Submitted by John A
We have heard the word inflation being bandied about a lot recently, but what does it really mean to the average Barbadian in real terms?
I sent BU a menu which was posted on the the 4.4% growth NTSH blog – see menu. This showed what a popular beach restaurant in St Michael was charging for their offerings in 1975. At this time there is no clearer example of inflation I can think of than what this menu brings to light. The question then when we look at this menu and compare it to today’s prices, has to be, are we better off today than in 1975? As numbers don’t lie let us now turn to them and compare 1975 to now. In other words has our personal GDP kept pace with inflation over the period or are we poorer in real terms?
- Coke large 25 cents 1975 cost $2.75 in 2023, 11 times more
- Salad large $1.50 in 1975 cost $15.00 in 2023, 10 times more
- Steak & chips $4.75 in 1975 cost 38.00 in 2023, 8 times more
- Ice cream lg 40 cents in 1975 cost $9.00 in 2023, 20 times more
- Cheese burger 75 cents in 1975 cost $9.00 in 2023, 12 times more
So the average factor of increase over 48 years on the above is 12.2 times higher prices.
One must now ask what has salaries increased by over the last 48 years? Well we know for 10 years under Sinkyuh we had a wage freeze, let’s subtract them and ask over 38 years instead.
If you were paid $1000.00 in 1975 and you got an increase of 4% over the 38 year period (48- lost decade), you would be earning $4560 dollars today. Now I don’t know how many got a 4% raise every year for 38 years but let’s be kind. This then gives us a wage increase factor for the period of 4.56 times.
In summary eating out increased by a factor of 12.2, but salaries only grew by a 4.56 factor over the same period. Now if we even take the 10 Sinkyuh years and assume a 4% increase in pay every year for them as well, the factor for earnings would still only be 6.79 times.
Now the OECD has forecasted globally an increase in GDP of 2.7% with a rate of inflation of 2.6%. This would mean you will not be poorer in real terms, at least not for 2024 if their predictions are correct. I have also included for you a survey of GDP done by Global Finance for the period 2018 to 2022, which is worth a read as Barbados is included and it covers the pre-Covid and post-Covid economy.
Finally take a read of the article by the ILO titled “Rising inflation brings fall in real wages.” Next time you wonder why you working for more but still always “ brek”, just remember the 40 cent ice cream from 1975!
@John A
Your argument is understood but there is a reality.
The consumption behaviour people have become addicted means that demand for goods and services combined with how input costs are manipulated by market conditions/speculators mean inflation will always be with us. This is more apt for a small open economy like Barbados.
True?
At the rate that Missing In Action is borrowing money that has to be paid back by our great great grand children it WILL get much worse.
The borrowing needs to stop.
We can’t discuss ‘borrowing needs to stop’ in a vacuum. It is more complicated than that.
@ David
If you look at the GDP chart you will notice Barbados is one of I think 3 countries, that at the end of the 5 years had a GDP that was still negative by 0.6 percent. Lets be honest we will never be China but we have to diversify our economy to get more out of the none tourism economy. We cant continue to bet the house on a one leg economy.
When you look at the numbers you will also see why we have to borrow so heavily. We keep borrowing to cover the deficit. Mind you not only Barbados is in this position so we are not alone. If you notice the average multiplier of 12 also would hold true for a car. In the early 70s a Datsun 1600 was around $5500 wheras today a similar car would be over $60,000. Land same story.
I also read a review on the USA economy that stated that this generation will be poorer in real terms than their parents. The thing is though that is partially because like here, they spend on the wrong things too. We just have to be more productive with the economy.
@John A
We agree, the underlying issue will always be leaders pandering to conspicuous consumption habits of our people. Mind you, the blogmaster will never negate the goal to grow the economy, however the growth must be sustainable based on our limited resources/capacity.
The other thing we need to do is to stop spending so heavily in non productive items. While this spending does go towards the GDP it does little to help our personal growth.
This comment may upset some but its true.
@John A
The reality is that we live in a time where populism is the approach of choice, ordinary people generally tend to focus on what is sold to them. A contentious point some may suggest.
