A new kind of stability
Now that the Government and its leader have awoken, it is necessary to inform them of the following: families are hurting; businesses are in pain and only the Government sector has grown in the last four years. This report card speaks to failure while asleep.
The only way forward coming out of the nightmare is to ignore the reality and focus on an illusion. The recent language is designed to address all of the non-essential issues and lead us from the facts. What are the facts?
Families have hardly had increases in salaries since 2007 and prices have risen significantly. Therefore Barbadian families are worse off. They have not been able to buy services that they took for granted under the last administration.
Apart from being unable to control food prices as promised, the Government has contributed to rising prices through the policy of spend then tax. In essence, the Government taxed the declining family incomes. The result of this policy is that Barbadians have reduced their savings considerably over the last four years. Increasing use of the credit card among middle-income families!
This seems to contradict the excess money in the banking system. It is, however, not a contradiction since the excess money is a result of lack of borrowing by businesses and households; only the Government has been borrowing and the commercial banks are no longer willing to lend.
This observation was made, sometime ago, by the Central Bank when it wrote: “. . . Banks have expressed little appetite for further investment in Government long-term instruments.”
The policy of spend then tax is informed by the philosophy that a private sector job is less important than a job in the public sector.
As a result, the new language of stability justifies 16 000 jobs lost in the private sector being equivalent to 2 000 jobs gained in the public sector. The only formula that would cause this outcome to be stable is for one job in Government to be equivalent to 8 jobs in the private sector. This would only be possible if calculated by a sleeping giant!
In similar vein, workers have been taxed on reduced incomes but their family incomes have remained stable. This could only have occurred in an economy where prices are cut to give families the same spending power – that is, if the dollar had been stretched. But this is a new kind of stability!
The Government has presided over an economy that is smaller in 2012 than it was in 2007. So the fatted calf has actually gotten smaller. However, based on new logic and reasoning, the Barbados economy is more stable now than in 2007, when the unemployment rate reached its lowest ever in post-Independence history. The rate has now been almost doubled.
Notwithstanding that the Barbados National Oil Company is more profitable on the back of the same mark-up on rising prices, gasoline and diesel prices are more stable according to the new logic. The new concept of stability is that it is okay for a Government-owned company to be more profitable in a depressed economy with suffering households and businesses. This is stability!
So if the Government has taxed everything in sight, why is it broke? The new policy is spend then tax, which means that by the time the Government knows what it has spent, it has to tax to meet the shortfall. But by the new logic, this is a stable approach to Government policy.
Perhaps there is a new normal. This new normal is a stable condition which is observed only during waking hours. So the instability occurs only when they are asleep. This is scary!
What is scarier is that the public is now expected to ignore the promises of the Government to stabilize things four years ago. Perhaps, the public is expected to forgive them for falling asleep on the job.
The nature of the job requires handling criticism. The easiest way to avoid criticism is to be asleep. Therefore, convenient sleep may be a strategy. There is method in the madness!
Therefore, it is easy to anticipate that the Government’s message for the upcoming campaign will not be about the facts. It is another case of finding the big one to rally the troops. Only the face of the sleeper has changed!
• Clyde Mascoll is an economist and Opposition Barbados Labour Party spokesman on the economy. Email [email protected]