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Fault Lines: Life, Debt, Default and a Failure to Invest

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The following blogs authored by a young Barbadian Economist Simon Naitram who is currently an assistant lecturer at the University of the West Indies while pursuing a PhD from the University of Glasgow (featured image: Simon Naitram)

  • David, Barbados Underground

Life, debt, and now default. Barbados has reached the final stage of its illness. This isn’t our sob story. This is the tale of how we got here. This post isn’t a eulogy—it’s a lesson, a warning to our future selves.

The reason the government has defaulted on the country’s public debt is simple: the government just doesn’t have enough money to both keep paying back its loans and keep the country’s services running. The government chose to keep the country running.

How did the government reach this breaking point? Did the government simply borrow more than it could repay? The economics of government debt aren’t that simple. The government might have borrowed too much—it certainly made some bad financial decisions—but that’s not the real economic story.

The underlying economic mistake leading to default is that our government did not invest. It’s not that we spent too much money. Instead it’s that we spent our money on the wrong things. For a decade we did not invest in a brighter future. Nodebtw that we’ve reached that future, it’s a dark and miserable place.

A government’s debt is measured relative to how rich its people are. Bill Gates borrowing a million dollars isn’t the same as me borrowing a million dollars. The richer we the people are, the more money the government gets from taxing us. A 20% tax on $100 gives the government way more revenue than a 20% tax on $20.

Read full text – Life, Debt, and Default

Barbados’ giant economic hole is entirely of our own making. Our distress stems from one fatal flaw: we do not invest.

Let me make it plain. Investment in new businesses, new technologies, and new ideas is the only way to generate sustainable economic growth. Economic growth is not just an economist’s foolish cravings. Economic growth is the only path to prosperity. Investment is needed for economic growth, and without economic growth, we perish.

Why is it that we don’t invest? What can we do to fix this fatal flaw?

The first problem is that we save only 13.6% of our income. The rest of the world saves 23.1% of its income. Our savings are paltry in comparison to the investment hole we need to fill. We simply don’t put aside enough money for our businesses to invest.

And yet, commercial banks don’t want our cash. They offer us a ridiculous 0.05% interest rate on our savings. Why? In 1990, the banks lent 68% of our savings to businesses. Lending to businesses is risky, but it is productive investment that generates high returns and grows the economy. In 2018, the banks have lent only 28% of our savings to businesses! Banks have stopped channeling our funds into productive economic activity—which is in fact their one job.

Read full text – Failure to Invest

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339 responses to “Fault Lines: Life, Debt, Default and a Failure to Invest”

  1. John Avatar
    John

    Banks have stopped channeling our funds into productive economic activity—which is in fact their one job.

    +++++++++++++++++++++++

    Is the assumption that Banks have our money correct?

    Suppose Banks have been laundering money from outside and the attention Barbados gets from overseas has caused them to ease off!!

  2. John Avatar
    John

    Since Harry’s Nitery it is claimed that lots of strip clubs have opened!!

    Do Banks lend for investment in these new businesses?

    From where does the money come?

  3. John Avatar
    John

    The underlying economic mistake leading to default is that our government did not invest.

    ++++++++++++++++++++++

    Is it GOB’s job to “invest” or is it Bank’s and the private sector?

    Has GOB prevented this investment from happening?

    Has it been borrowing from sources of investment to finance its payroll for example?

    Is this an investment?

  4. John Avatar
    John

    If it is generally accepted that GOB can’t run a business profitably why would we even want it investing?

    This makes no sense!!

  5. John Avatar
    John

    “It was agreed that in order for the BADMC to achieve any meaningful reduction in expenditure, the wages and salaries which amounted to $650,000 per month net of statutory deductions had to be reduced. At that meeting we learnt of the Government of Barbados’s decision to discontinue the overdraft facility the BADMC had with the Royal Bank of Canada (RBC), thus further constraining the BADMC in managing its operations,” the statement added.