@ David
If you ask young couples today why they spend on cars and travel, many will tell you that they live for today because they have accepted they will never be able to buy a house. While house prices have not escaped the inflation net and it is true a decent house in the early 70s was around $75,000, could they not have driven 2 old cars and not travelled less, but paid a mortgage instead?
The truth is the education system does not prepare school leavers for the real world. Much of what it teaches is of little use to them in reality. While it may prepare them for a job it does little to prepare them for life in a financial world where budgeting and prioritized spending is key.
@John A
That maybe correct to a point. We live at a time where materialism has reached a zenith. This is a consideration as well. Our leadership at every level of civil society needs to fashion a vision that reflects who we should aspire to be in order to nurture a wholesome society. Fluffy words but it is why we invested heavily in education, time to see the ROE.
@ John A
RE: “The truth is the education system does not prepare school leavers for the real world. Much of what it teaches is of little use to them in reality.”
Yet, several Barbadians and persons from other ethnic minority groups were able to capitalise, benefit and became successful as a result of the same system.
Why????
RE: “While it may prepare them for a job it does little to prepare them for life in a financial world where budgeting and prioritized spending is key.”
Some BU contributors are fond of reminiscing about ‘the good old days.’
My great-grandmother was a maid and great-grandfather, a plumber/driver at the then Water Works.
They, similarly to several other Barbadians in those days, DID NOT have any formal education, but were able to ‘budget and prioritised spending,’ to build their home.
Additionally, perhaps we’ve chosen to conveniently ignore the fact that, after Trade Confirmers Limited, Bank of Credit & Commerce, Narsham Insurance, CLICO, government bonds etc, the island’s financial sector remains poorly regulated, which may not inspire the confidence of young Barbadians therein.
@Artax
I doubt many appreciate what regulation means exactly.
And if the ongoing BL&P application to a regulator is any example, may (not unreasonably) assume regulators don’t function as intended. Hence, why are they required and what is their value?
NorthernObserver, the regulators are required by law. Unfortunately, the functions of FTC regulators are limited by the FTC Act.
Our materialistic culture feeds the supply and demand beast. We will never be able to reduce imports and hence prices through local production based on how we operate.
Also inflation only hits “certain” people. It really doesn’t bother others. As long as the status quo and mindsets remain we will be forever in this loop.
That’s why meagre salary increases which are touted as wins for the labour movement should be seen as mere token gestures to keep the populace quiet.
As for education, unfortunately it currently does what it was meant to do. Churn out workers and servants primarily.
Just observing
@ David
You realise this new approach with the feeding of materialism only started 2 or so decades ago. Our parents were laser focused on their approach. There was little obsessive spending and the little they made was targeted towards their goals. Many middle class were not only able to buy a home, but also bought a piece of land and ” put down” for each child.
Then again they drove probably a Ford Escort or Austin Cambridge and not a Jaguar so that helped.
@John A and Observing
We have created a beast in an environment that nurtured it. It is what it is, we must deal with it.
We have been on this path for fifty years.
I prefer the assessment of Prof. Justin Robinson, who recently stated the economy has showed no real growth for forty years.
High inflation, high food prices, propaganda driven employment statistics, increased taxation, increased bus fares.
What did we really expect?
@ William
It sadly is 6 of one or half dozen of the other as you have correctly said. Truth is a large part of our GDP is driven by consumption of non growth items.
@John A
The hardcode challenge is that key drivers of a capitalist system is stoking consumption, some may prefix with conspicuous.
@ David
The truth is unless we get the other sectors producing, relying on tourism only with make the next 48 years the same as the last 48.
Remember Owen Arthur touched on this a few years back where he said we needed to raise GDP by other sectors other than tourism.
@John A
Which sectors are positioned in the economy to generate revenue of any significance?
Simultaneously, Mark St Hill, CEO of CIBC FCIB, views it as an opportunity for growth and consolidation in core markets like Barbados and The Bahamas.
https://ca.investing.com/news/stock-market-news/cibc-firstcaribbean-set-to-rebrand-exits-dutch-caribbean-markets-93CH-3159854
The article “read oddly” and then at the bottom “This article was generated with the support of AI and reviewed by an editor.”
