Friday, April 19, 2024

WHAT MATTERS MOST: It’s not best practice

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THE MINISTER OF FINANCE’S attempt to chastise economists and other commentators for expressing surprise at the unemployment rate for the first quarter of 2016 can only be described as unimpressive.

Not too long ago, the governor of the Central Bank was not satisfied with the unemployment rate and proceeded to conduct his own telephone survey. Ironically, he was not chastised by Minister Sinckler; perhaps because it suited the minister’s purpose.

In the words of a former governor, the central bank governor is a creature of the minister of finance, especially when he is also the prime minister. It appears that what obtained in the past is no longer. It is astonishing how the current governor is allowed to make statements on fiscal policy long before Minister Sinckler. This new practice was in evidence for quite a long time.

On several occasions in the recent past, the governor spoke on debt, fiscal strategy, projects that have not come to past, among other things that typically should be the domain of the Ministry of Finance and Economic Affairs. Indeed, the governor was allowed to hold court in a meeting with the executive director of the International Monetary Fund (IMF) in a meeting with CARICOM ministers of finance that did not turn out too well. 

The most recent pronouncement by the governor that should not have been allowed was on the state of the foreign reserves. After several years of speaking to the adequacy of the foreign reserves, he served a warning that measures would be put in place to protect the reserves in the next budget. He also forecast the imposition of more taxation on Barbadians.

There has been a pattern of public commentary that is at variance with best practice from the past. In an economy that has struggled to gain momentum in the last eight years, it is inappropriate to give considerable leeway to the private sector with respect to concerns about the reserves. If the minister of finance believes that he is in a position to chastise anyone on the economy, then he has every right to start with the governor.

Truth be told, Minister Sinckler may not feel that he is in such a position. He is obviously more comfortable with the politics of the economics. He appears to have the favour of the media practitioners. When professional opinion is offered on economic issues, somehow a way is found to offer him the opportunity to put his political spin. In addition, his opinion becomes the lead story. It is the nature of the game.

Minister Sinckler, in his capacity as the minister of finance and economic affairs, has every right to present and defend the Government’s economic and fiscal policies. But it should never be believed that the position entitles him to escape the scrutiny of trained economists and commentators on the matters affecting the Barbados economy. 

For those of us who teach courses that make contact with some of the established theories and empirical evidence, which help students to understand economic outcomes and trends, it is important that we are engaged in public discussion. The environment is not the most accommodating for the majority of my colleagues; my experience has been different because of the political exposure.

At no time in the past or the present has the environment deterred me. Some have tried their best to do so. Others have been very accommodating. There is one constant in economic analysis; and it is truth.

In fact, Minister Sinckler should have pounced, favourably, on the analysis of the labour force data that was presented in this column two weeks ago. Instead, he chose the route that he is comfortable with. He might have had severe difficulty explaining how ultra-defensive tax policies designed to cut spending and protect the foreign reserves created jobs.

Furthermore, he might have had difficulty explaining how hardly any jobs were created in the tourism sector during the first quarter of 2016. He might have had difficulty explaining the sectoral breakdown of job creation and reconciling it with the real GDP growth estimated in the first quarter across the various sectors.

It is understandable why Minister Sinckler chose the political path and avoided finding the economic explanations. After all, Barbados is more than an economy, it is a society in which politics plays its part in protecting privilege. The latter comes in many guises. It comes from position; it manifests in power and when misused, it affects the poor and the powerless most.                         

• Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party adviser on the economy. Email: clyde_mascoll@hotmail.com

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