    https://barbadostoday.bb/2018/11/02/job-cuts-for-leaner-fitter-badmc-board/

  6. Hal Austin Avatar
    Hal Austin

    Barbadian households do not save 13.6 per cent of their income on average. This is obviously wrong. Common sense tells us that. And, it is clear, the government does not have a 13.6 per cent surplus of revenue. Maybe business does, but the biggest sector is the tourism (hotel) sector and most small hotels are badly managed, that is why the pressure on the DLP/BLP governments for special deals. How then does the author explain the 13.6 per cent saving?
    As to global savings, the saving rates in Asian societies are high because there is no social security safety net, families must meet their own obligations. China, the largest economy in the world on purchasing power parity, is a case in point.
    The savings rate in the US and UK is also in single figures, so a global figure (presumably from the World Bank) is misleading in this context.
    Barbadians owe Bds$340m on credit cards, this does not suggest a savings culture, and there are simply no savings vehicles apart from government gilts. Clearly there is no government regulatory policy of investor protection since the government itself has just robbed elderly investors in its own gilts and the banks do as they please Government allows this from a position of weakness..
    We need a grown up debate, not a celebration of student essays.

  7. TheOgazerts Avatar
    TheOgazerts

    It is refreshing to read the opinion of others on matters of national interest. Having a ‘fresh look’ pumped into the BU pool will allow us to see a wider perspective than those usually offered.

    I found his “What’s the real problem with Barbados” to be illuminating
    https://simonnaitram.com/weshouldallbeeconomists/2018/04/10/productivitybb/
    and though it was written in April 2018, it can be seen as cautionary and instructive for the next five years.

    Great post.

  8. Gabriel Avatar
    Gabriel

    “Barbados average income per person has not grown since 2008.From 2008-2017 Barbados average income shrank 2.8%.Compare that to the period 1992-2007 during which Barbados National Income literally doubled.Had we kept up that growth rate,National Income would have been $45000 per person in 2017.The stark reality is that National Income was $31000 in 2017.We have lost out on a 43% increase in our incomes.Our failure to invest is the reason your salary has not increased”
    If the above quotation is not a further colossal indictment on the Freundel Stuart led administration
    and a slap on the wrist of wannabes like Grenville Phillips of Solutions Barbados,I don’t know what will convince the likes of mariposa and T Inniss that they are supporting a dead DLP.

  9. PoorPeacefulandPolite Avatar
    PoorPeacefulandPolite

    OK Mr Austin – you go ahead and keep investing in the wrong things !

  10. TheOgazerts Avatar
    TheOgazerts

    I hesitated to write it, but it crossed my mind,
    We will have a few trying to drag the young lad into one camp or the other.. then he will be asked to declare where his allegiance lies. If no progress is made with that strategy, then he will be cussed by one or both parties.
    SOP

  11. Hal Austin Avatar
    Hal Austin

    @PoorPeace,

    Invest in what? Plse explain yourself.

  12. TheOgazerts Avatar
    TheOgazerts

    @Haha
    The tuth is I did not like your start or your ending…. “We need a grown up debate, not a celebration of student essays.”

    I made myself a vow to respect the efforts of the blogmaster and not to use derogatory language on his page, but if I was a cussing man I would tell you that sometimes you exhibit the mannerisms of an arrogant asshole.

    You may have the last word….

  13. Wily Coyote Avatar
    Wily Coyote

    The real UNDERLYING reason the author is searching for he’s masked with various technical terms, the ultimate reason for the FAILURE is the NEPOTISM OF THE GOVERNMENT TO ONLY INVEST IN ITSELF, ie keep and employee more staff, ministers etc that are not justifiable.

    It’s called biting yourself in the ass.

  14. Hal Austin Avatar
    Hal Austin

    @Theo,
    I will take up this challenge. You did not like the start or ‘your ending’. What precisely about the ‘start’ you object to? And the end? What is wrong with calling for a grown up debate? By grown up I mean dealing with serious economic theory and its application and not just regurgitating figures.
    I have hinted at why the figures cannot be accepted at their face value. What is wrong with that? I am used to the foul-mouthed behaviour, it comes with the territory, but are you suggesting that Barbadians have a savings rate of 13.6 per cent? Do you realise the economic implications of a savings ratio of such dimensions – higher than the US, Europe and comparable to Japan and the rest of Asia?
    What mannerism have I demonstrated? Explain yourself. I welcome debate, especially with new ideas. And what do you mean by having the last word? What if I want the second last word?
    You have proved my point. Let us have a debate about economics and not personal abuse. Any rum shop drunkard can be abusive. If we want to attract serious participants in discussions we must learn to debate, rather than be abusive.

