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Look Where The 1.5 Billion Gone

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Submitted to BU as a comment

Credit Photo:Bajanfuhlife Blog

There is no great mystery to the 1.5 billion.  The borrowing is the price for keeping the employees in government and statutory corporations employed during a recession, providing the same level of access to social services (like free university education, bus fares at 1.50), providing support to the hospitality industry and a modest fiscal stimulus.

Wages and salaries were 783.7 ml in 2008 and and 881 ml in 2009.  Transfers and subsidies (payments to the university, community college, QEH, BTA, Transport etc, to subsidize their salaries and other costs), were 1,075 billion in 2008 and 1.135 billion in 2009. Capital expenditures (which Ince does not seem to understand) were 286ml in 2008 and 283 ml in 2009.

To put some context the salaries and wages bill was 797.6 ml in 2007, transfers and subsidies were 901.7 ml in 2007 and capital expenditures were 241.4. Our fiscal problems did not start with the new administration.  The recession and hence slow down in revenues shows how vulnerable the economy is on the fiscal side.  The fact that the previous off budget spending is now clearly highlighted also means that we can observe the issue more clearly (no more Greece style accounting).

Now when professor Howard suggested that we slow the rate of increase in UWI students he was nearly crucified.  I noted that Mascoll (who works at UWI) took that off the table as a corrective measure, despite the fact that UWI is one of the largest transfers.

When Robinson spoke of a vat increase he was cursed out of town.

When Estwick said wage freeze he was shouted down by the unions in particular.

When Owen said that we needed a large fiscal stimulus people said what a great economist he is (he needs to explain how a large fiscal stimulus is compatible with a moderate fiscal deficit).

Motley has said that wages in the public sector are not to be touched.

Can someone please tell me how we are to solve the fiscal problem and meet all the above demands?

In my opinion the government has carried the economy for two years of recession and we have all  benefited.  Whatever you think of Hartley he is right on the employment statement.  unemployment at 10.6 % is a great achievement in the current context. However, I don’t think the government can continue this for much longer, it either needs to make some further spending cuts and/or raise taxes.

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153 responses to “Look Where The 1.5 Billion Gone”

  1. Trained Economist Avatar
    Trained Economist

    I think the headline is a bit unfair. The writer seems to be arguing that the 1.5 billion is the cost of a counter cyclical fiscal policy in the face of a deep and long recession. Its not just about public sector jobs but keeping access to uwi at the levels people seem to want, keeping access to health care etc..

  2. Avatar
    Anonymous

    do we prefer the increase in the deficit or mass public sector layoffs and commercially priced public services?

  3. Trained Economist Avatar
    Trained Economist

    Some of that money has gone to help keep a number of small hotels open as well. So lets be careful how we scoff at things.

    I agree with the writer that the support for the economy from the government cannot continue indefinitely.

    Are we ready to make sacrifice for long term gain?

  4. Conrad Avatar
    Conrad

    Anon finally admitted it in the last paragraph. The current situation policy is unsustainable, and they either have to raise taxes or cut spending.

    I dont accept that the rising subsidy to the transport board, to QEH to UWI and a host of statutory corporations was preferable than limiting the rise in unemployment. This isn’t about carefully calibrated, one-off, emergency, employment schemes it is about waste.

    The Government worsened the recession by raising tax rates in 2008 and 2009. These higher tax rates meant that despite recession, Government tax revenues were remarkably steady at $2.5bn. So our fiscal deficit could have remained the same at the 2007 level of 1.5%, but except at the same time current expenditure spun out of control, rising by 25% in two and a half years leaving the deficit at 9-10%.

    If this 25% rise was due to unemployment benefits you could say it was the price to be paid for social cohesion, but those numbers are in the National Insurance not Government deficit.

    If it was 25% expenditure on new infrastructure, schools and green energy you would say this is an employment-boosting investment in our future.

    If it was a 25% expenditure on a massive, thought-out, employment program that you might say that was a price to be paid.

    But how many jobs were created and how efficiently? If they created 5000 jobs if would have cost $100,000 per job. If they created 10,000 jobs it would have cost $50,000 per job and unemployment would be lower than in 2007……Didn’t happen did it?

    That is the problem about a stealth stimulus package out of sight, out of scrutiny of central government and in the hands of board packed with the likes of Senator Ince.

    In two and a half years we have increased tax rates, increased the deficit to almost double digits, increased the public debt by $1.5bn, increased unemployment by over 3000 workers and the Government and its friends are patting themselves on the back while asking others what the size of the GDP is. No wonder those nincompoops at the rating agencies are going to downgrade us to below investment grade to “junk” status. I hope that makes everyone in the Ministry of Finance really proud.

  5. Christopher Halsall Avatar
    Christopher Halsall

    @All… I’m just being pedantic here…

    But…

    $1.5 billion is $6,000 for each and everyone here in Bim — if it was evenly distributed. (Assuming we are 250,000 people (we all know we’re slightly over).)

    But, since this is “our money”, this also means we are each and all exposed to $6,000 debt for this exercise. Assuming the exposure will be equally evenly distributed.

    Who’s going to pay for this? Our descendants….

