Time For Economic Leadership: Editorial By Pat Hoyos

Pat Hoyos is often good at making a pertinent critique of economic and financial developments, as often heard when he moderates on Voice of Barbados' 'Down to brass tacks' or 'Tell it like it is'. I found his latest editorial in Broad Street Journal (BSJ) very good at setting out some important issues for economic policy in Barbados and throwing down a challenge to the present administration, taking his cue from the recent lecture by former PM Owen Arthur. Mr. Hoyos kindly allowed me to reproduce that editorial here.

Editorial from BSJ-Vol.X No. 4-Mon., Mar.8, 2010
Time for economic leadership

The most significant event in Barbadian politics of the last two years occurred on Thursday Feb. 25 at the Errol Barrow Centre for the Creative Imagination when former prime minister Owen Arthur took to the stage to address the Young Economists Association.

Displaying a sense of timing for which he was once renowned but seemed to have lost in recent months, Mr. Arthur delivered a virtual knockout punch to the David Thompson administration from which it was clearly still reeling, despite its protestations to the contrary, at Monday’s Public-Private Sector Consultation, ironically an event envisioned and launched by Mr. Arthur during his administration to help him rubber stamp the policies he planned to introduce to the country in the fiscal year ahead. And while technically a “consultation,” Mr. Arthur used the meeting to secure public approval from key economic stakeholders in what increasingly became an orchestrated public relations event.

This time around, Mr. Arthur used his considerable political talent to undermine the entire event with a speech whose conclusion so far remains unchallenged, despite a ‘whole lotta long talk’ on Monday: That the present administration is, to put it kindly, up the economic creek in a leaky canoe.

There is nothing we have heard since, unfortunately, to make us find Mr. Arthur wrong in his conclusion. His speech was a soaring symphony of withering criticism made by an economist at the height of his powers. His criticism rang true.

The responses by Prime Minister David Thompson have sounded more peevish and ad hominem than policy-based, and in fact have made the gap between the two gentlemen seem even more clear, that Mr. Arthur is the leader better suited to these times than is Mr. Thompson.

Hard to swallow? Ask Mia Mottley.

But it does not require an economist-politician of Mr. Arthur’s incredible ability to see that Mr. Thompson is way out of his depth. While we might not be capable of providing the devastating diagnosis offered by Mr. Arthur in his historic presentation last week, it has been clear to anyone who tries to follow economic trends, including this newspaper, that the Thompson administration, as we have said before, has long been on a rudderless slow boat to China when it comes to economic policy suited to the times.

Even if you forgave the finance minister for his first budget speech, which mainly raised government licensing fees and gave school children free rides on the buses, surely the writing was on the wall last year that the world economy was in for a rough ride and that Barbados needed emergency policies. Even if, as it did, the government decided to take the most optimist outlook early last year, by October it was becoming clear that the central bank’s predictions had been way too positive and in fact the economy was heading south.

We did not need the incoming governor of the central bank, Dr. DeLisle Worrell, to tell us this, which he did by way of his review of the economy, held three weeks earlier than usual, no doubt because of the seriousness of the situation. But we appreciated his forthrightness.

Mr. Thompson took the risky political position of saying nothing about the dangers ahead when he could have done so in October or November. We all knew we could have torn up the silly projections made by the central bank by then, and that the recession would not lift for at least a year or two more.

Now, all of a sudden, it seems that all bets are off. After the first two years in which the DLP manifesto promises to reduce the cost of living were broken time and again with the raising of almost all utility prices, higher costs of getting licenses, and rising unemployment, the Thompson administration is now putting almost all of its economic options on the table, including those which promise to place the heaviest burdens on the taxpayer and ordinary citizen.

The IMF prescription for raising the cost of almost everything else that has not been raised so far in order to reduce government annual expenditures by half a billion dollars per year over five years is based on a conservative approach which works in no developed country because it would wreak economic devastation on the population, except for the very rich. Like Dylan Thomas, Mr. Arthur wants us to not go gently into that good night. He wants us to rage against the dying of the economic light.

The astute politician sets out in some detail what he calls his Barbados Model for economic resurgence, and while not giving away the specifics, he essentially paints a picture of a country giving itself some legroom to find new ways to compete in a vastly liberalized trading system which is going to begin to be implemented over the next decade as major treaties which we have signed come into effect, and new ones have to be negotiated starting on a much more liberalized basis than ever before.

At the heart of it is our deficit, and the former prime minister argues again for the maintenance of a “sustainable” fiscal deficit of two to three percent, rather than going for broke and trying, as prescribed by the IMF, to balance the budget and even create a surplus in just five years.
It is now up to Mr. Thomson to decide where he stands on these economic options. If he continues to sit on the fence and de facto implement an unworkable IMF-based solution, he will once more have relinquished the economic high ground to his old nemesis. Whether he wants to be judged on it or not, what Mr. Thompson does do about the economy will be his lasting legacy.

He can no longer just let others decide these things for him without taking personal responsibility. He needs to lead this country in its economic recovery, but is he up to the task?

Patrick R. Hoyos
President
Hoyos Publishing Inc.

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