  15. Bush Tea Avatar
    Bush Tea

    @ TheO
    Take it easy with Hal

    As Bushie explained on MANY occasions, He has ALWAYS been an idiot .. a jackass who suffers from low self-esteem.
    His writings are therefore NOT deliberate attempts on his part to come across as an ‘asshole’….
    It is just his lot in life…

    It takes all kinds to make our world what it is… and somehow, David has been able to replicate our world here on BU
    Hal therefore has a key role to play… like Maripoka, GP de Doc., and lexicunt.

    Seen from that perspective, his contributions are indeed valuable.

  16. William Skinner Avatar
    William Skinner

    The best investment to make is one that revolutionizes our failing educational system. Once that is not done we will be always in trouble.
    Our failure to invest is a result of poor wages and an inherited colonial economic system that has been propped up by a decadent duopoly and their sycophants.
    Go and tell the 1500/5000 that will eventually go home to invest!!!!
    Are we dealing with economic theory or our reality.

  17. peterlawrencethompson Avatar
    peterlawrencethompson

    @Hal Austin
    Simon Naitram’s “student essays” are more lucid and coherent than the vast majority of analyses of Barbados’s economic malaise. Your critique of his emphasis on the savings rate has some validity, but your puerile put down of his work is beneath your dignity.

    A more complete critique would have pointed out that the global average savings rate is distorted by China as an outlier with a savings rate of 46.9% https://data.oecd.org/natincome/saving-rate.htm.

    Our failure to invest is a significant part of our problem, but it is not proportional to our savings rate. The USA has a 3.7% savings rate and Canada’s is 2.8%, but they each have very productive investment sectors where riskier lending/ investment is undertaken by private equity, venture capital and other investors which have a higher tolerance for risk. The underlying problem that we have is cultural… for a variety of reasons our risk averse culture sabotages our economic growth. Bajans complain bitterly that the Barbados Stock Market is moribund, but don’t realize that the only ones to blame for that is we ourselves.

  18. Mariposa Avatar
    Mariposa

    I agree with the writer the necessity for small island govt to invest
    It increases and raise our economic port folio leverage in a global market
    Running with the big boys is a must as well as a power play that will give credibility in hard economic times and also acess to many open markets for trading

  19. Hal Austin Avatar
    Hal Austin

    @PLT,

    Plse re-read my submission regarding the Asian saving ratio, and my explanation for this. I critiqued his savings thesis because there is nothing to debate about the investment ideas.
    In Barbados, as I have suggested, the only savings vehicles apart from savings accounts are government gilts. As you know,, one of the first things the BLP government did on coming to power was to default on its gilts obligations. In the process it also abandoned its protector of last resort for investors. What do investors do when the robber is the government? Who guards the guards?
    As to putting down his work, you are too busy @PLT. As a young post-graduate student the author is well aware that all his ideas and suggestions are being interrogated by his supervisor. The intention is not to ‘put him down’, but to challenge him in order to firm up his thinking. See my critique as unofficial supervisor.
    @PLT, you claim the underlying reason for the lack of investment vehicles in Barbados is cultural, whatever you mean by that. I beg to suggest it is the paucity of ideas by successive governments.
    The best investment opportunities are those incentivised by government, which we have failed to do. I can go out and buy premium bonds (with taxed income, no growth and tax free winnings), or Individual Savings Accounts (with taxed income, tax free growth, tax free withdrawals). Is that cultural? What are the ‘variety of reasons’ for people being risk averse? Spell them out.

  20. A. Dullard Avatar
    A. Dullard

    “A more complete critique would have pointed out that the global average savings rate is distorted by China as an outlier with a savings rate of 46.9%”

    I see what you are trying to say but one country can not distort the global “average” savings rate for the simple technical reason of the number of countries over which the average is calculated, and by average I assume you refer to the mean. But China can severely distort the mean rate for a smaller pool of countries, say G7 or OECD.

  21. John Avatar
    John

    The underlying problem that we have is cultural… for a variety of reasons our risk averse culture sabotages our economic growth.

    Bajans complain bitterly that the Barbados Stock Market is moribund, but don’t realize that the only ones to blame for that is we ourselves.

    +++++++++++++++++++++

    Way back in 2000 or before a well thought of accountant/auditor told me he would never invest his money in Barbados … and he had the ear of many large Barbadian and foreign companies and well off individuals!!!

