HAPPY NEW YEAR and welcome to what I hope will be the first of many articles exploring and providing thought leadership on a range of social, economic and political issues facing Barbados.
We have just celebrated 50 years of Independence and we have many things to be proud of, namely the development of Barbados through the provision of educational and social services to its people, especially those who did not have the ability to pay for them on their own. This social engineering can be credited with helping to lift many Barbadians out of poverty.
The role of Government has been key and still is key in the lives of many Barbadians. Education was instrumental in allowing me to transform my life and that of my family.
As was the same for many Barbadians, had education not been free, I doubt I would have been able to afford it, far less receive an education. I, however, am also acutely aware, having been born in Boscobel, of what political neglect from a Government can also mean. In both instances, Government can and does impact our lives.
It is our duty as citizens to decide what the role of Government is, and how the Government is structured to meet the challenges Barbados will face in the next 50 years.
How will we pay our way?
What will be the money earners in the economy? The average spending per visitor to Barbados has declined. The International Montary Fund (IMF) Country Report No. 16/280 (August 2016) makes this point.
Additionally, our biggest source of income in international business and financial services (IBFS), which was via Canadian companies, has declined. Canada has extended what was once a coveted tax treatment to Barbados to any country that signs exchange agreements on tax information.
In 2007, before the global financial crisis, the IMF report estimated that direct taxes paid to the Government from IBFS were over $350 million and by 2013, such taxes were below $100 million. These challenges to the Barbados economy will only be confounded by Brexit in the United Kingdom (our largest tourist market) and the convulsions from the election of Donald Trump in the United States.
We have, perhaps, the making of a heady cocktail of uncertainty for 2017. People are feeling that they are on the outside of globalisation, watching a few “other” people get rich and enjoy comfortable lifestyles that they cannot secure for themselves or their families.
It is this sentiment that drove much of the outcomes in the UK and the US. The recipe for electoral success of Brexit and Trump was: harness the anger to win the election and then placate. Voters in both places may be in for a rude awakening if they believe that the economic pie will be shared any fairer in 2017 than 2016.
Their votes may have been for more of the same.
Indications from the stock market fear index (Chicago Board Options Exchange SPX Volatility Index) show it is at a low. Investors appear to be feeling okay. Then again, these same investors ignored or did not spot the 2008 financial crisis. However, governments placating the anger of voters, as opposed to orchestrating real change, will only go so far and will do more to damage the already fragile trust voters have in their governments and democracy as a global project.
Electoral success is not the same as government success. Perhaps over the years of political spin, politicians have forgotten that. Winning is the easy part. Government and leadership is the hard part. So governments in the UK, US and elsewhere as in Barbados should be prepared for backlash if they do not or show real efforts to deliver on promises to share the economic pie more fairly. This is, however, not the first time that Western democracies have been challenged by issues of income distribution.
Many thought the end of the 1980s with the fall of the Berlin wall, the collapse of the Union of Soviet Socialist Republics, and the rise of the second wave of democracy was going to solve many of the problems of income distribution.
New markets would open, existing markets would be de-regulated, trade would be freer and people would make money. Democracy was packaged with privatisation as part of a neo-liberal agenda and the magic of the market was supposed to fix it all.
Some things were fixed. Globally, we live longer, we have higher levels of income, safer working environments, we are less likely to die from violent crime or die from basic communicable diseases, we have improved housing and higher literacy rates.
Also, let us not forget the first wave of democracy, that is, the de-colonialisation process of the 1960s that saw many small predominantly black societies, like Barbados, untethered into the big wide world, and were supposed to fail.
By the start of the second wave, independence projects such as those in the Caribbean could be viewed with some measure of success. As Barbados celebrated its 50th anniversary, we could point to various indices of success in reduction of infant mortality rates, increased life expectancy, improved housing conditions and high literacy rates.
However, like the voters in the US and UK after the 2008 financial crisis, from which many have not fully recovered, I sense there is much of the same anger about how the economic pie has been shared, who benefits from globalisation, how government functions and how government is structured to deliver for the benefit of the majority. Instead of addressing this, from our current leadership, we get vapid discussions and pronouncements about Barbados becoming a republic. I will conclude my thoughts on this next week in Part II.
Dr Ronnie Yearwood is a Chevening Scholar, National Development Scholar and Overseas Research Scholar. He has practised law in London, Brussels and the British Virgin Islands and is an international trade specialist, having published and lectured in World Trade Organisation law. Email: yearwood.r.r.f@gmail.com
