Submitted by Sylvan Greenidge (former BLP Press Secretary)
During a debate in the House of Congress in the USA, a Senator told a witness who was giving evidence on the application for the bailout of Commercial Banks words to the effect that if a light was spotted for the witness he could not find his backside even if he used both his hands.
The Senator’s assessment of the witness perfectly fits Looking Glass and the comments attributed to him in a post dated January 10, 2010 under the headlines Using Economics For Political Ends Can Be Destructive. He commits the very sin for which he accuses Mr. Mascoll. He has attempted to use politics to cover up the sordid economic mess being created by this intellectually bankrupt Democratic Labour Party.
To cut through the dribble posted by Looking Glass I have pulled out some bullet points from his post that are in my opinion largely misrepresentations made completely out of his total ignorance of the subject economics.
Let me from the outset David inform you and BU that Looking Glass is no match for Mr. Mascoll. In fact he has failed to demonstrate that he has a full grasp of first year mathematics farless elementary economics. Looking Glass writes, “Critics and the defeated should devote their energy to formulating a definitive plan to rescue the sinking ship”.
This is one point on which we can both agree. Barbados’ economy (ship) is sinking and may I add – it is sinking fast. Thompson and the DLP said in their election campaign that they had the solutions to the country’s problems so please get on with the business at hand. DO NOT expect any assistance from the BLP. You said that they were corrupt and their shelf life had expired. We have therefore taken our place. The people elected the DLP to lead and they should lead and stop begging for help.
Looking Glass continues, “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”.
All that fanciful vernacular above has said is that all developing countries like Barbados must become more creative in developing policies and programmes to stimulate their economies. When the BLP took office in 1994 it was against the background of almost 30% unemployment, limited foreign reserves, zero investment confidence and low morale in the public and private sectors.
By the end of 2007, our economy was transformed. Embracing the Party’s theme “Job #1 is Jobs” we witness over thirty thousand jobs being created, foreign reserves rose from $13 million to over $2.7 billion, a spanking new financial services sector was created and investments flowed as a result of the overwhelming confidence expressed by foreign investors.
For example in 2007, direct foreign inflows stood at $1.5 billion. By the end of 2008 that figure fell to a mere $320 million – a loss of over $1 billion and for 2009 these inflows were only $68 million. This can be attributed to the DLP’s aversion to foreign investment and the signals sent abroad to potential investors – a stance for which they have since the last election started to reversed themselves. That is what Thompson’s trip to England was about – begging foreign investors to please come back to Barbados. His new found interest in Four Seasons, the Marina and the Apes Hill project is testimony of his change of heart. Crass ignorance in understanding the role that foreign investment plays in the development of small developing countries like ours has led to our inability to earn the foreign exchange needed to maintain the standard of living to which our people have grown accustomed.
Another example of this Government’s poor management skills and lack of creativity can be also be found in our tourism industry. In 2003 our tourism receipts stood at $1.3 billion.
2005 – $1.8 bill an increase of 20%
2006 – $2.1 bill an increase of 19% over 2005
2007 – $2.4 bill an increase of 15% over 2006
2008 – $2.2 bill an increase of a mere 1% over 2007
2009 – $2.2 bill a fall of 10% over 2008.
The rest is history. This miniscule increase in tourism receipt has occurred even though reports from the CTO reveals that tourism arrivals to the region has remain constant at around 22.6 million visitors annually. Barbados has simply not managed to attract the numbers it customarily did over the years. The lack of creativity at the BTA and the lost in direction on key policy initiatives at the Ministry of Tourism can be attributed to the poor performance of this sector.
Looking Glass further writes, “The population grew by 30,000 plus expatriates and with it the changing colour of hotel and related workers”.
Once again Looking Glass merely regurgitates one of the bold lies told by his Party to mislead the electorate in the last general election. What are the facts?
How do we determine population growth? There are a few formulas to remember.
- Natural increase is birth minus death.
- Increase in population = natural increase + arrivals – departures.
In 1994 the Barbados Economic and Social Report recorded that our population stood at 264,300 persons and by 2008 that figure grew to 275,300 – an increase of 11,000 persons.
Note that the population increased by only 11,000 persons and when you take into account the formula for determining population growth it is clear that the figure of 30,000 Guyanese or any other nationality coming into Barbados is a myth – nothing more than a bold white lie.
For Barbados’ population to grow by 30,000 non-nationals our current population would have to be 305,000 persons. Since the current population is 275.300 and taking into account the formula given above then over 31,000 Barbadians would had to have left Barbados over the period between 1994 and 2008 to make way for the 30,000 non-nationals coming in. Where is the evidence of that exodus of Barbadians leaving and where is the evidence in the statistics of the Barbados Economic and Social Report to support the influx of 30,000 persons.
