MIA > Archive > Tim Hector
Fan the Flame, Outlet, 18 October 1996, online here.
Transcribed by Christian Høgsbjerg.
Marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
The Lester Bird administration, like successive Bird regimes, knows not what it is doing, where it is going or why is it going nowhere. Its economic management has no purpose – save and except the maintenance of power by patronage. The latter, patronage, undermines everything and makes economic mismanagement worse confounded. It is a problem that has to be faced now. Or else it will be never. That is to say, the Haitianisation of Antigua and Barbuda, under a Duvalierist or Birdist type regime will continue apace.
The problem is deep-rooted and deep-seated. It comes from successive Bird regimes total ignorance of all theories of economic development.
For instance, after the Second World War, Latin American and Caribbean governments, across the political spectrum, broadly pursued a national economic strategy based on a strong interventionist state. This strategy known as Import-substitution Industrialisation (ISI) was based on the work of Raul Prébisch head of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). According to Prébisch’s theory, the international terms of trade tend, in the long run, to move against primary products, such as sugar, bananas, or even for that matter, sand-and-sea tourism. In order to develop, the underdeveloped countries had therefore to shift from primary product exports to manufactures, and this through direct state intervention, and so promote industrial growth. It was designed to end Latin America’s and the Caribbean’s dependence on primary-product exports.
Governments on the Left such as Argentina’s Peron, Chile’s Allende, Peru’s Velasco, and Michael Manley in Jamaica pursued this strategy. As did the PRI in Mexico, Eduardo Frei, in Chile, or Dr. Eric Williams in Trinidad & Tobago or Errol Barrow in Barbados and these could be determined as centrist governments. So did Brazil after 1964 with a rightist-military government and likewise the Central American governments.
Indeed, it could be argued, that this Import Substitution Industrialisation (ISI) as the economic strategy pursued in the region, such as tariffs, protectionism and exchange rate controls were part of the mainstream Keynesian policies pursued by governments worldwide from 1945–1980.
Strangely, Antigua and Barbuda did nothing. It was neither fish nor fowl. Lester Bird, Minister of Economic Development here for some 15 years, simply did not understand what was going on since he himself is so innocent of all economic theory, as to be described as ignorant. Nor did he surround himself with persons who knew. Therefore Antigua & Barbuda muddled its way. Entirely without policy, far less plan. For all of Lester Bird’s time presiding over the economic development of Antigua and Barbuda, the best that can be said it pursued ad hoc measures. Antigua and Barbuda pursued adhocracy.
Let me bring this down to earth, out of the realms of theory.
Antigua and Barbuda affirmed CARICOM under the Bird administration from 1976.
The essence of CARICOM was that it would provide protection for local (CARICOM) industries to gain control of the 6 million CARICOM market, and so foster import-substitution, and industrial growth.
Throughout the period 1976–1996, Antigua and Barbuda hardly established a single industrial enterprise geared to take advantage of the protection provided by the CARICOM market. We were in CARICOM but we were deriving none of its trade benefits. No failure is more glaring than this. We paid lip-service to CARICOM, but did nothing by way of public policy to avail ourselves of the opportunities provided. We were in it, but not of it. CARICOM remained an abstraction. Antigua and Barbuda, under successive Bird administrations, carried on being a primary-product country, dependent on sand-and-sea to attract foreign exchange, through tourism. We remained an outmoded one-industry economy.
Nothing exposes the successive Bird administrations more than the facts and figures. Manufacturing in 1994 accounted for only 3 per cent of GDP. Far less than what it was in the 60’s – when it stood at 13 per cent of GDP!
For a while, in the 80’s, Lester Bird, pursued maquila type assembly and manufacturing geared to the U.S. market. The most elementary economic sense should have told Lester Bird, that Antigua’s relatively high wages, driven by tourism and construction, plus high operating costs, made it relatively unattractive for assembly type, screwdriver industries. Antigua and Barbuda went to great financial lengths establishing an industrial park at Coolidge and later Cassada Gardens for these assembly type industries. In a twinkling of an eye the assembly-type industries fled to lower wage territories, leaving Antigua and Barbuda, high and dry. And worse saddled with debt. It was a disaster. Coolidge Industrial Park is now an abominable Shanty town, a blot on the national landscape. Lester Bird, should appropriately be buried there.
