WHAT MATTERS MOST: Government wants praise
By Clyde Mascoll | Fri, November 30, 2012 - 12:00 AM
IT IS THE RECKLESSNESS of Government’s fiscal policy since 2008 that has the Barbados economy in its current state of misery. The Government destabilized the economy and now wants to claim that it is stable.
So much so that the Minister of Finance Chris Sinckler is swiping like blind Elda or, more appropriately, like a blind man on a trotting horse sitting down backward, in his most recent attempts to put the economic misery in context.
Initially, employing a strategy that the best form of defence is attack, Minister Sinckler is seeking to defend the indefensible. Having set the house on fire, he now wants to be praised for pouring water on the flames.
The strategy really is to find The Big Lie that hopefully will stick.
His most recent faux pas is an invitation to the ministers of finance in the Organization of Eastern Caribbean States (OECS) to come to Barbados to find a solution to the CLICO debacle. On the same day, Prime Minister Ralph Gonsalves announced a financial package as a solution to the CLICO problems in the OECS. The best form of attack is defence, not swiping blindly, when you do not have the facts.
He wants praise for raising the VAT rate, for increasing the cost of living and for reducing the size of the economy. The Government wants praise for doubling the printing of money at the Central Bank, for increasing the local loans limit on six occasions in four years and for almost doubling the national debt in four years.
The Democratic Labour Party administration wants praise for decimating the middle class, for increasing the size of the working poor and for reducing the country’s wealth.
It wants praise for putting 16 000 people on the breadline, for owing the University of the West Indies almost $200 million and for not giving public sector workers a pay increase.
The Government wants praise for locating Government departments in one of the two NIS-funded buildings at Warrens, but refuses to pay rent to the NIS. This is another way of hiding Government expenditure.
The Government wants praise for a failed housing programme. It is one thing to get the private sector to finance the building of houses but a market has to have willing buyers. The latter must find the houses affordable to be willing to buy. The evidence is that the once promising model has failed.
The ability to satisfy people in any country must start with an adequate economy. This is why the foolish notion that a society can be built without an economy also failed to take root.
In similar vein, it was false and flawed reasoning that small businesses can rescue an economy, where spending has been suppressed as happened in Barbados since 2008. An economy is simply an aggregation of spending for domestic consumption and investment plus net spending with the rest of the world. No amount of speechifying from whatever source changes that fact.
Minister Sinckler apparently wants to be praised for growing in his role of regurgitating information without questioning with respect to the Barbados economy. Only last year, the Governor of the Central Bank argued that “even though the fiscal deficit for 2009 was very high . . . a much larger deficit could have been accommodated, without depleting foreign exchange reserves and imperilling the exchange rate anchor”. This is the same argument that the Opposition is using to stimulate economic growth.
Why did the Barbados Economic Society and the independent economists not oppose the conclusion of the governor? Furthermore, why did they not comment on the Government ministers’ public pronouncements that $1 in tax relief increases spending by $3? How about a $1 increase in Government capital spending growing the Gross Domestic Product by $4? Minister Sinckler spoke to the tax relief in last year’s Budget debate and Minister Dr David Estwick referred to the capital spending recently in his speech at the storage tanks.
The economic commentators were being given time to truly join the debate that is so badly needed. Please do not back off now. It took about three years for the fiscal crisis debate to be joined, so there is still time.
This journey is not about seeking praise; it is about truth. This truth must come from all sources, independent or otherwise. The recklessness does not lie in giving tax relief; it was done four years ago when not only the Prime Minister was asleep.
• Clyde Mascoll is an economist and Opposition Barbados Labour Party spokesman on the economy.
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