Monday, 06 June 2011 02:30
By Dr. Isaac Newton
Antigua St John's - Our economy is flirting with disaster, lying down with greed, and sleeping in a bottomless pit. This article argues against tribal vision and a mindset of resistance to emerging ideas. Such thinking merely ridicules, but does not take sound strategies and evolve them into something better. I offer critical insight that the future could be different.
Last Friday, the Antigua & Barbuda Hospitality Training Institute announced that it is facing a $268,000 cash fall. In response, it prevented some students from attending classes and raised tuition fees. One week before that, the Antigua Brewery Ltd explained that it was planning to move to St Vincent, and consequently, 42 workers are likely to be jobless when it closes.
LIAT, Hadeed Motors, and the Observer Group have gone into survival mode. This translates into expanding the nation’s unemployment pool. I expect the banking and tourism sectors to downsize shortly. Employment is needed to turn the macroeconomics principle of supply and demand into high spending and job creation. But jobs have disappeared. Unemployment and underemployment rule the day.
This state of emergency has not engendered a change of policy direction. Shockingly, the United Progressive Party's (UPP) own branch chairman, Paul Ryan, sounded the alarm to the public after he met with a group of businessmen. Six days ago, he warmed that the government’s tax policy is choking profitable endeavours.
These are signs that the government is paralyzed by blind stubbornness and dated policies. More businesses will cut staff, drop out of the market, or escape Antigua for greener pastures. Crime will increase, and countless citizens and residents will be thrown into poverty.
As bad as things are, I predict growth in take-home income, and that per capita income will radically decline. The very poor will become desperate and the middle class will become poor.
Altogether, the UPP's tax structure, its inability to lift employment, and its obsession with the IMF’s debt repayment strategy will lead us into deeper darkness. All of this is happening while Finance Minister Harold Lovell’s answer to the nation’s anaemic economy is devoid of turn-around impact.
A candid and openhearted testimony is that even after Lovell has received helpful ideas from various social commentators, his performance continues to be like a balloon pinned to the ground, dancing back and forth in the wind but going nowhere.
To offset the devastation, there’s unrealistic chatter that there’s light at the end of the tunnel. But things will get ugly before they get worse. Too many breadwinners are lost in financial darkness without food, medicine, jobs, or shelter.
Understandably, it is very difficult to be optimistic. Yet, a real sense of the tragic should keep alive some sense of hope. Some may argue that things are not that bad. They praise Mr Everett Christian, an adviser to the government, for collecting more taxes. By tinkering with the Inland Revenue Department (IRD), Christian is raising revenue through late payment penalties and the issuing of Tax Compliance Certificates to business owners.
But these measures have no expansionary effect on the economy. They do not reduce the cost of labour to businesses or the price of consumer goods, or stimulate economic activity more broadly. A programme that increases revenue but funnels it to pay down debt has little multiplier effect elsewhere.
Until there is real recovery commitment, there is ineffectiveness. Splendid ideas are buried alive, like the need to collect relevant data on the nation’s unemployment statistics to tailor social safety net services to dire needs.
While the nation looks to PM Baldwin Spencer to make reason out of this mess, he says that he is unable to do anything about the rising cost of gasoline. But the PM is not without positive options. Despite the fact that small states like Antigua & Barbuda are vulnerable to external shocks, Spencer could implement appropriate domestic initiatives to lighten the burden.
Perhaps Spencer is possessed by a mindset that there is a special vice in being a small economy. This is false. Equally, there isn’t any unique virtue in adopting a fatalistic position by harping on global and regional conditions or by blaming the business community for being insufficiently flexible. Clearly, the government has a lot of letting go to do, and Spencer has to choose a strong macro-economic framework to increase economic performance.Future Possibility
The UPP can create far better competitive growth conditions by fundamentally reviving the country’s social and financial institutions. Some strategies include: creatively tapping into the nation’s natural resources; formulating a more structured economy built on job creation; fine-tuning its law, policy and culture to incentivise indigenous businesses and attract foreign investors and re-profiling its debt obligations.
There is more: refocusing on the quality of its decision-making and tying that to the efficiency of its bureaucracy; reinforcing greater democratic thinking and systems and; becoming more open to new ideas and solid answers coming from Antiguans & Barbudans living at home and abroad.
These strategies should induce marching orders. However, application of specifics is needed for a step-by-step economic stimulating model. Utilizing Michael E Potter’s framework on competitive advantage, the Scarlett Pimpernel discusses in a provocatively engaging op-ed piece, “A Prerequisite for Future Prosperity” (Caribarena.com 6/5/2011), how the market niche of marriage and divorce could be improved to move the economy forward.
Pimpernel places his economic recovery proposals at the critical intersect of national growth and political realities, with projected financial rewards. However, there could be ethical anomalies regarding our values on marriage and the family that warrant fine-tuning. What he was trying to address is the interplay between improving current programmes and breaking new ground.
Perhaps developing breakthrough methods of local food production to feed families and communities, attracting experimental opportunities to harness ecologically friendly energy sources, designing seasonal billionaire get-away tourism that yields high returns, and creating exclusive summer camp initiatives could magnify the competitive advantage mix.
I think Pimpernel’s article generates practical sensitivities and goodwill assumptions. His ideas should not be met with pushback from myopic leaders. Instead, the tendency to discard and ridicule every creative proposal should be offset by the desire to formulate credible terms of reference for rebuilding the economy.
"Blame-game noises" are inferior to "superlative solution-based frameworks". Therefore, I recommend a shift in orientation. This would require tough debates that permit excellent strategies to flourish. In this vein, Spencer should carefully appoint a new finance minister. This person should be better equipped to make bold and innovative decisions, and should be able to successfully implement a broad range of fiscal responses to spur growth.
If Spencer turns the above multi-dimensional recommendations into a rescue mission, legitimate reform- minded decisions must be made. He should analyze the economic situation correctly, with the logic that the growth of the country is more important than the comfort of elected or appointed ministers, and that a new approach to economic resuscitation is essential.
The PM should focus on immediate job creation. One option is to encourage private sector financing of public sector projects, with the right incentives. Another is to develop a more ambitious and daring set of economic initiatives that are likely to prevail. A third is to take full advantage of trends in international trade, technology, and global capital markets, to increase the government’s revenue and investment budget.
Yes, there is uncertainty in this climate of recession and depression. But Antigua & Barbuda needs a leader who will not wait for a clear path to emerge, but who is willing to make tough calls to induce speedy fiscal action. For Antigua to become a great place to visit, invest, work, live, and enjoy, Spencer must transition the economy from the morgue to the market.
Dr. Isaac Newton is an International Leadership and Change Management Consultant and Political Adviser. He specializes in Government and Business Relations, and Sustainable Development Projects. Dr. Newton works extensively, in West Africa, the Caribbean and Latin America and is a graduate of Oakwood College, Harvard, Princeton and Columbia. He has published several books on personal development and written many articles on economics, education, leadership, political, social, and faith based issues.