  6. Anon (2) Avatar
    Anon (2)

    The civil service in Barbados is top heavy in the extreme. It is a monstrous gaping maw with a voracious appetite chomping on the public purse. Is it good value for dollar? No! Is there any oversight? No! Most of those in the lower to mid level positions are not even qualified for their jobs. They milk the public purse while making minimal effort. Go to any government department to conduct the most routine of business and it takes all day and then some. These people stroll and sashay about gossiping amongst themselves while ignoring the taxpayers who pay their salaries. The whole lot of them should be fired out the door.

  7. David Avatar
    David

    @Trained Economist

    Your point is taken.

    Thanks Chris…lol

    David

  8. David Avatar
    David

    @Conrad

    I dont accept that the rising subsidy to the transport board, to QEH to UWI and a host of statutory corporations was preferable than limiting the rise in unemployment. This isn’t about carefully calibrated, one-off, emergency, employment schemes it is about waste.

    The above statement maybe theoretically/technically correct but to cut budgets to the state bodies in question would have to see an immediate commensurate improvement in the management of said state agencies. In other words if you cut on the basis there is wastage and leave the same inept management practices in position what would you have achieved?

  9. Avatar
    Anonymous

    nGodd post conrad.

    Your comment about the tax increases in 2008 reflects why I hate having arguments about economics and with economists. How do you prove one way or the other that the budget of 2008 (the 2009 budget had no new taxes) made the recession worse? There is no counter factual, we cannot prove that one way or the other. If you go down that line then we end up with opinions masquerading as fact. This is what a lot of economists seem to do. As a lay person barbados seemed to go into recession in line with its major source markets the us and the uk. In 2009 the economy declkined by 4.5%, in 2002 post 911 there was a global slowdown and the barbados economy declined by 4%. I think this global recession is a bit worse than 2002 so a 4.5% decline does not seem unreasonable to me. In 2002 the unemployment rate in barbadois was 10.7%, its 10.6 today. I remain unpersuaded by your argument as to the effect of the 2008 taxes.

    An analysis of the tables on government expenditures and revenues at the end central banks latest report ( a massive improvement on previous offerings) shows that in 2008 (when there was no stimulus, as far as I am aware), the deficit increased because goods and services increased by 75.9ml, interest payments by 80.4 ml, transfers and subsidies by 173.7 ml and capital expds by 45.4 ml.

    What constitues goods and services. My understanding is that it covers government utility bills and the other costs of running offices that provide services. The increase in goods and services in 2008 mirrors that of 2007, when expenditure on goods and services increased by 67.5. My sense is that the increases had to do with the increases in prices across barbados in 2007 and 2008 as a result of the global increases in food and energy prices.
    As capital projects are completed and the new facillities become operational the government faces a new set of operating costs. Economists like to focus on the economic benefits from the capital project but they seem to over look the stream of revenue expenditures that arise from capital projects. For example, the running costs (goods and services spending) on the new halls of justice must be signficantly larger than those at the previous facility. Where does that money come from, I don’t think the new hall of justice is generating any more revenue than before. the same applies to the new prison, the new coast guard base and kensington oval and a number of projects.

    The increase in interest payments is non-discretionary and reflects loans undertaken by various administrations.

    Much of the work of government is now done in statutory corporations and government companies. The reality is that maybe except the port and the airport these entities have never been profitable and require massive subsidies and transfers from the government. UWI, QEH and the transport board are the largest beneficiaries, but lets not forget the water authority, BTA, kensington management company, udc, rdc and a whole long list of entities that depend on the government.
    The new government decided to clear debts at the water authority and BNOC (remember the massive overdraft to cover the energy subsidy, that the oppostion so loves). UWI has doubled its student intake since 2005. these students are already at uwi, was the government supposed to pull the plug on the persons already at uwi.

    Salaries and wages increased by 103.5 ml in 2007, not unlike the increase of 97.3 ml in 2009, contrary to your arguments conrad the wage bill actually fell by 13.9ml in 2008. Every couple of years, successive governments of barbados grant wage increases that have nothing to do with productivity. We are now paying the price for that, but can you stand up to the unions and stay in office?

    The point I am trying to make is that in my view a lot of expenditure in bim is structural. Unless you are willing to tear up the current structure you are locked into a lot of the wages and salaries and transfers. Unlike you, I am not inclined to lay blame on any administration, but rather the structure of government and the barbados economy. Its only when the tide goes out we can see who is swimming naked. The recession and correct reporting of government expenditure (credit to the central bank governor) is exposing a lot to us.

    I am not sure that during a recession of this magnitude is the right time to dramatically downsize government. The economists all seemed to recommend either a fiscal stimulus or at least no scaling back of govt spending, no new taxes. Theree is now a considerable split as to correct policy among economists. But they are a useless lot anyway.

    Conrad, would you say the same about the fiscal stimulus in the USA? Despite a massive stimulus, increase in fiscal deficit and national debt unemployment rose in the us and is still high.

    My own sense is that in a modern economy fiscal stimulus is about damage control. What would the unemployment rate in the us be if there was no stimulus? What would it be in bim if the government had not held expenditure steady and done a modest stimulus. I am suggesting that the deficit is the price for the modest level of unemployment across the economy. With the contraction in private spending government is driving the economy right now.

  10. Bush Tea Avatar
    Bush Tea

    It is called CATCH 22.

