Sand heists and property rights in the Caribbean (Summer School)

**SPEAKER_1** (0:00)
This message comes from InSparity, providing HR services and technology, from payroll, benefits, and HR compliance, to talent development. Learn more at insparity.com/hrmatters.

**SPEAKER_2** (0:14)
This is Planet Money from NPR.

**Robert Smith** (0:21)
If you're going to hit seven continents in eight weeks, eventually, eventually, you are going to hit a flight delay.

**SPEAKER_4** (0:29)
So folks, from the flight deck, we have about, between about 13 and 15 aircraft ahead of us for takeoff. Thanks for your patience. Appreciate it. Thank you.

**Robert Smith** (0:37)
I guess we're going to have to start the show from the plane.
Welcome back, everyone, to Planet Money Summer School World Tour, if we can ever get this thing off the ground. The only international economics degree is where the textbook is written in sand, beautiful white beach sand. Because this week we are headed to Jamaica and a couple of other islands nearby. We have been saving this episode because we want our semester abroad to at least sound like we're working hard. Now, at this point in the series, we can relax, lie in the sun, and let the economics wash over us because, and I am contractually obligated to say this, you can learn a lot about how economies function by looking at the tiniest nations. Small changes there can have huge effects, both good and bad, and we can take those lessons, and a few shells, back with us to the mainland. Today's lessons will feature two fascinating stories from the islands, a case study about a group of people who challenged the very foundation of economics, property rights, and a mystery caper about the foundation of beaches, sand.
Our tour guide and professor today is waiting for us in Kingston, Jamaica. His name is Damien King, and he is the executive director of the... I actually don't know, do you say Caribbean or Caribbean?

**Damien King** (2:11)
So in the Caribbean, we say Caribbean. Outside of the Caribbean, people say Caribbean.

**Robert Smith** (2:17)
All right, we're going to do this like they do in the islands. Damien is the executive director of the Caribbean Policy Research Institute, a think tank in Jamaica.

**Damien King** (2:25)
That's correct.

**Robert Smith** (2:26)
Nailed it. All right. So Jamaica has 3 million people, and I know the other island nations around you have far fewer people. And economists often talk about the challenges of being a small, open economy. That is a place where you have to import a huge share of what you use.
How does that affect life in the islands?

**Damien King** (2:47)
When I talk to my economist colleagues around the region, we talk about vulnerability. You know, hurricanes come along, earthquakes come along, and economic shocks come along. Oil price fluctuations affect us much more than it affects the United States. Global interest rate changes affect us greatly because we are all highly indebted economies.
So this idea that your economic fortunes depend upon forces outside of your control is an ever-present consideration because it affects the long-term decisions that you make.

**Robert Smith** (3:21)
So if I have a plot of land in Jamaica, I might be afraid to do something ambitious like build a factory or an office building. I might just build, you know, a hotel.

**Damien King** (3:31)
Well, even worse than that, you may build a hotel, but are you going to build the cute boutique hotel that has over-the-water bar for which you can charge a much higher room rate because the first hurricane that comes along is going to wipe out the over-water bar. Whereas if you build a concrete behemoth, then it is more resilient to the storms.
So the idea really is that it affects all of your investment decisions.

**Robert Smith** (4:03)
So you have these small nations, very similar economies based on tourism. They share similar threats.
So why not band together? Will there ever be a United States of the Caribbean?

**Damien King** (4:16)
Well, the answer is no, but it was tried. In the late 1950s when former British colonies were becoming independent, the English-speaking islands in the Caribbean formed a federation, the West Indian Federation. It didn't last two years before islands started pulling out of it.
This is unfortunate because it has created economies that are probably below the threshold of economic viability. So it was tried, it didn't work, and it is never going to happen again.

**Robert Smith** (4:51)
What was the main problem?

**Damien King** (4:52)
The main problem was political. Policy promises that are electorally successful are not necessarily the ones that are best for the actual economy.

**Robert Smith** (5:03)
I hear you. I hear you, David. In our first case study today, we actually deal with this challenge of balancing economics and politics. Coming up after the break, we'll visit a magical place that breaks.