Recession and new opportunities

“To develop and use these opportunities requires one thing: change. Widespread economic reform does not require an intellectual planning approach. It requires belief in a foundation and in practical principles that will restore balance in our economy and improve our wellbeing.” This is the view of Management Consultant Gerry Pemberton.

In an exclusive interview with Business Day, Pemberton said, The International Development Bank (IDB) in an April 2010 publication “The Age of Productivity: Transforming Economies from the Bottom Up,” saw many people arguing or dismissing that study.

Today however, the subject of that study is the critical issue facing the US economy that the new President (Trump) knows he has to resolve, to achieve his goals. “It is not simply a question of labour productivity.

It is the productivity of everything else that determines the quality and cost of a product or service.

That is known as Total Factor Productivity (TFP). If we increase TFP we can pay better wages and train employees. We can also create a host of opportunities and make diversification a realistic goal,” said Pemberton.

Remember when Amartya Sen, that great Indian-born, modern economist wrote his book, Development as Freedom. The question must be asked - Do we have freedom? Enshrined in many constitutions all over the world, including Trinidad and Tobago, is this, “Men and institutions remain free only when freedom is founded upon respect for moral and spiritual values and the rule of law”.

He said, “This gives rise to many questions. In 2016 what level of respect do we have for moral values? How much respect do we have for spiritual values? If many who ignore or transgress moral and spiritual values are effectively beyond timely reach of the law, then what is the social value of that respect? “Our mood has changed since the Republican Constitution in 1976.

We do not seem to agree on our moral and spiritual values, so what freedom do we have in 2016? We have very few degrees of freedom to change anything. Every remedial study or plan refers realistically to the constraints and the politicians have to try to work around these.

“They cannot achieve any meaningful progress until they remove the political constraints.

That is common sense,” he continued. “It is also their common failure. As case in point (PTSC) was recently described in detail by a former minister Mariano Browne.

“The practical problem is our inflexibility. We do not have the courage to create a consensus to make urgent and necessary changes.

Regardless of religion and ethnic differences we have agree on moral and spiritual values to establish freedom and to maintain the rule of law. This is the starting point. It isn’t new or radical. This is what our 1976 Constitution says we should do.

It makes practical sense. We can’t develop opportunities unless we work together as one people.” He said, “Main opportunity for us is to transform the economy by focussing on ‘the drivers of the level and growth of TFP’. This is a transcendental opportunity because it can generate sustainable growth while uplifting the capabilities of people. It can release ‘native genius’. It will enable people to develop resources. It will reward innovation which is the heart of entrepreneurship.

“The resulting improvements will be widely spread and deeply embedded. The TFP approach appeals to the common sense of doing more with the same resources.

It will also promote the strengths of the ‘market economy’ internally which is the best way of ensuring fair treatment of consumers,” he said.

Pemberton forecast that the next substantial opportunity was the restructuring of state enterprises to produce economic growth with the transition objective being their contributions to the level and growth of TFP, not the oil price.

He said, “The more ‘necessary’ a State enterprise is deemed to be, then the more necessary is a significant contribution to national productivity.” Sometimes that coincides with commercial profitability. One example is if Petrotrin increased the price of gasoline, high enough to reduce traffic congestion, State enterprises that cannot or do not add to TFP should not exist as a State enterprise regardless of profitability.