Dear Sir,

Your editorial on October 8 about why the KeyTech deal is good for consumers, and why Bermuda should not dread the prospect of seeing more foreign capital, is absolutely correct. My criticism is that you did not go far enough.

For years, too much of the Bermuda economy has been steeped in mercantilist fallacies. Mercantilism, rampant in the 16th and 17th centuries, holds to the fundamental belief that national prosperity depends on assuming that the gain of one person, or one country, must represent the loss of another. It is simply a ragbag of commercial regulations resulting from special interest politics, influence peddling and parliamentary logrolling, all mixed together with some general misunderstandings of what an economy is all about.

To put it in simple terms, foreigners are believed to be the equivalent of economic bandits. If a foreign company made profits in Bermuda by providing a superior service, such as telephone communications, its income must have arisen at the expense of other Bermudians. Customers were regarded as a nuisance and therefore ignored.

Mercantilism worshipped the false god of nationalism and ignored the real purpose of economic activity, which is to satisfy the wishes of the consumer, or customer, in the best and cheapest way possible.

It was not until the 18th century when Adam Smith wrote The Wealth of Nations that a stake was driven through the heart of this reactionary theory — except in Bermuda.

The 60:40 rule of corporate ownership is a good example of our longstanding myopia. Instead of looking after the interests of the Bermuda public as customers, the law and public policy were directed at protecting the interests of established businesses and keeping out competition from foreigners.

The same was true about our immigration laws, which are also a throwback to mercantilism.

Because our ideas were grounded in the 16th century, organisations such as KeyTech (or BTC) and Belco were run for the benefit of the owners and the employees (and unions) not for the benefit of customers.

The net result was 16th-century service for 21st-century customers. The ideas of seminal thinkers such as Smith were ignored and superstitions worthy of witch doctors were preferred. If there should be a guiding principle for the future of Bermuda prosperity, it can be summed up in the following quotation from Smith in his 1776 masterpiece The Wealth of Nations, Book IV Chapter VIII: “Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.”

For years, our blinkered politicians ignored this sage advice, and the Bermuda public were robbed.

ROBERT STEWART