by Dr Marlene Attzs Sooping-Chow, Economist
The mid-year budget review draws nigh and the court of public opinion will soon be pronouncing on how the Government has fared since the 2018 budget was presented in the Parliament on October 2, 2017.
The question that often accompanies the budget specifics, is how john and jane public rate the Government’s performance. So as much as the mid-year review is meant to be Government’s account to the population it is also an occasion when Government’s performance is critiqued against what the public perceives to be important.
For the public, crime will no doubt be at the top of the list of hot topics for this year’s mid-year review and the questions are predictable: Has crime been reducing or increasing? Do I feel safer now than I did ‘before’? The rising murder rate and reports of fatal instances of domestic violence will certainly influence the collective response to such questions.
From an economist’s perspective, the mid-year review will be placed in the context of the overall state of the economy. Government’s ability to spend, invest and treat with the myriad of social issues will be contingent on its ability to have resources to attend to the list of priority areas citizens perceive to be important.
The Central Bank of Trinidad and Tobago (CBTT) recently released its Economic Bulletin for March 2018. That Bulletin reports some encouraging economic growth prospects based on activity in the oil and gas sector. The CBTT notes that “…the growth prospects for the Trinidad and Tobago economy have improved over the short to medium term owing to an upturn in the energy sector … the anticipated improvement in the energy sector may have positive spill over effects on the non-energy sector…”. The boost comes from activity related to bpTT’s operations.
The CBTT report also talks about inflation—the term economists use to describe a general increase in prices that leads to a fall in the purchasing value of money—in local parlance, inflation measures how far your dollar can stretch.
The CBTT notes that notwithstanding the increase in gas price (announced in the last budget) and which many anticipated would have caused a knock-on effect of increased food prices, they (the CBTT) expect that prices should remain fairly stable. The less optimistic news is that the unemployment rate could rise slightly if there isn’t an increase in economic activity in the non-energy sector.
Changing the conversation
All of the above are more or less elements of a typical mid-year review conversation. I want to suggest we add some other elements to the conversation this occasion. Instead of only looking at the dollars and cents of what’s happening in the country, how about confronting some of the other issues and challenges which, if treated with head on, also could have a very positive impact on the economy and society.
One such issue, productivity, is very relevant to economic growth—perhaps even more so than oil and gas. Some colleagues recently wrote an article on productivity that appeared in the daily newspapers.
Apart from treating with the issue of ‘low productivity’ related to high absenteeism, the article also spoke of the dependency syndrome evident among some in our society who do not want to work and look to successive Governments for support as if it’s a birthright.
That “dependency syndrome” referred to in the economic literature as the “rentier mentality” is found in societies such as ours where there is a heavy dependence on “rent”—money—that Governments receive from the exploitation of natural resources such as oil and gas. One author who has written extensively on the subject says that “…From a cultural perspective, it is not rent that should be censured and dismantled but the culture it produces….”
The idea is that once a country has oil and gas resources it doesn’t have to work too hard at earning revenues. That causes a false sense of comfort that diminishes, in the minds of a few, the need to be productive to earn income—they see no causality between work and reward.
The ‘rentier mentality’ that reflects a reversal of the conventional ethics of labour (that require one to be productive to earn a living) emerges.
Our conversations around nation building and national development must evolve beyond what currently is the dollars and cents discourse since that conversation is premised primarily on earning rents from natural resources.
We need to confront, deconstruct and reconstruct as appropriate, some of the deep-seated cultural values and issues that slow our path to progress. Productivity and work ethic is one such issue and a mid-year review is an opportune time to guide such a conversation. That’s just my point of view.