AS I SEE THINGS: Economic discipline
IN REFLECTING on the mixed performances of economies all across the world, especially since the 2008/2009 global financial and economic crisis that has created so many disruptions to various countries’ growth and development plans, I continue to wonder whether or not those disruptions could have been minimised or avoided or whether they were inevitable given the kinds of economic management practices we observe in different countries from time to time and the sorts of integration initiatives at play.
The more I reflect on this crucial question, the clearer it is becoming that many countries lack the required economic discipline to prevent widespread upheavals in their economies in times of a global recession even when the country is part of an economic or political union.
You see, one can easily draw some parallel between the performance of an economy and that of a professional athlete. No professional athlete, irrespective of his or her natural talent, can succeed at the highest level of competition without demonstrating, inter alia, a strong sense of commitment to training, dieting, meeting certain performance standards, and adhering to codes of conduct set by his or her sport’s governing body. In other words, to achieve international fame and recognition, an athlete has to demonstrate a tremendous amount of discipline in all that he or she does to lift his or her performance and be able to maintain high standards over a sufficiently long period of time.
In a similar fashion, no country – large or small – would be able to achieve much less maintain strong economic growth and development levels if those in authority continuously fail to be disciplined when it comes to designing and implementing policies for fostering economic transformation. How could a government that continues to run huge deficits on its fiscal accounts (especially on the current side) expect to be able to finance any capital works programme of significance? How can a government that continuously borrows to finance current account deficits ever be able to reduce its debt levels? How can a government that continues to spend more than it earns expect to finance basic needs for the poor and vulnerable? How can a government that is unwilling to accept that its economic policies are failing and hence are in need of reform expect the economy to grow and develop in a sustained manner? The answers to all of these questions dictate a certain level of economic discipline on the part of government.
But economic discipline must also be reflected in the kinds of commitments or promises political parties make to the population during times of general elections in order to get elected and form the next government. Too often grand promises are made that later prove unable to be met. More important, economic discipline ought to be the order of the day when countries decide to participate in economic or political unions. If a country is unable to “play by the rules of the game” then it ought not to enter any such union!
Going forward, therefore, any country in the Caribbean that feels constrained by its participation in the CARICOM Single Market and Economy because of a lack of economic discipline should immediately exit that regional arrangement. No country should want to find itself in a similar situation to that facing Greece and its status within the European Union. On balance, economic common sense should always prevail for the good of all concerned!