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Comparatively, when we spend $1 say in Super Value about 50 cents or more is sent to the USA to import the good we are purchasing. What happens with those 50 cents? That 50 cents is sucked, no pun intended, from our economy and is gone forever to benefit the economy of the USA as exports for them. It provides zero secondary GDP growth or employment creation for the Bahamas because as noted in the above GDP equation, imports decrease GDP.

Now, to be clear I am not advocating that one should consume gaming services over groceries, the only point I am trying to illustrate is that the argument makes no economic sense. As you have rightly pointed out, there are other socio-economic policy issues associated with gaming including its potential social negative externalities, the role of government and the optimal nature and extent of regulation and taxation and that is what we should be discussing instead of some made-up anecdotal fallacies and misinformation.

The other glaring implication here is that we need to take a serious look at producing and manufacturing more goods and services here domestically in the Bahamas to minimize our need to import necessary and basic bread basket and other items.

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From the perspective of the whole economy, the macro-economic context, savings refers to national savings which is merely national income less Household sector consumption/spending plus Government spending. When we earn income we can either consume/spend it or save it. From a macroeconomic perspective whether we consume or save is very important and, as you astutely noted above, there is a difference between domestic consumption/spending and imported consumption/spending. The distinction between current consumption/spending and savings is also important because a low national savings rate often precedes the requirement for inflows of foreign financial capital for business investments and government borrowings.

People often asks why does the Bahamas have to rely on FDI to finance business physical infrastructural investment and why is our government now having to borrow foreign financial capital. The answer is that because of our low national savings rate we just do not have the supply of capital domestically. This is not sustainable for us as a country and this does not even take into account the fact that even when we save our money in one of these Canadian banks they only want to lend it back to average Bahamians to buy imported consumer goods from abroad.

GDP or national income is Household consumption + Business physical investment + Government spending + Exports – Imports. Consumption includes spending on both goods and services. From a GDP perspective, Gaming is just another entertainment service similar to buying a ticket to go and see a play. So at the macro-economic level let’s examine and compare what happens when $1 is spent on gambling and a similar $1 is spent on buying grocery. When $1 is spent on gaming, between 75 – 80 cents is returned or re-distributed to other domestic gaming customers as customer winnings.

These customers can use those winnings to buy grocery, pay bills or do whatever they want to do with it. Another X cents is used to pay operating costs of the webshops, including taxes, salaries, charitable donations, local purchases and rent etc.

Finally, Y cents is profit for the webshop owners. It has already been established above that the webshop owners are re-investing these profits/savings in physical infrastructural investments that provides a secondary expansion of domestic GDP growth and also creates secondary local employment. So the webshops are creating direct employment and the investment of their profits/savings is creating secondary domestic GDP growth and local employment.

Excellent observations Banker. Just got in from the Icon awards and the wife would kill me if I stay on this computer. Will try to respond to your observations tomorrow.

Yes that is funny!

The story above is not about webshops directly but about economic activity related to physical infrastructural real estate investment and property development, construction activity, the utilization and employment of local professional services expertise, the utilization of other construction related labor resources and expertise, the procurement of building materials locally, FDI from foreigners investing in and purchasing finished condo units, the activation of domestic savings and investments from local who have purchased finished condo units and property management...... etc. Mudda has conveniently conflated the two to support his argument. However, in conflating the two he has inadvertently repudiated his own argument that Webshops suck capital from legitimate economic activity. I don't want to get too technical but in a very simplified form, to put the flow of money in an economy into an overall macroeconomic context, economist often use a tool called the national savings and investment identity which essentially states that the total quantity of financial capital demanded in a closed economy must equal the total quantity of financial capital supplied. The demand of financial capital in a closed economy comes from either government borrowing or domestic physical capital investments from businesses, similar to the above. The supply of capital in a closed economy comes from domestic savings and in an open economy it will also flow from foreign financial capital inflows. So in the example above you have a business making a physical capital investment in property development etc. Where is that supply of financial capital coming from? Based on the national savings and investment identity it must come from domestic savings. In this case it is the domestic savings of the webshops. I have simplified this example significantly and there are indeed other policy implications but I will leave that for another day. I too voted no in the referendum, but that does not give me or anyone a license to their own facts nor do I make any value judgement one way or the other. The real discussion should be about our abysmal domestic savings rate and about the failure of our legal and market institutions and intermediaries to facilitate transparent and fair access to capital and opportunities.

Did not know lunch lady Reckley was an actual person. I was actually using her as a metaphor.

And therein lies the slippery slope because presumably both would have had valid contracts and Lunch Lady Reckley may have been able to put down a killer curry mutton.

Exactly!

I have never been impressed by exaggerated and tortured hyperbole in debates and by the way nor is it a substitution for facts or logical reasoning. Please read the nonsense you just wrote. When you have a legitimate response that begins to make any kind of sense I will engage you.

So it is ok to not pay the janitor that was hired but because he is "qualified" we can pay him. Whatever happened to cut, cut, cut spending to impress the rating agencies.