The private sector’s niche in TT’s economy

This vilification is certainly a social trait that retards our society’s economic progress. Partly for historical reasons, the business class has always been viewed with mistrust by the average citizen. Business persons are often seen as exploiters, and even their profits are taken as evidence of such exploitation. But this attitude is not explained entirely by historical circumstances. Even in the United States, that bastion of capitalism, business is often portrayed negatively. The difference, though, is that such calumny is aimed at big business, whereas the ordinary business person is viewed with approval as an independent, hard-working entrepreneur. In our society, however, the criticism of the business class is frequently bound up with race — a low point being reached last month when, at the Labour Day rally in Point Fortin, Public Services Association president Jennifer Baptiste Primus told the working-class audience that Port-of-Spain should be taken back from the "Syrians."

Ms Merhair also took aim at Government hand-outs, when she warned about "dependency and complacency." Of late, the URP has come under fire because of its links to gang wars. But URP and CEPEP and other initiatives which are funded by taxpayers have even more insidious effects. Such projects do not add to the wealth and welfare of the country. Instead, taxpayers’ dollars that would go into other areas are thrown down the bottomless pit of public "works." The core rationale of URP and CEPEP ensures this, inasmuch as the more inefficient the work — ie the more people employed in relation to the value of the product — the more populist it is. Additionally, the Government ends up inventing work that will employ the least skilled persons. Ironically, but not surprisingly, the State-funded projects end up not helping those who most need it. The most recent employment figures from the Central Statistical Office show that, although there has been an overall drop in unemployment to 10.2 percent, the unemployment rate for males between 18 and 24 years is twice that. This is certainly a factor in the spiralling crime rate.

However, the URP’s bad effects are more easily demonstrated than that, since it is those areas which have been given the most State largesse which, after 40 years, are still the most deprived. If the money put into make-work projects were instead invested in private enterprise, the value added would be more likely to uplift those same areas. As Ms Merhair argues, "Without the private sector, the entire economy would become stagnant, sterile, and incapable of adapting to the changes of the modern international economic arena."

Many persons will see this as a gross overstatement. But a comparison with other countries shows that the most prosperous economies are those where the Government does not interfere with the free market. The economic function of government is to create and enforce regulations that prevent sharp practice from the private sector. In fact, the Government is even now engaged in such an exercise, holding public consultations on reform of consumer protection laws. But, insofar as the Government involves itself in other kinds of economic activities — whether bailing out BWIA or determining what Caroni lands should be used for — it probably does more fiscal harm than good. For that reason, our politicians and Government technocrats would do well to pay close attention to Ms Merhair’s wise words.