One thing this blogmaster knows from reading evaluations about the 2008 global economic crisis, it rubbished classical economic explanations. In fact the crisis served to popularized behavioural economics which is described as “an important link between economic and psychological sciences in the analysis of individual decisions especially combining psychological assumptions with economic decision-making analyzes, draws attention with its approach to the 2008 global crisis“. In simple terms the classical economic approach assumes individuals will be rational and consumed with self in decision making. Injecting behavioural economic considers psychological factors that serve to motivate people, force attitudes and create expectations. Using the theory of behavioural economics the conclusion was made that the 2008 global meltdown was more than a financial crisis, it was a crisis of confidence.
In recent years both political and NGO talking heads have been trotting out the message Barbadians should save in the credit unions because the movement is seen as more supportive to empowering Black and working class people based on its philosophy. They should challenge a risk averse mindset and use the billions in savings lodged in the banks to invest or buy equity stakes in businesses. In recent weeks the government has indicated a special arrangement will be established to attract citizen investment in renewable energy program. The government is on a mission to persuade risk averse Barbadians to INVEST.
There is an interesting inference to the 2008 global financial crisis and the austerity period Barbados has been navigating for the last eleven years. Although acknowledged there was a financial meltdown in 2008 in the USA – bear in mind the Barbados dollar is forever pegged to the US dollar – Barbadians ignored the failing economic indicators and maintained a lifestyle not reflective of the harsh economic environment. The irrational behaviour by Barbadians- including the government- has been responsible for the current perilous state of the economy.
In the book Stolen: How to save the world from fictionalization by Grace Blakeley, she wrote, “when people are uncertain about the future, they may behave in ways that seem irrational – for example, saving when they will receive little return for doing so, or spending far above what they can afford. This is because in the context of uncertainty, people prefer to hold liquid (easy-to-sell) assets – and they tend to prefer to hold the most liquid asset of all: CASH (blogmaster’s emphasis). Liquidity preference means that, the higher the levels of uncertainty, the more people save rather than spend“.
The same is true about business behaviour and how investment decisions are taken. Blakeley states, “this kind of uncertainty marks business’ behaviour even more than consumers’ and affects their investment decisions. If businesses’ confidence about the future turns, they are likely to stop investing. These lower levels of investment will result in lower revenues for suppliers, who may have to lay people off, who will reduce their spending, leading to a fall in economic activity“.
The point to be made is that it is not enough to expect Barbadians will behave rationally by answering the call to invest, there are underlying psychological reasons to consider. How does a government committed to transforming the way we do business understand the psychological factors at play in Barbados? Has this government with a bevy of communications people on payroll developed a strategy to counter the underlying psychological factors? So much learning from the 2008 meltdown but have we learned anything?
Social scientists have no satisfactory explanations for these ethnic differences. Many old-fashioned economists ignore them, and treat people as atomistic individuals, as if we are all the same, which is nonsense.(Quote)
Give us an explanation.
Any investor who is not an idiot will prefer to invest in companies that address a market bigger than the domestic one.
The company making fertilizer out of fish waste is export oriented for example.
peterlawrencethompson November 10, 2019 4:02 PM
The answer (e) is like motherhood and apple pie? Your focus on the individual and collective need to make things happen is agreed with.
That said, while there is no need to complain about B or D, there is a need to improve the level of government and its governance. Likewise bemoaning our perceptions of the risk tolerance of others, really means there is likely to be less competition associated with any opportunity. So go for it.
Peter from what I have observed of the island and the supply and demand factors is you should be investing in dat. I found whenever I would would walk down town with my teenage daughters I would always hear people saying…. gimmah some of dat…. or …..want some dat nah. So I can only guess there is a shortage of dat whatever it is.
Ok fellows well unlike some i don’t like to pull figures out the air, so below is why I proposed going to a small cap market where the public can participate. As PLT outlined we would place certain guidelines in place so that the investors are protected. Now below is data from fsb.org.uk on the small business sector at the beginning of 2019 there.
” the UK currently has 5.82 million small businesses with 0 to 49 employees. They represent 60 percent of total employment in the UK private sector and 50 percent of the total turnover in it as well.”
Now I am not saying we are anywhere near that level of contribution percentage wise here. But i will say the sector based on the UK data, has tremendous scope for growth. 50 percent of the total Turnover in the UK private sector is nothing to sneeze at.
We have to start some where.
Yes and ideas have been ventilated here and other places. The problem is we can’t legalise such suggestions, only government can put the necessary frame work in place.
What I can tell you though is that the U.S Stock Market does a nice trade in what is called PENNY STOCKS. Those that are interested can research this area.
@ John A
Both in the US and UK small and medium enterprises created most of the jobs. Mega companies do not created a proportional number of jobs. By the way, how is a small enterprise defined in Barbados?
At one time is was defined as a business with sales of under 1 million dollars annually. Not sure though if that criteria still stands.
This link should be useful, page 29.
