N Touch
Wednesday 26 June 2019
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State enterprise or free market?


WHEN REGINALD DUMAS speaks, everyone listens, for, as one-time head of the public service, Dumas’ working knowledge of the government is impressive.

It is, however, regrettable that his article of November 26, titled “An unenterprising state,” a response to recent remarks made by the US ambassador to TT, is commentary that clearly defends the TT state enterprise system rather than illuminates the reader’s understanding of the economic dilemma the nation faces: should TT abandon its state enterprise system and pursue the free market option?

Dumas states: “Now comes the US Ambassador Joseph Mondello to tell us… that state enterprise investment is clearly not transparent… not market driven, and… not designed to benefit the people of the countries (receiving such investment).”

“Not designed,” Dumas trumpets. “Is he (Mondello) saying that the Williams government… set out to disadvantage their populations (the people of TT)?”

Dumas cites corrupt US corporations and individuals to blunt Mondello’s address and to buttress his own opinion. However, what is missing in Dumas’ commentary is analysis of the core message implicit in Mondello’s remarks: should TT abandon its state enterprise system and instead pursue the free market option?

TT has over 100 state-owned enterprises and most are dependent on government subsidies for survival.

Petrotrin, the crown jewel of the state enterprise system, was closed on November 30 for reasons that affect most, if not all, of TT’s state enterprises – an overmanned, unproductive workforce resulting in inflated wage and benefit costs.

At $15 per hour, a minimum wage worker makes $600 per week, while reports claim a non-skilled Petrotrin worker made between $11,000 and $18,000 per week.

A high state enterprise wage bill alongside diminishing revenue from non-renewable resources makes the subsidising of state-owned enterprises unsustainable as currently run and is the grave dilemma faced by TT today.

Unlike Fidel Castro’s ideologically created state enterprise system, TT’s system evolved by way of pragmatism. At independence, Dr Eric Williams, faced with high national unemployment (especially among his supporters of African descent resident in the the so-called “depressed” areas), invited businesses to invest in TT. Foreigners declined. They were not interested.

When local businesses also declined, a practical Williams promoted a buy local campaign which inspired the Mighty Sparrow’s commercial jingle “The Doctor say to buy local, buy local if you please.” However, the buy local campaign failed, for what the consumer purchased as local was in fact to a large extent foreign.

Thus, having little choice to spur economic activity, Williams embarked on the state enterprise expedition. He purchased the bankrupt British West Indian Airways (BWIA), the emblematic precursor of today’s failed state enterprise system. In other words, if local and international investors were unwilling to invest in TT, then the government would assume the role of investor.

At its inception the state enterprise system was a win-win bonanza for the Williams government. It positively impacted unemployment while compensating its cadre and majority black African supporters, the people who pushed hardest and who expected the milk and honey that politicians had promised as the reward for independence.

Faced with today’s reality of low oil prices for the foreseeable future and the albatross of a failed state enterprise system, the Dr Keith Rowley administration is now confronted with a conundrum: should the Government continue to pursue the failed state enterprise system on which his African constituents depend or should the Government abandon it for the free market system?

If the Government abandons the state enterprise system and adopts the free market option, who will benefit and who will lose? Will it be the Africans, the Indians, or the one per cent?

Rowley has been playing for time while borrowing, taxing, selling off state assets, increasing state assets, and praying for an oil spike to finance continued funding of the failed state enterprise system and keep his support base intact.

In the pipeline is a government-financed, state-owned 1600-room hotel complex, one to be privately managed as the hedge against mismanagement, the bane of the state enterprise system.

If Petrotrin is sold, is this the first step towards a decisive journey to the free market system? And does labelling of Trinidad workers as “gimme gimme” (an endemic condition created by the state enterprise system instituted by Rowley’s party, the PNM) psychological conditioning and a rationale for the massive layoffs required to convert from state enterprise to free market?

If TT moves to the free market system, will the sale of assets follow the example of the world gas-to-liquids project, constructed for an estimated US$450 million and rumoured sold for US$35 million? And who will purchase these assets? Will it be the one per cent, the front men (the soucouyants), or the people?

Dumas has taken Ambassador Mondello to task but an analysis of the ambassador’s message should lead to the logical question: should TT abandon its state enterprise system and pursue the free market option? That’s a question Dumas totally ignores.

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