At various stages of the post-1973 period, Barbados achieved the status of number one developing country, predominantly on the basis of its social indicators. This did not happen by accident, in fact there was an implied development model around which our progress was constructed.
There are several definitions of development but the most convenient is economic growth plus social progress. The two elements must come together. We have identified that Barbados’ economic model included among others: (1) the pursuit of economic growth; (2) the attainment of annual current account surpluses by the government and (3) the maintenance of a fixed exchange rate.
On the other hand, Barbados’ social model included: (1) access to education for all; (2) access to health care for all; (3) social welfare for the vulnerable and (4) access to pensions for the elderly.
It is impossible to pursue these two models separately and more so to assign greater importance to one or the other. However in a real world, a social model has no legs without financial resources. In addition, the ultimate aim of using financial resources ought to be to make human beings better off and happy.
Beyond the rhetoric and in pursuit of the development, Barbadians were asked to pay high taxes in return for access to the social services identified above along with the greatest social good of all, employment. The achievement of economic growth allows the private sector to create more employment, while it allows the government to generate current account surpluses and therefore make public sector employment possible and sustainable.
It is self-evident that growing the economy is the prerequisite for creating sustainable employment in both the private and public sectors.
For the Barbados’ development model to be successful, the two major agents in the economy and society, outside of the government, had to be fully engaged and more so enabled. These two are the households and the private sector. Apart from health care, the former needs education in the pursuit of social upward mobility; the latter needs an enabling environment in which to invest.
This process of engagement became more apparent in the post-independence and the practical role of government was best articulated by Prime Minister Errol Barrow in 1971: “These [current account] surpluses when added to the annual charges of debt constitute this generation’s contribution to the permanent assets of our country. The total actual capital expenditure during the development decade[1961 – 1970] was $94.5 million; the surpluses available were of the order of $29 million so that they underwrote approximately one third of our capital expenditure during the period.”
It is okay to hang your hat high but you have to reach it. When seen in the context of a country, this sentiment oozes a reality that it takes money to make the people better off. It is one thing to dream but it is another thing to dream collectively.
In the last six years, the Barbadian dream has been thrown through the window because of fiscal ignorance. Some forty-two years of engagement and enabling of households and businesses have been compromised by a wayward Government.
There is no easy way out of the economic mess created by this Government. The lack of economic growth, the Government current account deficits and the rapid accumulation of debt have gone contrary to the economic model. And equally importantly, the social model is being systematically abandoned.
Access to education for all has already been dismantled. Access to health care for all is quietly being removed. And perhaps, the greatest threat of all is the failure to take care of the provision of pensions for future retirees. These departures from our development model are real not imagined.
Unfortunately there is pure political talk about restructuring the Barbados economy; it cannot occur in this environment. In the same way it does not make sense for a dentist to perform a root canal on a rotten tooth, the economy cannot be restructured in an environment of excess instability.
The economy has to be stabilised before it can be restructured. The best indicator of economic stability in a small Caribbean economy is employment creation which accompanies economic growth. Current economic evidence and over-reliance on alternative energy as a catalyst for restructuring of the economy tell the tale.
The past may not be the present but it determines the future. In the future, the two are the same, experiences from which lessons were learnt, hopefully.
• Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party adviser on the economy.