November 11, 2019 1:04 PM
@ John A
Both in the US and UK small and medium enterprises created most of the jobs. Mega companies do not created a proportional number of jobs. By the way, how is a small enterprise defined in Barbados?
I have asked the same question for years. Never got a proper answer. Same way I asked how do we define middle class. We can’t explain or understand the basics but love the” hifuhlutin “.
Government has (or had) a small business unit. Do they ever report? I remember attending a meeting with them in Warren’s, all the young man and woman did was to take notes.
@peterlawrencethompson November 11, 2019 10:52 AM
+++Any investor who is not an idiot will prefer to invest in companies that address a market bigger than the domestic one.+++
Presumably that is the answer to the question: Would an investor prefer …… a market bigger than the domestic one?
Respectfully, however, It is not the issue I posed. Here is what I said:
Unless the “micro entities” created impact significantly on import substitution it will not bring us out of the current [but-no-so-current] situation.
What I am saying is that we will need to ensure that we create enterprises that are export oriented, perhaps from the get-go. A restaurant is not by definition (or is it “expectation”? ) an export-oriented enterprise. However, Cheffette has achieved a certain level of internationalization.
The question – if we really need one is: How do we “ensure” that the enterprises created are export oriented…from the get-go?
What policy framework can be implemented to drive entrepreneurs and investors towards creating/ financing export oriented (a.k.a “born global”) enterprises?
Barbadians who have enough savings put aside for an emergency can take a ” risk ” with their extra cash.
Emergency cash to pay for an Air ambulance to Miami and the deposit for the Hospital visit.
Eight pseudonyms and counting. Anyone who uses so many bogus names must have a problem.
In the Caribbean, lending money for business startups only makes sense if you can trust the borrower.
Lending to blood relatives, honest and reliable friends, members of your church, etc. might be sensible, but lending to total strangers seldom is.
It is downright irresponsible of politicians and community activists to make it sound like we have a patriotic duty to lend our personal savings to local entrepreneurs. Given the horrific failure rate of new businesses, it is almost never a good idea to finance somebody else’s business ideas.
If the Barbados government needs to stimulate investment activity, the time-tested approach is to use a Citizen-by-Investment program. Or facilitate the formation of specialized venture capitalist firms.
One million Barbadians could be the boost the economy really needs, respected economist Jeremy Stephen has suggested, as he threw his strong support behind Government’s push towards a managed migration programme.
did you see some ‘think group’ wants Toronto to grow to 35 million by 2070. The new wave of economics seems to be growth by massive population expansion.
The infrastructural load, sewage-water-garbage alone, would need massive expenditure.
Every time I watch Stephens, he reminds me, facial expressions and how he grabs his face with his hand, of Kellogs Walrond.
God save us all from the current generation of UWI economists.
One million Barbadians could be the boost the economy really needs, respected economist Jeremy Stephen has suggested…(Quote)
I was under the belief that Mr Stephens was a lecturer in banking and finance at UWI. What is his experience in banking and finance, apart from his academic studies?
Anyhow, to the above point, the idea of a million people on a 166sq mile island is not just bad economics (the prime minister is also supporting a call for a growth in the population), it is idiocy. It has something to do with mimicking Singapore.
Of course, no one is saying why we need a growth in population, but it can be assumed that what they are talking about is productivity. WE DO NOT NEED A GROWTH IN POPULATION TO INCREASE PRODUCTIVITY. We need to work smarter, maximise the economics of comparative advantage and use technology and artificial intelligence positively.
Why can’t we debate these things.
By the way, can @Walter Blackman explain to the blog what de-risking means in terms of insurance and banking? I have seen some weird explanation in another place that put a smile on my face.
Lending to blood relatives, honest and reliable friends, members of your church, etc. might be sensible, but lending to total strangers seldom is.(Quote)
When you work and have your salary paid direct in to a bank account, does that mean you know and trust the banker, who then charges you to access your own money?
Any investor who is not an idiot will prefer to invest in companies that address a market bigger than the domestic one.(Quote)
Plse explain what percentage of the Barbados economy is driven by consumer consumption and what by exports.
Never take an IQ test because the results will be really bad.
Banks and bank transactions are highly regulated. All financial institutions are required by law to have strong internal control systems. (Look up the meaning of “internal controls” because it is used here as a technical term). That is why we can usually trust banks with our money — but not total strangers
@ Ewart Archer
Financial institutions highly regulated in Barbados? Really? First, do you know anything about financial regulation, because I do not. Plse explain the internal controls in its most technical sense? So we trust banks because of their internal controls? I have said to you before you should use these years for learning.
By the way, what is an IQ test? Poor me.
Nothing in Barbados would be properly managed or control So when Stephens throws his endorsement around a migration plan bandied about by present govt
He could not be living inside barbados
First govt would have to deal with the millions of extra garbage coming from this vast migration
Along with the growing expansion of families which includes birth rate
A hospital that can accommodate and give impeccable service to this new and expanded population
Also natives barbadians once again having to get accustomed to differing cultures and they way of living
Not to count out violence which will become more pervasive as the population increase
Housing a must to housed the increased population
Does govt have resources or plans to accommodate an extended population of foreign people on our soil.
