Submitted by Looking Glass
These days Bajan politics can be likened to a jungle echoing the calls of vicious jealousies and ruthless combat between politicians: a salon to satisfy the vanity and frustration of the defeated. Morality so thin the wisdom said to be entombed in their ideals becomes encrusted with deception and “fraud.” Self-esteem seems to come from the pursuit of narcissistic self-indulgence and self-aggrandisement. The dialogue that we as a nation need to have about our socio-economic condition is being replaced by tainted politics, becomes inchoate and ultimately detrimental to both Party and country. Critics and the defeated should devote their energy to formulating a definitive plan to rescue the sinking ship.
As noted in the Nation (20/12.09) the economic prospects for 2010 by the Prime Minister and Clyde Mascoll represent the economic and the political ends of the spectrum. Given the hand he was dealt, and compared to some countries, the case can be made that the Prime Minister had not done all that badly. I am not suggesting that his was a stellar performance, or that the administration is without blemish. But unlike other countries he inherited and empty bucket with which to water the garden and no Barley Loaves to be blessed.
Regarding economic sovereignty a heavily indebted country can’t win. “Its economy becomes unevenly controlled from outside through the subordination of all productive investment and debt” (A Fate Worst Than Debt), more so where reliance is on a fickle tourism sector and not much more. All things considered survival demands that the Prime Minister will have to borrow and go deeper in debt in order to keep the ship afloat; which has been the rule rather than the exception. To be able to access capital markets in order to manage our external position comes at a price, but at least he will be able to pay salaries, pensions etc. Optimism doesn’t supply jobs or retire the debt, but delays degradation and passage to the madhouse. Folly apart, it is about the only luxury we have.
On the other hand Mascoll confines his ‘analysis’ or focus to the 2 years of the DLP rule which, while political, is misleading and sends the wrong message to an unsuspecting public. His is a convenient reading of the IMF Reports, a political use of economics intended to feed an unsuspecting public ‘tainted’ information with which to blame the current regime which is at best disingenuous. Perhaps unintentionally he is nurturing the seeds already sewn on the breeding ground fashioned by the last administration for social unrest and disorder and which will “rock the very foundation.” (Bajan Economy: Crisis & Stimulus)
One is inclined to believe the DLP inherited a relatively sound economy. “The DLP is the wrong government at the wrong time.” Is it accidental that the comments of some critics of the present government reflect the tone and substance of his utterances? Perhaps one should revisit Candles Under The Bed . LG was weaned on Wallerstein, Myrdal, Frank et al., and possess the complete works of Kahlil Gibran.
He downgrades the “condition (the economy) to fiscal crisis, which if unchecked, would precipitate an economic crisis…Barbados does not yet have an economic crisis, the economy is in recession” (Nation 29/12/09), and forecasts a two year a current account deficit increase in excess of $250m by March 2010. (29/12/09) Mr. Mascoll, a recession is two successive quarters of negative growth. Crisis obtains when the economy is “unsustainable,” cannot service debt and short on job and revenue generating activity. Stop splitting hairs to score political points. As stated before we were in crisis before the global meltdown. (Stimulus: More Debt And Dislocation)
According to the 2006 IMF Report the challenge to sustainability (sustaining economic growth) would be to “address the macro economic imbalances, including a high level of public debt, large fiscal and external current account deficits, and declining international reserves.” It likened the economy to “a breeding ground” for social unrest and disorder, and “suggested the encouragement of (more) foreign direct investment. It also noted “weaknesses in statistical information” including “coverage and transparency of data on public service entities and capital account transactions needed to be improved.” The Report also endorsed the government’s intention to further privatize the tourism sector (sale of Gems)…identification of potential assets that could be divested in the near term…improvements in the buying and selling of real estate,” and projected a debt/GDP ratio of 75% by 2011. (Candles Under The Bed)
The 2008 Report warns that higher cost for oil and food will widen the current account deficit to 8 ½ % of GDP,” and reminds us that “Barbados lacks scope for development and is vulnerable to external shocks…dependence on tourism and a few other services expose it to geopolitical tensions and cyclical swings.” All of this before the DLP took office.
