Many Barbadians have been disappointed that the many products of our “free” education system are satisfied to return to society and be “servants” of the system. The lack of involvement in societal issues with a view to making the system better as a consequence of their higher learning is one of the greatest disappointments which BU has experienced post-Independence. In the BU household we have always stressed the importance of giving back to the society in whatever form.
BU’s customary preamble was inspired by a letter which was submitted to the editor of the Nation Newspaper by Professor Michael Howard of the University of the West Indies. The late Wendell McClean, Stan Reid, along with Frank Alleyne and in more recent times Don Marshall and Michael Howard are the notable exceptions of academics from the UWI who have ventured into the public domain to offer perspectives on the many social issues shaped by their exposure to higher learning and research. We find Professor Howard’s letter very interesting because many of his points are coterminous with how the average Barbadian is currently feeling about the same issues.
Professor Michael Howard’s Bio for those who may want to question his authority to lecture Prime Minister on the subject of Economics.
Capital Outflows and Exchange Controls Liberalization
I HAVE BEEN AMAZED at the almost uncritical acceptance of the free market doctrine by the directorate. The preoccupation with the CARICOM Single Market and Economy (CSME) has been associated with the removal of some exchange controls. However, freeing the market for capital transactions can only guarantee growth if capital inflows exceed outflows.
If capital outflows are larger to the rest of the world, complete or substantial removal of exchange controls will lead eventually to a depreciation of the Barbadian dollar. Theoretically, complete capital account liberalisation is incompatible with a fixed exchanged rate.
Fierce loyalty to the CSME has also led to a soft policy on immigration.
It does not take a degree in economics to know that immigration in a small economy should be controlled. Uncontrolled immigration will have a significant negative impact on real wages, social services and the level of crime. Further, emigration to some Caribbean countries is not an option for most Barbadians. Migrants are normally not attracted to economies with lower real wages, destabilising exchange rates and higher levels of crime.
It also seems that we have not learnt from the colonial experience. The directorate has jumped on the bandwagon of market liberalisation and has permitted the sale of prime real estate to rich foreigners. This is one element of the “recolonisation” of Barbados. The high demand for prime real estate by rich foreigners and locals bids up the overall market price of land in fixed supply.
The unrestricted sale of land to rich foreigners, despite its short-term foreign exchange gains, can never be conceived as a sustainable development strategy. The chief causalities will be the landless members of the younger generation. The other element of “recolonisation” is the dominance of transnational capitalism, especially seen in the profit-maximising behaviour of commercial banks. In the context of market liberalisation, the excessive profitability of the banking system over the years has largely gone unnoticed. Unlike banks in North America and Europe that maintain relatively lower ratios of net income to total assets, some banks in Barbados have been characterised historically by higher profitability ratios.
Excessive bank profitability is a reflection of high gross margins. Some banks have historically extracted high economic rents from the economy, because of substantial spreads between deposit and loan interest rates. To sum up, Professor Joseph Stiglitz was correct in his argument that market failure is pervasive in these economies. The market failure approach to economics seems not to have been learnt or understood
by the directorate.
BU hopes that Professor Howard does not mind us reformatting the article to provide what we hope is easier reading for the BU family. The Professor has in our view clearly and in simple terms ventilated on key concerns which are currently resonating with a very silent Barbados public. We say silent because it is BU’s view that the Barbadians living overseas and those who have returned after many years are the individuals who appear to want to discuss and agitate for accountability from our public servants – yes indeed we wrote public servants because we often wonder if roles are not switched around sometimes.
The educated Barbadian, the product of a free education system, seems to be quite happy to continue being servants of the system. BU will continue to ask the educated Barbadian – are you satisfied to remain in your comfort zone and to remain silent, while important decisions are being made by your politicians which will have implications for generations to come?
All Barbadians should insist that we desire from our government to come and as described by the great US President Abraham Lincoln, a government of the people, by the people, for the people, so that our freedoms as we have enjoyed post-independence shall continue for our next generations to enjoy as well.