Welcome

Dennis Jones is a Jamaican-born international economist, who has lived most of the time in the UK and USA, and latterly in Guinea, west Africa. He moved back to the Caribbean in 2007. This blog contains his observations on life on this small eastern Caribbean island, as well as views on life and issues on a broader landscape, especially the Caribbean and Africa.

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Tuesday, December 22, 2009

Bridging The Crediblity Gap

If a government says it has no problem but constantly acts as if it has a certain problem, then what is the problem? The problem is that it is hard to believe what it and its Ministers are saying. In politics, truth is a commodity, using any of its definition. But it is also a scarce commodity, whose value has risen enormously because of its too frequent absence or dilution.

I have listened to and read comments from the government in Barbados in recent months and wondered whether it is just me--I am admittedly a cynic--or if there really is a gap between my ears. I hear that the government says that it has no cash flow problem--hard to believe when the budget deficit is supposed to be widening, but cash could still be flowing in. Then I read that payments from the Inland Revenue were delayed and there was some problem in mobilising resources--albeit with some fuzzy logic (see Advocate December 3 report).

I've followed the debate about the country's credit ratings, knowing that one of the factors that impinge on that is whether stated policy actions are consistent with actual decisions and if expected outcomes are matched by reality.

I read this weekend of the claims by contractor Al Barrack that the government (not necessarily this administration) in the form of the National Housing Corporation, owed him around B$60 million: a court ordered he be paid B$34 million and with interest accrued this is now supposedly B$62 million. The PM was quick to acknowledge the money was due and that some money had been paid.

Of itself, the story is poignant--with tales of Mr. Barrack borrowing other people's life savings and risking his own life saving. But it highlights many weaknesses in a society that is supposed to be law abiding and rules driven--views that I have said often do not fit the national reality. It also betrays a certain dismissiveness by public officials--whom some have called 'wealth destroyers'. Someone in government must believe that owing a business some $60 million will not ruin the business or the person. Or, if they suspect that ruination may happen, that this will be for the national good and/or can be dismissed without much popular comment: the loss of the business and the possible fall of associated businesses and jobs with it is more likely when economic conditions are weak. Or they hope that the payee will just forget about the debt or die and his heirs also forget about it. Or some other nonsensical wishes.

There is a ton of writing available about public policy making and credibility of institutions. Some of it is highly readable but much of it is blindingly obvious. What has always intrigued me is how a government sees itself when it or one of its agents is being 'economical with the truth'. For those not familiar with the phrase or its more modern rendition in the mid-1980s, we are talking about lying, but for some lies are on a spectrum. As sources indicate, the phrase was first recorded from the 18th century, but rarely used. It was brought into the contemporary language by the UK Cabinet Secretary, Sir Robert Armstrong, who used the phrase during the Australian 'Spycatcher' trial in 1986. I remember it vividly, working for a government agency as I was and dealing with another set of economic untruths in the form of the Mexican debt crisis. The exchange went as follows:

Lawyer: What is the difference between a misleading impression and a lie?
Armstrong: A lie is a straight untruth.
Lawyer: What is a misleading impression - a sort of bent untruth?
Armstrong: As one person said, it is perhaps being "economical with the truth".

The 'one person' was Edmund Burke, who wrote in 1796: "Falsehood and delusion are allowed in no case whatsoever: But, as in the exercise of all the virtues, there is an economy of truth."

Governments and politicians love to give misleading impressions and some love to lie. Parliamentary proceedings should help us get to the truth, but I am not holding my breath for that to happen. Courts often help us get to the bottom of things, but as we know too well, courts may stipulate but individuals may not dispose and there seem to be all gums when it comes to getting financial redress from court orders.

Mr. Barrack's case is particularly bad, originating as it did in 2002, and involving government as the payer. But there are several other cases where courts have adjudicated and yet payments have not been made. That to me is truly contempt of court.

But, my concerns roll to the economics. When the PM/Finance Minister reminds people that Barbados has never not repaid its debts should that be taken as 'and always will'? If borrowing abroad will be avoided in preference for borrowing from domestic sources, I would always shiver because not repaying international loans has a very different taint than not paying domestic ones.

When, in late November, the PM said there was “no cash flow problem” I was not convinced and it made no sense given that economic conditions were turning out to be worse than expected. When he explained why the Inland Revenue Department (IRD) was not paying refunds my head spun. He said: “What may happen is that spending priorities may often change in times of economic difficulty, so that departments may find that the bulk of their resources may have to go towards the payment of wages and salaries and can’t be used for other programmes because departments are watching their pennies until the end of the financial year.” Why does rearrangement of the IRD's spending priorities affect the issuance of tax refunds? Don't tell people that return of their overpaid taxes are being delayed to pay the over-taxers their wages! I'm still not clear on what the PM was really saying, and may never be.

But I am clear that being economical with the truth does not change realities. Fool me once, shame on you; fool me twice, shame on me

1 comment:

MaxTheITpro said...

All I can say is that citizens in democracies the world over need to become more VIGILANT custodians of their democratic institutions.
Often times, citizens drop the ball and leave everything to government to solve. Not wise.

"We the people" need to wake up because these are strange times (record deficits, high unemployment, unhealthy populations, overpopulation, etc.) and it's ridiculous to expect irrational politicians (er lawyers) to have rational solutions to the plethora of problems that are on the table.