A Future Real Economy

[pongo]

Stop arguing ladies, lets get this back on a positive track It's pointless being bitchy.

 

IMO good reliable bandwidth is going to be essential. Because in 10 years time what we have got now will seem ancient - even without the island growing any sector based around it. Whether or not we like the weather. You can sell and license real product with no transportation costs if you have good bandwidth - a plan to continually grow it, and an environment which is rights-owner friendly. That is not just about tax. The virtual economy is real.

 

what you're talking about isn't so much a high tech industry based on the Island, as one element of a business being located somewhere due to the financial advantage of doing so. Really, that's no different to what we're doing now: attracting subdivisions of finance firms via tax breaks. It's not so much that we'd be building a tech industry, as just shifting the focus of the existing low tax basis for our economy, with all of the shortfalls and hazards preserved.

 

Not only about the technology but also about the use of the technology (which is different) - so, for example, I mentioned the business of ensuring the most rights-owner friendly environment. That's the media equivalent of back-office and warehouse and distribution. We keep talking about transport costs as being an impediment. So it seems obvious to focus as much as possible on businesses which do not depend upon transport costs to the same degree -- but which, unlike financial services, are actually about ultimately selling product.

 

Tax breaks and other incentives to companies which really do their business and directly employ people here is not the same as operating as a tax haven. But this is not only about tax breaks. More than that I am talking about trying to find ways to get the infrastructure built. Because if you have a good and reliable infrastructure it will attract other data based business.

 

ETA: we have e-gambling - but I am going to guess that e-gambling is a relatively low bandwidth business vs, for example, streaming movies.

 

I am not proposing bandwidth as an end-all solution. Mostly I think we need an economy made up of many smaller parts. And, ultimately, probably a smaller economy built around a smaller workforce.

[manshimajin]

Any such economy will need to be based on high-value-added activities (to minimise the problem of transportation costs) and be high-tech where we do not have to compete against the East.

Initial thought - why does it have to be high tech? It may be that our future economy is not dependent on one silver bullet but on a range of things from low tech to high tech.

 

A simple example is the cultivation of edible seaweed. There is a very large market in Japan for this. There are parts of Ireland that are already exporting this to Japan making use of the natural ability to grow the stuff. Could there be types of fish farming for higher value fish/crustaceans? Could we make a better Manx Whisky than that colourless stuff? A friend in Ireland is selling smoked salt, again to the Japanese, for miso. IMO it is worth considering whether the future is one with diverse ideas or based on one sector only such as hi-tech. I am not arguing against developing legitimate technological businesses but they should only be part of the picture.

 

Out of left field - Singapore is making big business out of private medical treatment/hospitals for non-nationals. This is a good employer with a high skills requirement, high value added and a high contribution to the economy. Could a few leading clinics (perhaps attached to some of the top US/EU teaching hospitals) be a good idea and positive for reputation?

 

What maybe more important to think about is what types of undertaking are sustainable here - ones that don't grow like topsy and then suddenly get moved to Whatevland because wages are cheaper there or tax breaks better.

[Evil Goblin]

If some businesses are closing/merging and some staff are being laid off this is much more likely to be due to the general economic climate and the activities of the FSC, not to any bad reputation of the Isle of Man.

[Evil Goblin]

I hope Spook takes note, Pongo, as it is him and GD4ELI who have been bitching.

[Tugger]

I work in the offshore game and have plenty of contact with other offshore centres. The thought that the IOM is considered dodgy compared to others is just laughable. I think we are perceived as having weaker capabilities than a number of the others (Cayman and Jersey in particular, Guernsey in funds) but dodgier? Give me a break

[GD4ELI]

I work in the offshore game and have plenty of contact with other offshore centres. The thought that the IOM is considered dodgy compared to others is just laughable. I think we are perceived as having weaker capabilities than a number of the others (Cayman and Jersey in particular, Guernsey in funds) but dodgier? Give me a break

 

If you're competing for major defence / government / homeland security deals you don't use a IOM company.

[Tugger]

The US Department of Defence limits the most sensitive stuff to domestic, followed by Australian, British and Canadian companies (the so called "ABC" policy). It doesn't surprise me in the least that they wouldn't give it to an IOM company, but the suggestion that we are in the lower reaches of the offshore world is just stupid.

[bellyup]

If some businesses are closing/merging and some staff are being laid off this is much more likely to be due to the general economic climate and the activities of the FSC, not to any bad reputation of the Isle of Man.

 

Possibily.

But one begets another

[bellyup]

I work in the offshore game and have plenty of contact with other offshore centres. The thought that the IOM is considered dodgy compared to others is just laughable. I think we are perceived as having weaker capabilities than a number of the others (Cayman and Jersey in particular, Guernsey in funds) but dodgier? Give me a break

 

Cab you explain weaker capabilities?