Yes. Really. Regulation does not primarily involve government oversight, although governments set the rules and have ultimate responsibility for them.
Regulation is primarily
achieved through the routine and non routine professional practices of the financial services industry and its auditors.
You are, or were, a journalist. Which is to say a jack-of-all-trades and a master of none. Do not confuse your condition with mine.
Thanks. I was a journalist, no even a good one. I still say you should use this time to learn.
“… we will need to ensure that we create enterprises that are export oriented […] from the get-go.”
Yes, this is the only way to revitalize the Barbados economy.
We have to earn to pay the bills. We import almost everything therefore shifting focus to being an export oriented economy is non negotiable.
There is the alternative position, we can curb our consumption addiction.
“… lending money for business startups only makes sense if you can trust the borrower.”
This is true everywhere in the world.
The only way to build an economy that is prosperous for the vast majority of people is to build a society where such trust exists. This means innovating social structures to create safeguards so that trust can grow.
The innovation under discussion here— a crowdfunding equity investment platform— is a social structure to create safeguards so that trust can grow.
Right now we need growth in the economy full stop. If that growth could be mainly by export oriented businesses that would be great. If it can’t be and will only expand the domestic economy, I for one will still welcome it.
Remember while no one wants to discuss it we are in a recession as defined by the fact that we have experienced 4 consecutive quarters of no growth.
@ John A
I asked before: what proportion of the economy is driven by exports and what by consumer consumption?
@ David November 12, 2019 7:23 AM
But Blogmaster, the only ‘export’ Barbados has a comparative advantage in is Tourism.
The current model of beach-based tourism is fading into a sunset industry and coming under further threats from the growing realities of climate change and self-inflicted environmental degradation.
Barbados needs to attract FDI in this sector before the sun goes down and it is not doing a fast enough job of it.
“Barbados needs to attract FDI in this sector before the sun goes down…”
But it’s already too late. Given the construction time frame and the decades required to amortize large capital investments in the sector, the sun has already set and we are existing in twilight.
If you expand the domestic economy would it trigger? A hint is that we import a significant % of our consumption. Although Mascoll has assured us many times 70 cents out of every dollar remains in Barbados this blogmaster is not convinced. Maybe Vincent can lend some assurance.
The Waterman festival conceptualised by Brian Talma was never given the attention it deserved. Its potential remains untapped. It should be marketed as an escape from the winter, offering novice, semi pro and professional competition. By now this should also be a national festival with school participation.
The Soup bowl still remains one of our greatest natural resources, the surf break is legendary and unique. Chelsea Tuach, Josh Burke and the other Chelsea girl are evidence we can produce world class surfers. Surfers and surf fans are loyal, they spend money and can be counted on to spread the word and invite others. The branding possibilities are huge. Surfing is also becoming a lifestyle sport, for persons of all ages. Surfers aren’t into brand name lodging like Sandals or Marriott, and are more likely to use AirBnb, so there is also potential for everyday Barbadians to invest and earn foreign exchange.
Instead we trying to develop road tennis, why, so the Chinese can take it over.
Developing those two examples will not require loads of capital and can give immediate returns, they may also attract FDI for development of the east coast.
Unfortunately Kerry probably looks awful in board shorts, so no photo ops.
A foreign dollar saved is the same as a foreign dollar generated. If these guys can produce products that will bring import substitution we will still get where we want. For example why the hell do I need to buy imported lettuce and tomatoes sometimes?
If the micro businesses focused on food production alone for example, it would put a massive dent In the fx used for food imports.
The guys don’t have to export they just need to produce products that save us from importing and the net effect will be the same.
Also most of the small businesses in manufacturing do add a certain amount of value added to what they import, so Mascolls figure may well be correct.
@ John A
Why does Massy in Oistin’s sell carrots from Canada? Apart from climate change, have Bajans lost the skills of farming vegetables?
That is a hard one to answer because we all view exports differently. For example I view duty free sales to tourist as equivalent to an export of an item. So in my view to get an accurate answer we need to add ALL foreign exchange earning entities together and treat them as exports. We can of course break them down by sector still but they are all foreign exchange generators in the end.
Help the blog to understand how in a free trade environment we can freely impose protectionist measures?
Why do we need foreign reserves?
@ peterlawrencethompson November 12, 2019 9:08 AM
PLT, I was being euphemistically kind to those who actually believe that there would be a miniature model of a Florida-based Miami beach lookalike along Bay Street called the Carlisle Bay Hotel corridor to be conceptualized and become a reality where nudist beaches, gambling, prostitution and recreational drug taking is a no-go area of Christian innocence of a bygone era which never existed like La La land.
