Sound economic advice needed
Barbadians do not expect a magic bullet from economists, Governors of the Central Bank, or even a Minister of Finance, but they have become accustomed to sound advice from the likes of former Governors Sir Courtney Blackman and Dr Marion Williams, says economist Clyde Mascoll.
The former Minister of State in the Ministry of Finance in the previous administration said yesterday: “In these dire economic times the same is expected from Dr DeLisle Worrell [Governor of the Central Bank], especially when there is need for a return of confidence in the country’s economic management.”Mascoll, who is also a former Leader of the Opposition, was reacting yesterday to comments made by the Governor last Wednesday during a review of the performance of the economy for the first nine months of the year.
Worrell, who has in recent times been critical of economists for losing sight of the limitations of what they can know with the help of the tools and techniques available to them, said people often gave more credit to the abilities of economists than they deserved.“There is a strange notion that there is some magic about the economy and that [economists] are some magicians and can figure out things that will make things happen in this economy that other people cannot figure out.
“Not true! There are no magic bullets and I don’t have any magic.“The Leader of the Opposition doesn’t have any magic. The Minister of Finance doesn’t have any magic.”Mascoll responded: “Imagine this country ran a deficit of $449.9 million on the current account of Government finances in 2009 and according to the evidence from the Central Bank, the deficit is on course to be higher in 2010, and the Governor has time to say that “the Leader of the Opposition doesn’t have any magic. The Minister of Finance doesn’t have any magic”.“This massive current account implies that the Government is borrowing to pay ordinary bills such as wages and salaries and not to build capacity in the economy.“Certainly, Dr Worrell is able to offer the Government advice on this unusual and outrageous situation that has little to do with the international economic recession.”
Mascoll stressed that the country’s lead economic advisor was expected to inspire confidence when he speaks, not throw his hands in the air, and he suggested that the Governor had options which he should be asked to exercise.He also questioned some of Worrell’s recent actions, including changing the standard for reporting foreign reserves, and quoting figures for Dodds Prisons which suggested that the cost was in excess of $700 million without explaining the concept of the time value of money.
“But the continued references to the inabilities of the economists to explain the real economy and the bashing of the research being done by economists indicate that he has gone through some kind of metamorphosis,” Mascoll said. “This is understandable but the job of Governor demands a broader view that reflects institutional opinion, not individual opinion alone. “As far back as 1986, Dr Worrell had the honour to deliver the Sir Winston Scott Memorial Lecture which is the preserve of the crème de la crème. If he is no longer committed to the challenges and responses which he outlined then, he is equally honoured to say so,” Mascoll added.