    As the bushman has been saying for some time now, the only way we could have managed to survive this INEVITABLE situation would have been to have the vision 20 years ago to plan for hard times, and the wisdom to work together for the common national good.

    We didn’t.

    As the writer of the blog has said, the DLP had the options of continued borrowing to maintain the unsustainable standard of living; Devaluation of the currency to structurally adjust the economy downwards; Massive layoffs in the public (and inevitably the private) sector areas; Salary cuts (a la Sandi 1991).

    In short, apart from prayers, and hope for lucky breaks, THERE ARE NO GOOD OPTIONS.

    Are the DEMS at a loss as to what steps to take?…….Hell YES!
    At this point even the PDC could be given the government for all the difference it would make.

    Are the Dems at fault for the $1.5 B increase in debt? Of course they are! …else they would have been at fault for 30% unemployment.

    Where did we drop the ball?
    …after Sandi was laughed at, and ridiculed -when he took one of the most visionary steps in government in recent times to defy the IMF; The Arthur government oversaw 15 years of glitz and glamour and DEBT that essentially discarded the age-old wisdom of saving during the years of plenty for survival during the hard times….

    What does one do, when handed the wheel of the Titanic -after it had already struck the iceberg?

    …….don’t try and find a life boat…..!!!

  11. David Avatar
    David

    It seems those of us who are not party hacks agree that problem with the Barbados economy is structural which again has been exposed by a recession. This time around the protracted nature of the global recession would have exposed the counter-cyclical measures Arthur resorted to at times like these. We continue to hear many of our leading economists going down the political line, what a waste of a good education system!

  12. ac Avatar
    ac

    @BUSHTEA

    after reading your comment. I have decided to go to my bed ,pull the blanket over my head and never look outside again! Doom and Gloom

  13. David Avatar
    David

    @ac

    Bush Tea is echoing what many have been shouting for a long time. The level of consumption in Barbados is unsustainable given our almost total dependence on tourism and FDI. Even Arthur recently was heard to opine that the cost of government has become very expensive. The free ride which Barbados has had in the past with quotas, preferential treatment etc. Even if the US/EU economies improve tomorrow it will take close to a year to trickle to Barbados.

  14. George Reid Avatar
    George Reid

    I’m tired off all you blasted armchair critics/commentators who never had to spend a day worrying about whether the government that you spent 33 years keeping afloat would be sent through the eddoes by a bunch of neophyte political nincompoops. Bajans have been known to act with commonsence and take their medicine when they realise that nothing else will work. SO BRING ON THE EMPTY HORSES!!

  15. ac Avatar
    ac

    Yeah! But can we talk about sensible solutions insteading of echoing the same old tired nothingness. I think it would help to know that their is some kind of light at the end of the tunnel. Instead of knowing their is no life boat. We Bajans as the PM said are resilient and we believe in Life after death. I’ve got to believe that!

  16. George Reid Avatar
    George Reid

    @Bush Tea

    “after Sandi was laughed at, and ridiculed -when he took one of the most visionary steps in government in recent times to defy the IMF;”

    Bushie seems as if you have bought into an unban legend.

    BTW I should reconsider my previous rant. Some commentators like Anonymous seem to have a modicum of non-economic common sense [Imagine I was so angry that I spelled the word wrongly before!]. Incidentally, I wonder what is to be gained by continuing to demonise the IMF. Should we not, rather, ask ourselves what corrective actions would the IMF recommend; what additional resources would be brought to the table by successfully implementing an agreed IMF programme; and conversely, how much worse it would make the GoB’s position (and,,in consequence, the position of Barbados) if it wrangled itself into a programme with insufficient “buy-in”, and then failed in implementing it. Wait, I talking ’bout Barbados, or Jamaica…?

  17. BAFBFProundtable1000@yahoo.comhttp://www.zhongwen.com/ Avatar
    BAFBFProundtable1000@yahoo.comhttp://www.zhongwen.com/

    My family pay for our private security, our private school, we pay for private garbage disposal and private hospital. We collect our water from the rain. We do not need Civil Service. We say good bye to this service years ago. Now we don’t see need to pay tax. (If we get in trouble my familly will pay for Judge as well…)

  18. David Avatar
    David

    @ac

    We are in deep doo doo. There are no solutions per se. In the short term the government will have to take some very unpopular decisions. Do our politicians have the will? They will have no choice, if they don’t the IMF is waiting. We have to cut government expenditure in a very drastic way. People will probably have to go home. There is no light at the end of the tunnel in the near term. As stated earlier if the US economy improves drastically tomorrow it will take time for global economies like Barbados to rebound. Barbados is facing another downgrade from the credit rating agencies. It is bad. All the solutions which have been offered on BU and elsewhere cannot change the fact successive governments have REFUSED to put our economy on a different footing. We have to pay for it now.

  19. BAFBFP Avatar
    BAFBFP

    You see my real name translate in the English.. It is not pleasant no..?

  20. BAFBFP Avatar
    BAFBFP

    “successive governments have REFUSED to put our economy on a different footing”

    This is what you get when Lawyers, Economists and Doctors ruin things… that should be run things (forgive me the English..) These people are most comfortable when there is adversity… It is how they make their livinghood

  21. Bush Tea Avatar
    Bush Tea

    .@ ac

    The first step needed in dealing with a challenging situation is to honestly face the REALITY that confront you.

