Opinion: More economy, less crime and corruption

POSTED: 02/6/14 1:49 PM

Jacob Gelt Dekker, the eccentric Dutch businessman on Curacao, writes a column for the Curacao Chronicle. Here we publish one of his opinion pieces because we think some of his ideas are applicable, at least in essence, to St. Maarten as well. His views echo those expressed by Prof Age Bakker, chairman of the Cft, as well, who felt that the key to St. Maarten’s long term sustainability is better tax collection while maintaining its vibrant market oriented economy and can do attitude. Here is Dekker’s column.

For more than ten years, growth of Curacao’s regular economy has been stagnant, whereas the shadow economy grew, year after year. By pulling the shadow economy out of its sinister underground existence, the total economy would flourish, and crime and corruption would considerably be reduced.

Laws and regulations, no matter how strictly enforced, do not dictate human behavior. At best, unwanted activities are relocated, but more often, they go underground and become crime controlled activities.

Curacao has an estimate of 20,000 undocumented immigrants who seem to be able to support themselves and their families in the shadow economy. These workers find employers easily. All their transactions are in cash, without levies of taxes, social premiums and insurances; no labor laws dictate their relationship and no judicial system is standing by in case of conflicts. Thus rogue employers find productivity at a discount, and undocumented workers can remain invisible. Law enforcement is costly for the community and therefore remains weak, and bribery is always tempting.

Recent efforts to document those workers were no success, since the regular labor costs became prohibitively expensive for rogue employers. Many undocumented workers simply preferred to keep their poorly paid jobs over obtaining legal immigration status. Labor laws, minimum wages, and labor unions, all designed to protect workers, instead, drove the most vulnerable, low productivity ones directly into the arms of organized crime. It is time to revisit all these laws and regulations and enable a workable liberalization.

An elaborate and costly system of business permits, to be issued by the government, has become such a barrier to entry that many small businesses prefer not to register and rather work under the radar. Whether an entrepreneurial young man sells beer out of the trunk of his car, a mime performer does a street act, or someone fixes computers from his garage, all need to go through a rigorous permitting process. Again, well intended laws and regulations have driven many new and upcoming entrepreneurs underground, where they easily become victims of extortion and exploitation.

An equally elaborate, non-transparent and very expensive license system for doctors, lawyers and other certified professionals has driven many applicants to such despair that they often preferred to pack up again and leave. Others became undocumented professionals in the shadow economy. The license system no longer protects consumers from poor quality professionals, as was intended, but is abused to protect local practitioners from competition and exclude newcomers. It created an underground economy.

The largest section of the shadow economy is illegal activities which range from minor infringes, like sales of liquor without a license, exploitation of slot machines without gaming license, lotteries, prostitution and sales of soft drugs, to severe crime, like hard drug trafficking, theft and fencing of stolen goods, and murder for hire. Tens of thousands of arrests over the years, made no dent in numbers of these every growing activities. Obviously the existing laws, especially for the minor infringes are outdated and no longer fit reality of today.

A reissue of applicable laws could legalize a large part of those underground activities. A strong example was the decriminalization of marihuana in Colorado, United States, on 1-1-2014 that turned thousands of growers and dealers, overnight, from criminals into productive farmers and retailers.

Courageous political leaders could realize an instant dramatic economic growth, simply by deregulation and reissuing outdated laws.


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