WHAT MATTERS MOST: Get familiar with real world
It is impossible to be a closeted intellectual and solve the problems of the real world. This sentiment was expressed by a former central banker with well over 40 years of serious study of the discipline of economics, 14 years as a national economic adviser and another 15 years as an economic consultant to central banks, governments and international institutions.
He wrote: “Since the adviser is concerned with the solution of real-world problems, he must familiarize himself with the real world. Not surprisingly, those advisers do best who have participated in practical affairs and are truly interested in the everyday problems of people.”
The discipline of economics affects everyone in his/her capacity as a consumer, worker or a dependent. More so than any other area of study, the discipline is complicated by the difficulty in finding adequate representatives of the several different economic agents, since it is virtually impossible to evaluate the circumstances of each individual/entity.
Unlike with a physical science, in economics it is not convenient to conduct controlled experiments in a laboratory. Furthermore, understanding the unique psychological profile of each individual is impossible, and, to some degree, the behaviour of the consumer is the starting point of all decision-making in the discipline.
Therefore, the notion that the average man on the street does not understand how an economy works is purely snobbish claptrap. How the economy works is an extension of the workings of the household for the most part. Individuals sell their labour for money, which is used to buy the goods and services produced by the firms.
When a government intervenes to provide mainly law and order, the economic relationship is necessary but complicated. This is because all societies are built on economic relationships, which are driven by the inability of man to have all the resources that he needs not only to survive but to prosper. Scarcity is therefore the genesis of exchange and by extension trade.
Given the basic tenets of economics, whenever there are departures from the basics, one can expect hardship for some if not all of the economic agents.
Of course, there is room for innovation but it must result in more satisfaction not less and better still for all.
The problems in the real world start when people are dissatisfied! Economic advisers must be able to identify the source or sources of their dissatisfaction and report the findings. If the advisers are detached from reality, then it becomes difficult to measure the dissatisfaction. This leads to misrepresentation of the facts.
The reason why Barbados has the worst performing economy in the region over the last three years is based on one fact – poor domestic policy decisions, especially in 2010. It has been tough proving this point in the face of biased local reporting on the international economic environment. But time is a friend of truth!
What made Barbados one of the best managed economies in the region since the 1960s was leadership that recognized the importance of Government without disrespecting its limitations. Apart from one or two mishaps over the years, previous administrations did recognize the limitations of government. Prior to now, some economists also did but have apparently changed their perspective.
While the ignorance of politicians may be excused, though not forgiven, it is difficult to excuse very well trained economists who were standard bearers in the past. History will not be kind to these men who know better!
In such a small society, it is impossible for advisers not to be familiar with the real-world problems confronting the average Barbadian, unless there is an obsession with the mathematics of the situation and not the psychology of it. Barbadians are hurting! They are losing confidence by the day! They feel a sense of betrayal!
In the past when adversity confronted us, some were willing to put their opinions on the line. This is hardly the case now. Some were willing to put the country’s interest first. This is not the case now.
The current Government is easily the weakest in our history and this is why it needs help. There is a major difference between the words of a man’s mouth and a wellspring of wisdom. According to Proverbs in The Bible, the former is as “deep waters” while the latter is as a “flowing brook”.
The time has come for a wellspring of wisdom to be applied to the problems affecting Barbadians, without the international environment being used as an excuse.
• Clyde Mascoll is an economist and Opposition Barbados Labour Party spokesman on the economy.