    The best option for our (and many other) nation now is for us to collectively face reality; accept that we face a challenge unlike anything before in history; and take the bitter pills together.

    The problem so far has been the idiot political posturings by the usual political yardfowls trying to score childish points. ….with one side claiming mismanagement and incompetence while the other seeks to fulfill unrealistic promises.

    The big joke is that we are on the same boat together – yet one gets the distinct hint of gloating by some…. There is obviously nothing wrong with criticism by the opposition, however it is obvious that this government was banking on the predictions of almost all the ‘experts’ two years ago who were predicting a turnaround in global economic fortunes by now…… (even MME was guilty of this optimistic outlook)

    If they had cut back in 2008 we would be hearing that they were using Sandi’s medicine all over again…

    We need to set new realistic priorities for ourselves.
    We have to look to establish ways and means to sustain our basic needs while tightening belts and cutting out unnecessary luxuries.

    …..but first of all we need to stop wasting time and energy bickering on our boat.

  22. Bush Tea Avatar
    Bush Tea

    @ George Reid

    Skipper, Bush Tea does not normally engage such high flying academic minds as yours – and for good reason;

    … first thing is that I have to read such posts multiple times to understand the gist, and I have to have my dictionary handy….. I still here trying to grasp your post @ 6.37 LOL

    But you REALLY serious though? You would suggest that we should SEEK OUT an IMF solution at this point?
    You REALLY do not get the significance if Sandiford’s stand in the 1990’s against the IMF?

    ……You is another George Reid?

    Do you not see the drastic difference between IMF prescriptions for countries like Barbados (and Jamaica /Guyana / Argentina ) and their dealing with places like the USA, Ireland etc? You would PROACTIVELY put this country in IMF hands??

    …If you are really saying so in your above post let me know…..
    …. but as I said, I may have misread the gist of your rant – cause I is only a bushman.

  23. BAFBFP Avatar
    BAFBFP

    And why not the IMF, It seems cool be able to blame a outside woman, that should read party, for all of your corrective medicine that not taste so good no..?

  24. Black Business Avatar
    Black Business

    David,

    I agree with you.

    We have put off the radical decisions necessary for too long.

    It is said that it takes a crisis to force us into difficult decisions. That it is hard to get people to do difficult things when they dont feel forced to do so and where the alternative of doing nothing seems perfectly fine.

    Well, this is the moment. We have our crisis. The question is how bad do we want it to get before we take a radical look at our public services.

    We need options where we want maintain access to quality public services, especially for the disadvantaged, but that these services – education, health, transport, housing, water, sanitation, are delivered more efficiently and more cost effectively.

    I like the idea of linking these reforms to building a black entrepreneur class by creating opportunities for businesses to deliver some of these services more cost effectively.

    Has anyone else noticed Prof Persaud starting to talk about some of these ideas as a solution to our fiscal predicament? On the call-in he talked about auctioning bus routes to driver co-operatives. I have heard him before talking about auctioning sanitation services to work crews and loan-guarantees for UWI where the government only pays the interest in full when graduates live in Barbados on low incomes. I am sure there are issues and challenges with each of these radical solutions, but lets start talking about it, discuss how other people do it elsewhere and lets create a mood in which government and opposition alike can start adopting ideas like these rather than playing the same merry go round of blaming each other.

  25. Avatar
    Anonymous

    If we look back at the 2002 (post 911 recession) we see how similar things were despite the BLP posturing. On an IMF basis the non financial fiscal deficit was 12.8% of gdp. Off budget spending was 6% of gdp. That was the effect of the much vaunted BLP counter cyclical policy that “successfully guided barbados through that recession. I am no economist but it seems that the new govt is following the same playbook but what is appears to be different is the depth and length of the recession. Whereas the post 911 was a short sharp recession, followed by a swift recovery in the global economy, this is a long deep recession.

    Now 2002 barbados’s gdp was around 5 bl, 12.5 % of that is around 600ml. Now imagine doing that for a couple of years and you can easily gey 1.5bl in debt.

    I still recall Owen Arthur in the budget debate of 2009 calling for a similar program and saying that he knew the government could not do it on budget.

  26. BAJAN TRUTH Avatar
    BAJAN TRUTH

    @ Bush Tea
    Does it make more sense to put your money on the bank or under a mattress as savings when you have 3000 school children every year needing jobs, you have a LOME agreement for sugar ending, you have WTO rules removing the protections that our companies had and guaranteed earnings. Should you initiate projects that build capacity to attract offshore business – renewal of the infrastructure of b’dos; renew the tourism product (which quite frankly I was ashamed of seeing what we charge) – airport, seaport, hilton, gems, harrisons cave, concorde, boardwalk, sewerage project; start new industries -professionals ervices industries, culture, cotton, health tourism etc etc. the list goes on. So that as they developed and businesses were able to take advantage of opportunities, they would generate jobs and foreign exchange and the continued growth of those that succeed would provide for the future. Tell me which makes more sense. Arthur would have deserved to be hung and quartered if he had done something that irresponsible, as to stash it. Right now we are losing that 1.5 not to building productive capacity that will help the future. They deserve to @#%#@#$ Which country you know in 2000-2010 had cash reserves and no debt – China. Anybody else?

