Notes From The Margin

January 31, 2008

Economic Advice From Prof. Howard

Local Economist Prof. Michael Howard who has become a regular commentator on Government’s economic policies today wrote an guest column in the daily Nation offering his views on the way forward for Prime Minister Thompson’s government and Owen Arthur’s stewardship.

His comments on former PM’s Arthur are interesting:

Whether he knew it or not, Arthur was also influenced by Rostow’s misleading “catch-up” notion of Barbados becoming a “developed country”. We may have already reached there since we are now in Rostow’s stage of “high mass consumption”.

Arthur’s expansionary policies eventually led to “overheating” of the Barbadian economy. Overheating was caused by heavy expenditure on the World Cup, the bunching of lumpy capital projects, and high levels of conspicuous consumption. The positive aspects of overheating were increased employment and economic growth.

The Barbados model has now reached a critical turning point where serious decisions have to be made to reduce high levels of spending, maintain capital controls, and curb illegal immigration. Without capital controls the exchange rate will come under significant pressure, as the economy faces a possible recession.

( If you want a quick overview of Rostow’s Theory click HERE.)

The point on the removal of capital controls we have spoken about on the margin already. It does seem to be a judgement call. As we said in our post “Capital Account Liberalisation – Good or Bad? ” it seems that no one REALLY knows what will happen when capital controls come off. Prof. Howards view that the world economic situation is less favourable MAY be right.

Interestingly his other points include tax policy:

It’s likely that it may happen in a cosmetically changed format and Thompson may claim that it was his idea! Arthur’s tax policy seemed logical to us on the margin, and it favoured gradual incremental change over a period of years rather than sharp adjustments. In lowering the income tax rate he was able to address the issues with the NIS pension fund without the population feeling poorer. With his policies he began moving the economy away from income taxes which inhibit investment and towards VAT. Arthur had indicated publicly on more than one occasion that he considered moving to one tax rate for both onshore and offshore sectors to be desirable.
On the issue of VAT Prof. Howard had this to say.
We on the margin agree with the professor on this point, and are concerned that once exceptions are made to the VAT tax, it becomes easier to make further exceptions. “You zero rated sports equipment so why not this?” Also the more zero ratings the more loopholes there are for abuse. (Are rally cars sports equipment? How about clothes to train in?) The objective is socially laudable, but we believe that the Government should find another way of achieving it.
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We aren’t sure that we agree with Prof. Howard on one of his later points on the cost of living.

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“Reliance on imported food is a major cause of the high cost of living in Barbados.”
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We believe this argument ignores the fact that (1) Many of the input into local agriculture are imported, (2) Much of the imported food is so subsidized that it lands at costs BELOW the cost of local production. While the lack of competition in the distributive sector is definitely a factor it is in our view simplistic to view them as a major part of the problem of local agriculture withering, without a full examination of ALL of the factors involved.
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That said we are happy to see input from some of the best brains “On The Hill”. Barbados is at a stage of it’s development where precious few countries have gone before. Input such as Prof. Howard’s is invaluable in helping both policymakers and the public understand the issues of the day.
Marginal
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January 29, 2008

The State Of Shipping In The Caribbean

We on the margin have for a long time been supporters of the idea of ferries in the Caribbean. In our view one of the most serious barriers to regional integration and the creation of a single market and economy, is the sheer difficulty faced by an individual attempting to move around the Caribbean. Moving people and goods from island to island is hugely difficult, and that has several knock on effects in the economies of the region.

In Europe it is possible to drive on to a ferry in Scotland and be in Ireland a couple of hours later driving YOUR car on Irish roads, all for the price of a ferry fare. It is possible to ship container loads of merchandise/products/food/whatever on the same ferry without even taking them off of the truck! When you contrast this ease of movement with the situation in the Caribbean it’s pathetic.

Move a car? Sorry you only have one seat on LIAT (world’s most expensive low cost carrier) and 50lbs of baggage, and when we get to our destination we are greeted by Immigration officers and Customs Officer who seem to have difficulty with the concept of people wanting to travel to another island. There was a brief moment of hope during the Cricket World Cup when we had the single space, but that seems to have separated back into the default position of fragmentation.

President of the CDB Prof. Compton Bourne, touched on these issues recently in a speech where he highlighted the difficulty in moving goods from areas with excess productive capacity to areas with demand for those goods.

