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OUTSIDE THE BOX: It’s time to reflect


DR RONNIE YEARWOOD

OUTSIDE THE BOX: It’s time to reflect

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I BELIEVE THAT at no point in a country’s history, should a single generation be faced with the decisions my generation will have to take to restore the fortunes of Barbados, but there can be no hiding. We are at a point in our history where the next generation to come may have less than the one before. That should simply never be, but again there can be no hiding. There is something resoundingly sobering – and frightening – about this.

Equally sobering is that I am speaking of governance and truth. Truth is, they should be one and the same. But in Barbados today, elsewhere too, in both developed and developing countries, there has been a vicious divorce of the two principles.

Without truth, there really is no governance. At some point in the not too distant future, my generation will be called upon to come to terms with the raw truth of our current economic and political situation.

It will be entirely up to us to make changes to the very public services that we have benefited from, changes which may not allow us to extend those same services to our own children, at least not in the same way we received them.

There can be no hiding for my generation, for none of us. Often truth and politics make strange partners. The lies in politics worry me. But that is not what worries me most. What worries most is our collective political indifference and acceptance of the lies that is a problem for our democracy, politics and governance. This is Barbados’ scariest predicament.

On the eve of the next election in Barbados, we parrot the ridiculous phrase “fake news” and laugh as we wage a war on facts. The gap is widening between truth and politics. Such behaviour can be destabilising for our governance in the long term. What is an exhausted voter, consumer, citizen likely to do? Not bother to engage and so the lie passes into history.

We become more divorced from our Government, the very Government, ironically, that we want to provide for us, to protect us. It begs a question: what role do we want the Government to play in our lives and how should Government respond to our current crisis to craft a new model of governance?

The responses and public debate in relation to Barbados’ governance have been telling for one reason.

The responses are the same ones, that have been proposed to address every major economic crisis after Independence. Broadly, there are three components in the Barbados crisis response tool kit.

The first part usually consists of a structural adjustment or austerity programme. This programme is either home-grown, via the International Monetary Fund or a mixture. The results are salary cuts or freezes and a decapitation of public sector workers in an attempt to realise an immediate decrease in Government spending.

However, what has also actually happened is an increase in Government debt and quantitative easing (printing money) to account for the shortfall between what Government earns and what it spends. The Central Bank’s holdings of Government debt expanded 53 per cent year on year in November 2016 to $1.85 billion– 65 per cent of total Central Bank assets.

The second part is privatisation of a major Government asset. This is done in an effort to control public spending and pay down some of the growing Government debt. It is also a signal to investors that the Government is serious about business and getting the debt under control.

Government announced its intention to sell the Barbados National Oil Company Limited in the 2014 Budget. It has only now captured the public imagination as the deal is before the Fair Trading Commission. The sale of the only oil storage facility in Barbados would instantly create a private monopoly that threatens the continued existence of other competitors in the provision of energy and puts consumers under the heel of the private monopoly.

It should be clear that even if the deal is approved, at $200 million, with a gross public sector debt estimated by some professionals to be $11 billion, the math is simply stacked against privatisation of this sort being a credible way to reduce long term debt.

The third part is to try to get injections of foreign capital, either by a stimulation of tourism and its ancillary services in high end real estate or by borrowing from the international market.

On the foreign buyers’ side of the property market, prices have fallen by 30 per cent. It would also come as no surprise that the average spending per tourist to Barbados is also down. Though it is estimated that in the United Kingdom (UK), our largest tourist market, real incomes have returned to levels before the financial crisis of 2008, such gains may be short-lived as inflation is at a high, meaning a rise in the price of food, transport and household items as a weak Pound sterling is fairly flat against the US dollar.

UK households therefore will have less discretionary money. Further, as the Barbados dollar, is pegged to the US dollar, the weak Pound sterling makes Barbados more expensive for UK tourist and investors.

The traditional tool kit and the levers that were once available to us simply do not work or are not available to us because of a combination of factors.

These include a changing market due to the 2008 global financial crisis, Brexit, which is perhaps the single largest foreign policy challenge we will face in this generation and technology, which has opened up consumer choice and competition, meaning consumers can be more discerning about how they part with cash from their over-extended budgets for the products and services that drive our economy.

We need to reflect on the hard truths of where we are at in this moment in our development, in order to determine our new model of governance and what we must do to promote prosperity for all Barbadians.

Dr Ronnie Yearwood is a Chevening Scholar, National Development Scholar and Overseas Research Scholar. He has practised law in London, Brussels and the British Virgin Islands and is an international trade specialist, having published and lectured in World Trade Organisation law. Email: [email protected]

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