    @ Anonymous 5.45pm

    How can you prove that the increase in taxation impacted and deepened the recession? did the cost of gas go up, did cost of licenses go up, did they take more form your pay pack in taxes; if you had a shop your fees went up. Now you may not hav enoticed ut behind that the cost of goods went up – food went form 15 to 25 dollars at Oistins and the other food places where I eat; supermarket prices gone up, my wife and I had a rela little ting because she came home with groceries at 900 dollars when she is accustomed paying 550. I tohugh she hadbought caviar. The increased cost of living will impact spending, which reduces busness income, which creates job losses and short hours, which impacts spending. so we had a further mini recession on top of our int’l recession. Only my haircut stayed put, I had to tell the man that if he raise it my wife is going to cut my hair. Unfair to him but I had had enough.

  27. David Avatar
    David

    Wasn’t Professor Persaud telling government 1 year ago it should borrow all the money it could to shore up foreign reserves before the economic position worsened? What has knocked all for six as all on this blog has been saying is the protracted nature of the recession, unprecedented! While Jepter Ince made himself an ass on national radio we should not let the political hacks distract us with this herring.

  28. zion1971 Avatar
    zion1971

    We cannot continue this extravagant lifestyle in Barbados propped up in part by large government subsidies, transfer payment and a behemoth public secor wage bill that consumes over 25% of government revenue. Government should not be in the business of creating” job-for -life” for majority of the populace , that should be the job of the private sector. Government should be lean and efficient and provide the necessary stimulus for job creation by the private sector.

    We flaunt our developed status to the world but , yet still ours are built on vodoo economics and banana republic mind set. How else could you explain that in this country it would seem that government jobs are sacred cow / holy grail mantra of the unions that no government in their right mind would – unless they want to end up in the political graveyard- even consider rationalisinig. The permanent feature of all developing countries is that government provides a dispropotionate percentage of the jobs which are mostly unionised which mean a lot of potential votes , so it always seemed a political suicidal mission for any ruling government to slim down bloated government beauracracy.The long run consequence of this inertia is waste and inefficiency. But mark my word it will soon catch up with us, we are just buying time for now.

  29. ac Avatar
    ac

    Well if the solution is in all paying their fair shair starting with the top so be it . It may be hard and painful. “Wuh sweetin ram goat mout.gunna bun e later” . All it takes is to tell the truth , and we bajans know what time is it.No need to addfuel to rhe fire, Somebody ought to grab a hose. Now you see why everbody is interested in getting agriculture up and running again I guess it is the only go to we have present.
    Desperate times call for desperate measures.

  30. Avatar
    Anonymous

    When all the DLP hacks have finished trying to say that nothing is wrong and everything is fine, just remember that never before in our history has public debt grown by $1500m in 2.5 years. And that for the first time in our history, we are about to be downgraded by both of the international credit agencies to “junk” status.

    And remember that the $1.5bn of extra debt in 2.5 years, is almost three times the cost of the Prison, ABC, Justice and Coast Guard. If you didn’t like that expenditure, then you must dislike this expenditure three times more……but you wont because its all politics.

    When will the politicos learn that saying that it was just as bad under the other lot is not what being in power is about. It is about leading us to a better place. The problems is that Governments of whatever stripe like expenditure especially when it is out of sight from capital expenditure rules and central government controls and is just jobs for the boys in the statutory corporations. Its patronage.

    Instead of trying to justify your politics, lets focus on how we get out of this mess because it is far, far, more important than petty political bickering. Becoming “junk” status could be the tipping point that switches the virtuous cycle of the last 4 years to a vicious cycle of decline.

    Lets hear some radical ideas from either side or no side that will allow us to bring our public expenditure down to sustainable levels.

    Its about time we had a plan to change the outcome at the Transport Board – poor finances and poor service, or a plan to change the outcome at the Hospital, or at UWI.

    Sadly it looks like Government is more concerned with finding excuses, but that does not stop others coming up with ideas and trying to get the Government to adopt them, assuming the likes of Senator Ince are listening.

    Black Business, I like the sound of auctioning routes to driver co-opperatives. I like the sound of not paying for the education of people who pay tax to a foreign government, I like the sound of getting patients to be more involved in their health decisions. Who is saying these things? What stops us trying? I want to hear more.

  31. Avatar
    Anonymous

    I meant shifting to a vicious cycle from the virtuous cycle of the last 44 years….

  32. Bush Tea Avatar
    Bush Tea

    Bush Tea would like to introduce a new term – ‘Pyramid mentality’.

    It is actually an old scheme, where participants in an expanding process, use resources collected from the new inductees to pay themselves unrealistic dividends.
    When the process is expanding aggressively everyone is happy. stalwarts make handsome returns and inductees enthusiastically await their turn to feed…

    Unfortunately, everything is finite, and eventually the party must come to an end – when the hoards awaiting their sweets must face reality.

    Enron, Alan Sanford, CLICO and even our everyday life – where many have collected salaries and wages way above any genuine productive efforts on their part – all these are examples of the pyramid mentality.

    When CLICO was offering interest rates that were ‘too good to be true’, what did the takers REALLY think was going on?

    When employees go to work day after day ( those who even bother to go) and KNOW for themselves that they have not made contributions in effort to justify their pay – do they expect this to go on forever?

