NOT A CURE! – Skeete against price controls


YES, to a wage freeze in Barbados’ public sector, but an emphatic “no” to a system of price controls.
That’s part of a prescription which Charlie Skeete, a retired senior economist at the Inter-American Development Bank in Washington, is offering for Barbados’ economic troubles.
Skeete also believes that if the Government wants to introduce a wage freeze as part of a national strategy to reduce the gaping deficit, parliamentarians and Cabinet ministers should take a salary cut.
Skeete told the SATURDAY SUN, “There is no easy way out of the current situation and what I would do, if I were the Minister of Finance, I would start with politicians’ salaries.
“I think the political directorate has to set an example and then the public would be convinced that the administration really believes in this policy.”
Skeete, a former Permanent secretary in the Ministry of Finance who once served as Secretary of the 1970s Price Controls Commission, was adamant that while a wage freeze would be a viable option to control public expenditure, price controls would fail because they would help to create artificial shortages, encourage the private sector to use measures to get around controls, such as hiking prices of essential items not being controlled.
“The trouble with price controls is that they don’t work. The number of ways that suppliers of goods and services can use to circumvent price controls are limitless,” he added.
Skeete was quite clear that any effective solution to economic troubles would inevitably result in people being made “worst off”.
“You are not going to get out of this problem without pain, you are not going to make omelettes without breaking eggs,” he asserted.
Like Skeete, Sir Courtney Blackman, the first Governor of the Central Bank, rejected a suggestion made by Tony Johnson, immediate past president of the Barbados Economic Society, that a system of price controls be introduced.
“People have to be made to understand that in the situation in which we now find ourselves you will feel pain. There is no escape from that. But we have to prevent the vulnerable people from feeling the pain. All the healthy people have to do is to adjust.”


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