Tony Deyal
IRISH WIT, George Bernard Shaw, said that if all economists were laid end to end they would not reach a conclusion. However, there would still be a ripple effect or gradually spreading influence. This concept of a ripple effect was not the brainchild of someone throwing stones in still water or a microcosm, watching the effect, and then like Newton with his apple-induced headache, applying it to the world as a whole, the universe or macrocosm.
The ripple effect was something conceived of by economists. There are three sorts of economists. Those who can count and those who can't. They get rich and highly rewarded for explaining to others why they are poor. They work with assumptions. Nobel Prize winner, Paul Samuelson, was fond of this story. A physicist, a chemist and an economist are stranded on an island, with nothing to eat. A can of soup washes ashore. The physicist says, "Let's smash the can open with a rock." The chemist says, "Let's build a fire and heat the can first." The economist says, "Let's assume that we have a can-opener."
BEDROCK OF POLITICS
Unfortunately, the assumptions of economists have become the bedrock of politics, development and national planning in the Caribbean. Our leaders keep making promises and developing policies based on economic concepts like trickle down and ripple effect. Trickle-down is something that is supposed to happen when the people at the top of the economic pyramid, or government as a whole, get money in their sweaty palms. It is supposed to trickle down to the poor somehow or the other. What happens instead is a fundamental rule of inequity the rich get richer and the poor get poorer. Previously poor politicians become upwardly mobile and increasingly distance themselves from their past and the poverty that went with it.
As the Gospel according to the World Bank and its sister institution, the International Monetary Fund (IMF), trickle down eliminated the middle class completely in some countries, particularly people whose income passed through the tax machinery. They got hit with income tax and variations of Value Added Tax (VAT), a case of assault and battery. The ripple effect is a different story. The only thing that seems to be rippling or even the slightest bit rippley, believe it or not, is bad news which inevitably is caused by a lack of foresight by the politicians and economists. Hindsight is always perfect 20-20 vision. The failure is in treating the past as a blueprint for the present and the future, and not managing the present as the past condition of the future.
SPENDTHRIFT
When Governments come into power, having deplored the spendthrift ways of their predecessors, they fall into the same groove of giveaways and make-work programmes that they condemned before the elections. It is called the nipple effect. The culture of dependency that is so apparent in the politics of the region is exacerbated by a syndrome of entitlement. People who supported the government feel simultaneously that they own the resources and they are owed a living. A considerable amount of state resources is diverted into programmes with no long-term benefit to the society or to the individual recipients of the Government's largesse.
More resources go to the financiers and supporters of the ruling party, either directly through patronage and contracts, or indirectly through positions of power and prestige. To use a Trinidad expression based on lacticity instead of the economic term elasticity, it is Frico for all. Then the inevitable crunch comes and we get the cripple effect. The economy rather than the economists who led us up the garden path gets crippled. Because of dwindling revenue, education, health and social services suffer. We get into the downward spiral of depression and decline. Yet, there are bitter complaints by those who feel they are still entitled to freeness.
CHANGES
In the end, self-interest prevails and people change their Governments instead of their lifestyles. This changes nothing. There is an over-riding riple effect that will ensure that things get worse instead of better. First, there is globalization. The little bits of sand and rock that comprise the Caribbean are specks on the global beach. Secondly, there is the Free Trade Area of the Americas (FTAA) that comes into effect on January 1, 2005. Countries that depend on customs duties and import taxes for much of their revenue, will have much less money to play with. Thirdly, there is the pressure to remain in power that over-rides financial realities. It exists on two planes - business as usual and other people's money.
My own analysis is that it is really a tipple effect. Our politicians, presiding over nations smaller than some American or European towns, are so drunk on power that they have time only for those who tell them what they want to hear. It is why Forbes Burnham once asked for an economist with only one hand. He was fed-up of those who argued that on the one hand this will happen and on the other hand... Me, I would go with the slogan, Grow your own dope. Plant an economist.
Tony Deyal was last seen agreeing with New Zealand Professor Sir Frank Holmes, "Economic statistics are like a bikini. What they reveal is important, what they conceal is vital.