    Too crooked, too unpredictable!!

    Everybody knows and has known for ages, that the GOB is corrupt and its ministers and lackeys will steal anything that looks even remotely worthwhile, from land in good locations to business ideas that are being incubated.

    The fault isn’t only limited to the GOB!!

    The risk averse culture is easily explicable and it could be argued of recent vintage!!

    There was a time when “risk averse” Bajans got up and left so they could risk their lives in foreign lands!!

    Many prospered!!

  22. peterlawrencethompson Avatar
    peterlawrencethompson

    @Hal Austin
    “The best investment opportunities are those incentivised by government…”
    +++++++++++++

    This is an example of the cultural blinders that cripple us when it comes to investing. It is simply untrue anywhere in the world and doubly so in Barbados. There have been a few modest fortunes made by some Black Bajans over the past 40 years (not politicians) but NONE of them have been made by paying attention to what the government incentivised.

    The best investment opportunities are in people who have good ideas and the commitment to bring them to fruition no matter what the government does.

  23. TheOgazerts Avatar
    TheOgazerts

    @Haha,
    I was going to hold my peace.

    I was deliberately harsh in my condemnation of you. I was impolite but I hate your nastiness disguised in soft language. To seek to pass it off as a critique of an “unofficial supervisor” is to be dishonest…..l

    You sought to rubbish the whole contribution of the author by ending with the use of the phrase ““We need a grown up debate, not a celebration of student essays.”

    I do not know the young man, but he is an assistant professor in pursuit of his PhD and you used the word “student” which in conjunction with the words “grown up” could be taken as referring to the young man a just a “school boy”.
    (I know exactly what ‘assistant professor” means – I was one -, so don’t even go there)

    You set the tone of your comments with use of the phrase
    “This is obviously wrong. Common sense tells us that.”
    Since common sense tells us that, is the young mane lacking in common sense as he got what was obvious, completely wrong?

    With your rude introduction and ending, I did not care for what was in between. A slice of bread with caca on each side is not a sandwich. I am refuse to touch that slice of bread (or debate your points as you put it).

    I am finished…..

  24. TheOgazerts Avatar
    TheOgazerts

    I would advise others to follow the links provided in the article and read what the gentleman has to say.
    We don’t want to call this post “Hijacked”

    https://simonnaitram.com/

  25. WARU Avatar
    WARU

    Please REPEAT AGAIN…for CLARITY..

    The government invested badly, they invested in the WRONG people…53 years later and they are STILL to invest in their OWN PEOPLE..

    “The underlying economic mistake leading to default is that our government did not invest. It’s not that we spent too much money. Instead it’s that we spent our money on the wrong things. For a decade we did not invest in a brighter future. Nodebtw that we’ve reached that future, it’s a dark and miserable place.

    A government’s debt is measured relative to how rich its people are. Bill Gates borrowing a million dollars isn’t the same as me borrowing a million dollars. The richer we the people are, the more money the government gets from taxing us. A 20% tax on $100 gives the government way more revenue than a 20% tax on $20…”

  26. WARU Avatar
    WARU

    Again…

    “A government’s debt is measured relative to how rich its people are.”

    You do not maliciously, deliberately and CRIMINALLY keep your OWN majority people OPPRESSED and living in abject poverty….and expect to not be FAILED governments…with MASSIVE DEBT..

  27. Georgie Porgie Avatar
    Georgie Porgie

    RE We need a grown up debate, not a celebration of student essays.

    HAVING KNOWN THIS LAD’S PARENTS AND GRAND PARENTS AND UNCLES AND AUNTS, I WAS DELIGHTED TO HEAR OF HIS ADVANCEMENT AND TO READ HIS WRITINGS.

    HE IS YOUNGER THAN 4O, BUT IS ALREADY SMARTER THAN HAL AUSTIN EVER WILL BE IN THIS WORLD…….OR THE NEXT

    RE Hal therefore has a key role to play… like Maripoka, GP de Doc., and lexicunt.

