2007-05-30

More photos from St. Kitts

We wandered a bit about the island on Monday. Here are some of our pictures:



And here are some I already posted before (the views from our balconies):



Greetings to our friends and family in Slovenia, where it's currently 52 F (11 C). :)

2007-05-21

St. Kitts real estate and economy

Tomaz asked in a comment:
How's the real estate market over there? It seems that resident land is really affordable (for Europeans). It starts with 9$ / sq. ft. How's the housing? GDP? Avg incomes?
The real estate market in St. Kitts & Nevis is dual: first, there's houses and apartments that foreigners can buy outright without requiring an alien landholding license; and then there is everything else. If you come as a foreigner and you want to buy land in the local part of the market, getting an alien landholding license is a drag and unlikely to happen unless you're investing in excess of $1 million US. The part of the market that doesn't require an alien landholding license is comparatively small - it is restricted mainly to the Frigate Bay area and other parts south of Basseterre, the capital. The foreigner parts are the nicest and most well-developed parts of the island; this is where you have the Marriott and several other resorts, as well as a well-maintained golf club. Buying a new property in this area with a value exceeding a certain amount gives you the right to apply for citizenship under the federation's Economic Citizenship Programme. The amount you have to invest in order to qualify is $350,000 US this year, but it was $250,000 last year, and it's quite possibly heading towards $500,000 at some point in the future. When the required amount changes, this has the effect of generally raising the prices of all properties eligible for the Economic Citizenship Programme, while having probably little effect on most other real estate on the island. So, if you're a foreigner buying a nice big 10-year-old 3-bedroom house in the Horizons development project on a hill overlooking Frigate Bay, this might run you $560,000 US; but if you're a citizen, buying a house in Basseterre would be much cheaper, as well as in the rest of the island.

If you get citizenship through the Economic Citizenship Programme, you get almost all of the rights of the local people, including the right to buy land without the alien landholding license. However, you don't get the right to vote.

The CIA factbook is probably the resource to consult for St. Kitts economic data. It shows a GDP at official exchange rates of US$453 million, which works out to $8,200 per head, growing in real terms at about 5% per annum. The currency here is the East Caribbean Dollar (XCD), which has a fixed exchange rate of 2.7 XCD per 1 USD exactly. You can generally pay USD everywhere and you'll get the change back in EC.

I don't have a definite source on average incomes, but looking at this financial report by Cable & Wireless, it looks like the salaries and wages they paid in 2005 were $8,551,000 EC for 127 employees, which works out to about $25,000 US on average per employee. Like in the rest of the Caribbean, and in particular due to the high import tarriffs and because everything needs to be shipped here, the prices in shops are generally higher than you would get in the U.S., so even the locals have to be comparatively richer here in order to afford the same things as a person in Alabama.

2007-05-20

The crash that would cost $1,400

By virtue of its economic uniqueness, this island seems to have appeal for an interesting type of person: the young, unattached entrepreneur with some successes behind him and a desire to do more from an environment that doesn't hinder him. Immediately upon arrival, I bumped into A, a neighbor who's also waiting for his unit to be built and has an interesting story behind him. At 24, and originally from Tampa, Florida, he is a professional poker player who apparently earned significant sums playing poker on the net. Forget Chris Moneymaker: A makes his lunch out of players like him. I saw A talk to me fluidly while playing 4 poker games simultaneously, on tables where pots climb to US$1,000 and beyond. He says he has downsized his gaming - he used to play tables with still bigger bets, even 15 at a time; he would be $50,000 up or down at the end of a day. He's been at it for some 5 years; it took him the first 2 years to start earning serious money.

Three months ago, he moved to St. Kitts after receiving local citizenship. His reasons for doing so are multiple:
  • The United States have recently moved to aggressively ban online gaming for US citizens - apparently in a bid to protect the good, free Americans from the perils of their own liberty. It makes sense for A to move to a country that allows him to continue to play.
  • St. Kitts has no personal income tax, an obvious advantage.
  • A is fed up with where the United States are heading politically. He dislikes the current situation with Bush and he detests how the U.S. political system, originally a glorious achievement, has become bastardized over two centuries of democracy. (A sentiment I agree with.)
A has renounced his American citizenship, and they wrote him back to say that even though he's not any more an American citizen, he still owes them taxes for the next 10 years, and they might draft him into the army. Needless to say - he doesn't plan going back to the States.

