Notes From a Native Son: The End of Dependency Development Has Come
Now that the majority of the developed economies, the OECD-member states, are growing, and Barbados has drifted deeper in to recession, we now await political and business leaders to tell us what are their master plans for rescuing, stabilising and growing the local economy. It means that finance minister Chris Sinckler and his adviser can no longer hide behind the crude excuse of the global crisis for their ineptitude. The ruling DLP is trapped between a lust for power and the development of an applied programme for economic change. We have seen that when faced with a serious economic crisis, it has no ideological depth to fall back on, no ideas of the kind of society it will like to see since its political modus operandi has always been the status quo. As a result it has been forced to seek economic ideas from an intellectually exhausted band of elderly academics who, clearly, have lost touch with new developments in their own discipline. So, like a comedian past his best days who depends on the old jokes told in the same way for his laughs, the old economists resort to their own post-war textbooks for the answers to new problems in a world with a new economic architecture.
Managing the Economy:
But, to coin a phrase, this time is different. Whatever the official explanation, walking on the ground in Barbados sends out all the wrong signals: shopping at Supersaver in Oistins, in the fish market, in Fairchild Street, and in other shops, supermarkets and hawker stalls, the story is different. While the middle classes, the majority of whom are public sector employees, those lower down the food chain are telling a different story: postmen and women are not being paid and are given letters to their mortgage lenders begging for a period of grace; the men and women who sweep and weed the side paths are also forced to borrow from friends and relatives because their wages are delayed; and members of some credit unions are begging them for repayment holidays so they can get their children through university. Yet, some banks and retail outlets are offering cheap credit as if partying on the Titanic.
One explanation could be that the economy is in a better state than critics are allowing for; another is that there is a thriving black market; and, third, the non-banking sector is gorging on a pile of household debt which is mounting by the day. From the advertisements and promotions, I prefer to believe that the retail sector is taking the economy to the edge with its irresponsible lending, which, given the Christmas season, will get worse in the short-term before it gets better. You cannot get anything more irresponsible, to my mind, than the Royal Bank of Canada’s so-called “Spot the Difference Car Extravaganza” held at the Garfield Sobers Sports Complex on November 2. If ever there was a situation in which the governor of the central bank, the minister of finance and the Leader of the Opposition should have spoken with one voice about this vulgar invitation to Barbadian consumers to dig themselves further in debt by a Canadian-owned bank, this was it. These financial brain dead nit-wits were not inviting people to take loans to buy land, or homes, or educate their children, or take out protection insurance, but to buy cars and have them customised and cleaned. Where is the best banking regulator in the world when you need him most? If the RBC bank was really interested in the financial health of ordinary households, not only would they not be offering what can be seen as irresponsible credit, they would instead be offering their account holders decent financial advice. I am convinced they do not really care about the health of the Barbados economy – that is the price you pay for having an overseas-owned retail banking system. In any case, the regulator should have stepped in and stopped this behaviour, that is what financial regulation is all about. Sometimes we have to protect over-excited and materialistic consumers from their own stupidity.
We also have a situation in which the Canadian owners of the Barbados light & Power are in effect threatening the government that if they do not get an extended permit they will not carry through planned investments. Apart from the fact the government should tell them where to go with their blackmail, they should also point out to them that investment decisions are the concerns of their board, not the taxpayers of Barbados. The reality is that for all kinds of reasons some people may find it disquieting that ordinary Barbadians should make claim to the economy of their country. One senior permanent servant once told me that it did not matter who bought land in Barbados since the buyers could not take it with them. Given this flawed reasoning, the same can be said for our vital utilities. I would prefer to rephrase that: it does matter who buys land in Barbados since foreign buyers with multiple passports could always sell up and relocate somewhere else, but locals have to stay put. Our essential services should be controlled by Barbadians, even if not the public sector; they should not be low-hanging fruit for foreign carpetbaggers to come and make huge profits. It will take the IMF top force the government to get rid of statutory bodies and service providers that it should never have had in its portfolio.
The list is long: why should government own hotels, then subsidise a regional hotel chain and local businesses in order to compete with the Hilton and Gems? Sell them all. Why is government getting in to bed with Butch Stewart, the very man who held out at Paradise Beach before walking away? Is he now getting everything he wanted? I do not agree with selling CBC, for the simple reason that most of those who want to sell the broadcaster are just embarrassed and fed-up with its second-rate journalism and programming or simply want to buy it. It will be far better if government auction’s a broadcasting license so that all those who want to get their hands on CBC can indulge with their own money. What CBC badly needs is good journalism. There is also the missed opportunity to re-invent the City and its surrounding area, creating a dynamic youth and night-time economy, with a cluster of creative industries, centred around the Empire (for performing arts), and the back streets of Jordan’s Lane, Beckwith Street, King William Street, etc for the fine and digital arts, night clubs, restaurants, market stalls, etc. All this I have mentioned here before and still it falls on deaf ears.
