Notes From a Native Son: For Whom the Bell Tolls, If Not for Thee?
The natives are getting restless as the dark clouds descend, it is as if there is an expectation of bad news. While ministers and their advisers, clearly out of their policy-making depths, struggle with a patchwork of policies initiatives, mainly around the exhausted tourism sector, the rest of government and the private sector is in lock down. People are talking as in a Tower of Babel, but the noise is not making any sense, often lacking in coherence and simple logic, while in the meantime nothing is happening. Even so, what passes for policy is usually a further waste of taxpayers’ money: Four Seasons, Almond Village, Sandals, Transport Board, Gems, the chaos at the central bank – we all know the score. Absent from this roll call are any new and persuasive ideas from parliamentarians, technocrats or policy advisers. It is as if there are no answers to the nation’s problems, that the millions we have spend on education since 1966 has all been in vain, that together as a people we cannot put country before party or ego and come up with viable solutions to our problems.
Recently I received a review copy of a book, The Entrepreneurial State, by Mariana Mazzucato, professor of economics at the University of Sussex, and it is a wonderful read. If I though it would have been appreciated, I would send a copy to every member of parliament – government and opposition – so that they can get new ideas on the pioneering role of government in economic development. Prof Mazzucato gives a long list of the new technologies and sectors, from the internet to Apple, Google, pharmaceuticals, and numerous others developments that would not have seen the light of day had not for early State support and intervention. It was State funding – government, military, health service, universities – that funded the early stages of most of these developments before they were transferred to the private sector.
It is a development that we have seen with the global banking crisis and the subsequent sovereign debt meltdown: a crisis that started with Bill Clinton’s removal of the Glass/Steagall barrier, which led eventually to banks over-dosing on cheap credit and, inevitably, the collapse of Lehman Brothers. Then the language of big business changed, from calls for minimum government to one of systemically important banks which had to be bailed out by taxpayers, removing huge unprecedented debt from the balance sheets of private banks to that of the State, ordinary taxpayers. Then calls for a solution, led by academics with access to policy-making, with one set calling for austerity, while the others lined up behind the so-called Australian School, calling for lighter government. But, as Prof Mazzucato has shown, there is room for State intervention, provided it is sensible and prudent and the outcomes are measured and productive.
The real problem, as Professor Dani Rodrik of Princeton, in an excellent paper (When Ideas Trump Interests: Preferences, World Views, and Policy Innovations), has shown in a rather interesting observation: “Ideas are strangely absent from modern models of political economy. In most prevailing theories of policy choice, the dominant role is played by ‘vested interests’ – elites, lobbies, and rent-seeking groups which get their way at the expense of the general public.” Prof Rodrik makes the point that trade restrictions such as import tariffs and quotas redistribute incomes to the politically well-connected and powerful lobbies. He goes on to ask: “Why do political elites not favour growth-promoting policies and institutions? Because growth-suppressing policies, such as weak property rights, excessive regulation, or over-valued currencies provide them with access to rents that would disappear otherwise”.
There are also other answers: the political elite, often talentless, prefer centralising controls since it gives them a greater chance of having their hands on the levers of power, feeding their tendency to corrupt. They also dislike new ideas unless they are the architects since it suggests they add no value for their well-paid positions. Take, for example, a simple idea such as a balance-sheet local bank, a no-brainer for any policy-maker interested in funding small and medium enterprises and households. The need for such a bank in Barbados – be it a Post Office bank or a credit union bank, or both – is so obvious that one is left feeling the reason the government has not introduced such an institution or amended legislation to allow the credit unions to do so must be political. It certainly cannot be financial or economic. Yet stubbornly, even when it is clear the Trinidadian and Canadian-owned banks have no real interest in funding small Barbadian businesses, our policy-makers and regulators continue to dream that something, anything, will happen to change the situation. They are crippled by their own inaction. Their lack of dynamism is such that they sit back and allow these foreign banks to operate like Japanese Yakuza, encouraging households to incur huge amounts of debt which will take them a working life to repay since in the main it is rolling debt. When borrowers are about to payoff one loan, these cretins who run our banks and retail outlets offer them further loans to bind them in to even more debt; it is an addiction fed by, to my mind, organised gangs masquerading as legitimate bankers and business people. Where are the regulators, where are the politicians, where are the investigative journalists to expose these awful wrongs?