[Tugger]

Oh Jesus, to you?

 

Oh well then: there is less experience in respect of funds (partially driven by the VAT millstone around that sector's neck), securitisations and structured finance generally.

[manshimajin]

The end of the Tourist industry and the reliance we had on a single industry was a lesson that was not learned, so now the dying finance sector should be a lesson we never forget.

In looking at the total picture for future employment IMO it would be daft to ignore tourism and dismiss it as a 'dead' industry.

 

For all the 'glamour' activities an economy NEEDS businesses that are capable of employing large numbers of people. Tourism and its related sectors internationally is one of the major people employers and is a sector that employs the skilled and the semi-skilled. Countries like Australia, New Zealand and the UK have seen tourism as a major sector for employment. In Australia dn NZ it is a high staus sector. I suspect that here there is a rather elitist attitude that tourism and its related leisure and catering activities are old fashioned and therefore not the sort of thing people of 'our' quality shoud be associated with. But if you want a real economy you have to have sectors that employ larger numbers of people and tourism has the potential to do this. Its has worked wonders elsewhere and is a global growth industry.

 

To reinvigorate our tourism sector requires skill. My preferred approach would be to identify a tourism promotion board (probably in the UK) that is doing a great job in its market (and a lot are) - and to see if we could sub-contract them to work on the rebuilding and championing of our sector. I am not impressed by DoTL.

 

I am aware that a lot of people look for the 'silver bullet' that fixes everything in one stroke - but it doesn't exist. A real 'future' economy will be like the 'present' economy from the perspective that it will be a mixed economy - hopefully not as heavily reliant on financial services.

[manshimajin]

If you're competing for major defence / government / homeland security deals you don't use a IOM company.

But there is a lot of money and employment in defense sub-contracting which is not constrained to the same extent.

 

Funnily enough I had a weird dream last night. Must have been the pickled onions or listening to the Test Match.

 

In it there was a business at Ronaldsway building pilotless drones. Come to think of it that might not be a bad activity. Not major aerospace, major manufacturing but one that requires a wide cross section of skills...and we have a security fence to protect the operation.

 

Could we even offer the remote piloting of these craft? I gather that commercial applications are increasing for their use so it is not an exclusively military industry and that the piloting is done from remote locations.

[P.K.]

Not only about the technology but also about the use of the technology (which is different) - so, for example, I mentioned the business of ensuring the most rights-owner friendly environment. That's the media equivalent of back-office and warehouse and distribution. We keep talking about transport costs as being an impediment. So it seems obvious to focus as much as possible on businesses which do not depend upon transport costs to the same degree -- but which, unlike financial services, are actually about ultimately selling product.

 

Tax breaks and other incentives to companies which really do their business and directly employ people here is not the same as operating as a tax haven. But this is not only about tax breaks. More than that I am talking about trying to find ways to get the infrastructure built. Because if you have a good and reliable infrastructure it will attract other data based business.

 

ETA: we have e-gambling - but I am going to guess that e-gambling is a relatively low bandwidth business vs, for example, streaming movies.

 

I am not proposing bandwidth as an end-all solution. Mostly I think we need an economy made up of many smaller parts. And, ultimately, probably a smaller economy built around a smaller workforce.

 

Doesn't that mean a smaller population?

 

I personally think that the island has left it too late to diversify. The obvious constant driver is killing power defence. So who is going to put up the R & D for all those micro-electronics? That's a question you could pose to just about every IOM diversity effort you care to mention. A friend of mine worked on developing GPS. It was driven by the US Dept of Defense budget i.e. name your price...

 

The idea is laudable enough, so who is going to put up the investment for all that infrastructure and R & D with a payback expected when exactly?

[pongo]

I personally think that the island has left it too late to diversify. The obvious constant driver is killing power defence.

 

Defence and the defence industry is not funding the on-going current expansion of bandwidth. It is largely being funded by advertising/marketing, the social media, data mining, future sales and therefore (again, as always) liquidity.

 

If you want to talk about defence - well talk about security because security (on the back of paranoia and hysteria) is the new defence, post Cold War. So you have people moving from govt depts to the boards of companies producing airport scanners, for example. In the same way in which people once and still maybe moved between govt and the defence industries. But defence and security is irrelevant in this context.

[P.K.]

But defence and security is irrelevant in this context.

 

In your opinion. not mine.

 

The killing power defence industries tend to be knowledge based, light engineering, micro-electronics, very profitable, able to get government (i.e. unlimited) R & D funding and have bollocks to do with bandwidth.