses does not mean more opportunities for Caymanians.

It is the openness of the economy that creates opportunities for Caymanians.