There is something evil and wicked about encouraging people to dig themselves in deeper debt when they do not have enough savings to pay their bills and fund their lifestyles for even a month if they were to lose their jobs. This is financial madness. It is the same with the government and public bodies. Recent public debate around the disposal of the Trinidad-owned Almond Resorts to Jamaican-owned Sandals is a case in point. There is no good financial or business reason why the state should have intervened to obtain the Almond Village property only to lease it direct to Sandals, without even testing the market to see if there was any other bidder interested in the property. There has been no explanation as to the business reason why the government should have paid Bds$6m for the Almond brand, then to discard it when Sandals moved in with its globally recognised name. Why, in these hard times, did the Barbados government wasted $6m to buy an intangible that it had no real reason to buy?
Given that the tourism authorities have been allocated a Bds$14m marketing budget, and the obvious attraction of Sandals (it appears as if Sandals has not spent any money on acquiring Almond Village, even though it is reputed to have bought, or is in the processes of buying, Casuarina on the South Coast), the only legitimate business case for doing a deal with Sandals could be one of marketing. Therefore, what was the BTA’s marketing strategy prior to the Sandals deal, and what empirical and demographic data was this marketing plan based on? How do the Sandals proposals differ from that of the BTA’s?
In financial services and accounting theory the Almond brand is what is described as a market-related intangible asset (see: Manual of Accounting – New UK GAAP), which should have been measured at fair value at the acquisition date. And one of the first questions a financial analyst (or any financial journalist worth his/her salt) would be: what was the fair value of the Almond Resort intangible asset at the time of sale? My suggestion is that the market value was nil. Almond Resort was not a going concern at the time of acquisition, therefore all government was buying was a seaside property and it should haven been valued as such.
This single event, to my mind, gives an indication in to the quality of government legal and financial advice, or how it is interpreted by political and civil service decision-makers.
Nationhood and Development:
The real problem goes beyond the failure of a single opportunity to negotiate in the nation’s favour. In wider terms, constitutional independence has not made any real impact on the way most Barbadians perceive the State. First, despite claims to Errol Barrow being the Father of the nation, this sentimental and largely political interpretation of post-war statehood independence has nothing to do with the facts on the ground. In 1937, Barbados, like most of the other British colonies in the Caribbean reacted to the economic hardships of the 1930s by rebelling, but the battle against Hitler intervened and concentrated minds. The post-war Moyne Report, to a large extent, was historical in its scope and by the late 1940s Britain was in serious economic trouble, even offering to give Jamaica, Trinidad and Guyana to the Americans for a loan. Britain was broke. The US turned them down, but demanded in return for the Marshall Plan that Britain granted independence to its colonies. This briefly was the beginning of the discussions which started with the granting of internal self-government and led eventually to the Marlborough House negotiations and independence.
One major post-independence failure is the lack of transparency in public sector governance and the apparent inability of decision-makers to use government procurement as a vehicle for the redistribution of wealth. Major contracts seem to go to the same narrow circle of business people, in particular construction, road-building and supplies. In a political culture made up mainly of lawyer/politicians we cannot seem to break that death grip. This can in many ways be explained through the prism of collective failure, of both Left and Right, people who have taken a different journey to arrive in the same political cul-de-sac. Where is the radical, angry even, army of young people who came up under the late Leroy Harewood? Those who congregated around the People’s Progressive Movement and its Black Star Bookshop, an organisation terrorised by Prime Minister Errol Barrow?
In its own way, the indigenous business class has also failed, the old Roebuck Street boys, those who worked as book-keepers on the plantations for absentee landlords, eventually sold out to the Trinidadians, an act that also symbolised failure. In the main they are the very people marginalised by the Trinidadians who leveraged their insurance companies to establish banks, buy property and other retail businesses.
