The recent Estimates debates have confirmed that there is no workable plan to improve the national economy. Therefore, it seems that the ‘society’ of Barbados is being prepared to be sent over the economic cliff. Those of us who are old enough have seen this movie before. It is instructive that we watch it again in the hope that we can avoid it from being our reality.
After their independence in 1966, Guyana embarked on a socialist experiment. Socialism essentially means that the Government, and not the private sector, manages major industries. By the 1970s, Guyana was one of the most prosperous countries in the Caribbean with an exchange rate of G$2.55 for US$1. However, two decades after their independence, the fatal flaws in their socialist experiment had damaged their economy and the International Monetary Fund (IMF) was repeatedly warning them to change course.
Following are two of Prime Minister Desmond Hoyte’s blustering responses in 1985.
“We have concluded that the standard IMF prescription is not only palpably irrelevant and useless, but also positively dangerous and counter-productive in our particular situation. We must resist, with all our might, the pressures that might be exerted to force us on to the IMF’s Procrustean bed.”
“But let me make our position clear on this issue. While the People’s National Congress remains in office, the bauxite industry, the sugar industry and the other strategic industries which we have nationalized in this country will never, never, never be denationalized [privatized]. For one thing, to do this would be an admission that we are abandoning the socialist ideal, and we have no intention of doing that.”
By 1988, this time as President following the death of Forbes Burnham, Hoyte finally admitted that his party’s 19-year socialism experiment idea had failed, and he surrendered the Guyanese people to an IMF programme. In 1989, the IMF stabilization programme had resulted in: a 70% devaluation of the Guyana dollar, doubling of the income tax rates, a ruined economy, dilapidated infrastructure, lack of supplies, reduced social services, mass emigration of professionals, and 75% of the population in poverty.
In addition, the Government-managed industries were privatized, including: mining (bauxite and gold), rice, timber, sugar, fishing and telecommunications. In the aftermath, Guyana’s citizens learned two simple lessons the very hard way.
1. Politicians rarely tell citizens the true state of a poorly performing economy.
2. Industries are not toys for politicians.
3. Politicians are prepared to ruin the economy for the sake of their socialist philosophical ideals.
Barbados also embarked on a structurally deficient socialist experiment after our independence and, like Guyana, our politicians seem determined not to correct the fatal flaws in our system. Whenever the IMF gives us similar warnings to the ones that they gave to Guyana, the Government’s blustering response is that they do not understand Barbados’ economy. It may be useful to be reminded of our Prime Ministers response to Moody’s downgrade in June 2014.
“What they say is only relevant if we want to embark on an orgy of foreign borrowing in which people should know how much we should have to borrow, how much our money should cost. But if we are not intending in the short or medium term to go to the capital markets to borrow money, what they say has as much value as what you would see in any garbage dump collected by the Sanitation Services Authority.”
During the recent Estimates debates, the DLP politicians found themselves unable to provide any meaningful solutions to the national economy. However, to their credit, they requested solutions from the Opposition BLP politicians, who were also elected to govern. The Opposition reportedly noted that it was not their responsibility to offer solutions. Peoples, if we intend to elect either of these at the next general election, then we are truly sunk.
Over 20 months ago, Solutions Barbados published workable solutions for Barbados’ economy on SolutionsBarbados.com. They remain relevant. Since neither the DLP nor the BLP are solving the nation’s critical problems, then the time has come for Barbadians to put their houses in order and prepare for the foreseen dangers. Proverbs 22:3 advises: “The prudent see danger and take refuge, but the simple keep going and pay the penalty.”
Next week, we will share the practical things that Barbadian employees can do to increase the likelihood of them: maintaining their jobs, maintaining their salary levels, and earning foreign currency.
(Grenville Phillips II is the founder of Solutions Barbados and can be reached at [email protected])