CIBC unload the Dutch locations, and irrespective of the CEO’s comments only need a willing buyer to unload the others
@NO
Saw that earlier and that’s why I didn’t link it to my earlier comment on the Diaspora page.
@ David
Rum I think has the best positioned sector for exports, as all the major brands seem to be expanded their business for more export. David Seale for example just increased his bond spaces and other Brands seem also to be spending on their infrastructure. Local agriculture could also increase GDP activity and provide employment. What worries me is every project I hear our government speak on as ” coming soon” is tourism based. I see no diversification of our economy on the cards, its as if we learnt nothing from Covid.
@John A
We have discussed many times the challenges associated with expanding rum production. We don’t produce enough molasses for a start which compromises rum identity etc/
I here listening to Down to Brasstacks on VOB929.
Just heard a woman in tears complaining about suffering in pain for many years.
She also mentioned the mental anguish from having a settlement in the control of the usual suspects.
The problem we all have to accept be we B or D, is that we have a GDP that is based mainly on Tourism and consumption. So unlike others we dont have much export in their.
If you look at the graph you will see that for the 5 year period of 2018 to 2022 we did not grown the average GDP at all. Instead in declined by -0.6 percent over the period.
Off topic
One shouldn’t rely on AI for accurate info, as evidenced by lawyers in the US who used ChatGPT for research purposes and ended up in citing faulty legal research, in essence Chat GPT made up case law.
https://www.cbsnews.com/news/chatgpt-judge-fines-lawyers-who-used-ai/
@ The most Honourable Blogmaster.
I hope you are listening to Brasstacks.
@Hants
What is the subject matter?
woman deprived of a settlement while she has been suffering with chronic debilitating pain.
buh doan mine me. Just venting because I have over one hundred thousand reasons to complain but I will continue to suffer in relative silence.
Thanks Hants, deprived of a settlement meaning delayed court case or with lawyers? Will try to listen to the podcast.
Hants,
Many more like that lady. It’s very common.
On that topic, I haven’t seen your good friend Yolande, aka Waru, aka Well Well & Consequences.
I hope she is well.
Protest mounts across the globe.
https://www.aljazeera.com/news/liveblog/2023/11/3/israel-hamas-war-live-israeli-forces-gather-outside-gaza-
@David
you will be pleased to know, that buried in the appendices of the Fiscal Framework was
“The effectiveness of the the Public Accounts Committee has been strengthened to allow the public to monitor in real time its oversight role, thereby ensuring full transparency.”
Naturally this shiite is penned primarily for the anal operatives at the multilateral lending agencies and credit rating bureaus.
Apparently, under the 2021 Procurement Act. the Chief Procurement Officer has the responsibility of reporting annual on all contracts awarded and the performance of the supplier awarded.
Have you see that report yet?
And it was late August the PM informed us that NIS Reports had been completed to 2015. Have you seen any of those yet?
@NO
The public’s apathy and cynicism regarding politics and promises by politicians is real.
Source: Nation
Source: Nation
Jobs coming ?
“Just heard a woman in tears complaining about suffering in pain for many years.
She also mentioned the mental anguish from having a settlement in the control of the usual suspects.”
In a land where people prefer to suffer in silence and refuse to admit that they were outsmarted and robbed, the pain became so unbearable that the woman had to squeal.
Further abuse is expected as the system will now try to punish her for crying out in pain.
Here, use this Vaseline and try to relax the muscles involved.
“The public’s apathy and cynicism regarding politics and promises by politicians is real.”
~~~~~~~~~~~~~~~~~~~~~~~~~~
Good morning folks
Bushie notes that the concept of ‘Brass Bowls’, languishing in abject self misery and ignorance, is becoming clearer to more of us…
Don’t try to put a smoke screen on the issue Boss…
It is NOT just with politics and politicians….ALSO with..
Lawyers and justice
Education and common sense
Health and healthy lifestyles
Ownership and borrowing
Public health, cleanliness and waste management
Roads and transport management
Public services – ALL…
……..
Steupsss.. It it MUCH easier to list areas where the (BB) public are not apathetic and cynical
1 – Kadooment, Reggae in the hill, Jazz on de beach etc
2- Buying a lotta shiite fuh Xmas
3- De 11 plus (If they have a young child, or if they failed like Petra Wicky)
4- ahhhh ummmm errrr …. whispering, complaining, begging
What a place!
