THERE IS NO DOUBT that philosophical differences have truly emerged between the two political parties with respect to major economic and social issues. Perhaps the differences are reflecting an increasing crisis of confidence in the competence of the Government.
Philosophically, the Democratic Labour Party (DLP) seems to be locked into the concept of the plantation economy, which concedes that its fortunes are driven solely by external events. The leadership does not seem to appreciate the differences between a sugar-based economy and a tourism-driven one. It fails to understand the latter’s linkages to construction, retail and distribution, transportation, financial services and telecommunications.
Unlike tourism, sugar in its heyday did not need or have the accompanying support and infrastructure to carry it. It is physically exported. Tourism is delivered at and from home base. Sugar’s strength came from the earning and high rate of repatriation of foreign exchange. In addition, it employed numbers of workers at the lower end of the wage scales. Unfortunately, there is little foreign exchange to repatriate these days.
In essence, the DLP leadership is stuck in the plantation mode. It reflects an inflexible, weary and mechanistic approach that focuses on production, not productivity. The latter is the rate of production that measures the relationship between inputs and output. The country’s leadership is prepared to ignore the rate at which things are done.
Fundamental divide
On the economic front, a fundamental divide emerged over the role of local spending in the pursuit of economic growth. Until three weeks ago, the ruling party was convinced in principle that it is detrimental to increase spending power among locals because of its impact on the foreign reserves. The rhetoric has recently and suddenly changed, but the policy of suppressing spending power among locals remained with the very heavy taxation in the Budget. Another major error!
On the other hand, the Opposition proposed relentlessly over the years that in the presence of adequate foreign reserve cover reported by the Central Bank of Barbados, increasing local spending via tax relief, in the absence of wage and salary hikes, was part of an appropriate stimulus for the economy.
In relation to the pricing of energy products and electricity, the current administration did and still does not accept that our crude oil production must be used to the benefit of local consumers, especially of electricity. It did, and still does, not accept that the Barbados National Oil Company is not to suck every last ounce of profit out of the pockets of users of gasoline and diesel. Energy is to an economy what blood is to the human body. Unfortunately, local energy prices are once again moving in the wrong direction.
On the social front, the divide between the political parties is becoming more startling. After rushing to introduce legislation to protect the rights of workers, the ruling party was the first to break the spirit of the new law at the National Conservation Commission. Having succeeded in pulling the wool over the eyes of a very compliant National Union of Public Workers leadership at the time, it assumed that a free passage was available to further abuse the workers at statutory boards.
Quick move
How does a political party move so quickly from protecting the rights of workers and stating that no worker will go home, to its current stance at the Barbados Investment and Development Corporation (BIDC)? Certainly, the saving of a few hundred thousand dollars at the BIDC cannot be the reason for the justification of the Government’s action. Furthermore, it is unfortunate that the CEO is being asked to defend what is obviously a policy position of the Government.
But the emphasis on dollars gets worse. In 2007, a Catastrophe Fund was established to mitigate losses occasioned by a natural or man-induced disaster. The Sargassum seaweed currently affecting the coastline and beaches must be considered a very significant threat to our environment and by extension economy.
Given that the Government recently diverted $20 million of the Fund’s $33 million to the Health Care Capital Expenditure Fund, it is reasonable to ask for some of these funds to be used to cleanup the seaweed. The fact that the Minister of Finance allocated a mere $1 million to the clean-up is indicative of the incompetence of the Government.
Let us not fool ourselves that the current Government is making error after error simply because of hard luck. It lacks a framework for governance that clearly identifies its economic and social objectives and more so the strategies required to achieve them.
• Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party adviser on the economy. Email mascoll_clyde@hotmail.com
