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Why say this kind of gobbledegook?

March 15, 2014

Dear Sir,

Do ILS really benefit the Bermuda economy? By that I mean does it really raise the standard of living of everyone living in Bermuda? I'm referring to the article “Cash: ILS growth does benefit the Island's economy” published in The Royal Gazette's business section on March 13.

The article started off with questions on what tangible benefits are likely to arise for Bermuda's economy since these ILS have “produced a proliferation of capital structures to meet reinsurance needs, rather than waves of new companies that hire people”.

I've noted the big Bermuda audit firms tripping over themselves to give their blessing to something they should be impartial to, but that kind of behaviour isn't new, remember it was AM Best and S & P giving their blessings to complex derivatives before they blew up a few years ago and started the world recession … it's funny how being in a position of moral authority often exempts someone from having to act morally.

Anyway, now we have the CEO of Bermuda Development Agency (David Cash) saying “The projected growth of ILS will directly benefit Bermuda, as businesses will be required to increase capital spending by hiring people and services in order to meet client needs”.

This is standard business jargon and also pure rubbish. In the science world they called it metatwaddle. A term I first saw used by the evolutionary biologist Richard Dawkins.

Now I don't personally know the BDA's CEO but it would be very strange if he knew nothing about capital expenditure, or the difference between capital and revenue expenditure.

Capital expenditure is definitely not expenditure on hiring people and services. If that was the case then all businesses can capitalise their monthly wage and consulting bills and profits would soar.

Businesses would love it and hire audit firm consultants to give it their blessing and to figure out how to make another unproductive product out of wage bill profits to market to some poor pension fund.

Here are other metatwaddle quotes from the same article by different business elites:

“ILS is an exciting industry for Bermuda as it aligns perfectly with our responsiveness to an ever-changing business environment and highlights our drive to maintain the Island's position as a leading domicile for financial services and worldwide centre of excellence for ILS and Convergence.”

“The increased use of Bermuda and the BSX for existing and new launches indicates that critical mass for which Bermuda is known in the reinsurance industry is spanning into its ILS/ART sector.”

“Bermuda continues to see increased interest from investors on a variety of Bermuda-based reinsurance structures and partnerships. We are looking forward to another great networking session in Bermuda in November where risk takers and risk makers will converge.”

Try goggling “corporate jargon generator” and have a good laugh. I'm not trying to have a go at the people saying this, because they made it easy to do so, I'm seriously asking why say this kind of gobbledegook?

I'm not sure any of them knows why either. They might all simply be relaying what someone else said at the last cocktail party.

And that there is a problem. When those who role it is to question and critique use metatwaddle and make the issue more confusing or even worse, jump on the commission bandwagon and bless things while using metatwaddle.

Using metatwaddle reveals an intellectual laziness on the part of its user, ie by making something confusing it becomes hard for others to question or to form an opinion.

Also, don't think that ILS is far removed from the average person and is only the concern of boardrooms trying to create money out of nothing. Here is a partner in Ernst and Young Bermuda as recorded in an article in The Royal Gazette on March 10: “There is lot of interest from pension funds”.

ANTHONY DONAGHY

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Published March 18, 2014 at 9:00 am (Updated March 17, 2014 at 7:16 pm)

Why say this kind of gobbledegook?

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