Populist governance

We are indeed in a recession but sustainable economic diversification based primarily on technological innovation, when started, takes some ten to 15 years to come into its own — it is no short-term mechanism to address a recession.

Hence the Government is telling us, mistakenly, that in the short term the hardships of a recession can be alleviated by local spending on infrastructure — like President Hoover in his economically misguided attempt when faced with the recession in the US.

Hence the Government is planning a highway to Toco and a ferry port there, continuation of the highway to Point Fortin, particularly through the wetlands of Mon Desir, much to the chagrin of the environmentalists (who are still hoping to meet with the Prime Minister as he promised them), a series of hotels and there is even talk of making aluminium car wheels from imported aluminium ingots. Yet, there is a sense of dissatisfaction among the people — “we voted them in but we still catching hell.” The OWTU is threatening to shut the place down if it does not get its pound of flesh from the emaciated Petrotrin.

The PNM was put back in office not only because of the perceived corruption of the UNC, but because the PNM had a plan to bring back the good times, which after a year plus it has been unable to do. TT is a small open economy and depends, as for lifeblood, on earning foreign exchange mainly from its exports of petroleum and its products to fund the necessary essential and luxury imports. When the foreign exchange supply fails, as it has at present, the only realistic option is to reduce economic activity in the country, the speed of which can be controlled via the sparing use of debt and our foreign reserves. This will hurt the population.

Recognising the fate of the NAR in a similar recession that abruptly tried these austerity measures, the PNM is using increasing debt and our foreign reserves to slowly reduce economic activity, given the massive fall in foreign exchange income — appearing to be hoping that oil and gas prices will soon recover and their production will follow suit.

But this is not what some think we voted the PNM in to do and postponing the tax increases on wine until after Christmas is not enough (some retailers have already raised prices), given that we already are paying more for gasoline. To my mind this is a failure of leadership, failure to communicate effectively with the populace.

The population in general does not appear to understand the gravity of the situation which is aggravated by the private sector crying out for more foreign exchange (sales are down for Christmas) — something which, had the then PNM government diversified the economy since the sixties, this recession might not have occurred. When income to a household is cut — and that seems to be the new status quo — the family’s economic activity has to be reduced and savings/borrowings used to adjust downwards. So it is with national economies.

Mary K King St Augustine