By Raffique Shah
January 17, 2018
Dr Terrence Farrell’s resignation last week as chairman of the Government-appointed Economic Development Advisory Board brought into focus a long-simmering conflict between economists and business interests in one camp, more or less; the Government, which sees the economy primarily through the prism of political power, on the other; and trade unions and a disparate population that sense the near-violent instability of the ship of state and recognise the need for adjustments by all passengers on board, from captain to cook, but each one expecting the other, not him, to move.
The debate on how the country extricates itself from its energy dependency, commodities that, up to a few years ago, contributed the bulk of a healthy gross domestic product (GDP) that stood at approximately TT $150 billion, and 80 percent of foreign exchange earnings, has been as old as when the first oil boom of 1973 turned into a bust less than a decade later.
It spanned governments from Dr Eric Williams’s, who, in 1976, in the euphoria of high oil prices and Hasely Crawford’s gold medal run at the Montreal Olympics, crowed “money is no problem”, to George Chambers’s reality check in 1981, “fete done, back to wuk”. It brought the PNM crashing from power in 1986 and sent its successor, the NAR, cap in hand to the IMF, ushering in more than a decade of austerity measures that pauperised the already-poor and many among the middle classes, and even took a few wickets among the wealthy.
By the time the oil dollars started flowing again around the turn of the century, except for monetising natural gas through the downstream industries at Point Lisas and Atlantic LNG, credits to the technocrats more than the economists, the politicians and the people had learnt no lessons. The gravy train got longer and thicker, with governments doling out dollars like “parsad”, and the new and expanded “kleptocracy”, be-suited bandits closely linked to politicians-in-office, brazenly stealing from the public purse.
Diversification of the economy remained a hackneyed phrase, mouthed to give the impression that some people were thinking outside of the oil-barrel, but never seriously addressed. Among the bulk of the business elites, it was always safer to buy manufactured goods cheap from China, mark up and make profits if not profiteer based on demand and supply. And Government, which led the way in the downstream energy industries, made such a mess of the State enterprises, planting square political pegs in round corporate holes, was forced to sell out industrial plants at basement prices, only to see the buyers (Mittal and ISCOTT, CL Energy and the first methanol plant) make fortunes that ought to have boosted the Treasury, not other people’s bottom lines.
Now that we are once more on the edge of the economic abyss, the economists see the solution in harsh, IMF-like measures that will cripple the poor and the middle classes more than other sectors of the society. The elites will bear some pin-pricks—postpone buying another Mercedes, hold off on investing in a $10-million property deal, etc—but the good times will roll on for them.
Farrell’s resignation from the EDAB has intensified the “whither Trinidad and Tobago” debate. But in my humble, layman’s view, it has failed to stimulate new perspectives that might steer the ship of state away from turbulence and into waters that might be uncharted, but in a direction that might just allow this tiny country to avert the global hurricane that looms large on the horizon—the titanic clash between the “one percent” and the masses, the war over a more equitable distribution of the wealth of nations.
A good starting point for redirecting the debate is using Mahatma Gandhi’s famous dictum, “The world has enough (resources) for everyone’s needs, but not everyone’s greed.” This is not intended to revive the utopianism of my youthful days when, as young revolutionaries, we pursued the dream of an egalitarian society, something we can still dream of, but realistically, we know is unattainable.
An equitable society, one in which wealth is created and distributed such that the yawning gap between the very wealthy and the mass of people is narrowed, is surely something that we can achieve if only we can believe in ourselves, and if every able-bodied citizen is prepared to contribute.
From this perspective, while increasing GDP is important, and a high per capita GDP is impressive, the economists will agree that as indicators, they tell a misleading story. A few years ago, T&T boasted of a per capita GDP of US $20,000. That was the third highest in the hemisphere, and translated into every four-person household producing the equivalent of TT $500,000 per year.
If 50 percent of that reflected incomes, it meant that the average annual household-income should be approximately $250,000—which we know is way beyond reality. In fact, a decent middle-income family earns less than half of that. So boosting GDP does little to dampen poverty. But it does a whole lot for the “tender-preneurs” (to borrow an Afra Raymond word) and the very wealthy.
The Ghandian approach should guide the restructuring of the economy now that we have yet another opportunity to start afresh, in a manner of speaking. Needs must come before greed or we shall be damned to eat the bread the Devil knead.