    I DONT KNOW BOUT DE REST BUT I AINT GOT NO ROLE TO PLAY PUN BU, SO LEFT ME OUT
    I DONT CARE TOO HOOTS

    I COME HERE NOW FOR ENTERTAINMENT AND TO TALK SHITE LIKE ALL THE DAILY DRIVELERS

    I HAVE NO INTENTION OF TAXING MY BRAIN TO IMPROVE NUTTIN OR SUGGEST NUTTIN
    I JUST MEKING UP A NUMBER NOW

    I DO NOT CAST MY PEARLS BEFORE SWINE REPEATEDLY OR INDEFINITELY

    WATCH NOW…….WATCH

  28. Hal Austin Avatar
    Hal Austin

    @Theo,

    This is what is called trying to read my intentions. This is a cultural as the statement: have the last word, or I am finished. It is a rhetorical device meant to deflect from the substance.
    It was not my intention to rubbish anything, that is your interpretation. I know these claims can come back weeks/months later as my opinions. A call for a more mature debate is not to rubbish or put down. It means that the issues raised are not at the cutting edge of the topic. In short, a call to raise the bar.
    You claim the author is an asst professor but he is listed as an asst lecturer and a PhD student at Glasgow University. In other words, a post-graduate student. A school boy is a pupil, not a student, although I am aware some people use the terms interchangeably.
    The ‘tone’, as you call it, was about the savings ratio, which is obviously wrong. Given the source was not referenced, if you know anything about the subject. Had that been me, making any such claim, I would have questioned myself: that figure seems a bit high? And I would not have used it. If the author did, then he was clearly quite happy with it.
    Often we get figures used on BU that are wide of the mark. One regular once claimed that 20 per cent of Barbadian government revenue is spent on education. You do not have to see the actual figures to know this too is made-up nonsense.
    Yet, to this day, not a single person has challenged it. I raised it once and the chairman published a link to the revenue statement as evidence. There is a danger that the 13.6 per cent savings ratio would become part of the general conversation unless refuted. Maybe I should have said the figure was incorrect instead of wrong.
    By the way, what are your views on savings and investments in Barbados?

  29. Hal Austin Avatar
    Hal Austin

    @PLT,

    Sometimes you say things that are so wrong I get the impression you are simply winding people up. In every liberal democratic country, outside the Confucian cultures, the BEST investment opportunities are those incentivised (and protected) by government – tax breaks, investor of last resort, protector of last resort, regulation, access to the courts, I can go on.
    In finance, as you know, people can make money otherwise (drug dealing is one example), but without government protection it is high risk. I hope you do not give retail investors any investment advice.
    Even investments in start-ups, as you mention, are best when protected by government ie law, accountancy. Look at venture capital for an example of this. Why do you think limited liability and listed companies employ highly skilled accountants?

  30. peterlawrencethompson Avatar
    peterlawrencethompson

    @ Hal Austin
    You are completely wrong. I am not talking about finance, I am talking about building productive businesses. You seem under the mistaken impression that investing = saving. This is nonsense which is spread by companies selling savings instruments. No matter how good you are at saving you will never save your way to wealth… it is simply arithmetically impossible. There are lots of government incentivised savings instruments in developed countries: RSPs, RRSPs, 401Ks, ISAs, etc. These are great for savings, but it is a pathetic joke to consider them to be investments which can build significant wealth. The difference is simple: for savings you need to minimize risk, for investment you need to strategically adopt risk.

  31. peterlawrencethompson Avatar
    peterlawrencethompson

    @Hal Austin
    The plain truth is that savings instruments that are incentivised by government: “premium bonds (with taxed income, no growth and tax free winnings), or Individual Savings Accounts (with taxed income, tax free growth, tax free withdrawals)…” will do absolutely NOTHING to help Barbados. These will help some people save for a slightly more comfortable retirement; but none of them will create a single job, none of them will help earn a single dollar or euro of foreign currency, none of them will contribute an iota of growth to the economy.

  32. Pachamama Avatar
    Pachamama

    David

    Your article artfully continues to draw from an empty well.

    We have commented, ad nauseum, on the misguided general political-economic principles which undergird your majoritarian, but wrong, thinking.

    However please permit us to engage you on the point about a lack of investment.
    Again , a popular but imprecise notion, to say the least. The fact is that the average Bajan household is in debt. Has no investible capital. Despite the nonsense you are led to believe by the CB.

    In the first place, the saving which are popularly heralded as assessable to Bajans in local banks are largely not held by individuals but are the moneys of large institutions, local and foreign, and HNWIs.

