THE HOYOS FILE: Game changer
The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.” – Milton Keynes, The General Theory of Employment, Interest and Money, I935
Leader of the Opposition Owen Arthur’s speech at the Barbados Employers’ Confederation luncheon last Wednesday was filled, as usual, with ideas for growing the economy.
But one had the sense that Mr Arthur was conserving his energy for the general elections, keeping most of his party’s powder dry until the proverbial whistle is blown.
Some of those ideas have been outlined before – for example, the development of a “township” around the University of the West Indies’ Cave Hill campus in order to provide a full range of services for a student body expected to reach I5 000 in coming years. Others sounded new or new-ish, for example, creating incentives for people to save more for their retirements, and easing restrictions on businesses in order to make the country more competitive.
I am not going to summarize them here because I have the impression that these ideas are still being worked on and will become major planks of the Barbados Labour Party’s (BLP) election manifesto. And there are certainly many points about them that would need lots of discussion and clarification.
But what the actual existence of all these ideas signals is far more than the ideas themselves: their very enunciation over the past couple of years since Mr Arthur re-took the reins of the BLP has shown his rejection of the overall policy of austerity measures without incentives for growth which is being followed by the incumbent administration.
Long before the Greek and French electorate threw out governments which only served up belt-tightening, starvation-inducing economic measures demanded by an all-powerful Germany and its Euro allies, Mr Arthur was telling the Do-Little Administration led by the dynamic duo of Messrs Stuart and Sinckler that austerity policies were not going to get us out of recession.
Of course, the Do-Little version of austerity is that everyone else must be punished while the Government continues to fund its pet projects while keeping its occupying forces fully employed. This approach softened the impact of the austerity policy across the whole economy, first putting the pressure mainly on private enterprise and households.
But it has begun to catch up on the Chosen Ones – the Government workers – too, as rising prices aided and abetted by punishing tax-gouging policies are now hitting every working citizen’s bottom line.
On the same day that the Leader of the Opposition was putting forward more ideas for regenerating growth in our economy, German Chancellor Angela Merkel was suddenly softening her stance on the tough measures which have been imposed on Greece in return for drawing down bailout funds.
Those measures have led the Greeks to vote in Nazis and Communists representatives, so determined were they to send a message to both leading parties who had accepted the German-led austerity line.
Now, Greece will likely catch a break, allowing its people to live a little even as they try to emerge from their tough times.
In Barbados, it is also crystal clear, by the Government’s own admission, that its policies of austerity have not worked, and have not even created the kind of moderate growth it had predicted just a year ago.
The Do-Little Administration, however, continues to blame external forces, but Mr Arthur argued last week – with the justification that comes from common sense as well as professional economic analysis – that without robust domestic demand for goods and services any recovery will be too slow.
It is to Barbados’ great shame that there are not two major political parties having a good old political fight about which would be the best measures to use to stimulate growth in the economy. There is only one, which is in Opposition and remains unable to implement any such policies at the moment, while the other continues to see no reason to delve into such airy-fairy concepts.
Instead, its sole aim appears to be to meet the targets demanded by the ratings agencies in order to avoid the ignominy of a downgrade on the national debt.
All the rest is neither here nor there in the increasingly frightened and narrowing economic worldview of an administration which is still waiting for the economic ill winds to subside before venturing out of its boarded-up house.
By stark contrast, Mr Arthur has consistently argued that embracing growth and putting incentives in place to achieve it can only be accomplished if oil prices are not allowed to run amok within the country and only if people are left with enough money in their pockets to stimulate local demand at the same time as the Government implements new approaches to the way we earn foreign exchange.
Implementing such measures will call for serious re-evaluation of our options going forward, and that is why every major proposal made by Mr Arthur – or anyone else – must be looked at in terms of overall impact.
But in the face of an administration that seems hell-bent on ramming a clearly flawed piece of legislation down our throats just to say it did something before elections, there can be no doubt that Owen Arthur is a game changer.
There is no doubt that he remains a political leader who understands better than any of his peers the way the Barbados economy works and how it must adapt to worldwide trends in order to return to the “sunlit uplands” of prosperity and confidence in the future.