What i am outlining is not protectionism it is import substitution. If there is an abundance of local lettuce in constant supply selling at $4 a head and someone wants to import lettuce to sell at $7 a head, then by all means please feel free. This is where market forces will dictate that there is no need for the imported product. I saw a little tray of imported mixed lettuce in a supermarket the other day for $12. When I asked why there is no local lettuce I was told ” boss de rain falling nobody ain’t got none.”
Your carrot question is the same as my lettuce question. Why the hell in a climate like ours are we importing these items?
I would love to see a survey done that would outline how much we could cut our food import bill by implementing a program of locally grown produce substitution. I agree we can’t grow rice large scale and items like that, but don’t tell me we can’t be self sufficient in vegetables and other ground provisions.
Then again I saw in the same supermarket a tray of Stoufers macaroni and cheese for $28!
Imaging Importing Mac &cheese pre cooked to the macaroni pie capital of the Caribbean!
Why do we need foreign reserves? (Unquote),
John A, would you please answer that question, ASAP?
The man from England could be ‘onto’ something.
If only the current BLP administration had followed his advice there would have been no need to borrow from the IMF and attract the economic strictures of BERT.
Barbados would have paid off its foreign loan obligations due at the time and would have saved millions in foreign currency-denominated advisory fees paid to the White Oak newbie tree and its sub-contracted consultants of ‘insider’ capital intelligence status taking their share of the cake totally baked by the hardworking Bajan taxpayers and hotel workers.
The foreign exchange argument is one viewed differently by many.
Some argue as long as our FX earnings are adequate with a small surplus we don’t need reserves. Others argue we need reserves as a buffer if our earnings are affected by some global incident that would affect our ability to earn FX.
My view is that as long as we can earn enough FX steadily to meet our needs with a small surplus every year, I don’t see the need for massive reserves of borrowed money that sits there being non productive. Also how does one know we are in fact earning our way, if we constantly are borrowing money to prop up our reserves which we then dip into mainly because we ‘re not earning enough?
This is a question that can be debated till the cow growths teeth and they will always be conflicting views.
You are aware a significant % of our reserves is borrowed? You will recall if Barbados did not have the 1 billion bigger Arthur left the DLP would have taken us where in the last ten years? Anyway, philosophical positions will always be with us.
John A at 11 :41 AM
You are quite right. A lie repeated a hundred times becomes truth in certain peoples minds. And no argument to the contrary will change their belief.
Barbados has always managed the risks of exogenous factors that temporarily affect the economy. There is never a good reason to press panic buttons to hedge against unknown unknowns.
Can your comment be challenged if the aggregate effect of bad decisions are considered and the unprecedented 2008 position that exposed the fickleness of the economy?
@ David BU
Borrowing is borrowing . Until recently, loans have to be repaid.
@ David Bu at12 :32 PM
What do you mean by fickleness of the economy? And what was unprecedented about the 2008 position?
Since 1994 debt to GDP ratio has been on the rise. Was there a tipping point giving the trending (see link). Was there a point the economy stalled because of poor decision making somewhere in the time series?
@ David Bu
All my comments are open to challenges. That is one of the many reasons why I put them out there.
Of course your comments are a must read!
@ David BU
I am not comfortable accessing the link. What is the source of the Debt/GDP series?
There are none really. It depends on the comfort levels of borrowers and lenders. They are, both, required to do due diligence.
We have had this discussion on acceptable levels of DEBT/ GDP ratios several times on this blog. They must be disaggregated by purpose and source.
I do not think decisions( good or bad ) are additive. New managers come into office to make decisions on the agenda before them. That is why they were appointed and elected not so?
Why the harping back to what your predecessors did or did not do?
@Vincent your expert opinion would be nice.
“Government is putting a stop to spending more than it earns as it focuses on ‘growing’ the island’s economy.”
” Government consumption during that period, the decade 2008 to 2018, ‘crowded out’ private investment,”
It’s a matter again of opinion. In my view reserves should be recorded as net reserves after Loans are removed. Only that way can you compare one year with another accurately. To borrow $500M the end of April and to then come and say in May that reserves for May were up $500M on last year is total horse droppings.
In other words good politics but piss poor economics.
It is a recognized website, your choice to access.
@ John A November 12, 2019 11:41 AM
A reasonable and intellectually-stimulating response.
However the validity of your argument to the Bajan scenario would hold only if Barbados was a consistent net exporter of goods and services sufficient to support the local currency from the high risks of devaluation.
Barbados has to borrow to support its balance of payments either in the form of borrowing on the open markets or by way of injections of FDI which are effectively investment loans which must be recouped and repatriated in the long term.
Do you recall when $300 million in foreign reserves went ‘missing’ out of the blue just after the February 2013 general elections? Has the Bajan economy recovered from this sudden and significant loss of forex blood?
How can $300 million in foreign reserves go missing from a two-bit economy without serious investigations into this national embarrassment?
What is the current governor’s position on this electorally contrived sleight of hand? Was he part of that national accounting foul-up of a political cock-up?
