Submitted by Looking Glass

Economic theory like ideology is “rooted in the material conditions of life.” However, despite what we believe or are taught there is no unilateral or universal relationship between the true foundation of society/country, relations of production and the legal/political superstructure. Quite often the structure of society exerts a determinative effect on the ideas that assume prominence.

Countries differ substantially in terms of physical and human resources, location and power. As noted in A Look At Dr Persuad’s Analysis what we call the world economy is not an unilinear or unilateral system and does not operate according to a theoretical model. Economic theory is based on rationality and assumes other things to be equal. In fact the only thing rational about man is his irrationality.

Economic Development is not a linear process. Standard theory and classical paradigms do not truly explain our structure and development. It uses abstractions to describe and predict diverse and complex patterns of human behaviour in an attempt to explain how societies work and could or should be managed. In the process many variables including the non-economic kind are excluded from the calculus.

Standard scales of measurement do not necessarily reflect the true state of affairs. For example the GDP which replaced the original GNP is assumed to be synonymous with progress, growth and an adequate measure of national well-being. But it ignores debt accumulation and non-monetary transactions, resource depletion and perpetuates an illusion of progress or retrogression. GNP tells a different story.

Economics is neither homogenous nor mono-cultural. Analyses based on general theory will inevitably be faulty and conducive to mismanagement. That the only way for us as a nation to realise economic prosperity is by following free trade, capitalism and classical paradigms is in our case a passport to trouble and dependency. That said they are economists and economists: those who look beyond established theory and those who validate theory at the expense of reality with far reaching negative consequences. We appear to be short of the former.

Two years ago negotiations for both the Black Best and Four Seasons projects were put on hold (Nation11/13/2009). China for whom financing was no problem decided Black Best was not profitable and backed away. Now Four Seasons having gone the other route is asking government to invest. Had they evaluated the project to be unprofitable or way beyond their budget then like China they would have walked away. It is absurd to ask Government to invest $5m or more of taxpayers’ money in a product whose future is at best uncertain. That an economist should even suggest such the investment suggests faulty/ convenient homework and personal interest.

With tourism there is an optimal point beyond which benefits decline and diminishing returns set in. Some 30 hotels and guest houses have disappeared in the last 15 years but we continue to increase accommodation in an unstructured industry over which we have no control. People can’t afford to travel. In our largest market,North America, personal and household indebtedness are now beyond record levels

We are the most expensive destination in the region and cheaper ones with much more to offer more than sea and sun are coming on stream. European tourists via Portugal can have an all-inclusive holiday in Recife for less than half that of Barbados. Cruise lines are now bypassing us and airlines have increased flights to Jamaica, Mexico, St Lucia and elsewhere. Apparently we no longer no longer cater to low income travelers and marketing is a bad word. Look in the media travel sections, magazines and travel agents there is hardly a trace of Barbados. As noted in Tourism In Perspective, Tourism Another Look and Tourism In Peril, more hotels and housing will not increase economic growth or facilitate “development,” but will in socio-economic terms impact negatively.

There is nothing generous about capitalism. There is no “invisible hand,” markets are not self-correcting entities and business cycles neither universal nor unilateral. People go into business and invest in foreign countries to make money not to facilitate the development of the country. Often they tell you what you wish to hear in order to justify their presence.

The Coverley Housing Development will offer Bajans a lifestyle, will contribute to the economy, have a positive impact on exchange reserves and we will “end up with a surplus of foreign exchange” (Advocate 12/11/2011) and intend similar projects in other parishes. I suppose this fallacy is also true for Pickering, Harlequin and the three similar projects in St George, St Lucy and Bathsheba now in “negotiation.” All told we are looking at about 5000 new homes the vast majority of which will be sold to foreigners who may employ a few maids. The amount of locally owned homes and land for sale in Cariblist.com suggests that few Bajans can buy these homes and the state of personal and household indebtedness. Construction related employment ends with the completion of these projects. Government gets some income, property and sales tax, an increasingly import bill and a bundle of socio-economic problems along the way. Scarce arable land is lost to unproductive endeavours and we will own less of the island.

That the vast majority of these homes will be sold overseas suggests miniscule foreign currency for the government. In mid 1980 it was estimated that only 25 cents of every dollar spent by foreigners remained on the island. The increase in foreign home owners along with the presence of thousands of illegals from the UK and elsewhere (not Guyana) will increase the import bill. Housing and hotels will impact the deficit and debt negatively, increase the import bill and reduce our already meagre foreign reserves. In time the costs for almost everything from light and power to water will further burden the locals. The implication of population social and race relations is another story. All things considered the socio-cultural cost is likely to exceed the benefits of unfettered tourism and housing.