Now that we are having the debate over the mismanagement of the Barbados economy and the failure of monetary and fiscal policy, it is important that we turn our attention to the question of the wider macro-economic winds facing us in 2014. First, however, it is necessary to note that although the big battalions of the International Monetary Fund are waiting to invade with their rejuvenated Washington Consensus prescriptions, those in charge of monetary and fiscal policy are still locked in a policy-making vegetative state unable to even think for themselves. Here is Dr DeLisle Worrell, governor of the central bank, in a so-called sponsored statement (was this paid for by the central bank?) stating: “Barbados’s recent economic performance has been commendable given the unprecedented recession in the markets for our tourism and treaded services.” This is a blatant untruth; which ‘markets’ is he talking about? Is he talking about the UK, eurozone, in particular Germany, Canada, the US? If so, Dr Worrell is either not keeping up with global macro-economic data or he is attempting to mislead financial economists, deliberately or otherwise. If so, it is bound to fail because all fund houses have more economic data than he and his colleagues imagine.
All the major developed economies are now showing growth; the eurozone may be a bit more fragile, but the IMF is not so impressed that it is about to revise upwards the fund’s growth forecasts for this year. He goes on “…Barbados brings a number of competitive strengths to the international market. The country’s social and political institutions are stable, the labour force skilled and educated, the physical infrastructure good, and there are strong institutions for information-sharing, discussion and democratic decision-making.” Again this is waffle. There is an enormous skills deficit that is weighing down the economy; people are ‘educated’ in the sense that they are not illiterate in real terms, however they are uneducated to function in a highly technological and sophisticated world. Our claims to being 98 per cent literate are bogus and, as a nation, we should stop advertising what we do not have in stock. He goes on to claim: “The financial regulatory systems are of a high standard, judged by the norms of the Basle Committee on Banking Supervision and other international regulatory bodies.”
Is he referring to the Financial Services Commission, which cannot even understand the business model of the mismanaged Clico and is still allowing this awful regulatory mess to hang with investors and annuitants still waiting for settlement when Clico apparently still owns Todds, Henley, Poole and Wakefield plantations – a classic example of its investment incompetence?
Or is Dr Worrell talking about the central bank, which he heads, which has just allowed a foreign-owned company to tell an innocent businessman to move his money – a man who has not been arrested, tried or convicted in a court of law, whatever people may think about his involvement in Clico’s collapse. Why did the central bank not called in the bank’s senior executives and order them to come up with evidence to substantiate their damaging imputation of the man’s character? Why did the money-laundering authority not call in the bank’s compliance executives and ask them for evidence of suspected criminal behaviour failing which order them to continue providing a normal service to the customer? I am not a lawyer, but it me it seems like malice, a breach of the duty of care which a bank owes to its customers, breach of good faith, fiduciary duty, the list is endless.
The brutal truth is that the financial sector in Barbados, even with Chris Sinckler at the helm, is a classic example of a failed state. Its politicians and technocrats have failed the nation and themselves.
What is now urgently needed is a strategy to deal with the short term problems, such as the massive high unemployment, high household debt, the current account deficit; the medium term, such as the awfully high debt-to-GDP ratio,; and, the long-term, growth and prosperity to take us in to the middle of the century. There are two dominant negative influences on the macro-economics of Barbados. First, narrow party political self-interest is continuing to dominate economics; and, second, there is an epidemic of under-productivity that no one wants to talk about. But the failure is not just that of the DLP government, at least Chris Sinckler is right about that. It is a national failure of imagination that goes right across the board, from the civil service and wider public sector, to the cosy family-run and badly managed small hotels who are always extending their hands for state help.
