EACH QUARTER, the Governor of the Central Bank of Barbados delivers a report on the performance of the economy that by its very nature generates a tremendous amount of discussions among economists, politicians, policymakers, academics, and members of the public; and rightfully so, if our democratic way of life is to be preserved.
In modern day Barbados, a key issue that takes centre stage in those deliberations is the level of criticism levelled against the Central Bank for its handling and reporting of economic matters by members of the main opposition Barbados Labour Party (BLP), moreso by the BLP’s political leader and economic adviser. While some pundits may disagree with the public uttering from those two individuals, in particular, I firmly believe that history will eventually prove that the positions adopted by the Opposition Leader and her economic adviser were correct and within acceptable norms.
Why? The answer begins with what constitutes an economy.
The Merriam-Webster Dictionary defines an economy as “the process or system by which goods and services are produced, sold, and bought in a country or region”. Dictionary.com describes an economy within the context of “the management of the resources of a community, country, etc, especially with a view to its productivity”.
Anyone familiar with basic economic principles would immediately accept and recognise from these definitions of an economy that in order for the citizens of a country to enjoy the consumption of high quality goods and services, production and distribution must take place efficiently – an outcome that is only possible with an effectively functioning economy.
But as a people, how do we create or support an effectively functioning economy? One critical aspect to that important question is the role played by the monetary authority which, in Barbados’ case, is the Central Bank. Evidently, the Central Bank fulfils that mandate with hilarity!
To put the dicussions into propert context, Allan Greenspan, the former chairman of the Federal Reserve in the United States, ended a 1996 speech at the annual dinner and Francis Boyer Lecture of the American Enterprise Institute For Public Policy Research, Washington DC, in this fashion: “This evening I have tried to put current central bank issues in historical context. Monetary arrangements, including central banks, naturally are under constant scrutiny and criticism. This is no less true of the Federal Reserve in 1996 than of the gold standard in 1896. Central Banks need to respond patiently and responsibly to the commentary, and we need to adapt to changing circumstances in markets and the economy.
“A democratic society requires a stable and effectively functioning economy. I trust that we and our successors at the Federal Reserve will be important contributors to that end.”
Not only was Greenspan reminding all and sundry of the important role to be played by the central bank in ensuring an effectively functioning economy, but also that central banks must evolve in a mature way to be able to efficiently respond to criticisms as well as evolutions without our domestic economic landscape.
The responses, therefore, from the Opposition Leader and her economic adviser, to the various reports delivered by the Central Bank on the performance and prospects for the Barbadian economy should be seen as just another attempt
in the quest to ensure the effective functioning of our economy ultimately preserves our democracy and opulence!