Haunting echoes: Money is no problem

Dr Ramchand Rampersad

ECONOMIC cycles are the irregular expansion and contraction of the economy and determines the overall state of the nation. These states are affected by fiscal and monetary factors such as: GDP, interest rates, total employment and consumer spending. The outcome is either a stable economy, a boom, or recession.

TT’s current recession started in 2016 and to date it has steadily worsened. The economic impact has been devastating: massive retrenchment, rising food and fuel prices, closure of businesses, poor road and infrastructure maintenance.

Economists posit one explanation for recession as: unpredictable global activities influencing local economies. This theory gives governments compelling excuses for our economic downturn such as the war in Ukraine and the recent oil discoveries in Guyana which affect global trade, or the pandemic.

The argument about whether recessions can be curtailed is one that hinges on whether governments are engaged in short-term or long-term economic policies, whether they are creative in their economic strategies, how effective they are in diversifying the economy and how prudent they are in managing the resources of the country. Let’s explore this further.

I vividly remember, while walking to primary school one morning in the late 1970s, hearing my neighbours boasting: “Money is no problem.” These words were echoed by many, following a broadcast from then prime minister Dr Eric Williams. From then to now, this phrase has become etched in my mind as I am sure it has with many citizens.

Williams's remark was motivated by our lucrative oil revenues. In 1970 TT earned $29 million from oil exports but by 1979 that income had bloated to $920 million. For a country of barely 1.2 million people, that was a lot of money to spend, and many will argue that Williams’s statement was justified at the time.

While accurately representing the country’s current revenue, history has proven that Williams’s vision was short-sighted. For the years to follow, he placed the country’s survival solely on oil revenues, and the statement effectively transferred his attitude of complacency to citizens and successive prime ministers.

As a renowned scholar, Williams would have been cognisant of economic cycles, yet his decisions ignored such knowledge. The average housewife understands basic economic concepts and can appreciate that oil prices will one day drop for multifarious reasons, or that we will eventually run out of oil.

In 1982, when oil prices dropped to unprecedented levels, so too did economic activities, and TT plunged into years of devastating recession. It may be difficult to comprehend how a sudden drop in oil prices caused an instantaneous economic depression. Where did all the oil revenues from the 1970s that Williams boasted about go? How come we did not have sufficient savings to act as buffer that will allow him to manage the country’s affairs at least for the few years to follow?

From 1982, our economy would have endured several cycles of rise and fall. However, it appears that Williams's lack of vision or short-sightedness was contagious as successive prime ministers have failed to plan for future downturns. Clearly, after several cycles of economic joy and pain, still no lessons have been learnt. Williams has gone to the grave but his psyche of “money is no problem” continues to haunt us.

For how much longer would we live for the moment, depending on the mighty oil dollar to save the day? Today there is still only superficial talk of diversification.

Our sugarcane industry has been destroyed and Caroni lands are now utilised mainly for housing towards political gains; tourism continues to be a talk-shop topic as spiralling crime taints TT’s reputation internationally; our abundance of natural resources – the pitch lake, lumber, agriculture, fishing, manufacturing and many more – are critically underdeveloped as import duties rise and foreign exchange is restricted.

Compared to prosperous economies like Singapore and Dubai, “underdeveloped" is the ideal adjective to describe our failed state. Some contend that Williams’s intention was to keep his supporters in a state of perpetual dependence on the government in order to advance his oligarchy’s political ambitions.

If that is true, when will we wake up and smell the coffee? We must realise that our economic disasters are intertwined in a web of systematic failures, propelled by political arrogance, racial disharmony, constitutional insanities and social discrimination.

Without the will of the people to progress beyond tribal politics, the lower class will continue to increase, and the upper echelon will be confined to a few. Without a change in mindset and a long-term vision that would harness our natural and human resources, beyond petroleum, we will continue to be stuck in this state of recession.

If the politicians don’t have the will to make the change, then we should have the will to change them.