What a curse!
Reminds Bushie of Sodam and Gomorrah, when Lot was challenged to find just a few worthy men…
One wonders if the visiting ‘angels’ are here yet…
A wonderful Friday morning to the one thumper who exhibits moments of sanity.
Perhaps, it may be the presence of brass bowlery that keeps him sane.
Give thanks.
The point we are missing is that when the science of economics is stripped of its mystery , and there really is none, it evolves like any other study.
We have a Minister of Finance, who obviously does not enjoy the passion for the subject, and has deliberately left national discourse on government economic policy to others. Her main focus seems to be perpetual electioneering mode.
Our economy is not evolving because there is no creativity in its leadership.
We recall how some on BU praised a policy of borrowing and begging without even paying passing attention to the price and consequences of so doing.
And the lack of vision and inattention to detail continues buttressed by now lame defenders of economic stagnation.
Fortunately , for Mottley, the still floundering out of Parliament DLP, dubiously called the Opposition, seems incapable of surgically dissecting the lack of progressive economic planning now enveloping the country.
@ Bush Tea
Lord you painting a rough pictire of us as a people. Only interested in fetting and buying crap while paying little interest to financal planning and matters that concern them. Lord Bushie you mean we is a ” wuk up and lick out” people then?
Dont tell nobody but I agree with you wholeheartedly. If I was the PM and I had new taxes to drop in wunna tail I doing it Kadooment week! That way wunna will not know till the next pay check.
You see that thing called the 4th estate, I watch them at the PM talk ask a roll of foolish questions, which did nothing to seek enlightenment. Them want a bush bath and cut tail too!
@John A
Could be some of you are overly critical? Listened to a clip of Olu Walrond who complained social media paints too negative a picture of Barbados’ state of affairs. #weoutside nothing to worry about John A.
Then again, we are known to be a people not very financially sophisticated.
@ David
Talk cheap but numbers don’t lie. Unlike some I don’t preach what I feel only what numbers support. The numbers I shared are clear for any to see, so I leave the spin doctors to try and challenge them. The problem is the numbers are there but they are not presented in a way that is easily understood. Cut away the pretty talk and big words and it’s there for all to see.
Mind you let me say here that what the governor shared was all true. It was more a matter if what wasn’t said, but that is not his job. If the 4th estate was worth anything it would be theirs.
“Numbers don’t lie” is a verifiable axiom. But, people have to ability to manipulate numbers to substantiate their specific biases. More often than not, those particular individuals become overly upset or defensive when challenged by persons who may not necessarily agree with their opinions, while presenting an alternative perspective, or are simply asking for explanations of issues raised. John A, you presented a price list to BU and provided the forum with a comparative analysis of 1975 and current prices. Although I understand the point you’re making about inflation, I have to agree with the Blogmaster that such a discussion must be approached hollistically, so as facilitate a rational debate about the issues. Absent from the discussion, are factors of inflation during the 48 year period, such as costs associated with manufacturing, goods and services available for sale, wages etc, that are ultimately passed on to consumers.
@John A
Rum talk.
——————
CBCBARBADOS (@CBC BARBADOS) posted: There’s concern about new economic threats to the island’s rum industry. The issue has been a talking point at a week long conference at the Radisson Aquatica.
https://t.co/lXhRrALGI1 #CBCNewsBarbados
nuff nuff tourisses. sweet.
@ Artax
What you say is true in terms of conditions such as labour cost etc, the conditions though what ever they were, resulted in the outcome I showed. For example the 70s saw serious inflation due to the oil crisis, then they were years where inflation was basically flat.
Going forward now in 2023 we may have high oil prices again. Then we had the hyper inflation with covid too. I think we will have other challenges as well in the years to come, I also foresee an economy growth wise much like the past. In other words higher inflation than growth at a personal level. We have to remember that for 10 years nobody got a raise, so to make up for that ground lost will be a difficult uphill battle for sure.
Also remember the average multiplier of 12 between 1975 and now. That factor applies to many other things like car and homes as well, not just restaurant meals. If we had a crystal ball in the 70s and bought beach front land for instance we would be smiling today. I find the topic of inflation truly amazing to study. It shows how easy it is for the comfortable to become poor if they make the wrong financial decisions.
