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Growth is desirable


Clyde Mascoll

Growth is desirable

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Unfortunately, it was possible to allocate only 24 hours to Christmas, my favourite time of year.
The issues surrounding Barbados’ future are much too critical to have done otherwise. Our country is in a state  of comatose as reflected in the lack of lights, the Government’s intellectual paralysis and its desire  to dream.
It is time to get real about our leaders’ capacity to cope with the magnitude of our challenges. They have determined that keeping the people in ignorance, as much as possible, is smart politics.
So why does Barbados need a Government,  if there is nothing  it can do to, at least,  offer our people hope  in trying times?    
Some four years ago, it was being suggested that Barbados had a fiscal crisis and it was denied by the Government.  The obvious strategy  was to conceal as much  as possible.
This time around, it is being suggested that there are initiatives that can be taken to kick-start the process of economic recovery. The obvious strategy is to say that  the foreign reserves  are inadequate.
Given that the strategies are obvious and wrong, I was inspired to reread the appendix  of Sir Arthur Lewis’ masterpiece The Theory Of Economic Growth.
In this appendix, he was answering the question: Is economic growth desirable? The answer is compelling reading as he deals philosophically with the benefits and costs.
“The [greatest] advantage of economic growth is not that wealth increases happiness, but that it increases the range of human choice.”
Lewis suggests that happiness results from the way one looks at life and that wealth increases happiness, if it increased resources more than it increased wants.
In the circumstances, why will the Government believe that Barbadians are happy?
Perhaps, by some strange way of looking  at ourselves, Barbadians have enjoyed the rising cost of living, no increases in wages and salaries, and borrowing or dissaving to meet their expenses. This would  be a new brand of philosophy that may excite the mind of a sleeping giant or a fully awakened cast in denial.
Whatever the inspiration behind the obvious strategy of asking Barbadians to see darkness as light, the reality is that they know the difference because of their lived, not imagined, experiences. Wealth may not be a sufficient condition for happiness at the individual level but it is a necessary condition for happiness at the national level.
The only way to guarantee meeting the demands of larger wages and salaries and ever increasing expenditure  on housing, education, health and other amenities, is through economic growth. This is the only strategy for sustaining wealth and increasing the range  of human choice.
Each individual is entitled to define happiness by the way he/she looks at life, but  it is the collective responsibility of the society to establish minimum material standards for happiness.
According to Lewis, “like everything else, economic growth has its costs. If economic growth could be achieved without any disadvantages, everybody would be wholly in its favour”.  In the current context, economic growth is a necessary condition for recovery and the minor loss in foreign reserves is worth every cent.
Why does the Government continue  to argue for the strangulation of the economy in the pretext  of foreign reserve inadequacy? At the beginning of December 2012, the Central Bank received over $150 million in reserves from the sale of National Insurance Scheme shares to the Republic Bank. This means that the bank now has about 18 weeks of foreign reserve cover, which is just about  $500 million above the minimum requirement  of $1.2 billion or 12 weeks of cover.
Given the evidence, some of us believe that economic growth is desirable. The cost  to the foreign reserves, which are healthy, is not a risk to the economy but an injection that increases the range  of human choice.
It also increases  the Government’s ability to collect more revenue from stronger economic activity and not  from higher rates.
It bothers the mind that some very well trained economists are prepared to defend excessive Government spending but they fail to publicly see the wisdom of boosting private spending to spur desirable economic growth. There is no theoretical justification for not choosing growth as the strategy.  
The discussion about the leakage of foreign reserves is overrated. The real discussion has to be about how to restart  the Barbados economy.  In which case, Jamaica offers several insights of what to avoid; no growth.
 • Clyde Mascoll is  an economist and Opposition Barbados Labour Party spokesman on the economy.  Email [email protected]

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