As we were in the same room and I did some work while he played, there was a point where his system blue screened. For the first time. Ever. In the middle of several open games. For a few moments he looked, perplexed; then he unplugged his laptop and reset it. He came back online within 15 seconds of forfeiting his positions in the game. If he were so much as another 15 seconds late, he would have lost $1,400, through no fault of his own. Imagine he was playing 15 tables with even more money in them. That crash, right then and there, would have cost him the equivalent of 10 laptops.

I briefly examined the blue screen, and it turned out to be an IRQL problem in portcls.sys, a Microsoft MiniPort driver. I figure it could be a hardware problem: the laptop has been exposed to this island's electricity without a UPS or a surge protector. The local electricity is known to have surges and spikes that make equipment go awry. But imagine that it was a software problem. Usually, bugs don't have such a striking economic impact; this is one situation, in addition to hospitals, wars and aerospace craft, where they do.

2007-05-19

First greetings from St. Kitts

Last Sunday, May 13th, me and my wife arrived with our two cats to St. Kitts. All things permitting, we wish to make this our permanent home.

St. Kitts is an island in the Eastern Caribbean that forms part of a two-island federation called St. Kitts and Nevis (pronounced Nee-vis). The two islands form an English-speaking country with a population numbering a few tens of thousand. Unlike Turks & Caicos, where some three quarters of the population are immigrants, most of the people on St. Kitts & Nevis are local; they are predominantly descendants of blacks imported from Africa a few centuries ago. There are also a number of whites that were born here and still call these islands their home. There used to be a few thousand indigenous American people that used to live here; but unfortunately, they were eliminated in a 'preemptive' genocide by the English and French a few centuries ago.

Today, two main drivers of economic activity here are tourism and offshoring. The islands have some beautiful beaches to offer, and I heard that the more upscale Nevis is home to a number of celebrity villas. Although the beaches are not as amazing as Grace Bay on Providenciales (at Turks & Caicos Islands), the two islands here have greater variety, more interesting history, and are better developed. They also have more exposure to natural disasters: the dangers here include hurricanes, earthquakes, as well as a not-yet-quite-dead volcano. Not very far south is Montserrat, a neighboring island where a previously dormant volcano erupted in 1995-1997, killing 20 and causing 4,000 to seek refuge.

Our reasons, and the obligatory income tax rant

Although we certainly don't mind the beautiful beaches and all-year-round sunny weather, what we hope to achieve by moving here is for me to be able to run my software company without the Slovenian bureaucracy and the US/European income tax burden.

Largely due to income taxation, running a small software business in Europe is a chore. If you don't want to get hit by a 25% corporate income tax, you need to document all your expenses. What this means is that you can't so much as go buy a pencil, or a printer, or a network cable, or a chair, without having to keep track of all the related paperwork. For example, if you want to expense a cable, you have to get an invoice, but not just any ordinary invoice, it needs to be an invoice stating your company's full address and tax ID, and it needs to state the seller company's full address and tax ID, and everything else on the invoice needs to be kosher. If there's any error or omission, such as the street name of your company spelled wrong, the invoice will be rejected by the tax man and you'll have to pay the 25% corporate income tax on the amount of the invoice, as well as possibly a penalty. So your accountant will notify you and then you have to go back to the cable vendor and request a corrected invoice, all of which takes some calls or a personal visit. Now imagine getting this kind of invoice, as well as getting everything exactly right, when you're buying things abroad!

Then, you get a bank payment from abroad, which you might get several times a month, and every time this happens your bank faxes you with an urgent request to supply them with an invoice associated with this incoming transfer. This is required by the Central Bank and the time limit for supplying that invoice is some 3 days, so you can't even go on holiday without violating some such deadline.

Then, at the end of the month, you want to get paid, and it turns out that the aggregate taxes and 'social contributions' for paying yourself a salary are some 60%. In addition, you have to charge all your customers a 20% value added tax in the first place, so for every $120 that your customer pays, you really earn $40. The rest goes to support the idleness of government bureaucrats; the people on welfare who mostly can work, and do (off the books); and into a pension fund from which you will never benefit, and which pays retirees who retired while they could still work, as well as retirees that would like to work, but cannot, because even by working part time they would forfeit their pension and have to pay the income tax. Effectively, by working part time, a pensioner would get less than if they do nothing and just draw their pension.

