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#BTColumn – Chickens, meet roost

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by Adrian Sobers

The Jamaica Observer recently reported, “CB Foods, in a statement released Monday, has announced an approximate five per cent increase of all CB Chicken products, which will take effect on Friday, September 10.”

This is a(nother) case of the proverbial chickens, literally in this case, coming home to roost in the form of higher poultry prices. We can thank the monetary policy mercenaries for this debacle. It’s the same “over in away”.

A White House official commented that, if consumers (the ungrateful lot), would only take poultry, beef, and so forth out of their basket of goods, price increases wouldn’t look so bad.

The Biden Administration is boarding the “looking into” high prices train to see if consumers are being “gouged”. (You know how it goes.) But the only one gouging is the government. President Biden should be checking the temperature of Jerome Powell’s printing press (but, of course, there is an infrastructure bill to fund).

Aforementioned mercenaries and White House official would do well to heed the words from Mr. Owen Arthur’s 2001 budget speech, “Neither will we seek to stimulate this economy by incurring massive deficits, financed
by the printing of money nor will we seek to borrow
our way forward.”

I am young enough to remember when the then leader
of the opposition, current Most Honourable Prime
Minister, lambasted the previous administration about said printing press.

But I am too old to remember the details of Mr. Arthur’s first budget speech in 1995. Thankfully, it is included in The Essential Owen. I refer the reader to the opening line of the section, National Insurance Scheme: “Mr. Speaker, Sir, I turn to matters pertaining to the National Insurance Scheme dealing first with the issue of pensions.” COVID is dominating the news cycle but other medical conditions still have to be addressed.

Similarly, in addition to the monetary policy chickens and the inevitable high prices, another brood, concerning pensions, is also coming home to roost.

Further into the discussion on the NIS, Mr. Arthur said, “When it is considered that a contingency reserve of one year’s expenditure is the actuarial recommended reserve for such a fund and the greatest level of expenditure for any one year has been the $27 million that was paid in 1992, reserves, Sir, of $94.4 million at the end of 1994 are gross to say the least. This has to change, Mr. Speaker!”

You will be echoing that last sentence when you read the National Insurance & Social Security 16th Actuarial Review. In his 1999 budget, Mr. Arthur did not introduce any changes to the NIS but referenced “the Ninth Actuarial Review of the Scheme and the concerns raised therein”, and thought it necessary to “enjoin everyone in the discussion of the issues and reform options”. A similar discussion should be had concerning the Sixteenth Review.

A good place to start comes in the form of a question posed in said Review: “What would NIS look like if it were being established for the first time in 2019?”

The issue of pensions affects not only, to borrow a phrase from Mr. Arthur’s 1995 speech, “poor Barbadians in the evening of their days”, but our young future stars as well.

The Sixteenth Review can be summed up in two excellent titles: The High Cost of Good Intentions and The Great Demographic Reversal. We are paying the former now, and the latter will increase said payment, placing an even greater strain on the system.

The most fuzzy eyebrow section of the Review concerns the investment policy. After referring to a well-documented policy, it states, “Many decisions over the past fifteen years were made contrary to policy guidelines and external advice, as asset allocations were allowed to remain outside agreed and approved limits.” That becomes painfully clear when you read the first entry in the table showing the actual asset mix compared with said investment policy.

It also explains this comment, “One of the increasing threats to social security funds in the region is the incidence of excessive political interference and influence over where funds are invested.” But read it for yourself.

“All 80 pages?” as one friend asked. Well, at least the Executive Summary and Chapters 5 and 8. Another asked, “Wait, when do I retire again?” Good question. And another commented that there won’t be anything left in the kitty, should we reach our twilight years.

In answering the question posed in the Sixteenth Review about what the NIS would look like if it were being designed today, we should ensure our answer aligns with Mr. Arthur’s closing remarks from his 1995 budgetary proposals, “Mr. Speaker, when economic historians come to consider the economic policies set out in today’s presentation, I should wish them to say that they represented a resounding statement of confidence in the future of Barbados.”

“They will come to recognise that this was, as intended, the first in a series of similar such efforts” intended to “combine humanity, creativity, and pragmatism in the search to make Barbados the just and prosperous society we all wish it to become.”

Our answer will take the form of reforms that cannot be done in one fell swoop. As the U.S. found out in Afghanistan; you cannot go from burkas to gender studies.

Should we tempt fate and not align our answer with aforementioned closing remarks, we will (not might), be forced to face the reality that Dr. Thomas Sowell noted about the American counterpart: “We can pay higher taxes temporarily to rescue them [older people].

But, there is no reason to bankrupt the country by keeping the fraud going forever. Younger people can be allowed to opt out and arrange their own pension plans in the private sector.”

Adrian Sobers is a prolific letter writer and contributor on matters of national interest. This column was submitted as a Letter to the Editor.

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