    When a country can year after year spend MORE money that it is making – most of this spending on luxury items and status symbols (like a ‘world class’ cricket ground. state of the art prison, what-ever-Greenland is; etc – WHAT DO WE REALLY EXPECT?

    …it was just matter of when….

    So since we all enjoyed the wild ride together – now we should collectively prepare to WILLINGLY face the consequences TOGETHER.

    The one good thing about Barbados is that even though both parties may have overspent our resources, both of them generally spent to benefit ALL OF US….unlike some other places where the divisions between the beneficiaries were much more marked….

    As Anonymous says, it may even be good for us in many ways. We can restructure ownership in this country.
    The Credit Unions can play a major role in re-ordering the concept of ownership locally.
    ….. and we may at last be FORCED to explore and refine the unlimited talents of the thousands of ordinary bajans who have been marginalized to ‘the blocks’ while we paid for jokers from overseas to bypass our valued local traditions….

    …it could be exciting.

  33. Bush Tea Avatar
    Bush Tea

    @ Bajan Truth
    Which country you know in 2000-2010 had cash reserves and no debt – China. Anybody else?
    *******************************************************************************************

    Bajan Truth’
    Which country you know in 2010 facing bankruptcy and serious structural difficulties – everyone else but China

    …tells you anything?

    BTW, no one said anything about putting all your money in the bank instead of investing…. Just that if your salary is $2000 per month, make sure that your expenses are less than or equal to $2000 per month. If you have an emergency and need a loan of $200, then you PAY IT BACK as a priority.

    ….you didn’t have a grand mother to explain these things to you.?…lol

  34. David Avatar
    David

    To all you talk show hosts who visit and read quietly, this is your right except Dennis J, the time for you guys to step up has come. Stop peddling that horseshit or as zion1971 alluded, voodoo economics. Here is an opportunity to tell the people like it is. Even at this time with economic peril with us Barbadians are leaving Barbados by the plane loads to visit Miami, London, Puerto Rico, New York and other destinations. A listen to the radio, scan of the newspaper or Facebook and the number of parties occurring is mindblowing. What is happening? We see Al Gilkes former NCF bossman is at the head of the pack staging these fetes. We notice a government MO was behind the move to bring Movada and the other wog. What is happening.

    To you moderators of the talk shows, especially the top rated ones according to BU’s poll (Ellis, Don and Tony Marshall, Peter Wickhan and Dennis Johnson) the time has come, you are either with us or against us.

  35. Trained Economist Avatar
    Trained Economist

    According to my count at least 500ml of the debt is foreign borrowing to shore up the reserves and protect the fixed exchange rate. Is that borrowing worth the while?

  36. Trained Economist Avatar
    Trained Economist

    The dramatic expansion of uwi is a major part of the fiscal probem. Thye number of fully funded students at uwi has doubled over the last five years. Maybe the time has come to means test uwi fees. No one should be denied a university education on financial grounds, but surely many persons can pay something.

  37. Carson C. Cadogan Avatar
    Carson C. Cadogan

    OFF TOPIC

    Dennis Jones(livinginbarbados) is leaving the island for good.

    http://livinginbarbados.blogspot.com/2010/07/which-way-to-go.html

  38. zion1971 Avatar
    zion1971

    Next to the Bahamas, Barbados has the higest wage rate in Caricom. The high price for labour and other commodities are in no way a refletion of the economy -given our inefficiency, uncompetitiveness and a chronic trade balance – but rather it is artificially price by government policies.What has been saving us for years in our balance of payment account is foreign direct investment . FDI has been propping up the reserve for years. But the FDI goes into the same old projects and a few new ones. Tourism attracts most of this investment. I see this recession has favourable time for government to clean house ( we should never waste a crisis) and resrtucture the structural flaws in the economy.

    In order for a economy to justfy a high wage rate it must be becoming sophisticated, efficient and adding high value-added jobs. This is not happening in Barbados. Let us be real, tourism because of its labour intensiveness is appealing to the shortsighted politician beause of the potential for mass employment but it does not provide enough vale-added jobs and the little it provides are given to foreigners. We sould move away from these simplistic ,archaic economic models. The same goes for the agricultural sector. You cannot have a high- cost -of- living society when all you have to show for is high -paying, low- skilled jobs. Therefore since we are producing
    a surplus of territiary graduates what we need to do is to attract investment in high-vale added goods and services. This is exactly what Singapore did to maintain a high wage rate. Because of their educated population the government was able to attract large FDI in electronics, Oil refining, pharmaceuticals etc. We need to do the same in Barbados. Their is a whole world of vale-added oppurtunities out their in goods and services that we can attract to Barbados.

  39. Avatar
    Anonymous

    Dear Cousins in Barbados,

    I don’t know a thing about the 1.5 billion dollars, but I have breaking news that Suriname has elected a convicted murdered and drug dealer for its President. Desi Bouterse is now President of Suriname and since the majority race in Surianme is cut from the major race of Barbados, plus Lord Willoughby sailed to Suriname from Barbados and colonised the place with people from you all, then David must comment on this unfortunate situation in Suriname. Had Guyanese elected a person of such character this blog would have been ablaze with all sorts of rants and raves about Guyana. I am waiting to hear what you all have to say. We are all Christian people here.

