It really didn’t take a Noble Prize to predict the out come of the Diageo Vote. Most political prognosticators in the islands got it correct and predicted the outcome well in advance. The acceptance was unanimous on St. Thomas and 5 to 2 against for St Croix Senators although most guessed it would be 4 to 3 against.
Now very few St. Thomaians and as a matter of fact Crucians understand why it happened this way but almost all St. Thomas Senators think their Crucian Counterparts were nuts whereas as the Crucian Electorate with the exception of affluent White people believe their representatives did the right thing. Every single Senator wanted a deal with Diageo and the St. Thomains focused on the rewards and voted for it while the Crucian Senators focused almost exclusively on the risks and voted against it.
Gary S. Becker won a Nobel Prize for developing the concept that people are rational, their economic decisions make sense and as a group they make the best economic decisions even when they can’t explain why. So how would Professor Becker explain the two different groups reaching different conclusions based on the same set of data?
Well the answer is almost intuitive when you understand the island dynamics and belief sets. First, it has been a historic fact verified by a random survey done years ago for the St. Croix Chamber that two thirds of all Government Wages go to St. Thomians. This is because they have more employees, they have a higher consumer price index and partially because all employees are in close proximity to the seat of power and know the decision makers who can grant a raise.
Regardless of why, if 2/3 of all wages are paid on St. Thomas than 2/3 of all pension benefits will be paid to St. Thomains. Thus paying off the GERS pension fund should be a St. Thomas problem. Even if the money were used to stabilize energy prices, St. Croix has the refinery. Thus, if Gasoline prices were stabilized a $3 a gallon, St. Thomians would get $2 per gallon bebefit and Crucians $1. The belief is held that whatever good is done from $100 million a year, St. Thomas will get steak and Crucians will eat “dumb bread.”
Meanwhile the risk is assumed equally by all Virgin Islanders. So While Crucians assume half the risk if the project fails, they will only get one third or less of any benefits if it succeeds.
Now it doesn’t take a Noble Prize winner to understand that both groups were rational and reflecting the belief sets of their constituencies.
Tags: Captain Morgan, Cruzan, Diageo, Gary S. Becker, Nobel Prize, St. Croix, Virgin Islands