From a university that is happy tickling its own belly with courses that are largely a waste of public funds, while over-supplying the nation with lawyers, humanities, social science and history graduates – a non-producing caste. A nation that is rightly proud of its education and training institutions, yet can have dozens of state-owned historic buildings in various states of dereliction yet have a skill training centre, the Samuel Jackson Prescod Polytechnic, which does not think it part of its brief to renovate some of these buildings. Despite all the economic problems, the DLP government has still failed to draft a sustainable programme of spending reductions. Just look at the mess that Sinckler has made of the proposed public sector redundancies. One minute 3000 people are going, next he is discussing the matter with the puffed trade unions, the very architects of much of this national down fall. Why is he talking to Sir Roy Trotman? Why is the BWU still pretending that Sir Roy has anything of relevance to say about industrial relations? Yet, in typical Barbadian style, this government is still determined to live beyond its means, with all the trappings of wealth held up by a false pride, while it is neck-deep in debt. For example, why do we need a Defence Force, when a nation like Iceland – geographically bigger but with a population similar to our own – does not? What about spending money to introduction modern technology right across government which, within a single parliamentary term, will pay for itself in productivity gains? One other obvious gap in the government’s policymaking is the urgent need for proper financialisation of the small and medium business sector. The Trinidad and Canadian-owned banks have gone on strike; it is clear to anyone who cares to watch that they are hellbent on not lending to local businesses. And, as every first year economics students knows, it is this business sector that creates the bulk of the jobs and drives the economy. The DLP can capitalise on the flawed decision by the BLP government to sell off the Barbados National Bank, one of the worst policy decisions by any post-independence Barbadian government, by righting this wrong. A small retail bank, trading on its balance sheet, could meet most of the needs of households and local businesses.
Impose a swingeing windfall tax on the retail banks and use that money to fund a small balance sheet bank? Ignore the bad economic suggestion from those on the periphery of national life and print money; use some of the remaining foreign reserves to fund the bank. Tax mobile (cell) phones; tax sugary soft drinks; impose higher taxes on tobacco and alcohol; make vehicle owners pay to have them on the road by imposing higher petrol duty and road taxes.
The minister of transport, Michael Lashley, is doing the right thing by ‘restructuring’ the Transport Board, but his idea of a joint private/public system with a ‘social element’ seems off key. What this cash-strapped government should be doing is preparing the Transport Board for re-location, splitting off the various businesses and then selling it to the people of Barbados (but certainly not to Kyffin Simpson). In the process he should also be thinking of getting rid of those mobile vandals called ZR vans. There has been nothing on the government’s, or indeed the public’s, agenda about social enterprise, community-supported industry, cooperatives, or friendly societies. The government has failed to draft a rescue plan to save the nation because its ministers, advisers and senior civil servants do not have the imagination or necessary policy-making skills to create a sustainable plan.
Analysis and Conclusion:
As we dance around the damning challenges encircling Barbados few of our political and social leaders are even thinking about, far less acting on the building social tensions that threaten to tear our society apart. As I have said before, we cannot be one-dimensional people, we must see Barbados in the round, including the massive inequalities and injustices. One initiative that government should have introduced as soon as the David Thompson administration came to power was a programme to rescue the boys and girls on the block, the very foundation of our nation. As things stand, these young people are not even in the frame. This is a time when the government department that should have come in to its own is the Small Business Unit. Instead it has been viciously marginalised by a government that has little time for small businesses – a blind spot that we as a nation will later regret.
One dimension of the failure of the DLP government is its apparent inability to even devise an industrial strategy as one potential driver of change. This is because of the white-collar obsessed thinking of the power elite. And, of course, after this failure of thought and imagination, they are appealing for loyalty. But his appeal for loyalty is bogus, to do so genuinely he must admit policy failure and open up decision-making on a non-partisan basis, which he has failed to do. But, as Oscar Wilde said, patriotism is the virtue if the vicious.
A great part of our failure as a nation is that we have no post-independence collective memory, far less one that goes back to the early 20th century, so each generation is forced to re-invent the policy-making wheel. What our political and business leaders do not understand is that nobody owes Barbadians a living. They have to compete on level terms with the wider Caribbean, and indeed with the rest of the emerging world. The state of national denial is such that people still believe we are only in fiscal intensive care, they hardly believe we are now on a life-saving machine. After this is it lights out, kapput, the end of the line. The truth is, in a society that fools itself about its political maturity, the writing is on the wall. I must reiterate, since it is very important, these foreign-owned banks are the weak links in our financial architecture and the government and central bank are incapable of doing anything about them. They are bullies and cowards. Whatever many people may think of Leroy Parris as a person or political operative, the reality is that he has not been accused by any official body of any criminal act, he has not been arrested and brought before a court of law; he has not been convicted of any offence. Yet, our regulators, including a so-called money-laundering authority, have allowed a foreign-owned bank to publicly humiliate the man by ordering him to remove his savings within a set time, they no longer want to do business with him. The message, whether intended or not, is that he is not a fit and proper person to have a bank account with that institution; that his money may be ill-gotten, therefore, implicitly, he is deemed to be dishonest or immoral or both. Not a word to defend the honour of a Barbadian from the money-laundering authority, the central bank, the Financial Services Commission, the ministry of finance or the police. We are on our knees and these |Canadians know it.