"Taxpayers will bear the brunt" is one of those stock phrases in journalism which is both meaningless and misleading. This is because taxpayers actually bear the brunt of very little in T&T–rather, the Government uses rent revenues from oil and gas to support policy decisions made on the basis of electoral politics, rather than economic rationality, social good, or even political negotiation.
But now that energy revenues are more than halved and the country faces a recession, taxpayers will indeed bear the brunt of the Government's decisions, such as the award of a five per cent wage increase to the workers at Petrotrin, where a cleaner earns as much as $10,000 a month. For giving in to the Oilfield Workers' Trade Union's unreasonable demands in these parlous times, the Keith Rowley administration has been roundly condemned, even by OWTU employees who felt they should have been given more. But, in the short term, the Government's decision actually makes political sense.
The PNM regime, like all political parties, understands that the average citizen doesn't understand how money works. That is why many people could have argued that the Petrotrin cleaner's salary was a fair wage. Such a position rests on class and even racial ideologies, and rejects any argument based on meritocracy, market forces, or fiscal prudence. Those apologists act as though wage rates bear no relation or productivity, let alone the overall structure of an economy. Thus, given that energy revenues are down and Petrotrin is saddled with debts it cannot possibly pay at present productivity levels, it is taxpayers who are going to have to foot the wage bill for the company's workers. However, since that burden is spread out across 600,000 people, the political effects are attenuated or even non-existent. Whereas a strike would have had visible and intense effects.
This doesn't mean that the negative consequences of this wage increase, and the wage demands that will come from other unions, aren't real. After all, the market doesn't care about political perceptions. But, banking on the population's ignorance of how money works, the Government can take three policy measures whose effects are largely invisible to economic illiterates, which includes nearly all the media commentators in T&T: let inflation rise; eradicate the "managed" part of T&T's floating exchange rate, hence devaluing T&T currency; or officially devalue. Any of these policies immediately erases any monetary benefits from government's gift of wage increases to union workers. To be sure, such policies harm the poor most of all, but both the PNM and the UNC have always drawn their staunchest support from the most deprived of their respective constituents.
Such decisions, however, will be more harmful to the country, since inflation and/or devaluation are not solutions to our economic slump but a political compromise the Government will make in order to narrow the gap between political goals and economic realities. But this doesn't change the Government's two main fiscal challenges: recurrent expenditure and foreign exchange spending. There is, however, one policy which could at least mitigate both problems–privatisation.
This, however, has never been attempted in T&T. Contrary to popular propaganda, there never had been a "neo-liberal" transformation of our economy. From the 1970s, the PNM led by Dr Eric Williams decided to take control of the "commanding heights of the economy", under the pretence that the government was pursuing policies that were neither capitalist nor communist. In the 1980s recession, some liberalisation did occur when currency controls were loosened and protectionist measures dismantled, all of which helped economic progress. In his book The Underachieving Society, economist and head of the Economic Advisory Board Terrence Farrell writes that "while the country was still in the thrall of the multilateral institutions, it was de rigueur to divest State enterprises as part of the overall thrust to reduce the role and scope of government in the economy, and also as a practical means of revenue raising."
But, as the table below shows, any movement towards privatisation was short-lived, and T&T is now even more of a state-directed economy than 30 years ago. Privatisation is a policy that trade unions vehemently oppose because state control of the "patrimony" allows unions to exert political blackmail during wage disputes, whereas with private companies they would have to present cogent arguments during negotiations. The argument that the local private sector has never displayed the necessary entrepreneurial spirit to create or even control such companies is quite bogus, inasmuch as the private sector has always been hampered by government intervention in commercial activity.
Type 1983 2015
Wholly owned 3 44
Majority owned 14 7
Partly owned 18 29
The so-called "mixed economy" was just socialism by another label and so, like socialist policies everywhere, failed to transform T&T into a developed economy. Moreover, every poor nation which has progressed over the past 30 years has done so by following capitalist principles, and reduced poverty levels by so doing far more than those nations which adhered to the failed paths of welfare and redistribution of wealth.
A serious government at this time will therefore focus on getting rid of as many of these state enterprises as possible. And it will be better to do so early, by choice, rather than later when forced by economic ruin.
Kevin Baldeosingh is a professional writer, author of three novels, and co-author of a history textbook.