THE ECONOMIC CHALLENGES facing Barbados and other Caribbean countries are real and intensifying. With the growing uncertainty in the global economy, the options available to our small and highly open economies for restoring macroeconomic stability are unmistakably becoming fewer and fewer to the extent now that only creative ideas can result in any sustained levels of growth and development within the region.
As tricky as our economic realities are, we cannot give up the fight for, inter alia, more economic freedom, greater equality in the distribution of income and wealth among our various populations, better health care, wider access to education at all levels, the protection of the most vulnerable among us, securing a cleaner physical environment and diversifying our economic bases to make our countries more resilient to external shocks. Indeed, these are all noble goals. But, to achieve those objectives, we surely do need to work hard toward achieving very strong economic fundamentals. Put differently, we in the Caribbean should seek always to create good economies if only for the sake of guaranteeing ourselves and our children and grandchildren an even better quality of life. But what is a good economy?
Writing on the subject of steps toward the “good economy, Bowman Cutter categorises a good economy as “an economy that works – a sustainably growing economy that provides the Americans who will come of age over the next 30 years or who are already working with the genuine possibility of a middle class life; an economy that provides Americans once again with a solid shot at upward mobility; an economy that begins to restore a broader degree of equity to working Americans”.
He continues: “In the absence of significant change, we are on a low-growth track driven by declining business formation and investment, unprepared workers, eroding infrastructure, and worsening governance particularly at the federal level.”
Cutter adds: “There is much more to be said about the cul-de-sac we are caught in, particularly with respect to the kinds of institutions required by what I’ve called in another context ‘the next American economy’. However, here I focus on two main issues and wave Brink’s magic wand twice. Problem 1: The Wrong Economy – Declining Business Innovation and Formation. The rate of business formation has been falling for 20 years, and nobody knows why. Magic Wand 1: Bring about a long term increase in the rate of business formation in the United States and (small sub-wave of the wand) establish an ‘ease of being an entrepreneur’ index and. Problem 2: An Unprepared Labour Force. Our educational system is designed to prepare Americans for success in the industrial economy we used to have. It does not prepare Americans for the economy that is evolving now. Magic Wand 2: Give the ‘high school movement’ so well described by Larry Katz and Claudia Goldin in The Race Between Education and Technology a 21st Century Rebirth.”
Even with those two examples alone, it is quite clear what kind of features Cutter has in mind that would make America a good economy.
Returning to the Caribbean, I am is absolutely firm in my conviction that a good economy requires the following critical ingredients: it must be managed efficiently; wastage, particularly with respect to public spending, ought to be reduced to a bare minimum; fiscal deficits, especially on the current side, that are sustainable; debt levels that do not exceed “normal” requirements; socioeconomic policies which are growth-enhancing; and quality institutions that foster rather than impede economic growth and development.
What is your take?
Email: bfrancis@uwi.edu.bb