The question still stands as to why the current administration- with all the local economists, financial gurus and ‘consulting’ brain power available to it- opted to go the Loans Default route.
What was the stark alternative looking Barbados in the face?
Went missing to me means either it was recorded incorrectly or booked as a prior promise that never arrived. Lol
You know like when we say we have a billion dollars in the pipeline of new development. No one ever says when, what’s concrete etc
I know we shouldn’t joke about it but they are so many questions unanswered what Is one more?
@ Hants at 1 :20 PM
Two promises,which I am sure the GoB will try to honour. In other words we should expect Balanced Budgets as we go forward. Aiming at a surplus is self defeating if not impossible.
I am not too sure about the crowding out effect of GoB borrowing during the referenced period. Did the private sector provide viable projects over that period to the banks that were turned down because of lack of funds?
Were any IPO floated on the Barbados Stock Exchange in that period?
Did the private sector projects not depend on GoB funding directly and indirectly and tax concessions before 2008 and after?
I agree that the Private Sector needs to step up to the plate and I have been saying that for years. Let us hope we have turned that corner.
There has been a low interest rate regime in Barbados for atleast 7 years and it is likely to continue. Is that good for business ? Or is the World wide slow down in the economy affect the domestic economy?
Observation: the rapidly annoying pah-lit-icks reference to “the decade 2008 to 2018”. Even the Senators have to bore us with this rhetoric, where they raise their voices, and become more animated, as if on a pre-election platform. Barbados, as @ac liked to remind us, ran annual deficits from 2005 onwards. The peak was in 2013 & 14; when the annual deficit exceeded $1B. And it was an operating deficit EVERY year from 2005-2017/18. Let’s get on with 2019 and the years ahead. The milk done spill.
@ John A
You are remarkable. You still see light at the end of the tunnel. I have said to you before, the major problem in Barbados is incompetence. We have people who do degrees in economics and become experts on every aspect of the discipline, even of banking and finance.
We have accountants expressing views on complex macro-economics; we have party loyalists who see no wrong with anything done by their parties.
Yet , you keep on positively engaging people on this blog, even the talking heads and fraudsters with their seven bogus names. We need honesty, both from the BLP and DLP: what is the deal with China? Why do Chinese doctors practice at the QEH? Are they secretly carrying out any test or experiments on Barbadians? What about those doctors who qualified in Cuba?
Who is going to come clean on the external debt? Now we are told government won’t be borrowing anymore for the next four years. Really? No more borrowing up until the next general election? Was this decision made for us? If so who by?
Then there is the matter of productivity: when are we going to discuss growth (@John A your favourite)? How are we going to achieve this? What about the airport concession? Is that deal still on? If so, who with? W hat about the 12-hotel corridor? Have we done an impact assessment of a likely UK recession on Barbados tourism?
November 12, 2019 4:33 AM
“By the way, can @Walter Blackman explain to the blog what de-risking means in terms of insurance and banking? I have seen some weird explanation in another place that put a smile on my face.”
A lot of human activity involves risk.
We run the risk of dying too early (premature death) and leaving our family in dire financial straits.
We run the risk of living too long (longevity risk) and not having enough financial resources to support ourselves in our old age.
We run the risk of getting robbed if we store too much cash at home, and we run the risk of the value of our money being eroded by inflation if we leave it sitting idly under the bed.
Traditionally, in the financial services arena, models were developed to MANAGE these risks. Thus, we developed insurance policies to manage the risk resulting from premature death, and we developed pension plans and annuities to manage longevity risk. We use banks and investment houses to keep our money safe, and to hopefully credit us with a rate of return that is greater than inflation.
The risks inherent in these models ultimately manifest themselves as liabilities on the balance sheet. Monies have to be reserved for events that will occur in the future.
In the pension arena, for example, the longevity risk has been managed by the plan sponsor (employer) setting aside sums of money yearly to provide a promised pension when the employee reaches retirement age. Monthly pensions to retired participants are routinely paid from the trust fund of the pension plan.
However, rather than manage these risks and keep liabilities on the balance sheet, some employers have decided to use techniques to AVOID these risks altogether. Thus, some eligible participants in pension plans are paid lump sums in lieu of monthly pensions. Once the lump sums are paid, the employer no longer has to account for them, and no liabilities appear on the balance sheet. Some employers purchase annuities from insurance companies (Do you remember that some Barbadian employers purchased annuities from CLICO?) for their pension plan participants, and consequently, the longevity risk is avoided by the employer and transferred to the insurance company. These are major de-risking techniques used in the pension arena.
Another example of de-risking can be cited in the banking sector. Legislation aimed at preventing money laundering and thwarting the financing of terrorist activity, has now forced banks to be more circumspect in their dealings with depositors and other banks. Some banks have decided that the penalties, fines, and needed additional staff resulting from this legislation are really not worth the return on investment, and have decided to AVOID the risk altogether by terminating their relationships with depositors or correspondent banks. Do you remember a commercial bank in Barbados compelling a Barbadian depositor to remove his funds from the bank?
