When economies are in trouble, economists and other pundits usually engage in widespread and heated debates on the right mix of policies to turn those ailing economies around and return them to sustained growth and development paths. More often than not, the policy recommendations to achieve that goal simply follow ideological lines rather than reflecting wise economic decision making.
For example, since the 2008/2009 global financial and economic recession, the most powerful country in the world – the United States – has spent billions of dollars on various initiatives such as the promotion of alternative energy, the bailout of weak financial institutions and improvements to the country’s deteriorating infrastructure, all with the hope of creating jobs and turning around the economy. That approach to stimulating economic growth and generating employment was a direct contradiction to the policy recommendations of the Republicans who logically preferred lower taxes and private sector led initiatives to aid economic recovery.
While there is no consensus in the US on the efficacy of the economic policies of the current administration, no one can deny that the main difference in approaches between the Democrats and Republicans is the notion of big versus small government. Generally, the Democrats prefer big government and usually engage in huge amounts of spending to boost economic activity.
The Republicans, on the other hand, prefer small government and hence advocate for less spending and lower taxes as incentives to attract private investment within the marketplace.
Even without any genuine assessment of which of these approaches is more suitable to the US, what is clear is that the economic policies that have been implemented over the past five to six years have done little to aid in the recovery of the economy. Consequently, the national debt has risen to over US$17 trillion and economic growth remains weak.
The message here is simple: unless there is wise economic decision-making, countries all around the world will find it extremely difficult to achieve their stated socio-economic objectives. The US has clearly found that out and so too would other countries that fail to take heed.
It is for this reason that the recent pronouncement by the Caribbean Development Bank (CDB) that Caribbean countries have made some improvements in their economic growth performance in 2013 comes as good news but with cause for concern. You see, while, for example, the CDB is calling for improvements in our levels of competitiveness, many of our regional governments are seeking to resolve their fiscal deficits by imposing more and more taxes on their citizens.
Since taxes are generally regressive by nature, they can only serve to retard economic growth in economies that need to ensure that the benefits gained in 2013 are improved upon in 2014 and the years ahead. Once more, wise economic decision-making is required and that notion should be reflected in all of the policies implemented by our various governments.  Â
Going forward then, every country in the Caribbean should undertake to design and implement growth-enhancing as opposed to growth-retarding policies to ensure that the fight against poverty, unemployment, and fiscal deficits could begin in earnest.
Are you with me?
