The budget debate has come and gone. One thing is clear: unlike 1992, this Government is not in deep denial about the trouble we’re in.
We’re ailing. And the Minister of Finance has prescribed his bitter medicine. But that’s at best an interim measure. It may cure the immediate affliction, but we have to protect the long-term health of the nation with preventive measures.
We should plan to emerge from the current crisis by laying the basis for continued moderate prosperity and reasonable social equality.
I stress “moderate” and “reasonable” because I think there is an ethical trade-off between social equality and economic growth that defines us as a country and gives us our national value: stability.
Four things we must do immediately: target the poor, bring the growing underclass of ill-educated, largely unemployed young people into the mainstream, reform the public sector, and find an institutional way of tapping into people’s ideas.
Social welfare model
First, the poor. We have, by and large, followed a social welfare model of universal benefits and it has worked well. But we simply cannot afford to continue subsidising those who are relatively well off.
We are now a society addicted to freenesses, especially those of us who can afford to pay. And how do we show our gratitude? By refusing to pay Government for anything: income tax, land tax, water bills, NIS, educational loans, you name it.
Our society would be far better off using less money to finance programmes targeted directly at the poor with a view to lifting them out of poverty into self-reliant productive activity.
We might also target new areas of social well-being like subsidised preschool/day care for the less well off that instils ethical behaviour and civic responsibility at an early age, and less expensive tertiary education focusing on technical expertise relevant to a knowledge economy.
There are ways of targeting the poor other than means testing. We have the ingenuity to do it.
Targeting the poor will help us come to grips with the growth of an underclass of disaffected youth. This is a complex problem whose solution must embrace educational reform, penal reform, skills training and employment opportunities, family and community development, and targeted law enforcement.
Will undermine stability
If we don’t get a handle on this issue, it will undermine our stability. Time is not on our side.
Reforming the public sector is essential. The cost of Government is a brake not only on economic growth and national productivity, but also on entrepreneurship, innovation, and social equality.
We should try to reduce both the cost and size of Government by 20 per cent over the next ten years. Some of this may be achieved by increased efficiency (reducing time required for all regulatory approvals/permissions by 50 per cent), but most of it will come from increased effectiveness, that is, by getting Government to cease doing some of the things it now does (agricultural extension, printing, landscaping, road repairs and so on).
All this can and must be done with the cooperation of the business community and the trade unions. We wouldn’t have to lay off a single person.
lngenuity will flow
Finally, we must find creative ways of tapping the ideas of all Barbadians. Our system of Government, which depends essentially on the expertise of the politicians and civil servants, is wasteful of the wealth of ingenuity to be found in Barbadians at home and abroad.
Some of this ingenuity will flow into innovative ways of making money, which is good news for our economy; but most of it is free for the taking, if the Government would only tap it and use it. Think Social Partnership.
The best thing is that our small size and lack of resources is not a disadvantage; it’s a huge plus.
Let’s remember, according to economist Paul Romer, that economic growth occurs whenever people take existing resources and rearrange them to yield greater value.
That’s innovation.
?• Peter Laurie is a retired diplomat and a commentator on social issues.