To my mind, de-risking is the overall process of moving away from managing risks to minimizing or avoiding risks.
Walter how should we reconcile your comment with the mouthing of Minister Ronald Toppin re banks being made to do business with Cannabis sector the government is working to give wings?
One million Barbadians could be the boost the economy really needs, respected economist Jeremy Stephen has suggested, as he threw his strong support behind Government’s push towards a managed migration
Citing his own research, he said economic development would grow significantly if the Barbadian population were to quadruple its current size of 280,000 to at least one million.
Noting that Barbados may only be able to double its population in the next two decades, he stressed that no managed migration programme should come before assured investment in new sectors. He further argued that managed migration must only be for the purpose of filling voids in the skills needed for the new non-traditional sectors without risk of disenfranchising Barbadians.
Stephen told Barbados TODAY: “About 80 per cent of Barbados’ industry is directed inwards, so in other words, you make the money on activity happening on the ground.
“If you have an increase in population, especially from those that are brought in high-value areas, it is greater likelihood that the goods and services on the island can serve more people and as a result you will get an increase in GDP.”
Arguing that history is on his side, the UWI economist said all of the countries that have gone this route, numbering about 20 in the last two decades, have reaped significant economic benefits.
He explained: “There has never been a case in history where managed migration has not resulted in positive economic results for that country.
“In cases where you are purposely filling gaps that the current population is not prepared to take up for one reason or another, be it a lack of skill or resources, there is no evidence of displacement of locals.
“The only way you have displacement is if you bring people that can replace locals simply by under-pricing and not by skill.”
Noting that Barbados has suffered from low birth rate and high net migration over the last 20 years, Stephen argued that managed migration is the obvious solution, adding that it must be done on a large scale in order for it to make sense.
He said: “Any country that has a high net migration will always have a drag on its economic growth. In addition, the cost of living is becoming so high that there is now a distortion between the public pension [NIS] and what persons actually need to survive.
“The way you fund pensions is through birth rates, through population growth and through productivity.
“Persons who will be accessing the pensions in another five years will be the first persons to begin to feel the impact of these problems, although we are seeing them to some extent already.”
But when asked about housing that many people on a 166 square mile landmass, Stephen explained that this would require a major shift in culture, as Barbadians will need to get used to the idea of living in apartments in high-rise buildings, instead of houses with substantial yard space.
The economist said: “This is going to be one of the major adjustments for Barbadians because given the size of the island. It means that we are going to have to build up and not out.
“In other words, people would have to become accustomed to living in apartments.
“It may have to be similar to the NHC projects but much better managed than before.
“I believe that there are many young Barbadians that would be okay with this type of accommodation, but the question is if the older parts of the population will also be willing to do so.”
Stephen also called for the ramping up of social services, which he believes would be possible if there is an influx of persons and businesses contributing to the public coffers.
He said: “You are going to have a lot more tax revenue coming in but when that happens, you have to re-direct towards four key areas; healthcare, education, housing and water.
“There has to be major development over a ten to 20-year period in order to sustain the population increase.”(Quote)
Citing his own research, he said economic development would grow significantly if the Barbadian population were to quadruple its current size of 280,000 to at least one million.(Quote)
The way you fund pensions is through birth rates, through population growth and through productivity.
“Persons who will be accessing the pensions in another five years will be the first persons to begin to feel the impact of these problems, although we are seeing them to some extent already.”(Quote)
I refuse to comment on the quotes above. They speak for themselves. Does he understand pensions?
“Now we are told government won’t be borrowing anymore for the next four years.”[Quote @HA]
Minister Caddle was quoted as saying
“”“Let me specify that this relates to capital markets and not to multilateral financing, which is as far as we can try to achieve [is] mostly concessionary financing,” she said.””
I didn’t interpret this as “won’t be borrowing anymore”, rather borrowing only from bodies which offer low interest loans (concessionary financing). [IDB, CDB, IMF etc etc]
Not that at the current time, any commercial lender is going to offer to loan. But it sounds better, as though the control lies with “us”.
@ Northern Observer,
If you default on your debt then you are not in a position to talk about borrowing from capital markets. And the Bretton Woods organisations also have a duty of care to borrowers, they must apply t he affordability test. Barbados is bankrupt, it cannot afford to borrow from a charity.
@ Walter B at 2 :35 PM
Wow ! A brilliant exposition of the derisking Bogey Man that some commenters are using to instill fear in the ordinary citizen. And at a time when electronic money has virtually replaced cash and bills of exchange as the vehicle for international money transfers.
@ Northern O
I did not want to keyboard it but you both did. Hobson’s choice at play?
It is a good master lesson n de-risking. I am not sure how some rubbish can be published in some papers pretending to be a theory of de-risking. Do readers fully understand how they have been sold rubbish by some academic so-called experts?
It is becoming more apparent that this government and the previous one have discussed the possibility of introducing mass immigration to Barbados as a means to bolster the economy.
