This article is not so much about what the Government is doing, but rather why it is doing it.
One of the greatest restrictions in the search for a means of dealing with the impact of the current recession on our economy is the natural tendency of debaters and discussants to confine discourse to knowledge that supports only the conventional views.
As a result they are at a loss as to how this catastrophe could happen, and how it can be prevented from destroying our standing as among the leaders in the United Nations Human Development Index.
The intention is not to be dismissive of conventional views on recession economics and the conveyers thereof. However, if there is one additional thing that economists have learnt from this recession it is that it is not merely about the amount of money in the banking system or even the level of foreign reserves.
Our banks have in excess of $5 billion and our foreign exchange reserves are more than adequate. Therefore, the conventional approach, on the right of centre, would suggest that all that is required is the reduction of interest rates.
This would incentivize investors to borrow and invest, thereby creating more jobs, better wages and ipso facto the problem is solved.
On the left, in accordance with the dictum “from each according to his abilities to each according to his needs”, the Government would intensify progressive taxes and extend its welfare services.
The current recession has demonstrated and continues to demonstrate the irrelevance of both of these as practical solutions at this time on the following grounds.
The core of the current recession is the reckless, greedy pursuit of money wealth. Money is now itself an end. It is de facto the main source of owning wealth and speculating, given the nature of this recession, where the private sector has the ability to supply goods and services of the nature and way in excess of the consumers’ capacity to purchase even for their basic needs.
Businesses that are very well managed are closing down, and making well trained, experienced, motivated workers redundant because there is a shortfall in demand for orders.
It is easy to see that the shortfall in the demand for goods is the main culprit, since the situation is the result of the natural flow of the business cycle.
The question is this: can the increase in the demand for goods be initiated by adding to the supply of money – the printing of money – without doing commensurate damage to the wider economy, in increasing prices, triggering price inflation and a run on foreign exchange?
The strategy of the Government as expressed both in the Estimates and the Budgetary Proposals shows that it understands the precarious nature of managing the current situation, and has come up with a mixture of measures that demonstrate fiscal prudence and socio-economic responsibility.
It is up to businesses and consumers to show the same level of moral responsibility. If we do, we can ride out the recession.
• Tennyson Beckles is an economist.