    Secondly, how can there be an ‘expectation’ that average Bajans should invest in an economy which has a number of fundamentally uncertainties, an economy which has spent the last 30 years giving big businesses monopoly/oligopoly power, an economy which sold out the leading businesses to foreigners and allowed what was owned by Bajans (Sagicor) to be demutualized to the global capitalists.

    And David! We could go on and on pinning your ‘effigy’ to the walk, in lieu of our real enemies, but we are certain that your are very familiar with our current.

  33. Hal Austin Avatar
    Hal Austin

    @PLT

    The conversation started out about savings and investments and I was talking about savings and investments. I do not know anything about building productive businesses.
    I seem to get conflicting views about the quality of your contributions to BU. I know it is part of our debating culture to attribute things to others hat they have no said. I DO NOT HAVE THE IMPRESSION THAT INVESTING = SAVINGS. You put up a straw man and went on to know it down.
    Since you ask, the line between savings and investments is very thin. If you save in a bank account, the bank invests your money; if you save in government gilts, the government invests that money; if you save in pensions, the providers invest that money. The growth comes from the investments.
    As to saving your way to wealth, it depends on how you define wealth – and it is not arithmetically impossible. Here are two examples that UK investors are familiar with: if from birth parents/guardians/grandparents invest in a stakeholder pension for the newly born, by the age of 55, when that pension could be accessed, the beneficiary would be a millionaire. You can argue about the impact of inflation on a million pounds, but that is the reality.
    The other is if from the launch of ISAs in the UK an investor had invested the full amount allowed in a stocks and shares ISA, they would have saved a million by the start of 2018.
    @PLT, you must stop your scatter gun approach about these things and stick to what you know.

  34. peterlawrencethompson Avatar
    peterlawrencethompson

    @Hal Austin
    The gap between savings and investments is enormous. When you save money in your bank account and the bank’s loan portfolio is for cars and other consumer items there is no link between savings and investments. That is what happens in Barbados. If you save money in Barbados savings bonds or other government paper and then the government uses that to pay the salaries of civil servants then there is no link between savings and investment. That is what happens in Barbados.

    Barbados needs actual investment.

    Savings and investments may look similar, but there is a world of difference. Savings are like a ship moored in safe harbour: it is safe but unproductive because it is going nowhere. Investments are like a ship on the ocean: it may run into stormy waters, but it is actually productive and going somewhere. You need to be able to tell one ship from the other.

  35. Hal Austin Avatar
    Hal Austin

    @PLT

    Come on. When you save as an individual, the bank invests collectively. @Peter that is elementary. The interest you get on your bank savings account comes from growth of the investment – think mortgages. When you invest in an insurance policy, that premia are invested collectively and the payments made through a policy called smoothing – think pensions.
    @PLT that is the link between savings and investments. Every time we talk about savings and investments you fall back to nonsense about what happens in Barbados.
    I cannot believe you have said “Savings and investments may look similar, but there is a world of difference.” Have you ever studied finance? Where does the cash to invest come from?

  36. peterlawrencethompson Avatar
    peterlawrencethompson

    @Hal Austin
    When the bank’s loan portfolio is consumer lending do you consider those to be investments?

  37. peterlawrencethompson Avatar
    peterlawrencethompson

    @Hal Austin
    I “fall back” on “what happens in Barbados” because the subject of this discussion is literally the failure to invest IN BARBADOS… and you yourself critiqued the author’s connection of this failure to the national savings rate.

  38. Barbados Underground Whistleblower Avatar
    Barbados Underground Whistleblower

    John

    Since Harry’s Nitery it is claimed that lots of strip clubs have opened!!

    Do Banks lend for investment in these new businesses?

    From where does the money come?
    ×××××××××××××××××××××××××

    Drug dealing profits and taxing of the visitors/exotic dancers on travel and Immigration clearance.

    Banks do not loan to Strip Clubs and many are ran by US Criminal Deportees.