“There are countries in the region that have considerable food production capacity, but their arrangements for trade in the region are far
from adequate.”

This made it very difficult to supply the markets that are experiencing shortages or to provide a cheaper source of commodities to those markets with the existing arrangements, he argued.

“First of all, shipping is very poor within the region,” he charged. “Our shipping arrangements are largely geared towards bringing commodities from outside the region to the region, rather than moving commodities between the various islands and countries in the Caribbean.

“Secondly, our port facilities in the main for CARICOM trade are atrocious, often under-staffed, often not provided with the requisite phyto-sanitary inspection facilities and sometimes characterised
by a bit of hostility towards the trade. . . .”

For the single market and economy to become a reality, there needs to be ease of trade, and ease of travel, at the moment it is easier to get items out of a furniture store in Miami than it is to get it from a furniture manufacturer in Guyana. To speak of a single economic space is a farce unless this situation is rectified.

Marginal

January 10, 2008

Politicians, It’s One Week Before Elections, Do You Know Where Your Vote Is?

With one week left to go before elections, Barbados is in the grips of one of the most intense election campaigns in recent memory. The two parties’ campaigns appear to be evenly matched, and evenly funded, and to a certain extent evenly supported. We on the Margin have been watching the silly season unfold in all its glory, and we have to admit we are unable to predict a winner at this stage.

Yes, if you listen to Waiting In Vain and Royal Rumble and the other party hacks that inhabit the blogosphere, they all predict a resounding victory for their particular party. But having spent the last week talking to many people, we think that both parties are “Whistling past the graveyard”. For as much bluster as either side makes we’re not sure that either of them has captured the hearts of the electorate.  Barbadians are looking at both parties with a skeptical eye and the hard truth is that this election could go either way.

What we have noted that this campaign has been more about accusations and counter accusations rather than issues. We would like to see some serious discussion about both parties’ visions for the next five years. While we wish that we could say that we thought we would get such reasoned debate in the next next week, we really don’t think so. We think that this next week will get wilder and dirtier with each passing day.

We on the margin would urge Barbadians,  think long and hard about both parties before you go into the polling booth. Whoever you choose is entirely up to you, but be sure to participate, be sure to cast your x. Be sure to treat that decision with the seriousness it deserves.  Hopefully we will all be better off for your doing so.

Marginal

October 15, 2007

Stephen Alleyne – Rest In Peace

Filed under: Barbados,cricket world cup,Tribute — notesfromthemargin @ 2:02 pm

 

We on the margin would like to pay tribute to a great Barbadian Mr. Stephen Alleyne  who was one of the chief architects of Barbados’ World Cup bid and event, he passed away this morning at the young age of 47.

We extend our sympathy to his family in this time of grief.

He will be missed.

Marginal

July 31, 2007

Emergency Services Show Grace Under Pressure at Joe’s River

Filed under: Barbados,cricket world cup,Health Care — notesfromthemargin @ 1:47 am

In reflecting on the tragedy of this weekend, what is remarkable is that NO ONE has a single bad thing to say about the emergency response to the Joes River accident. I commented on this to a doctor that I know and received a bit of an earful. Most persons do not know that Barbados has a very detailed, very well thought out system for dealing with mass casualty events. In the recent past it has been used most frequently for accidents involving ZR’s. Sunday was by far the most serious incident that it has been used for.

Praise for mass casualty operation

In a fascinating conversation, the doctor noted that the mass casualty procedures have been polished and honed during the run up to Cricket World Cup, with practice runs for everything up to and including a plane crash. The plans integrate all aspects of the response teams from the Defence Force to the hospital. So when the $**t hits the fan everyone moves in concert and there’s no tripping over each other despite there being personnel from more than half a dozen agencies on the incident site.

I’m particularly impressed that a review process is being automatically done with a debriefing of the participants, and that counselling has been put into place for not just the victims but the first responders as well.

For showing amazing grace under inhuman pressure, very well done guys!

Marginal

July 3, 2007

Advocate Headline: Promoters may have overestimated CWC impact

Filed under: Barbados,Caribbean,cricket world cup — notesfromthemargin @ 1:39 am

do ya think? (the article is here if you are interested)

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