An inexpensive but painful pill

 

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Category: Trinidad Economy Date: 15 Apr 99


I have discovered a new sleeping pill. It’s wonderful. It works. You sleep even before all of it is administered. You don’t need a prescription for it. It’s not expensive. Just a couple of dollars a week will do. But it can be painful to swallow. It is called “the economists’ rant”.

 

With the exception of the likes of the late William Demas, Frank Rampersad, and one or two others, our economists (who for some strange reason are labelled intellectuals) are caught in a time warp along with their shirt-jacks and insistence on leaning on the broken Berlin wall, fists in the air, and their embittered petulant expressions as if to say “no one listens to me.” Damn right no one listens. You know why? Two reasons: firstly, they complain, apportion blame, instead of offering practical solutions; and secondly, even if they are brilliant and capable of leading the way to a brighter T&T, no one would know because no one understands what they are saying.

 

Here’s an example. Instead of saying the price of bread will go up, they will write a sleeping tablet going something like this:

“The economic indicators of the past five months point to the fact that factors of production relating to flour are somewhat strained due to disruptions in labour costs and water production.

“This factor combined with the fact that capital costs relating to the production of products such as yeast have been in short supply due to the collapse of the Asian tigers in 1997 indicate that supply has not been able to meet demand and the law of diminishing returns has come into being.

“Therefore, the downstream industries have been unable to keep the price of the product made from flour, water and baking powder down.”

Torture.

TS Eliot would have said: “The horror, the horror.” Terrible writing. Are you asleep yet? I nearly am.

 

I would forgive them for being boring if they offered solutions, but they don’t. They just bitch about the government and the private sector, and then squabble with one another in the papers. They are, on the whole, self-indulgent, repetitive and ineffective. To top it all, after reading totally contradictory conclusions by Central Bank Governor Winston Dookeran, who said the economy is comfortable and growing at 3.5 per cent, and economist Dennis Pantin, who said we are freefalling into recession, I decided it was time to find out what was really going on.

 

Like construction, advertising is a reliable barometer of any economy. So I asked David Inglefield of Inglefield Ogilvy and Mather for a business overview:

“There (is) no shortage of projects, but the business community is not investing as heavily as it should. The main reason for this is a loss of confidence in the market and a credibility gap in what the business community and the government says.

“The impending local government elections have contributed to this caution. Stock movements are slow; people are not trading as much, and (are) being cautious with projects involving high capital costs.

“The slowdown in the oil industry in South has also affected a large market base and downstream industries. What we need is confidence in the government, and market. Once that is restored, investment will resume.”

 

As a lay person, I understand there is a trend of growth which will continue as though nothing as changed, so the lack of confidence is unsubstantiated. Why worry about local government elections because in fact more money will be pumped into the economy. If the UNC does well, then there is a vote of confidence in the Government. If not, they will work harder to create confidence.

 

What seems to be the problem is the indecision. What are we doing about the loss of jobs in the South, the indecision over Severn Trent in WASA, the inability to make hard decisions about Caroni. Then I approached Frank Rampersad. The questions, as I sat next to him, pen in hand, came tumbling out. Is there a recession coming? Why? If so, what are we doing about preventing it? What is the economic situation? Is there going to be devaluation?

 

His ideas come tumbling out faster than I can absorb them, but I trust him because he can be pragmatic and humanitarian at the same time. He understands that market forces are necessary but understands that they are also ruthless, and will discard the poor, the uneducated, the elderly, and the ill. He understands a need for a safety net for them. He understands that no economy can survive around angry young men, or in an AIDS epidemic, which is threatening to blow up in our faces.

 

He thinks as wide as the ripple effects of world economic movements and as basic as the boy selling green mangoes on the highway. First question: Mr Rampersad, do you agree with Mr Pantin that we are freefalling into the abyss or Mr Dookeran who is optimistic? In short, is there going to be a recession or not?

“There is no evidence that we are freefalling. Pantin has no empirical support for his claim. It is true that construction boom is coming to an end, that the industrial scene in Caroni is dicey, but I don’t see any evidence that April, 1999, is in any way different from September, 1998.

