Some people believe that it is better to be a big fish in a small pond than it is to be a bigger fish in a bigger pond. This simple belief is at the heart of many things in life where people seek comfort in what is, and are not too concerned with what ought to be. This belief is also at the heart of governing a country.
The most demanding issue concerning the governance of this country is whether the public sector should remain a big fish in a small pond, or should be the same size in a bigger pond. It ought to be clear to even the most partisan that the current administration responded to the economic recession by hiring and expanding the public sector employment.
The same administration is now in no position, having wilfully ignored fiscal prudence, to do what is right because it is not the correct political thing to do at this time.
Apart from the existing fiscal crisis, the financing for the CLICO affair, the cost of providing existing social entitlements and the cost of restructuring the Barbados economy are immediate and future issues which have to be confronted and they require leadership. It is impossible for the politicians on their own to chart the course to navigate the challenging waters up ahead.
It is even more impossible to successfully navigate the future by telling the politicians what they want to hear rather than telling what they ought to hear – the facts. No trained economist, who has studied Caribbean economies since the first oil crisis in 1973, can be satisfied with the present course of the Barbados economy especially its fiscal condition.
I must confess my surprise at the views that emanate from the Central Bank of Barbados in support of the fiscal imprudence practised by the current administration since 2008.
This support is in direct contrast to the bank’s views in the early 1990s when lack of fiscal prudence was the hallmark of the Government and the bank was strident in its observations.
Now very basic principles of managing Caribbean-type economies, which have been espoused and accepted, are being challenged on flimsy grounds. It is fully accepted that regional governments have to at least attempt to manage their fiscal deficits and the countries’ foreign reserves. The two are inextricably linked.
 The success story of the economic programme of the early 1990s, notwithstanding the attendant hardship at the time, is well chronicled. The fiscal prudence was embraced with few exceptions in the post 1993 era. To this day I will argue that greater emphasis could have been placed on restructuring the economy.
Lo and behold, the gains of the early 1990s and beyond have been compromised within the last three years as fiscal prudence gave way to fiscal ignorance under the guise of an international economic recession being its genesis.
The response of the Government was to increase taxation during a recession while at the same time significantly increasing the current expenditure of Government. All sensible governments around the world since the1930s have increased capital expenditure during a recession to help increase aggregate expenditure when private sector spending is under threat.
This Government opted to ignore conventional wisdom, and the people are now expected to pay the price in higher VAT, higher excise taxes, increases in utility costs, rises in other forms of taxation and, of course, galloping food prices.
Unfortunately, the problem is going to be a burden on the people, who do not deserve to be punished for the incompetence of the Government. And no amount of public relations can mask the incompetence which is becoming more obvious by the day.
