Guillermo Moreno's Plan For Dealing With DR's Problems

[Lambada]

Suggestions cover wage increases, subsidies, public spending priorities, austerity (50% wage reduction for highest paid politicos, judges etc so that all fall below salary level of President), corruption & fuel saving. Pie in the sky or some good practical suggestions? What think you all?

CLAVE DIGITAL - REPORTE EXTRA

[cobraboy]

Fine ideas, crossing my fingers, truly wishing him luck.

However, he proposes substantial spending increases, and the only "savings" is in gubmint salary/perk reductions and anti-corruption efforts. Where does the rest of the $$$ come from?

Not sure about the 15% reduction of fuel consumption without harsh gubmint controls over freedom of choice in vehicles and use.

Raising the salaries of 4,000,000 workers will NOT be paid for by the reduction on politico salaries. In fact, increases in minimum wages have the unintended consequence of increasing unemployment. 4,000,000 is a lot of folks to give more $$$ to. Additionally, that would be the stake in the heart of the struggling Free Zones without further subsidies of them.

Other than vague weasel words ("encourage investment", "priortize public spending", etc.), I saw nothing about affecting the #1 economic problem: a plan to sharply increase per capita GDP. Without that, all else is just shuffling a deck with missing cards. Actually, the manditory increasing of wages may have an opposite effect...not good. The marketplace determines what a job is worth. In fact, the most insidious form of inflation is artificial wage inflation.

I also saw nothing about increasing power production/reliability, anything addressing environmental concerns, or modernization of the tax system.

I truly wish the guy well, and support his efforts (short of centralized gubmint control of the means of production). But isn't his message fairly similar to every other Prez contender, MOL? Edumacate the chirren', fight corruption, subsidise gas and electricity, help farmers, and reform the body politic?

Fact is, there is nothing ANY politician or political institution can do about the fundamental problem the DR faces: more population that the internal resources can support. It would take a true Messiah with direct connections to above to solve that one.

[A.Hidalgo]

Just wanted to throw this out there...

Originally Posted by cobraboy

Actually, the manditory increasing of wages may have an opposite effect...not good. The marketplace determines what a job is worth. In fact, the most insidious form of inflation is artificial wage inflation.

According to the latest figures, the inflation rate for DR in 2007 was approximately 6.1% and the estimate for 2008 is approx 6.2%(maybe a bit higher because of oil prices). The last minimum wage hike was last year. So far inflation is nowhere near damaging the economy in any real sense because of wage hikes.

Report for Selected Countries and Subjects


Actual minimum wages in the DR.

The executive branch sets minimum wage levels for public workers, and the National Salary Committee sets levels for the private sector, with the exception of workers in the FTZs and the sugar, construction, hotel, and shoe manufacturing industries. The minimum monthly salary was approximately $139 (4,450 pesos) in the FTZs and $200 (6,400 pesos) outside the FTZs. The minimum wage for the public sector was approximately $81 (2,600 pesos) per month. The daily minimum wage for farm workers covered by minimum wage regulations was approximately $4.70 (150 pesos), based on a 10-hour day. Cane workers were subject to a special, lower minimum wage for the sugar industry, $2.50 (80 pesos) per day. The national minimum wage did not provide a decent standard of living for a worker and family.

Dominican Republic

[Texas Bill]

The basic problem is the number of unemployed in the workplace vs the number of individuals on the "dole" through the numerous subsidies to that same group.
In addition, the huge Public debt that the politicians continue to run up in an effort to meet the demands of those who want a "free lunch" without giving cognizance to the costs involved in the process.
Everybody wants the government to solve their problems for them and that just isn't possible given the lack of financial resources available.
I doubt bery seriously if the Legislature and theAdministration have even given serious thought to any plan that will inable the country to climb out of the financial mess it is presently facing short of declaring bankruptcy and starting all over again from scratch.
All the rhetoric in the collective vocabularies of the collective government ministeries won't solve the lack of intelligent actions this and other administrations are guilty of.
Texas Bill

[ExtremeR]

He is just saying what people wants to hear...

[qgrande]

Originally Posted by ExtremeR

He is just saying what people wants to hear...

So it would seem.... or does it?
what 'people'?
Or do people want to hear who gives auntie Yahaira her job as cleaning lady in the San Pedro procuraduría office?

[cobraboy]

Originally Posted by A.Hidalgo

Just wanted to throw this out there...

According to the latest figures, the inflation rate for DR in 2007 was approximately 6.1% and the estimate for 2008 is approx 6.2%(maybe a bit higher because of oil prices). The last minimum wage hike was last year. So far inflation is nowhere near damaging the economy in any real sense because of wage hikes.

It's been clear that the DR has been and still is under significant inflationary pressure. I'm sure we can all recall the 40-60% inflation just a few years ago.

And inflation clearly hurts wage earners, especially those at the bottom rung of the prosperity ladder.

But throw in wage inflation on top of what is occuring now, and it's a recipe for the perfect economic storm: a stagnant economy shedding wealth and jobs, with inflation. Stagflation (remember the Jimmah Cahtah years). Then, my friend, it gets REAL ugly, and with the already negative resource/population issue ("rats in a cage"), there is no way out.

[Chris]

Originally Posted by qgrande

Or do people want to hear who gives auntie Yahaira her job as cleaning lady in the San Pedro procuraduría office?

Yes, yes tell us that! It sure is more topical than remembering some fellow that most in the DR have no experience of and could not remember if you paid them.

[Chris]

Got interrupted and could not edit my post ... Last paragraph is ..

Anyway most folks here lived through a period of very rapid peso devaluation against the dollar setting in motion an extreme cycle of inflation - similar thing with a stagnant economy. A change in government and some promised rapid fiscal reforms and a lot of help from the IMF changed things.

This time I think things are even more shaky .. Its like the financial functioning of the world is made up of jello. I don't think any leader or wannabe leader has answers for the 'perfect storm' that the DR is facing.

[cobraboy]

Originally Posted by Chris

Its like the financial functioning of the world is made up of jello.

It's made of oil.

Originally Posted by Chris

I don't think any leader or wannabe leader has answers for the 'perfect storm' that the DR is facing.

Politicians do not draw their power from being economists. They draw their power from taking money from one group and spending it to buy votes.

The ONLY solution is a drive to increase real per capita GDP. But, once again, it's difficult if not nearly impossible, when you have more people than the internal resources can support.

The real problem comes when external funding to the DR shrinks up because of the global pressure stemming from higher oil prices from a huge global increase in demand. About every country on the planet will have a shortage of "gift" funds, because resourses are shifted toward oil.

What do you think will happen when foriegn aid to the DR dries up?