In recent times, debates have been raging over the management of the Barbadian economy under the leadership of both the Barbados Labour Party (BLP) and the current Democratic Labour Party (DLP) over critical issues such as the fiscal deficit, unemployment, the cost of living, and perhaps most critically the restructuring of the local economy.
An interesting observation made by the Minister of Finance is that “in times of plenty,” the BLP administration failed to restructure the economy and that failure has made it more difficult for the present administration to respond to the challenges of the recent global recession.
While the call for the restructuring of the economy is quite noble, the truth is that that idea has been on the debate table for more than a decade and I am yet to see any meaningful plan for addressing the issue.
In fact, I am not even sure that sufficient clarity has been brought to the fore in terms of what exactly the politicians mean by restructuring. So for the moment, I am prepared to put that matter on the back bench not because it is not important or even urgent but because of the absence of a vision to achieve that broad mission.
Restructuring aside, real issues such as the fiscal deficit, debt burden, inflation, and unemployment still have to be tackled in a consequential and sustained manner.
Hence, Government has to rely on all available tools at its disposal to address these matters.
And it is within this context that the effective management of the local economy becomes critical.
The tools chosen and the extent to which they are employed must be consistent with the objectives Government sets for itself.
The truth, though, is that the economy is made up of several units that interact with each other.
Government is but one of the many pieces that constitute the economy. But its policies generally provide incentives to other units such as households, businesses, investors and financial institutions to maximize the gains from their activities or minimize the losses therefrom.
Furthermore, Government’s policies also signal to regional and international organizations its seriousness and commitment or lack thereof to steadying the ship of state by getting economic fundamentals right.
Therefore, it is not only a matter of formulating and implementing policies in managing the local economy. As often as deemed necessary, those policies must be reviewed and important adjustments made in order to correct deficiencies as well as maintain and improve on what is working well.
The problem in practice is that Government seems conditioned to boast when things are working well but has serious difficulties admitting the opposite.
The net result is that the finger-pointing usually begins and adverse conditions prevail for far too long to the customary detriment of the economy.
As the country reflects on the recent downgrade by Standard & Poor’s and the debates intensify on the implications of the downgrade, our Government must remain vigilant and seek to address carefully all of the domestic concerns that stand as negative signalling devices.
That sort of response would be a lustrous example of what efficiently managing the economy should be all about!