  39. Hal Austin Avatar
    Hal Austin

    @PLT

    We are all here because we are interested in Barbados. But unless we get the theory right we will not get the application right. I know sometimes in Barbados we like to make it up as we go along, but there is nothing exceptional about Barbados. Keep it real.
    That is why the bogus narrative about foreign reserves and the mass sacking of public sector workers are not in themselves solutions to our economic problems.
    I critiqued the 13.6 per cent savings ratio because it is clearly incorrect (or wrong). Think outside the tiny Bajan box. There are other ways of getting foreign direct investments in to Barbados. Over the last ten years I have suggested a number.
    I will end with this as a bit of free advice to our tourism officials: if you make Barbados a desired destination, then the foreign capital will follow. Not the other way round. (ask the BU archivist who monitors every contribution by contributors).

  40. John Avatar
    John

    Government incentivized CLICO!!!!

    No words of warning were given, in fact all the investing public could hear was it is a safe bet … and from PM’s!!

    … and the PM’s knew the regulatory controls were deficient.

    There has been the Cotton Factory, Trade Confirmers, Plantations, BS&T CLICO and plenty others that are private where it is clear the message is, don’t invest in Barbados!!!

    Now we are in the sights of the OECD for sharp practices and the former Minister of International Business is before the courts in Florida.

    Monkeys handling gun!!

    Why would any sane individual invest in anything in Barbados … except what he/she controls?

    That means more than likely, family businesses need to grow … and new ones need to spring up!!

    It means strong families need to be built ….. but the family has been systematically attacked by the GOB and its lackeys from Independence!!

    There is no way any individual in Barbados is going to invest money with a family he/she does not know.

    A bank might!!

    If we want our economy to grow we better get a clear understanding of the importance of family.

  41. John Avatar
    John

    I will end with this as a bit of free advice to our tourism officials: if you make Barbados a desired destination, then the foreign capital will follow. Not the other way round. (ask the BU archivist who monitors every contribution by contributors).

    ++++++++++++++++++

    … and I have given the way how to do that!!!

    Every square inch of this island is a World Heritage Site.

    Think Quakers!!

  42. WARU Avatar
    WARU

    Yeah…and look at the results ..

    the lessons that should have been learnt from the 70s and 80s with Trade Confirmers and coming forwad to the 2000s with CLICO..:

    DO NOT invest your money with insurance companies or any of the other fly by night businesses in Barbados…especially Barbados JOKE for a Stock Exchange BSE..they are ALL CROOKS. .

    DO NOT invest your money in anything government or in anything Mia Borrows and her gang endorses…ya will be ROBBED blind and sent to ya graves BROKE…with NOTHING left to leave your families….

    They are ALL hardcore thieves…ya can’t say you were not WARNED.

    “”Earlier this month, the private entity representing thousands of former CLICO policyholders had requested an urgent meeting with Prime Minister Mia Mottley to address fears that many more of its members may die without receiving “one red cent” of their savings if Government’s recent bond exchange offer is applied to their investment.

    President of the Barbados Investors and Policyholders Alliance (BIPA) June Fowler said then,

    “Our concern is that more of our members will pass away, adding to the 300 people who have not survived the CLICO debacle [over the past 10 years] to see their hard-earned savings being returned. These issues need to be addressed as a matter of urgency,” Fowler said.

  43. peterlawrencethompson Avatar
    peterlawrencethompson

    @Hal Austin
    “… unless we get the theory right we will not get the application right…”
    ++++++++++++++++

    EXACTLY!!
    What Barbados needs is jobs, foreign currency earnings, and economic growth. Agreed? Therefore our strategies must be designed to produce these outcomes.

    You have shown that tweaking the savings rate will demonstrably NOT produce these outcomes because the western liberal economies that have a productive private sector have modest savings rates (the UK has a 0.0% savings rate). It is clear that bank lending to buy imported cars will not produce the outcomes we want. I can demonstrate that savings instruments of any sort, government incentivised or not, will not produce the outcomes we want. John has recited the regrettable list of Barbados government incentivised investments: “Cotton Factory, Trade Confirmers, Plantations, BS&T CLICO and plenty others…” and this makes it clear that government incentives in the Barbados context are like kryptonite to Superman.

    So what then should we do? You suggest foreign direct investments. These can be productive: Gildan and Lenstec are among the better examples. I suggest that we also grow our own companies that can compete in the global marketplace. The major barrier is not money, but mindset and know-how. It will require some angel investment, venture capital, and impact investment, but it is entirely feasible. However, neither banks nor government incentivised savings instruments will be of the least utility for either foreign direct investment or local ventures.