  40. Young Bajan Avatar
    Young Bajan

    If we all could ONLY earn up a maximum of $ 6000 per month, would that be sustainable? could you realistically survive in society. My answer is yes. But many will ask why, i will ask how much more do you need and why? what other rubbish can or will you want to accumulate and waste money on.

  41. George Reid Avatar
    George Reid

    @ Bush Tea // July 19, 2010 at 7:45 PM

    @ George Reid

    “Skipper, Bush Tea does not normally engage such high flying academic minds as yours – and for good reason;

    … first thing is that I have to read such posts multiple times to understand the gist, and I have to have my dictionary handy….. I still here trying to grasp your post @ 6.37 LOL

    But you REALLY serious though? You would suggest that we should SEEK OUT an IMF solution at this point?
    You REALLY do not get the significance if Sandiford’s stand in the 1990′s against the IMF?

    ……You is another George Reid?

    Do you not see the drastic difference between IMF prescriptions for countries like Barbados (and Jamaica /Guyana / Argentina ) and their dealing with places like the USA, Ireland etc? You would PROACTIVELY put this country in IMF hands??

    …If you are really saying so in your above post let me know…..
    …. but as I said, I may have misread the gist of your rant – cause I is only a bushman.”

    Bushie, I try for consistency. I am working on my “memoirs”, and I have a section entitled “Dealing with Prime Ministers”, in which I will have something to say about all six (6) of them. But I promise you, to some it will appear to be a parable (you remember the definition – an earthly story with a heavenly meaning! The provisional title is “Gatemen and Political Kingdoms” .

    I think that you have obviously got the Sandi-scenario wrong, but have patience! Anyone interested in a sneak preview can visit http://www.dunwidalldatshit. But, don’t rush me!

    As for what I really think about going to the IMF, why don’t you ask the GCBB? After all, he went there after the RHOSA superceded him with Winston Cox.

  42. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    Bush Tea,

    In the above rant, Dr. George Reid seems to think that we are still living in those old colonial days when – upon emancipation – the masses for a long time were denied access to proper education; were prevented from accessing much information and knowledge pertaining to all sorts of things; were unable therefore to properly assimilate and analyse many events and happenings in their country and beyond at the time, and too had to therefore rely on a few so-called educated middle class black people ( a few white colonials ) to be informed and to be guided by them on what decisions they ( the broad masses) had to take in their own interests.

    Dr. Reid seems to think that many of us still live in those same old wretched colonial days when – upon being freed from the shackles of enslavement – many of the masses were for a time thereafter considered to be too uneducated, too illiterate, and too ignorant by the colonial powers/ the local ruling classes – under the Old Representative System – to be fit enough to govern themselves far less able to criticize the so-called social economic policies of government, and to offer alternative policies and policy prescriptions to them.

    Well, we the broad masses and middle classes of this country are DENIZENS of this country, living in this age of information, in an era of greater enlightment and greater communication and greater social interaction – cyberspace, internet, blogs, video conferencing, online dictionaries, wikipedia, facebook – far removed from the days when the black and white TV, the telegraph, the cable radio, the type writer, the smut lamp, etc dominated.

    Verily, no longer is it possible for a few in a society like Barbados to monopolize or restrict the flow of general information, knowledge and research on endless subjects and topics!!!

    And, as denizens of this country we have every single right – just as he has – to criticize any policies of this government or any other government, and to offer any workable alternatives to them and to debate them among ourselves, and, yes, in an era where many people in Barbados are demanding greater transparency and accountability from government, greater sharing of information with government and where many wish to participate more and to help directly run the affairs of Government.

    Ask, Dr Ivan Henry.

    PDC

  43. Bush Tea Avatar
    Bush Tea

    @ Dr Reid
    As the bushman tried (unsuccessfully) to point out to another bright BU Doctor (both the medical kind and the pine hill dairy kind LOL) called GP, that definition of the parable is WRONG.

    Parables are NOT earthly stories with heavenly meanings –

    they are deliberate (and successful) efforts by Jesus to ensure that those to whom he spoke, HAD NO IDEA what he was saying.

    …that said, are you sure that you want to tell us about the six boss men in ‘parables’? LOL

  44. George Reid Avatar
    George Reid

    Bushie, Im a septaugenarian – too old to change my style in any sense of the words. In fact, too old to change the diapers of the PDC committee, or for that matter, any other committee. So their writers should enjoy the warmth of their dingle berries for a little while longer:
    and afore they go
    perhaps they’ll know
    that their halo
    smells like shit
    to the rest of us!

    As for AC, I hope that he or she gets a little DC while its still current (or should that be currants), like PDC’s dingle berries. But they have to dry to achieve that status. My God, how I have all dried raisings.

    But back in de day, and to the IMF (read reid’s “1991 and all that”, again!) don’t you accept Audley Shaws’ dictum that the Fund has change(d). Or is that you feel that there is no cents in the change? What did the Bard of Avon say, “a RHOSA by any other name would still smell”? But he must keep his nose to the ground. Just ask my wife’s two doggies that I gave her (as pups) for Xmas 2004. I think that I should let sleeping dogs tell all the lies that they want to.

    I gone!

  45. Enuff Avatar
    Enuff

    Pure capitulation and embarrassment.

  46. Adrian Loveridge Avatar
    Adrian Loveridge

    Trained Economist,

    ‘some of that money has gone to help keep a number of small hotels open’.