“Dookeran, on the other hand, is wearing rose-coloured spectacles with the statement that the economy is growing at 3.5 per cent. My own guess is that it will grow at about three per cent.

“There is no pressure on the exchange rate. The indications are that output will continue to rise because of the LNG and ammonia plants, not significantly but enough to keep us jogging along for a while.

“If there were a freefall, people would panic and move on. Pantin’s concern, and it is a very valid one, is that we haven’t made any dent in eradicating poverty.

“When people aren’t working in construction companies and elsewhere, things may get nasty on the social scene which will also impact on the economic scene.”

 

I assumed that I was doing the interview, but the inimitable Rampersad pulled the rug out from under my feet and asked the next question himself.

“The question you should ask is what will happen if the business community panics, and stops investing, and further, how can we prevent a freefall?” Then, he complained: “You reporters never talk solutions.”

Okay, I say, “How can we prevent a recession, and worse, a devaluation?”

“Firstly, I don’t see a need for devaluation. It will only happen if we don’t get in foreign exchange. Businessmen have to be far-sighted and think beyond getting fat on domestic markets.

“They have to adopt the attitude they did in 1995-96 and realise that if they expand exports, it would bring in much needed foreign exchange and create employment.

“Pantin referred to Nucor and Ispatt as evidence that the heavy industrial sector is in difficulty. Why should it be? Just because the Americans are playing monkey with steel doesn’t mean we can’t find new markets with our products.”

 

But there are danger signals. People are beginning to worry that the Asian crisis is catching up on us.

“Of course there are danger signals such as the loss of the US market for methanol. Methanol is a raw material and we have to find by-products and new markets for it. We have to be courageous and creative, but mostly we have to get off our backsides and market ourselves.

“The Asians are climbing out of their crisis and that’s no excuse. Trinidad and Tobago is a beacon of hope in the Caribbean.

“Jamaica has gone through. Barbados has committed suicide by sacking its Central Bank Governor, the Windwards are losing their banana industry, and the Leewards thrive only on tourism.

“Guyana is in hell and this is the only place which has stability and performance. There are good prospects. The question is: can we maintain stable growth and keep our eyes firmly on the performance of export earnings, and at the same time tackle our social problems?

“Businessmen are contradicting themselves. They must understand that there is a difference between investing in the domestic economy and in the exports.

“They are always making excuses like we better wait till elections are over, but by that time other countries will have marched in and taken away markets.”

 

But you did say Pantin had a valid point in that we haven’t made a dent in poverty. How do we get around that?

“The Government has to target the social safety net. The Finance Minister was partially right in increasing old age pensions, but now has to tackle NIS and social security benefits.

“The Government also has to deal with women who have nine children for nine men and bring up boys who have nothing to do and no skills.

“They have to tackle head on the AIDS epidemic, which will soon shift from being a social to an economic problem.”

 

What areas do we need to strengthen to maintain growth?

“Human resources development, the service industry and eco-tourism. Instead of talking about a free-fall, we need to sort out Caroni.

“Break it up and exploit unused assets such as bagasse, rice, and ceramic clays. Caroni cannot survive because the plantation economy died a long time ago and it can only exist in conditions of semi-servile labour and we don’t want to go there.

“We’ve got to stop mollycoddling our academics and make them work not just to teach but do research relevant to development.

“We’ve gone the wrong way with casino gambling. I’d prefer to see us develop our sporting industries, create a world class golf course, expose foreigners to the Amazon and Orinoco with a base in Chaguaramas.

“Our vision and goals must be clear. Equitable income distribution, a safety net for the vulnerable, (a) far-sighted business sector which is creative with products and courageous in its search for markets.”

 

So, is there going to be a recession or not? Is there going to be a devaluation or not? Is there going to be increasing crime or not? The answers, it seems, are not “out there”, but in the hands of all of us, particularly the business community, who has the power to act rather than react.

 

As Frank Rampersad said, we are the only beacon of hope in the Caribbean, and if we fail to act individually and collectively, then I suppose it’s freefall all round. But I do take something back. The fists in the air do show humanitarian concern, and that should never be knocked, however ineffective. And I think shirtjacks are quite cute. There is a kind of earnest innocence about them. Even Rampersad wore one.

 

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All Articles Copyright Ira Mathur