By Raffique Shah
June 14, 2019
Trinidad and Tobago should be grateful for having among its citizens patriots who are unafraid to speak out on issues that affect us all, and more importantly, who bear allegiance to the country, not to any political party. Of course, such persons have the right to support a party of their choice at any point in time. But they also jealously maintain their independence by criticising the policies and actions of the party they voted for when they are convinced it has made decisions that are inimical to the best interests of the nation.
Every so often I read or hear such persons voice their opinions, knowing they will incur the wrath of whoever happens to be in government, and I feel for them. Recently, Dr Terrence Farrell, a brilliant scholar who was selected to head the incumbent Government’s Economic Development Advisory Board shortly after the Keith Rowley-led administration came to power in late 2015, has been critical of Finance Minister Colm Imbert’s claims and utterances with respect to the state of the national economy.
Minister Imbert made much ado about a one-to-two percent growth in gross domestic product (GDP) after several years of decline or stagnation, and proclaimed that the economy has “turned around” and the energy sector was “booming”. As was expected, the Opposition in Parliament and the go-to economists that the media feature in discussions on the topic followed up with sterile debates over whether or not there was growth, and if so, by what miniscule percentage.
Addressing a Rotary Club meeting, Farrell posed some extremely pertinent questions that the wider population should ponder. Express reporter Camille Hunte quoted Farrell telling his audience: “‘It is not enough to say one per cent growth is sufficient or two per cent growth is sufficient. What is the rate of growth that this country requires to lift the sections of our population who are living in poverty out of poverty? What rate of growth in this economy is required to reduce income inequality which is a serious problem in this country? What rate of growth is required to be able to achieve a diversified economy and to transform the economy? That rate of growth is not one per cent or 0.9 per cent or 0.5 per cent or two per cent.’
Farrell said the target rate of growth should be in excess of seven per cent per year. “So when I hear people talking and praising themselves about having achieved 0.5 per cent growth or two per cent growth I say, for what? What is that going to do? Is that going to make us into a developed country by 2030?”
I have quoted extensively from Farrell because he has delved into the meat of the matter, in a manner of speaking. What kind of growth do we really need to make a difference in the lives of the majority of citizens of the country, and to mitigate if not eliminate poverty? Farrell also raised the issue that is likely to dominate discussions worldwide, and quite possibly lead to confrontations, maybe even mass uprisings—income inequality.
Besides Farrell’s objective approach to a highly-charged topic, another independent contributor to such discussions, financial analyst Ved Seereeram, injected radically different approaches to how economists, governments and international agencies should measure economic performances.
Writing a column in the Express (and no, I’m not being incestuous!), Seereeram argued that GDP as a metric has long outlived its usefulness. He wrote: “While the GDP number attempts to record the overall performance of an economy, there are serious flaws with the GDP calculations and the use of the GDP as an economic indicator… In fact we often have at the same time a growth in GDP and witness a decline in the standard of living or a decline in the economic well-being of citizens.”
He quoted several eminent economists, among them Nobel Laureate Joseph Stieglitz, as dismissing GDP as an artifact. Stieglitz in fact co-authored a book titled “Mis-measuring our lives: Why GDP does not add up”. Seereeram cited several instances of the absurdities of GDP calculations. “Let’s agree to gently place GDP in a time capsule to be opened in the year 2069, 50 years from now, so that our descendants could see the folly of our generation. The main purpose of the burial is to avoid using phoney numbers to make serious decisions…”
Again, I have quoted extensively from Seereeram on why we should dispense with using GDP as a metric of growth, stagnation or decline because I agree with him. A few weeks ago, I wrote that on a 2018 IMF list of 185 countries ranked by per capita GDP (purchasing power parity), T&T stood tall at 41st, with an average of $32,000 “international dollars” (I suppose that implied US dollars).
That just does not register right, not even in the best of times for our economy—which 2018 certainly was not. I am not putting down my country the way so many others do: sure we have our problems—crime, corruption, wastage of resources, poor work ethic, unreliable public transport and potable water distribution systems, disregard for the environment and so on. But we do not feel like a developed country, which the IMF rankings tell us we are, based on a GDP of approximately TT $150 billion per annum.
Indeed, I wonder if our GDP doubles based on some freak spike in energy prices, whether poverty would disappear or income inequality rectify itself. The World Economic Forum notes that in both advanced economies and emerging economies, their absolute levels of inequality remain much higher than they were 40 years ago. Even more damning, wealth is significantly more unequally distributed than income.
I submit that a kind of economic apartheid has tightened its grip on the world, and measuring the rich-poor gap will not bring us solutions. If the powers-that-be fail to find creative ways equitably redistribute the wealth in nations among people deserving of better standards of living (“lochos” and the lazy excluded), conflagrations such as we cannot imagine will consume us all.
Armageddon will not descend upon us from above. It will come from within.