BETWEEN 1966 AND 1972, Government’s Budgets were designed to achieve the principal objectives of (1) economic growth, (2) job creation and (3) stable consumer prices. For the next decade after 1972, the objectives shifted to (1) controlling the fiscal deficit, (2) managing the foreign reserves and (3) sustaining moderate to low rates of economic growth.
It must be understood that the fiscal measures designed to reduce the deficits and protect the foreign reserves do not promote economic growth. If plants are deliberately deprived of water, the objective is certainly not to encourage them to grow. The same is true of an economy that is deprived of spending power.
It does not require anyone to take a course in basic economics to appreciate that less spending power among Barbadians will reduce economy activity. This country is suffering from a deficit of honesty by some who know better as much as it is suffering from persistent fiscal deficits because of prolonged ignorance.
In the period 1966-72, the Barbados economy experienced the highest average growth rate for a seven-year period. The logic of numbers alone would explain that it is easier to grow faster from a small base. Therefore, it should come as no surprise that the Barbados economy grew fastest in the years immediately following Independence.
The infrastructural needs of the economy and society were at their greatest having achieved self-government. The Government was now able to borrow more to develop the infrastructure. The relative cost of building would have been much lower than now. The environment was therefore right or ripe for the pursuit of faster economic growth.
Can anyone recall the days of double-digit increases in workers’ wages and salaries? Does anyone remember the building of schools and housing areas? Who remembers the changing of the country’s housing stock from wood to wall?
These questions are asked simply to refresh the readers’ minds. It is now easier to recall that the pursuit of economic growth in Barbados was based on increasing disposable incomes and pursuing greater investment by the public and private sectors. Now that the minds are refreshed, think about the utterances of the current minister of finance and do your own reasoning.
Understanding the economics of the 1960s to the 1990s does not require any major leap of intelligence with respect to the economics of today. The difference in intelligence is more evident in the policymakers. These days, they have become more inclined to public relations and less so to proper and progressive policy formulation.
It is becoming increasingly popular to assume that the electorate is simple-minded. There is therefore no need to waste time discussing policy issues with them, when propaganda will suffice. There is a very heavy price being paid by this country for allowing itself to be seduced by such a strategy in the recent past.
The seduction has given rise to a business community that is holding on, a working class that is becoming increasingly hopeless, and a middle class that is quickly becoming the working poor. It must be apparent by now to the Government that human beings are not numbers. Their happiness cannot be quantified on a numeric scale. Their hope cannot be forecast within a range of 2-3 per cent. And their horizon must at least be visible.
Barbadians have had enough of the arithmetic of the fiscal deficit, the national debt and the foreign reserves. They need relief, belief and renewal; relief from the torture of ongoing misery; belief in a future that offers greater access to basic needs, and renewal in preparation for a better life ahead.
In the last seven years, the Government has become obsessed with the arithmetic required to correct the fiscal deficit and maintain the foreign reserves. This came at the expense of increasing the spending power of Barbadians – the thing that enables sustainable growth and development of not only the economy but the society. If the readers’ minds are truly refreshed by now, then it is easy to reason that the country has been put on the wrong path by the numbers approach.
Given what Barbadians experienced in terms of economic management and leadership, give or take a few years, in the first four decades after Independence, it is impossible to conclude that the country is on the right path. Such reality only needs for one to be honest. It certainly does not require a PhD in economics.
The time has come to reflect on where we were, where we are and where we want to be.
• Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party adviser on the economy. Email: clyde_mascoll@hotmail.com.