The Sixth Caribbean Economic Forum hosted by the Central Bank of Barbados and featuring University of Michigan Economics Professor Dr Linda Tesar was very enlightening. The topic posed as a question was: In a World of rising debt; how can Caribbean countries stay afloat?
Former schoolmate Jeffrey Cobham called from Jamaica to thank her for speaking ‘English’ by which I think he meant as opposed to the lofty macro-economic jargon that so often obscures the discourse in that what has been called ‘the dismal science.’
The discussion confirms my untutored belief that there is no easy way out of the debt-trap into which Barbados, like many other regional states, has fallen. The choices are few: either you cut expenditure and raise revenue through taxation or you earn more by growing the economy.
In Barbados, there is a lot glib talk about ‘growing the economy’ but no one seems to know precisely how to do so with guarantees of success. Professor Tesar made it abundantly clear that as she put it, ‘growth is elusive,’ or as she repeated, ‘relying on the growth component is uncertain.’
It is particularly uncertain at the moment because as Tesar indicated, worldwide, we are seeing low rates of growth which is bad news for Barbados and everyone else. It must be even worse for small open economies that are perennially vulnerable to external shocks. This is the existential reality we must all confront assuming that our primary concern is not the defence of some narrow partisan political constituency.
Professor Tesar’s warning is that we need to manage our resources well and with ‘efficiencies.’ She has cautioned that there is little room for error and we have to get it right and do things on a pre-emptive basis to recover from and stay out of the cycle of indebtedness. My contention is that Ms Mottley is attempting to get it right. Our guest speaker herself stated: ‘I do believe that when debt levels are very high, some hard decisions have to be made.’ The Prime Minister herself is quoted as saying that, ‘We must all move out of our comfort zones in order to move forward.’
A rather worrisome note was struck when Professor Tesar suggested that it could take years to extricate ourselves from the current level of indebtedness – anywhere from five to seven years. Though she opined, ‘improvement could be seen before that.’ Hopefully it will. The question is: Does this fast food generation of Barbadians, obese and paunchy, have the stomach for prolonged austerity and stringent belt tightening?
The professor’s notion of a possible seven years of economic insecurity could witness entrenched inequalities and the stalling of social mobility. It is wrong and bordering on the malicious (given the extent of the challenge) to suggest that after only one year, there could be some momentous turnaround in our national fortunes.
Addressing the recent Risk Management Conference, Christian Laffler, Deputy Secretary of the E.U. External Service warned that resilience in the face of natural disasters or economic challenge requires ‘a change of behaviours and mentalities.’
The Prime Minister may have certain things in her favour. Personally, she is showing herself to be a leader of tremendous energy and political tenacity. A writer to the RSA journal recently stated that the debilitating disease of our time is ‘the poverty of leadership.’ Miss Mottley has the qualities of leadership. She must take her time and think things through. The BLP’s majority in the Assembly and the discredited state of the DLP make it likely that she will have at least ten to 15 years in which to complete the BLP’s legislative and administrative programme.
Secondly, as Professor Tesar points out, our ‘people are aware of the challenges.’ The Prime Minister is currently the recipient of considerable goodwill from a Barbadian public once known for its level-headedness. This beneficence should not be squandered. Simmering discontent over increased bus fare, water and sanitation charges and rising crime will die down if the government can show that it is getting it right in relation to improving public transport, sanitation, water shortages and issues relating to law and order. Of course, nothing is guaranteed. There are always the exigencies of human existence. Dr David Smith pointed out that a bad tropical storm could wipe out from between eight to ten per cent of any Caribbean country’s GDP.
At the end of the Sixth Caribbean Economic forum, moderator Julian Rogers asked Professor Tesar: ‘Are you optimistic?’ She replied: ‘I sense that there is an understanding of and a commitment to what has to be done.’ Let us hope that she is right and trust that as Dr Vital who called from St Lucia hinted, narrow partisan political considerations do not intersect rightful decision making.
Ralph Jemmott is a respected retired educator.