I remain convinced that they were and are being strong armed and corrupted into accepting immigration by numerous lenders.
Who would have thought that this idiotic economist would be prepared to carry out research that will at a stroke disenfranchise the majority black population rendering them as mere bystanders in a new Barbados if it were introduced.
Listen to the man’s language.
Barbadians will have to get used to living in high rise buildings.
I would hope that the idiot economist was exaggerating the numbers of his desire to see the Barbados population exceed one million.
This government is trying to introduce citizenship by investment. It will fail miserably. You cannot introduce a policy to deflect from the fact that both the Bees and the Dees have . They cannot hide behind the mantra that our economy will boom on condition that we accept mass immigration. Corruption and mismanagement go hand-in-hand.
Would it have been asking too much from this “respected” economist to have carried out some serious research on how Barbados could diversify her economy with the assistance of his/her countrymen.
I wonder who paid him to carry out his research. Is this man another product of the infamous UWI.
I know as you say I am probably fighting a losing battle. Actually to be honest with you after the fiasco we called ” the restructuring debate” I have to agree with you. When those in opposition, the press and others fail to bring reality to an issue this important, I can only surmise that ignorance is bliss.
Steady on. He is highly respected and he carried out his ‘research’ which proves that immigration will significantly contribute to societies. One thing we know he is living in a blinkered world, Plato’s Allegory again.
I do not blame him, I blame the silly journalists who run to him for quotes on every subject. But you are right, there is obviously a plan to introduce mass immigration and they are softening up the public. If Bajans do not agree then they will be criticised as backward and primitive.
They have run out of ideas after 19 months and are grabbing at anything. Barbados is a failed state. It will end in tears.
“…..Mascoll has assured us many times 70 cents out of every dollar remains in Barbados…”
Not quite. The two of us seem to be interpreting what Dr. Mascoll said differently.
Dr. Mascoll has been reminding us that Barbadians have a marginal propensity to consume (mpc) of at least 70%.
This means that out of every dollar they receive, Barbadians spend at least 70 cents. Since almost all of what they spend the 70 cents on is grown or produced overseas, money going into a Barbadian hands ultimately creates a major drain on our FOREX.
He was advancing the classical argument constantly used for not giving Barbadians significant salary increases.
I am no economist (obviously) but Jeremy need not worry about whether older Barbadians will get used to apartment living.
In 20 years time more that 90% of Bajans who are now 60 or older will be dead, [me too] so we can make do with a 6 foot plot in a cemetery, or 6 inch cube on our grandchildren’s dressing tables, or we can be tossed into the Atlantic. We won’t need a whole 500 square foot apartment. Demographics 101.
November 12, 2019 5:37 PM
“Walter how should we reconcile your comment with the mouthing of Minister Ronald Toppin re banks being made to do business with Cannabis sector the government is working to give wings?”
Some states in the USA have legalized cannabis for recreational and other use. Therefore. local banks operating at the state and local level in the USA are free to accept deposits arising from the cannabis trade conducted in these USA states.
However, the Federal Government has not yet given the green light to the cannabis industry. Possessing cannabis is still a criminal offence at the federal level in the USA. Thus, banks regulated at the federal level should not accept financial deposits from cannabis dealers.
I am not a lawyer, but I suspect that if the Government of Barbados were to give the green light to using cannabis for commercial purposes, local Barbadian banks (we have none) and applicable financial institutions (falling under the control of Barbadian laws) would be able to accept financial deposits from cannabis dealers doing trade in Barbados. International banks, operating in Barbados, but falling under the long arm of USA federal regulation, cannot accept these “cannabis” deposits.They would be hit with severe fines and penalties.
International banks do not march to the beat of Minster Toppin’s relatively tiny toy drum.
Re: Hal’s questions about carrots and lettuce and such, and John’s responses
Why then do the boys of BU when they want to curse me, curse me about my efforts to grow my own food Why do they make it seem that the only people who grow food are those too stupid to be politicians, economists, journalists, engineers etc.
I grew 400 feet of carrots this year. I am still working my way through eating them. I haven’t bought a Canadian carrot in months and I know that wiIl won’t eat any for the rest of the year (Hants, Northern and the other Canadians, please note that I have nothing against Canadians or Canadian carrots). I picked twenty 20 avocados on Sunday, gave then to the neighbors. I haven’t bought an avocado in decades and I eat many dozen every year. Will harvest three varieties of sweet potatoes tomorrow morning. Cassava and yam towards the end of the year. I have enough frozen okras to last me through to next season, and enough scotch bonnet peppers to last me for the rest of my life, lol. I bought some vinegar today and will preserve them this weekend. I have enough pesticide free banana leaves to make my conkies on November 30. And in addition to this i have lost 7 pounds between May 1 and now, and this happened without my making any effort to lose weight. But I very likely am depriving some gym owner of several hundred dollars of gym fees each year. And oh yes blood pressure typically below 120/80.
