Wasting money

The question that naturally follows is: Have we got our money’s worth? Can it be said that communities throughout Trinidad and Tobago are now so beauteous and spotless as to be worth $1 million a day? Have the nation’s drains been unclogged, the bush kept at bay, and pavements built to the tune of $1 million a day?

Apologists for these programmes will no doubt argue that the returns are social rather than fiscal. But, apart from this being a false separation, it is arguable that, far from bringing social benefits, URP and CEPEP have exacerbated the country’s social problems. The link between URP workers and the climbing murder rate is now undeniable. A disproportionate number of the persons killed over the past three years have been attached to the URP and, while it may be because this is the only employment available to former inmates, the question still arises as to what motivates these murders.

CEPEP, too, may have had a more indirect effect on the murder rate. The Manning administration has made a habit of blaming the former United National Congress (UNC) regime for many of the problems being experienced today — arguing, for instance, that it is the UNC which created the "community leaders." But, if any policy of the UNC then impacted on the crime rate now, the most likely candidate is the minimum wage, which went up to $7 per hour under that administration.

This is because minimum wage laws have harsher effects on certain groups within the general populace. Economic theory predicts that a wage rate raised above market value results in certain groups of people finding themselves less in demand by employers — because those people are less skilled, less hard-working, less conscientious, or simply because of bias. So a minimum wage that is above the market rate increases unemployment more among that sub-group than within the general populace. Generally, teenagers are the most affected and, in our scenario, urban Afro teens are likely to be the most negatively affected. Hence, perhaps, the consolidation of the gangs which have been wreaking havoc along the East-West corridor.

But statistics in Trinidad and Tobago show that unemployment has been declining steadily over the past three years. However, this has not been because of real growth in the economy, but because of the rise in oil and gas prices, the revenue from which has been injected into URP and CEPEP to create an artificially low unemployment rate. The artificiality is best shown by the plethora of "Workers wanted" signs outside small businesses, such as carwash places, mini-marts, and retail stores. And the further consequence has been the rise in the cost of living, as CEPEP and URP help drive inflation.

These consequences could be mitigated by phasing out URP, CEPEP, and by reducing the minimum wage (or exempting persons below 21) from its present $9 per hour. However, it is doubtful that any of these measures would be considered politically feasible — at least, not until the gas dollars run out and the IMF comes calling. The only other solution is for the economy to grow while the minimum wage is held steady until it is in line with the market. Until that happens, though, the country will continue to suffer the socio-economic consequences of these wasteful programmes and policies.