Editorial
Inflation: Fearand faith
The financial industry has brought an astonishing transformationin the 30 years since the pages of the legislation, which makesthe Islands such an attractive place for businessmen seeking asafe and professional harbour.
Our survey of the local banking and trustcompany operations shows the stature and capabilities of the industry,which is one of the two main support of our prosperity.
Along with tourism, finance has undeniablybrought new levels of affluence to the majority of Cayman's citizen,but they have also, less desirably, made Cayman susceptible tothat worldwide affliction, inflation. This is not a new topic,and it is certainly not one that allows an easy answer, but ithas a vital relevance to the future of all who make their homeshere.
Last year the Cayman Islands cost of livingindex rose according to official pronouncement, and it is unlikelythat it is going down any time soon.
Indeed where it is most obvious, on theprice tags in the food stores, the last few weeks seem to havebrought a new surge of increase. The continuing upward march ofprices is as dismaying to the shopping housewives, at the failureof Government to give a lead in combating it. No one supposesit is in his or her power to cure the situation overnight, butthe continued absence of initiative is discouraging.
This is a free enterprise society, so thereis little point in suggesting that authoritarian methods shouldbe adopted. A system of price controls, is a start but there isno reason why Government should not seek voluntary co-operationfrom traders to the same purpose. A weekly list of prices, publishedofficially, might do something to level out (and we obviouslymean down, rather than up) those gross disparities which stilloccur in the prices charged at different stores for the identicalarticle. If a price rise is going to be officially recorded andperhaps the subject of official inquiry as to its cause, thenperhaps managements will be a little more restrained in the pricing.
We do not suggest that all price rises areunjustified; in an economy where, in general, too many peopleare chasing too few goods and services, this result is inevitable.When the previous Government, in its last year saw the need togive its employees an increase there was obviously going to bean inflationary effect.
Too many jobs seeking too few skilled workersis another fact of Cayman life and it has the same effect. Itpartly springs from the curbs which are placed on new workers.But the alternative, the opening of the gates to all who wantto come and work here is obviously unthinkable.
But beyond all that Government can do andindeed as an essential factor in that, is the need for all responsiblemembers of the Cayman community to realise that our rate of inflationis a very real threat to our future; the dark fears about inflation'spotential harm should not blind us to that.
Everyone who builds a home or store or anoffice block here (as well as the institutions which commit their,and their client's, funds to financing such investment) is expressingthat faith.
The volume of people prepared to do thishelps to make the Cayman Islands the exceptional place that itis. But there is undoubtedly, also, a streak of greed discerniblein some of the commercial activity here.
A past Financial Secretary, Sir Vassel Johnsonwas quoted in 1974 as saying: "When principles and standardsare forgotten and the 'free for all' battle begins. When thishappens, he warns, prosperity is left watching its setting sun."