    Can you please just explain that statement Mr/Ms TE?

    Are you talking about the TIRF (Tourism Industry Relief Fund), because if so, it did not just benefit SMALL hotels?

    I do not believe the list of all the tourism entities that claimed and actually benefited was published.
    In the interests of transparency and the fact it was taxpayers monies, I think it should have been.

    Certainly our little hotel did not either claim or benefit and ALL our Government contributions are up-to-date.
    As usual we wait for up to 15 months for VAT repayments.

  47. Crusoe Avatar
    Crusoe

    The article is right on the ball. Bang on.

    On one article point, ‘When Robinson spoke of a vat increase he was cursed out of town.’,

    Note that this is exactly what the UK has just done, along with increasing the scope of capital gains tax, both of which focused incidence on point of least ‘hurt’.

    But, as people on this blog love to say, fairly so, that everyone wants to got to heaven, but no one wants to die.

    That said, one other point to be made is that the two main jurisdictions of international business i.e. Cayman Islands and Bahamas, are currently going through deep trouble economically also.

    Be careful to separate the wheat from the chaff and do so fairly.

    Quite correct that we need action, belt tightening is necessary, we said so a long, long time ago on these blogs, it was even said before the prior administration spent a waggaton of money on Kensington and the Prison and the Highway.

    Lastly, one commenter referred to a number of ‘schemes’ as suggested by Avinash Persaud.

    While never discounting more effective expenditure, note that a broad scheme, such as a marginal increase in VAT, willbring far more predictable and greater returns than many small schemes alone.

    I think half the problem is that some people really still do not appreciate the great sinkhole that the world economy is still in.

    Remember, only a few months ago, ‘some’ senior economists and pundits were beginning to be brave about a commenced ‘recovery’.

    Now, they are withdrawing from such a stance.

    Do they truly understand? Do most people really understand?

    They say they do, but by their actions, I doubt it.

    Straight Talk and Bush Tea do understand, they have communicated this for some time.

    But alas, voices in the wilderness are sometimes not heard, or ignored out of fear of facing the truth.

  48. Trained Economist Avatar
    Trained Economist

    The fact that a particular hotel or hotels did not benefit from the scheme does not invalidate the point that the TIRP was implemented and did help hotels big, medium and small. A list of those benefiting would be useful.

  49. Trained Economist Avatar
    Trained Economist

    Would it be fair to conclude that the much vaunted program of public sector reform was a dismal failure. Much of what persaud and others are speaking to speaks of public sector reform.

    I was just looking at the Barbados Short and Medium Term Action plan presented to the government in November 2008 by the special working group on the economy.
    I quote one of its recommendations, “Government needs to repeatedly say: what it intends to do, that it is doing what it intended and thaty it has done what it intended, to reinforce the message of consistency between intentions and actions.”

    The opposition understandably thrives on a sense of chaos, can the government please take the advice of its own committee and repeatedly say: what it intends to do, that it is doing what it intended and thaty it has done what it intended, to reinforce the message of consistency between intentions and actions.”

    The special working group also recommended that public sector wide service standards be established. Officilas with the responsibility for achieving the standards should also have the authority to enforce them. For example, a standard would be that a passport application should be completed in two weeks. A patient with rectal bleeding should be seen by a specialist in at least two weeks. Standards should be set for town and country planning and so on. These standards should be published and performance published at regular intervals.

    This is a low cost initiative.

    Of course the elephant in the room is sir roy and dennis clarke. I submit that until we rein in the unions there will be no progress.

  50. Avatar
    Anonymous

    If there is a choice between raising VAT or cutting current expenditure, we should focus on the latter.

    First, raising VAT and leaving our structural expenditure is the cop out, easy “choice” and all it will mean as David has said is that a few years later we will be coming back for more because we have not changed the process of Government using its patronage to win and influence friends through expenditure at statutory corporations and transfers to agencies.

    Second, one of our key problems as an economy is the high cost of living. This not only makes it hard to make ends meet (VAT is a “regressive” tax as it hurts the poor more as they consumer more out of their incomes than rich folk, who do not pay VAT on savings) but it also makes the economy uncompetitive. Yet this is one of the precise structural problems we have to deal with – making the economy more competitive.

    A VAT increase will disproportionately hurt the retail sector – why should they carry the sins of our politically appointed boards?

    The good things about a VAT increase is that will reduce consumption which will reduce imports and so protect our foreign exchange reserves, but it only does so by contracting the economy. Another good thing about VAT is that foreigners pay it too. This makes it better than direct income tax, but this is also a feature of property taxes. Indeed, property taxes are the best taxes as they hit the wealthiest and therefore are progressive and they force people to do productive things with their land which is good for the economy, but because it hits hardest the wealthiest, they always manage to limit it.

    Lets say enough is enough in terms of the size and expenditure of government and focus on trimming it down with current expenditure cuts (not capital expenditure cuts). Lets make the provision of public services more efficient and with delivery more private driven, we could also reduce the scope for patronage and corruption.

    The amount we could increase the VAT by will bring in less than the transfers to public transport and far less than the transfers to UWI or QEH, so there is scope to make a big impact if we do as David said and step up to the plate.

    Say “Yes” to current expenditure cuts, “No” to higher taxes.

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