Now forget the disastrous cricket world cup, flyovers and roundabouts etc that increased the incidence of road accidents. Under the flawed stewardship and wanton mismanagement of the last administration the four most important and productive assets went the way of the National Bank. More foreign banks were allowed in and ownership of the Oval remains a secret.
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Very little job generating value-added production came on stream. Direct foreign investment was largely tourism related: hotels, golf courses, villas, houses etc. The population grew by 30,000 plus expatriates and with it the changing colour of hotel and related workers. Among other things they increased demand for local utilities and the cost to the locals. When the socio-cultural cost is factored into the mix the net benefits from tourism and related investments will likely be much less than suggested.
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Those familiar with the Atlantis Hotel will recall Bathsheba as the Bajan Monaco. Even local whites vacationed in the area. Tom Adams said ages ago, and Dipper concurred, that Bathsheba would not be given over to foreign development. (I believe there was a moratorium to that effect). Today the last vestige of Bajan socio-cultural heritage is about to give way to the proposed yachting facility, villas and other things foreign and white along the entire East Coast from Morgan Lewis to Merricks. In the next decade or so we will likely be encased in a permanent white shell with no place to go or swim.
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And then there is the good old National Debt. Assume accumulated debt in the 1993-2009 period to be $20bn (I am being very generous), the DLP contribution is surely less than $3bn. If debt had narrowed to 6% pf GDP in 2006-7 as suggested sustainability would not have been a problem. The 2008 IMF Report would not have projected the “75% debt ratio,” and the 2009 recommendations would have been quite different (The Debt Problem, Walking On Thin Air) This basically is what the present Prime Minister inherited: an empty bucket and no Barley Loaves to be blessed.
Mascoll reports that the economy will be tougher and unemployment is expected to rise (10/01/09), which was already stated in the 2009 Report, and that the economy was operating at close to full employment. Without illegal immigrants “the unemployment rate would have been virtually zero at the end of 2007.” (7/7/09). It didn’t happen during the height of mass migration. There is little in the IMF Reports to support the assertion. The government, “locked in an IMF-type austerity programme” is being “encouraged to borrow from foreign sources.” (9/28/09). Mr. Mascoll we were in the arms of the IMF before you crossed over. How else would you obtain the money needed to pay pensions, salaries and keep the ship afloat? Borrowing from “domestic sources” (public not private institutions) is like borrowing from oneself. It invites liquidity and social problems while leaving the wound to fester. (Indebtedness: No End In Sight ). Such funds treated as revenue raises questions about the GDP.
The 2009 Report dealt with the impact of the global meltdown, not the cause of our pre-crisis state. The fiscal adjustment recommendations contained therein are not new (see earlier reports). They were designed to ensure sustainability i.e., that debt will be serviced. They were not intended to generate jobs or increase productivity and won’t bring more tourists to our shore. We have no value-added job generating base to stimulate. No stimulus can temper greed, corruption, lust for power or compensate for the human factor.
The economy is “expected to contract by 3% in 2009…International revenues declined in recent months, reflecting lower tourism receipts and private capital inflows (hotel/villas investment), but were boosted by a successful international bond placement (a form of borrowing)….Widening fiscal deficits in recent years (pre 2007) led to an increase in public debt to 106% of GDP at the end of 2008.” It warns that “recovery in tourism will likely have to wait for a resumption in employment growth in advanced countries.” Output is expected to contract by 3% in 2009 and to “remain virtually flat in 2010 while the unemployment rate is likely to increase further….the risks to the economic outlook are mainly fitted to the downside.” To put it nicely we are in a protracted recession
The above suggests a) the economy is in very bad shape b) the last regime not the present administration is largely responsible. Power at any cost: using economics for political ends can be detrimental for Party and country. Let us start the new year right. Join forces, identify systemic causes and design a Programme to correct them and move forward. A country unable to substantially feed its population remains behind the eight ball.
The blogmaster invites you to join the discussion.