So can anybody explain why those who grow, even in “small” quantities food insulted?
I truly don’t understand it.
Ignore those that criticise you for growing food. People like you are the ones we need to pull us out of this hole of high food imports.
If I had a dollar for every time an import-substitution initiative was launched in Jamaica, Guyana, Trinidad and Barbados, I would be retired by now and living the Good Life in Vegas, Geneva and Paris.
Import substitution has seldom worked. West Indians are not the most disciplined, energetic or resourceful people on the planet, but we can’t seem to face that fact. The post-independence stories of Guyana and Jamaica in particular are chock full of dozens of failed projects that were intended to save on foreign exchange.
Learn from the past before you repeat it.
International banks, operating in Barbados, but falling under the long arm of USA federal regulation, cannot accept these “cannabis” deposits.They would be hit with severe fines and penalties.
That maybe true today but the SAFE BANKING ACT now winding its way through the Senate after being passed overwhelmingly by the US House of Representatives will eliminate those penalties if/when the Bill becomes law. The Bill’s future lies in the hands of McConnell and he may be loathe to allow its passage as he has in the past but he maybe unwilling to buck the wishes of House Republicans who supported the Bill. In any event some version of the law will be passed after the 2020 Election.
Vamos a ver.
November 12, 2019 11:14 PM
That maybe true today but the SAFE BANKING ACT now winding its way through the Senate after being passed overwhelmingly by the US House of Representatives will eliminate those penalties if/when the Bill becomes law.”
Thanks very much for the link showing the USA legislative update. I had no idea that developments were taking place with such breakneck haste. But then again, given the potential billions to be made, we should not at all be surprised to see the USA, the bastion of capitalism, removing all obstacles that could stop the money from flowing.
Given these moves on the part of the USA, I know that you are not at all surprised to see Caribbean governments now speedily changing their approach and attitude towards cannabis.
With respect to Barbados, if I were allowed to bastardize some of Red Plastic Bag’s lyrics and apply them to the marijuana referendum issue, I would write:
They will rig me up in draft,
If I don’t pass, I gun really laugh.
the story from the cannabis producers in Ontario, is the classification of cannabis on the Schedule 1 list of controlled substances in the US, blocks potential federal approval. And could create Senate hurdles. As recently as 2016, the DEA refused requests for the reclassification of cannabis. Should the SAFE Act pass, does it create precedent for other Schedule 1 substances?
I think what you are doing is way smarter than what most are doing. That is why I am planning to join you just for my own use and that of my immediate family. I am looking forward to it. Hope to be up and running by March. I cannot wait to feel useful. Will keep you posted.
“De-risking Demystified” should be the name of your comment.
Its not a slam dunk but as WB noted there is a lot of money at stake and as I suggested expect some movement after the 2020 Election. The folks in the “Red States” would prefer not to have their constituents reminded in the lead up to an Election that they voted to support any law legalizing marijuana…….
You only fail the day you stop trying.
November 13, 2019 1:06 AM
“De-risking Demystified” should be the name of your comment.”
I never really thought for one moment that there was any mystery attached to the concept of de-risking.
I would really love to get my hands on some of those vegetable goodies that you and Simple Simon will be producing next year.
I know that I will be accused of being a Casanova and trying to cozy up to you ladies, so I will send my sister to collect them.
Your last link shows any sensible investor what stocks he/she should invest in now.
You may not have thought there was any mystery. That is because you knew what it was. What I really meant though is that you laid it all out in a simple manner that the average person could understand.
PS. Simple Simon and I are eligible for the senior games. You are welcome to pass a joke or two. Tastefully done, of course.
Walter and Donna: The sweet potatoes are turning out nicely. I peeled one, sliced it, and threw that and some cut up okras in some left over soup.
Delicious and filling.
Walter if you were my neighbor today would be the day that you “got lucky”. Avocadoes for all of the neighbors today.
I asked you for an idiot’s guide to de-risking, partly for myself, but also following a confusing definition given by an academic economist in another publication. I thought as an actuary coming from you it will carry a greater punch. It has.
However, it still will not stop people with limited knowledge, and journalists with no knowledge, from speculating.
November 13, 2019 3:29 PM
“Walter and Donna: The sweet potatoes are turning out nicely. I peeled one, sliced it, and threw that and some cut up okras in some left over soup.”
People who live in “town” (the St. Michael area) complain that they plant, but others reap.
You seem not to have a problem with praedial larceny. Is that a reflection of the way you live with your neighbours?
Probably. We always share with the neighbors. But of course we have the challenge of the monkeys, although the monkeys tend not to trouble us in times like now when there is plenty of wild stuff to eat in the gullies. When it becomes drier and wild food in the gullies become scarcer then, trouble.
But we rarely get any of the coconuts. We have been told that a coconut vendor comes with a truck and picks several bunches at a time. Maybe he is a “town man”
So when I want coconut water i have to buy it at $12 a bottle.
Very helpful article for me! Thanks for sharing and keep posting.