Cut out the political rhetoric Looking Glass and give Barbadians the proof of the 30,000 non-nationals in Barbados. Gone are the days when what the so-called informed spoke without being challenged and I challenged you to produce the evidence.
Looking Glass pours out even more political rubbish when he wrote,
“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”.
From the statement above it is clear that LG does not have a clue of what he writes. The national debt, as at October 2009, now stands at $7.3 billion. That figure represents Government own debt. When one takes into account the public debt, as at the end of 2008, which represent debt owed by the private sector and Government and this includes the foreign component that figure stands at $8.3 billion.
Where did Looking Glass get his generous figure of $20 billion from? I honestly do not feel that LG was trying to be mischievous when he quoted the figure I sincerely believe that he is simply out of his depth on the subject of economics. If Barbados had a $20 billion debt one of two scenarios would have to be at work:
Firstly, Barbados would definitely not be able to service the debt and would most likely be classified a hipic country. Our debt would be nearly 300% of GDP and only God could help us then.
Secondly, for Barbados to have a $20 billion debt it would have a $20. billion economy (if the debt was 100% of GDP). It would be a country that none of us alive today could imagine. The level of transformation in Barbados would be equivalent to living in “heaven” or as they say in economic parlance we would have reached the “golden age”.
Our current national debt is an accumulation of debt dating back decades of successive BLP and DLP Governments. To say that the DLP’s contribution to the current debt is less than $3.billion is clear proof LG’s depth of ignorance in understanding economic matters. You have to take into account not only this DLP administration but the others that went before.
Finally, one gets the impression that LG is, as all Barbadians are, concerned with the country’s high level of debt and speaks to it as though it is an abstract matter. Let me say from the outset that debt is never the real problem but rather the ability to repay it – a point reinforced by the Rt. Excellent Errol Barrow many years ago.
Ever since full internal self government Barbados has had to chart a course for its development and has had to indulge in debt accumulation to drive that development. Successive Governments in the past have tried to contain the debt within reason but the more our people demanded from the state the more the state had to find the resources to satisfy the demands.
Demands on our health care system to provide for our elderly, children and chronic diseases, the pressures on the educational system to meet the new challenges of a more educated work force and to respond to the global market trends, the demands for improvement to our infrastructural development, all place greater pressure on Government’s resources.
Recently Dubai was thrown into the melting pot of countries that are experiencing economic difficulties. Their problem stemmed largely from an inability to service their debt which now stands at $59 billion. Economic commentators around the world do not feel that the Dubai experience is long term. They are of the view that the debt will easily be refinanced and the assets derived from the money Dubai borrowed will pay for its economic recovery.
Dubai barrowed heavily on the international financial market when it was financially prudent to do so. They used the money to develop their country’s infrastructure, improved the technological capabilities of the country and raised the standard of living of people.
Veronica Chapman, an Englishman and a long standing a real estate agent in Dubai said that when she moved there thirty years ago, Dubai had three main roads. It was all sand and dessert, no air conditioning in hotel rooms nor milk and bread . Today Dubai has been transformed but at what price? The price is high debt but the assets derived from that debt will be the source from which that country earns its way out of the debt .
In the case of Barbados the DLP cannot show proof of how it spent the over $2 billion that it increased our national debt by. Not a single asset has been created. In fact we are now borrowing money to pay salaries and send Thompson and the others on joy rides around the world.
Looking Glass failed or simply does not appreciate the impact of the WTO’s regulations on trade linearization and the negative impact those regulations have had on the revenue earning capacity of developing countries like Barbados.
Countries like Barbados earned billions from duties on goods and services from international trade. Today such revenues are lost as a result of WTO rules. Coupled with this is the fact that developing countries like ours have now been graduated, resulting in their inability to access concessionary funding and soft loans. There is now little or no grants to facilitate development in these peripheral societies. In fact, some countries pay out more in interest and amortization fees than it receives in loans. Much needed revenue has been lost as a result of the removal of duty on foods coming into the region.
All these things have combined to reduced the levels of revenue for small developing countries while the demands for improve standard of living from their people continues to rise.
Looking Glass, if you want to seriously participate in the intellectual discourse in this country you will have to be more thorough, truthful and mature in your commentary. Access to information is no longer confined to an elite class.
In closing let me strongly recommend to looking Glass that he reads the latest report of the Central Bank Governor on the state of the economy and then maybe he would want to rewrite the nonsense posted on this blog earlier this week.
The blogmaster invites you to join the discussion.