In place of what should be a post-independence dynamic leadership and professional group has emerged a technocratic class comfortable with its public sector jobs, huge mortgages and SUVs on credit – and a lawyer class quite prepared to risk stealing from their clients to maintain a lifestyle their earnings cannot support. So, in place of being the architects of post-independence nation-building, they find themselves reduced to alcohol, promiscuity and personal abuse of anyone who tries to critique society and their wasted lifestyles. One reason that we have failed to devise a roadmap to the future is that we have ignored our history.
Some time ago I suggested that the university, the National Cultural Foundation and CBC should work together to collect an oral history of Barbados, going through the villages and talking to all those old people so anxious to tell us stories from their youths. But, like most things which cannot be interpreted in a party political way, it was largely ignored.
A few weeks ago, listening to some of the wonderful stories told by some old men sitting by a well, the thought came rushing back to me. It is not too late. We can stretch this urgent need for State intervention across a number of disciplines, but it will all fall on deaf ears.
Analysis and Conclusion:
In the final analysis, our failure is not to do with ability, but with self-hate, a people prepared to tolerate any form of leadership as long as it is not indigenous. I remember on one occasion some time ago when Ms Farnum was chief immigration officer seeing a private health care facility advertising for a specialist nurse; knowing someone who had recently retired from working at a similar job in the UK, still strong and healthy, I encouraged her to apply for the position, which she did. She wrote out her application and I drove it down the Wharf and handed it in myself; to this day she has not even got an acknowledgement of her letter, far less an interview by the immigration authorities. To my mind that was not just administrative incompetence, but contempt. We need to see State intervention in a positive way. There is nothing wrong with state activism, per se. What is wrong and inexcusable is lack of vision, misuse of office, ignorance. And it is this poisonous view that has dominated what passes as national discussions. Because someone wants a different future for his or her country that does not make them disloyal or an enemy. What it means is that all sides should sit down and have a grown-up discussion, a desperate search for common ground.
It is clear to any fair-minded person that the state has a right to intervene in the development of the nation, to direct resources where they are most needed, since by definition the State is the guardian of the big picture. Where this is sometimes betrayed is when government – the execution arm of the State – uses office not in the interest of the entire nation, but as a form of continuing campaigning, as an arm of a political party. We must also pay closer attention to the failure of the business class, another aspect of our collective failure.
It is generally badly-managed, dominated by family-owned small hotels, most of whom seem unable to identify their core customers, not through the rough and ready, but often misleading, measure of demographics, but through lifestyles and personalities – drill down the data. What is more, government, regulators and retailers close their eyes to mountainous household debt as if it did not matter.
There is a mistaken belief that if individuals were to use their credit cards and bank and credit union loans to buy cheap consumer durables that somehow the economy will take off and that personal debt of over 100 per cent of workers’ annual salaries are not just tolerable, but should be encouraged. Barbados should be an exciting and thriving island-state, with beautiful architecture, creative and innovative enterprises, a successful night time economy, great opportunities for its young and relaxing third-age activities for its elderly. We should, in a real way, be the model for small states, rather than living in a fantasy world.
Instead, the course they are embarking on, pumping more taxpayers’ money in to a dying tourism sector, is like a drowning man grasping at straws. It is the course of least resistance, one that is full of uncertainty and downside risks. They do not fully understand what is happening to the local economy, far less the global one.
How are we going to explain our failure to future generations? Blame it on party politics? Our geographical size? Our collective obstinacy? We must wait for the appropriate time for a detailed story about our failed political leadership to be told; it will be one of devious, mistrustful, sardonic, coldblooded, flawed men and women. A self-appointed professional and political elite that is filled with self-hate, who cannot stand new ideas, and who dislike anyone who shakes them from their mental laziness.
But a government that has lost its nerve to innovate, that has substituted intrigue and betrayal and cunning for principle and vision, is not fit to govern. History will tell that story. Until then, government will continue to depend on burnt out academics, who, apart from failing to keep up with their disciplines, are in the main in the midst of serious cognitive decline.
These are men (they are mainly men) who now dine out on their PhDs and professorships, but have little of real intellectual value to offer their former disciplines – and it shows and the nation is the poorer for it.