Yes, John A. I agree with your above comments wholeheartedly. You’ve provided the forum with further explanations to clarify points you made. But, let’s not forget economic polices of successive political administrations, such as financing tourism, while neglecting manufacturing and agriculture. Angelus, Husbands, Winifred Enterprises, Hamden, Mapp’s Garment Factory and several other popular manufactuers no longer exist.
@ Artax
The things is how do we get governments to stop depending so heavily on toursim? If covid did not teach them the folly of this what will it take to make them see that we must get other sectors to contribute more to our GDP?
To be honest this worries me more that anything else going forward.
@John A
To transform the economic sectors in Barbados will call for heavy lifting by public and private sector alike. What must drive it is robust advocacy from civil society at large. Our lazy politicians looking for a quick pension will not do it. Unfortunately the quality of individuals offering themselves for public duty low quality.
@David
They have to do it or the people will continue to get poorer in real terms.
The numbers show clearly for even the biggest party loyal, that in 48 years we experienced a factor of inflation of 12 rougly but in the meantime we only saw a wage increase of a factor of 5 roughly. So lets say we do nothing, where will we as a people be in the next 25 years? What will the 30 year olds of today find themselves in?
People dont realise the damage Sinkyuh did to the economy and people of this island. That 10 years of no wages while inflation rose, has left us in a position where I dont see us catching up in terms of our earning to cost of living ratio.
Government has to act now to get the other sectors of the economy to contribute more to the GDP or the next 50 will the same as the last 50. The days of a one leg economy therefore needs to be a thing of the past.
@John A
Some do not agree but nothing will change unless WE demand it. Unfortunately we allow conscious and unconscious biases to compromise our priorities.
Apparently we are admitting that there really is no substantial or sustainable improvement in running the economic affairs of the country.
Quite frankly COVID provided a perfect excuse for many people to hide behind.
William you are so right. Instead of learning from it and changing our 50 year old economic plan, we used it as a scapegoat for why things so bad.
If you look at the chart you will see Barbados is 1 of 3 or so countries who had an average net GDP between 2018 and 2022 inclusive. So that included the 2 best years of tourism before covid as well as the post covid year.
Source: Nation
https://www.instagram.com/reel/CzWeCJrt184/
Sorry i meant an average negative net GDP
boss lady
https://barbadostoday.bb/2023/11/04/pm-at-white-house/
It will be very interesting to see how we are going to reach one billion dollars in earnings from rum.
Might be a bit easier than making chicken more affordable .
Five Things You Need to Know to Start Your Day
https://www.bloomberg.com/news/newsletters/2023-11-09/five-things-you-need-to-know-to-start-your-day
Food will be imported to support “Tourism”
https://barbadostoday.bb/2023/11/09/vendors-say-cost-of-produce-doubling-in-some-cases-making-it-difficult-to-earn-a-living/
It boggles the mind why we have not integrated local production of food and other goods with the tourism sector to a greater degree. It boggles the mind.
@ David
So imagine what the inflation factor will be over the next 25 years! We know the last 48 was an average factor of 12, so anyone want to guess at the next 25 based on what is unfolding?
All the vendors are doing is confirming what we all now know and have discussed above and that is we continue to get poorer in real terms.
Some things are substantiative and only a madman would question their existence and some things only exist in the minds of madmen or party faithful.
I was listening to a caller on Hants favorite (Brassb̶o̶w̶l̶s̶/tacks)show and he gave a list of his party many accomplishment. Like his colleague on BU he put a few items in the win column that (1) should not be there, (2) may easily be reversed with the passage of time and (3) their value can be questioned.
Here is the lis
Debt to GDD Ratio down
Credit ratings gone up
10 consecutive quarters of growth
Sugar being packaged and exported
Exports in 2022 being more than 20% in the previous year
Restoration of free education
Sewage problem fixed
Improvement in water supply
Increase of salaries
Extension of our independence
Electric (some shit)
I don’t care who you are answer me this. Does Motley’s miserable motley mistake making misfits deserve another five years based on the above record.
Source: Nation