Some time ago, I visited Germany and met this guy - let's call him Walter - who lived on welfare while trying to 'make it big' with Amway. A young, healthy guy, he explained to me how it doesn't make sense to work for a living when you can work for six months, then arrange to get fired, and then the German welfare will pay you two thirds of your salary for a year! Then the welfare expires, and you repeat.

With such obviously sick policies and such an overwhelming bureaucratic and tax burden, you might wonder - how does anything get done at all? Well, by everyone taking every opportunity to ignore the rules and the bureaucracy! When I went to a dentist, a licensed professional, to get my braces a few years ago, he asked me if I needed a receipt for the 1500 euros. I didn't need one, I paid him cash, and so the money went straight into his pocket - no VAT and no income tax paid. And I don't blame him, at all: this kind of economic activity is what allows him and his family to make a decent living. If he paid all of the taxes on all of his income, it would just go to pay for more people like Walter in Germany. It would just help the country get still more dysfunctional.

So that's the situation in Europe. I believe that the burdens are similar in the US, with the exception that more people there follow the law - the penalties are too high not to.

In St. Kitts and Nevis, there is no personal income tax. There is also no income tax on companies that do business abroad exclusively. Instead, there are very high import tarriffs. Since most items of value are imported, this effectively means that, instead of paying some 50% tax on your income, you pay some 50% tax on your spending. But this changes the ballgame significantly: all of a sudden, you don't need to keep track of every pencil you buy, because you don't need to worry about expensing it. You keep all the money you earn. You don't need to worry about your end of the year balance report, because the government doesn't really need it. And because you're taxed on your spending instead of your income, your savings remain untaxed until you eventually spend the savings in some way, too.

Imagine how much more upwardly mobile a young working person would be if this were the case in Europe. How much quicker could you save for your apartment if every salary you get wasn't taxed at 60%? Just making this one change - taxing spending instead of income - would remove a huge bureucratic burden, and it wouldn't cost the government a dime. The FairTax analysis show that the same amount of revenue could be collected with a simple 30% (exclusive) sales tax as with the current 5,100-page U.S. tax code.

So, what is it like to live in St. Kitts?

Right now, we are renting an apartment while we are waiting for ours to be built. The apartment we're renting is an older one in the same building complex. Although it's a two-bedroom, it's very spacey and nice, with the exception of a decrepit kitchen and some serious rust under beds. Everything rusts quickly here: the air is hot, humid and salty, there's wind all the time, and apparently it gets to things.

Here are the views from our balconies:



The weather is like this all day, every day. Temperatures this week are about 30 degrees Celsius; humidity is about 70%, in general. If you're used to European weather, air conditioning is compulsory.

The supplies here are pretty decent. The selection is narrowed down from what you can get on the mainland, but you can get most of everything, be it food or household items or computers or office furniture. We spent most of this week shopping for stuff that was impractical for us to take from Europe, and so far we haven't been able to obtain just the following:
  • A clothes rack - for drying clothes after washing. Apparently no shop here carries a clothes rack. It seems that everyone dries their clothes on a string - we have to explain the concept of a clothes rack to most people.
  • A digital kitchen scale. I have grown accustomed to an accurate kitchen scale as absolutely essential for keeping track of my calories so as not to gain weight. They have analog ones, but that's absolutely useless for all-day weighing. Someone help me with a digital kitchen scale!
  • Internet access. We got local mobile numbers the first day and we were lucky to get a fixed line on the second, but internet access, that's a different thing. I met one neighbor who has been waiting for Cable & Wireless to install his internet access for the past 3 months; he knows another neighbor who is still waiting after 6. Apparently, Cable & Wireless doesn't like new subscribers. After I post this at the office nearby, I'll be looking into alternate solutions. Perhaps satellite?
How was the trip?

Some of you might be interested in how we and our cats made it from Europe. The best connection from Slovenia to St. Kitts goes on weekends with Iberia from Munich to Madrid; then from Madrid to San Juan of Puerto Rico; and then with American Airlines to St. Kitts. Depending on when and where you buy, a return ticket for this route might cost you some 800+ EUR. Additionally, we had with us two transporters with cats and 3 big suitcases weighing 32, 32 and 27 kilos. This cost us an additional EUR 315 in Munich, and US$ 160 when re-checking the cats in Puerto Rico.