Is Barbados another Detroit, with a generation of aspiring professionals who share one thing in common, incompetence and failure? The government has failed to develop a reformed educational system fit for the purpose of a knowledge-based economy; it has failed to stimulate small and medium enterprises; it has failed to understand that the crisis in housing, typified almost ever week by desperate people living in hovels crying for help; it has failed to reform the public sector. It has also failed to tackle youth unemployment, the crisis in the criminal justice system and what to do with the overload of state enterprises it has on its books. If this seems like repetition, it is, since the government, day after day, continues to fail to introduce new social policies or even debate them. Housing remains the major social issue, the barometer of our progress, with a continuing number of people still living in hovels typical of the pre-war days. How do you explain to a nation that a man, whatever his personal faults, living in 21st century Barbados in the most loyal constituency of the ruling party, is living in conditions that you would not put a pig in? This is a reflection on us as a people, a nation without a heart, not on his failure to provide for himself. Yet, for reasons best know to itself, the government has failed to tackle this easily resolved social problem. Where is his member of parliament, his church ministers, his social workers, his neighbours?
It is clear that the government does not understand that the housing problem is a supply side one, not demand, given, as I have said here before, one senior member of the current government when in opposition said there were about 30000 people badly in need of decent homes. If this is the case, and there is no reason to doubt him, building two or three hundred single-family homes over a parliamentary lifetime will not solve this problem in a hurry. It is bigger than that, but it will be a start. Another of the big issues, of course is what to do with the crippled national insurance scheme, apart from using its contributions as a piggy bank. What the government should do, of course, is ring-fence the current contributions, de-risk the liabilities and launch a lifestyle-based long-term saving scheme with key point interventions, at births, marriages, housing, university and death. But such an innovation will call for independent thought, a deep understanding of policy-making, an empathy with ordinary people.
Analysis and Conclusion:
Barbados is facing what Kenneth Rogoff has called an economic Armageddon, with the vast majority of the people, including some who should know better, repeating the mantra about growth and foreign reserves like some religious sect, while few are even acknowledging that we are in a deep recession. Where are our innovators, our talent managers, our young men and women bursting with ideas to make fortunes while making the world a better place? Talking to ordinary people in the streets and supermarket queues one gets an impression of a nation that is depressed, tired, fed-up with the burden they are carrying; a nation dying on its feet. By far the greatest failure of the government, its technocrats and policy advisers is intellectual, a resistance to change or to confront new possibilities and challenges. They sit waiting for new ideas from Europe and Asia or even the IMF or for their new Chinese masters to hand them a bag full of money. The ruling political and policy elite is trapped in a black hole between rhetoric and the lack of a sound policy framework, between the notion of austerity and neo-Keynesianism.
Historically, they have depended on their civil servants to rescue them, then to claim the glory, but this time the civil servants, academics and the man in the rum shop are also short of original ideas. Their only answer to every problem is that old mantra of foreign reserves, even school children now shout foreign reserves. I say if we traded in derivatives and the futures markets we will be a more sophisticated financial market, but it is outside the experience of our central bankers so they do not want to encourage it. Instead, they are prepared to lock-up over Bds$1bn of cash doing nothing while the economy collapses. It is the kind of economic lunacy more fit for an asylum. The epidemic of household credit, apart from everything else, raises serious questions about consumer credit and the way it is regulated. Is there any affordability test when people walk in to shops and show rooms for credit on a 4X4 vehicle or a 48-inch flat-screen television, or are car salespeople and store staff so keen to earn a sales bonus that they will sell to school leavers?
In all this there is not a single word from the central bank, the institution responsible for monetary stability, or from the ministry of finance although the world is now recovering from a global crisis caused precisely by such lending. It is as if the Good Ship Barbados will sail on no matter how rough the seas. It is more likely the last voyage of the Titanic. Part of the reason why public discussion is so weighted in favour of the loudmouths and those with no views of their own is because of the historic Barbadian preference for personal abuse where political ideas should be. But, in terms of managing the economy, you can get in to all kinds of technocratic verbiage most of which is meaningless to the average reader. The bottom line, is that if we do not get our house in order, and soon, and go cap in hand to the IMF, the nation will collapse like a punch-drunk boxer. The steady decline of Barbados is not only the government’s fault, it is also due to the lack of an entrepreneurial spirit from the skilled and middle classes. One example reminds me of this and that is my conkie story: some time ago I was in Barbados on November 5, and, was not able to get a conkie in any bakery or supermarket. I was boldly told that I would have to come back on Independence Day to get a conkie. Here is a market crying out to be exploited. How about retired accountants and finance directors offering their collective services to small and cash-strapped businesses not individually? Instead of explaining to the people in simple terms why the crisis has come about in Barbados and proposals to resolve it, the ruling party has chosen to tell a consistent lie in the hope that some, if not all, of the people will eventually believe it. People want to know why they have been working so hard for so long yet their living standards are falling and they are living from hand to mouth. They need to be told that the global banking crisis was caused by the greed of American banks, the so-called subprime lenders, who embarked on a scandalous lending spree to inner city people who could not afford to repay them at the rates and the conditions lenders imposed on them. They want to hear that because of the ownership structure of local banks when head office wants greater liquidity they withdrew capital from branches and subsidiaries in Barbados, allocating money for high interest consumer lending. They want to know how a crisis in banking could become a global sovereign debt crisis, why politicians transferred all that debt on to taxpayers under so-called bail out schemes. They want to know why in Barbados taxpayers are underwriting incompetently managed family hotels, why they are buying the freedom of Almond Village only to lease it to Butch Stewart, why some new employers can apply for work permit for chefs and nurses, in a highly educated country. People are not fools. People want to know why a government that owns Mr Barrack about Bds$80m could refuse to pay him yet borrow money to spend like drunken sailors.
Finally, missing from the narrative is any mention of Caricom and the role it could – and should – play in the restructuring of member-states’ economies.