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WHAT MATTERS MOST: Wealth creation wiped out


DR CLYDE MASCOLL, [email protected]

WHAT MATTERS MOST: Wealth creation wiped out

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THE PRINCIPLES UPON WHICH the plantation economy was built were never intended to be eternal. For one, it was not expected that the plantation workers would become wealthy.

Two, the land could not remain forever fertile. Three, the exploitative foreign owners would not remain loyal to a system that was showing signs of reduced profitability.

It took the economic depression of the late 1920s and early 1930s for the world to recognise that an economic system based on exploitation and market forces was inadequate. The need for government to play a critical role in the economy was now accepted.

Until the chicken comes home to roost, the natural inclination of mankind is to ignore the circumstances around him. In fact, the 33rd president of the United Sates, Harry S. Truman, captures the sentiment above most appropriately in the following words:  “It’s a recession when your neighbour loses his job; it’s a depression when you lose your own.”  Of course, he is referring to an economy.

The intention of any economic system ought to be to make as many people as possible better off, and not just for a year but for life. Naturally, over the course of the journey, there will be ups and downs that are tolerable if properly managed.

Barbados’ heavy reliance on sugar was understandable given our colonial history. However, the thing to do is not to ignore our history, but rather to understand it and then hopefully learn from it.  The notion that “sugar made us free”, sung by one of our top calypsonians, may seem like an oxymoron; that is, the thing that enslaved our forefathers eventually set us free.

Since the plantation system was never intended to be forever in its physical form, it is important to put the breakdown of the world economic system in the 1930s in context. It certainly hastened the emergence of trade unions and much more in Barbados and the wider Caribbean during the latter half of the decade.

While the plantation workers were not expected to become wealthy, it was still necessary to fight for their rights. These included better wages and working conditions. These struggles laid the foundation for sugar to make us free in the words of Red Plastic Bag. These struggles also led to the creation of a genuine political class and political parties.

Early struggles

The lessons learnt from these early struggles ought to have been informing the current political leaders on the needs of the workers and the society as a whole.

There is no statistical justification for depriving workers of salary increases for over seven years. Wage restraint cannot be an ongoing policy. Furthermore, a policy of wage restraint cannot be accompanied by persistent calls for increased worker productivity. Putting the two together is an unkindly reminder of our people’s past.

Imagine a sugar industry in which workers are being asked to produce more from land that is becoming increasingly infertile, and where there are no new technological advances being employed.

Further imagine that the full weight of increasing productivity is on the shoulders of the workers who are not being appropriately compensated. The current calls for increasing productivity by policymakers are taking place in an environment of no salary increases for workers.

These calls are being made by individuals who are prepared to spend and approve $600 000 for two vehicles in the current income year. When things are looking up, this kind of spending is overlooked, but in the current circumstances, when Barbadians are being asked to sacrifice, such spending is hard to understand and harder to justify.

While the policymakers preach sacrifice, there is increasing evidence of wealth creation among a select few. The economic system accommodates such inequality. However, it is exceedingly difficult to understand why taxpayers are being discouraged from creating wealth through inappropriate taxation and monetary policies.

Every area of possible wealth creation that was encouraged by progressive policies in the past has been wiped out for the current income year for 2015 and beyond. Interest earned on bank deposits has been slashed as an uncaring Government allows commercial banks to set deposit rates. These policies are backward.

It remains surprising that several things, which the political class of yesteryear fought so hard to earn for the workers, have been removed from Barbadians’ list of expectations by an unprepared group. These include the right to a wage increase, the capacity to build a home, the desire to create wealth and the expectation of being better off than previous generations.

Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party adviser on the economy. Email: [email protected]

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