All in all, the whole journey takes about 24 hours door to door. Our cats made it fine up until Puerto Rico, but the last flight was too much for them and they peed on the way, resulting in two unhappy cats and two rather messy (and smelly) transporters. However, once here, they got used to the new apartment quickly.

2007-05-07

Evan Sayet on non-discrimination

The Libertarian linked to this video of Evan Sayet delivering a speech titled How Modern Liberals "Think".

I took an hour off to watch the whole performance. I find it sad. On the one hand, Sayet is correct that the "democrats" espouse a number of dysfunctional ideas that are fanciful and lead to failure. And it is a very good observation that, deeply, this seems to be a consequence of the desire not to discriminate.

However, it is sad that this is coming from a person who is harboring a number of dysfunctional ideas himself.

If I understood correctly, the speaker is against abortion. But abortion is functional; aiming to prevent abortion is dysfunctional and goes against reality. Not all kids are good, desired and necessary.

If I understood correctly, the speaker is defending Israel. Israel is dysfunctional. If you want to have a functional state, you don't build it in the middle of a hive of primitives who have been preventing Israel to live in peace since when it was established. If the founders of Israel wanted to have their desert democracy, they might as well have founded it in Australia and their country would now be celebrating 60 years of peace.

If I understand correctly, he is defending the war in Iraq as a way to enlighten Muslims. Now that would be all nice and well, if the war in Iraq actually had the effect of enlightening Muslims. It won't be possible to tell for certain until after several decades, but from today's vantage point, prospects are dim. Sayet also shows no understanding for the idea that it matters what reasons a politician uses to justify his starting a war. This war wasn't justified by its actual reasons; instead, it was sold to the public with lies. That is not irrelevant.

And finally, to claim that there is not enough evidence for global warming is like claiming that there isn't enough evidence for holocaust.

This is why this guy is making conservatism a bad favor. On the one hand, his argument is good - about democratism and the failure of non-discrimination. But on the other hand, this argument is coming from a person who himself believes in pretty stupid things.

Sad.

2007-05-04

Literarni agent avtorju

Literarni agent avtorju:
Z neskončnim zadovoljstvom smo prebrali vaš rokopis. Če bi ga objavili, po njem ne bi nikoli več mogli objaviti česarkoli nižje kvalitete. Ker v naslednjih tisoč letih zagotovo ne bomo dobili rokopisa na istem nivoju, moramo, na žalost, zavrniti vaš božanski prispevek in vas tisočkrat prosimo za odpuščanje.
(Po Mazziniju)

Cultural relativism: Iranian fatwa for journalists in Azerbaijan

According to BBC, two journalists in Azerbaijan published in 'a small-circulation newspaper' an article comparing 'European Christian values to those of Islam'. Result? The journalists 'were sentenced to four and three years in prison respectively, for inciting religious hatred'. Meanwhile, 'a leading Iranian cleric issued a fatwa calling for the journalists to be killed.' Likewise, 'during the trial, radical Muslims also protested in the courtroom, demanding the death sentence'.

Please excuse my confusion - who, again, is inciting the religious hatred here?

It is heartening to read, at least, that 'authorities say there are no problems with free speech in Azerbaijan as long as journalists obey the law'. Phew. That sure puts a load off my chest.

Doctors can't think

Understanding this is very important. People who don't understand this cause significant and unnecessary damage - be they physicians, politicians, or voters:
Here's a story problem about a situation that doctors often encounter:
1% of women at age forty who participate in routine screening have breast cancer. 80% of women with breast cancer will get positive mammographies. 9.6% of women without breast cancer will also get positive mammographies. A woman in this age group had a positive mammography in a routine screening. What is the probability that she actually has breast cancer?
What do you think the answer is?

Next, suppose I told you that most doctors get the same wrong answer on this problem - usually, only around 15% of doctors get it right. ("Really? 15%? Is that a real number, or an urban legend based on an Internet poll?" It's a real number. See Casscells, Schoenberger, and Grayboys 1978; Eddy 1982; Gigerenzer and Hoffrage 1995; and many other studies. It's a surprising result which is easy to replicate, so it's been extensively replicated.)