Put vision to reality

Letters to the Editor

Put vision to reality

Wednesday, October 21, 2020

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Dear Editor,

According to Kristalina Georgieva, International Monetary Fund (IMF) managing director, “Today we face a new Bretton Woods 'moment'. A pandemic that has already cost more than a million lives. An economic calamity that will make the world economy 4.4 per cent smaller this year and strip an estimated US$11 trillion of output by next year.”

I am concerned, because the IMF is still pressuring countries that have loans to privatise industries and carry out austerity measures in terms of their government service, which leads to unemployment. For example, the IMF gave a loan to Tanzania and had chains attached. According to an IMF press release in regard to Tanzania, “Looking ahead, structural reforms remain crucial to support a robust economic recovery. The focus includes addressing arrears on VAT (value-added tax) refunds and government expenditures, enhancing human capital and the business environment, and improving the affordability of bank credit.” Tanzania now has two doctors per 100,000 and, with the structural adjustment prescribed by the IMF, the situation will get worse during the pandemic.

Across the globe, lockdowns are easing and economic activity is gradually resuming. But, with the pandemic likely to be with us for a long time, the world is going to back to the old, but developing countries will become more indebted, and poverty will increase substantially.

According to the World Bank, “Specifically, under the baseline scenario, COVID-19 could generate 176 million additional poor at US$3.20, and 177 million additional poor at US$5.50. This is equivalent to an increase in the poverty rate of 2.3 percentage points compared to a no-COVID-19 scenario.”

As millions of people all over the world lose their jobs at the height of the crisis, billionaires increased their wealth by more than a quarter (27.5 per cent) or US$10.1 trillion, according to a report by Swiss bank UBS. The number of billionaires has also reached a new high, rising from 2,158 to 2,189.

Political forces that were already raging before the pandemic are likely to accelerate. The US-China tussle, the backlash against widening inequality, and the growing attraction of inward-looking economic policies all persist.

Caribbean countries that depend on tourism will suffer because travelling will be diminished for years to come. I recommend that countries invest in agriculture to ensure food security. The demand for food will increase due to the disruption of supply chains and the closure of many production facilities. The central bank and government should — as a primary objective — maximise employment. There will be economic, political, and commercial forces to cut back on labour, but this will be detrimental. The tax base will shrink drastically, and the economy will shrink along with it, which will make it impossible for Caribbean countries to pay back their debts. They will have to privatise and get more help from international lenders, like the IMF, which will make cutting public spending a conditionality so the international elite can come in and invest and get 'steals' of deals.

John F Kennedy is reported to have said: “The Chinese use two brush strokes to write the word crisis. One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger, but recognise the opportunity.”

My advice is to invest in technology and use it to improve productivity while keeping workers employed. Germany, Switzerland and Scandinavia are good examples of how it can work — by increased manufacturing and agro-production. This can be started immediately and expanded in the future. It will be costly to build a new economy, but it will cost much more to go back to an economy designed by our former colonial masters.

The economies in most Caribbean countries have barely changed since they gained their Independence. I am not sure if the Caribbean has ever had a political leader who does not pay attention to the dictates of the developed world, instead of the prosperity of their population. They talk a good game about prosperity, but deliver crime and poverty.

The value of research and development is not captured by capitalism (Adam Smith) or communism (Karl Marx), but is the key to success in the 21st century.

To paraphrase Bob Marley: Wake up and put your vision to reality.

Brian Ellis Plummer


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