  44. Mariposa Avatar
    Mariposa

    Barbados needs to get back tonthe drawing board and tweet those incentives which were giving as gifts by older generstion
    Even a cat takes caution before it crosses the street which brings to mind barbados investment in Liat with one purpose in mind but unable or did not have the vision to understand the economic principal of profit and loss

  45. WARU Avatar
    WARU

    “I suggest that we also grow our own companies that can compete in the global marketplace. The major barrier is not money, but mindset and know-how. ”

    I have said on here ad nauseam …unless MANY MORE businesses are created…preferably BLACK OWNED businesses to give the majority population access to free enterprise and business building, that can be expanded regionally…then internationally with time …to continue broadening the tax net…generation after generation……Barbados will continue to go nowhere..

    …even IMF told them the tax net needs widening, to do so common sense dictates that more businesses are needed, many more..

    But a narrow minded government would never want that, although the country can never do anything but limp along with just a tiny minority of the same blighted business people destroying the economic landscape and a useless tax collection system the jokes in parliament refuse to adequately upgrade….

    PLT…it is an exercise in futility …you have no geniuses in the Mia Borrows government.

  46. Georgie Porgie Avatar
    Georgie Porgie

    re Mariposa November 23, 2018 2:02 PM

    Barbados needs to get back tonthe drawing board and tweet those incentives which were giving as gifts by older generstion

    AC I AGREE WID YOU CHILE

    Barbados needs to get back tonthe drawing board and tweet LIKE TRUMP! MURDAH!

  47. TheOgazerts Avatar
    TheOgazerts

    🙂
    tweet or tweak
    Something like trick or treat

  48. Hal Austin Avatar
    Hal Austin

    @PLT

    Stop fabricating an argument. I have not mentioned anything about savings interest rates. I have mentioned the rate of saving, ie the savings ratio. Again, you clearly do not understand modern finance.
    As you mentioned savings interest, it is the interest rates that attracts savers. When competing banks and savings institutions offer attractive rates it is a sign that they urgently need cash.
    Here is lesson 101, do you home work: the reason why the savings ratio is so low in the west are two fold: the first is near full employment, unlike in Barbados, when a bank manager can get fired and be reduced to near poverty, in developed economies it takes on average between three months to six months to get a job; and while unemployed there is a social security safety net; in the UK that includes the state paying the interest on your mortgage. It is the argument for a savings nest egg.
    Second, money is cheap; interest on borrowings are at historic lows. And, until recently, when China was the global factory for consumer durables, it was the case that Walmart could import televisions from China, sail them across the Pacific, drive them across the US, and sold them on the East Coast for US$1 each.
    Modern capitalism is driven by debt, that was why Owen Arthur could argue that the Barbados economy flourished under his prime ministership. He was being economical with the truth.
    Your argument is all over the place, on minute we must grow our own companies, next local companies such as Clico and Cotton Factory – you could have mentioned Banks. We can compete in the global market place and have an outstanding product; it is called rum, not tourism. Why is it that we turn our backs on rum?
    You are right, the barrier is snot money, but ideas. It is only when you are outside Barbados that you realise fully the poverty of ideas that cover the nation like a fog.
    You also talk about Angel Investments, Venture Capital, etc, but they are all cushioned by fiscal policies. What is there about that that you do not understand. Read the Entrepreneurial State by Mariana Mazzucato. Or Google it.
    I suggest two books for further reading; Alistair Milne’s The Fall of the House of Credit; and The Myth of Capitalism, by Tepper and Hearn.

  49. Gabriel Avatar
    Gabriel

    Hal @2.59
    “it’s only when you are outside of Barbados that you realize fully the poverty of ideas that cover the nation like a fog”. I assume a pea soup fog.Thank God for emigration.We managed to make Barbados a paradise for those of us who remain on the rock.You show your slip every time you write and try to foist the title of a book on BU.Reminds me of a certain bajan wannabe who drives around with books on economics and such like on the back shelf of his car…Wannabes..

  50. WARU Avatar
    WARU

    Ah take it someone is not happy with the 2 has been DBLP governments, this is being shared across Facebook.

    “NEED A JOB? WANT TO STEAL MONEY GET RICH QUICK, DONT PAY TAXES,AND TALK NUFF SHIT.PLEASE APPLY TO THE BLP OR DLP ADMINISTRATION.”

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