WHAT MATTERS MOST: Success was built on development model
The current government is doing everything to compromise Barbados’ future growth and development. Barbadians have always tolerated high taxation in return for access to health and education services for all, social welfare for the vulnerable and pensions for retirees. However taxes have been rising in recent years while unfortunately access to social services is falling.
It is surprising that some Barbadians want to dismantle the model that carried us to the top of the human development index for developing countries.
There was always a human element implied in the model which accepted that we have to be our brother’s keeper – that is those who can afford to pay taxes do so with the understanding that they are helping the less fortunate.
In the absence of such a model, several Barbadians would have been unable to realise their potential. Furthermore, the country would not have been able to so quickly make the transformation from an economy based predominantly on agriculture, and in particular sugar, to one of services.
In this regard, the relationship between the self-employed and education is not truly appreciated.
In the post-independence era, the upsurge of the professional class was responsible for the creation of very meaningful employment in the economy; a fact that is hugely underappreciated. Furthermore, this class of small business has employed quite a few workers, even though to this day many of them do not see themselves as businesspeople. This class cannot meaningfully expand, however, in the face of declining spending power of the masses. It is a fallacy to think otherwise.
Unless the principle of contributing to the plight of others was invoked, it would have been impossible for a country with such limited resources to spread the social net so wide. In short, in paying taxes the individual is not guaranteed benefits in proportion to his/her contribution; the benefit comes in the collective use of the taxes. This is what makes taxation different to a payment for social insurance in which there is a clearly defined benefit that is directly related to the size of one’s contribution.
In essence, the taxes had to be pooled for the government to deliver schools, health-care facilities and other institutions on a large scale.
The fact of the matter is that the Barbados development model that worked so well in the past did so on the basis of people embracing their responsibility to pay taxes with the understanding that others will benefit.
If the current Government has had to allocate an additional $25 million or even $50 million to the annual cost of university education since coming to office, this can in no way be responsible for the whopping almost $900 million current account deficit for the last fiscal year. The University of the West Indies is being used as a scapegoat in the search for an explanation of the fiscal indiscipline simply because it lies on a hill, figuratively and otherwise. It is an easy target for social discourse.
The fact is that the Barbados Government ran surpluses on its current account for all except four years between 1966 and 2008. The question is what has gone wrong?
The simple answer is the Government’s arithmetic.
The real difference is that every Government prior to 2008 understood its role in the development model. The truth is that such an understanding required an appreciation of basic arithmetic first and foremost that is now obviously lacking. Once the arithmetic is out of the way, the question of what to spend the money on becomes the priority; this in essence is the political dimension to the model.
Sadly, over the last six years the country’s future has been compromised by the decision-making of the politicians. This is not to suggest that no mistakes were made in the past but they were aberrations that could have been easily and quickly corrected and they were for the most part.
It is one thing to fail to understand the arithmetic but it is quite another thing to fail to understand the mission. In this regard, it is easier to forgive a lack of competence with numbers than it is to forgive a betrayal of the country’s impressive history.
The passage from a colony to the number one developing country for a place with such limited endowments was not simply an act of faith, it required a pool of collective talent and wisdom. A requirement that seems now to be taken for granted.
• Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party adviser on the economy.