The Australian economist John Quiggin coined a rather interesting title for his book on dead economic dogmas that somehow still walk among us: Zombie Economics.
“Ideas are long lived, often outliving their originators and taking new and different forms. Some ideas live on because they are useful. Others die and are forgotten. But even when they have proved themselves wrong and dangerous, ideas are very hard to kill. Even after the evidence seems to have killed them, they keep on coming back. These ideas are neither alive nor dead; rather . . . they are undead, or zombie, ideas,” he wrote in his introduction to the book.
If we were to extend Quiggin’s theory beyond economics into other areas of Barbadian life, we might discover that our country is being stalked by zombie politicians, for example, who have long past their usefulness but hang around eternally to haunt us, zombie institutions that control our lives and all other forms of zombies that plague us.
For the most part they have no credibility or moral authority, but they keep finding ways to run our lives.
However, it is the issue of zombie economics that most concerns us today.
While the National Union of Public Workers was engaged in a two-day national strike last week – a strike that received lukewarm support – Solution Barbados, one of the newest political parties seeking to upset the traditional parties in the next general election, promised that civil servants would get the 23 per cent increase they are demanding. But, from what the party’s spokesman on economic affairs, Scott Weatherhead, said, this would be accomplished in a roundabout way.
“Under a Solutions Barbados administration we unequivocally promise all Barbadians and their representative trade unions to provide all public servants and citizens with immediate relief from economic hardship by offering an effective increase in net disposable income at least equivalent to the 23 per cent increase the unions have sought,” Mr Weatherhead said as he offered his party’s support to the workers.
We cannot be certain just what that meant, but it is fair to conclude that Solutions Barbados believes that its economic policies will leave 23 per cent more money in workers’ hands.
The party had said in the past, and Mr Weatherhead repeated, that it will scrap the unpopular National Social Responsibility Levy, the 17.5 per cent Value Added Tax and the two per cent foreign exchange tax, as well as taxes on pensions and retirement benefits. It also plans to introduce a simple ten per cent flat tax, remove import duties and taxes from healthy foods and reduce land taxes through its agricultural incentives.
On a separate occasion, Solutions Barbados also promised to write off $1 billion in debt owed to Government.
Just how the country is expected to function under these conditions, remains a mystery. Former United States president Ronald Reagan’s trickle down economics, which his then opponent for the Republic Party nomination, George H W Bush had described as voodoo economics, did little to improve the lot of the ordinary person. All it succeeded in doing was put more money in the pockets of the wealthy.
Therefore, is voodoo economics the answer to Barbados’ fiscal problems? We believe not.
However, Solutions Barbados must be commended for recognizing that we cannot do the same thing again and again and expect a different result, therefore we must find a way to once and for all get rid of the economic zombies.
Like dilettantes, the Freundel Stuart administration has long practised the form of zombie economics that the University of Queensland lecturer wrote about.
From the graveyard of economic ideology, it resurrected the theory of increased taxes hoping this would help the country emerge from a recession that has long been history to the rest of the world.
This undead policy benefits few, if anyone, and has done little to revive the economy, reduce the national debt or rebuilt faltering foreign exchange reserves.
But then, any economic naïf would have predicted that the outcome of such measures would be predictably dismal.
The Prime Minister told the Barbados Chamber of Commerce and Industry luncheon this week that the deficit was dropping and “it is anticipated that this gap will be closed by a further three per cent, therefore bringing the actual outturn very near to, or even surpassing, the intended target of 4.4 per cent set during the Budget Estimates debate last year”.
He also said that Government’s latest stab at tackling the economic malaise, the Barbados Sustainable Recovery Plan, which was promised last year, would return the economy to “a path of steady state equilibrium with a view to propelling the economy to the pre-crisis growth level of three per cent on average” by 2021.
It is left to be seen if this plan will achieve what so many before it failed to do, for the behaviour of this administration often mirrors what historian Barbara Tuchman wrote in The March of Folly about Philip II, the 16th century king of Spain, also referred to as The Prudent.
“No experience of the failure of his policy could shake his belief in its essential excellence,’’ Ms Tuchman wrote.
This attitude results in the administration serving us the same old failed economic policies, leading to further damage to the economy.
In the meantime, since the devastating earthquake in 2010, Haiti’s economy has been growing at a steady pace. It grew by 5.5 per cent in 2011, 2.9 per cent in 2012, 4.1 per cent in 2013 and 2.8 per cent in 2014, before falling to 1.2 per cent in 2015 and 1.5 per cent in 2016, according to the International Monetary Fund (IMF).
However, it recovered to post 3.3 per cent growth in 2017, the IMF reported.
To compare the two may be seen as the equivalent of committing apostasy, but the point must be made that zombie economics is getting us nowhere.
The time has come for us to think outside the undead.