It is not an accident that the ‘best and brightest’ in Antigua over the last twenty years did not go into the productive and creative sectors. They went into traditional professions, law, medicine, teaching. Few went into management, engineering, marketing. This was because the productive sectors of the Antigua and Barbuda economy became even more underdeveloped between 1976–1996. We are going to suffer in the future from this lack of trained personnel for modern industrial and productive activity. Besides, the free movement of skilled labour in all CARICOM territories, is going to make Antigua & Barbuda a net importer of skilled labour. This together with the fact, that nearly one-third of the Antigua labour force some 7,300 workers are already ‘foreign nationals’ will complicate both politics and economics here. The economy is a thorough-going Bird mess.
Simultaneously, Antigua and Barbuda, under successive Bird administrations did nothing to develop its human resources. from management through entry level labourers. That is, did nothing to train managers and provide labourers with skills. There was no plan. Therefore, those things dignified with the name “skills training” were pork-barrel patronage programmes, to provide workers to existing firms, with the government paying! Millions of dollars went down the drain. These millions added to the disastrous assembly type foray, made awful financial matters worse. No project instituted under the aegis of Lester Bird has ever worked. Each and everyone has always been a drain on the national treasury.
This resulted in over-employment in the government sector. For, it became a matter of competition between Ministers to see how many of their constituents they could employ in the government sector. Patronage became the order of the day. No industrial or manufacturing opportunities created, therefore the government sector, became the first and last resort for employment. Follow the logic.
In consequence, this over-employment caused serious failure to control the current fiscal deficit. In plain terms, the growth in revenues did not keep pace with expenditures caused by over-employment, or better, patronage. Patronage could get Ministers elected and re-elected. But the very over-employment caused by patronage plunged the entire nation into recurring current account deficits.
Since it is necessary to be authoritative on this question let me quote the IMF Report on Antigua and Barbuda for 1995.
Says the IMF Report “The current deficit of the Antigua and Barbuda Government (including unpaid interest) increased from an average 1.2 per cent of GDP in the period 1990–93 to 2.4 per cent of GDP in 1994.” The average deficit doubled in one year, 1994! 1.2 per cent of GDP in Antigua-Barbuda equals, $5 million. Therefore 2.4 per cent equals $30 million! The Lester Bird regime had gone financially mad in the 1994 election year.
Mark you says the IMF, this huge leap in current account deficit “was due mainly to an increase in the government wage bill” which in turn was due to over-employment in the government sector, which, in turn, is really patronage on a larger scale.
We are not done yet with the IMF 1995 Report. Says the IMF “In 1990–94 the central government deficits were financed mainly by the accumulation of external and domestic arrears.” In layman’s terms the government did not meet its debts to local and foreign creditors. The bad public debt situation inherited from successive Bird regimes, was ended in 1994.
Continuing, the IMF said “Arrears on domestic obligations comprise overdue contributions to the Social Security scheme and Medical Benefits scheme, overdue bills to domestic suppliers and unpaid interest on treasury bills and bonds.” The Lester Bird government honoured nothing. Neither interest on treasury bills and bonds, nor payments to social security and medical benefits – money extracted from workers pay packets by government as employer – nor payments on its debts to local suppliers. The non-payment of local suppliers, reduced the supply of goods and services, since local suppliers were short of cash to provide more goods and services. So contraction of the economy was inevitable. This economic contradiction was induced and produced by the Lester Bird administration in 1994, mark you.
In the same period, says the IMF, that is, 1990–1994 “The governments net obligations to the Social Security scheme and the Medical Benefits scheme continued to rise in 1994 and amounted to 14 percent of GDP at the end of the year (1994)”. 14 per cent of GDP amounts to approximately $175 million! It is in such a mess we find ourselves now. In consequence, the maintenance of infrastructure has been neglected, due to negative public savings and a lack of foreign financing. In other words, successive Bird administrations, and the Lester Bird regime, in particular, has run the economy downhill, at a time, when, there was a recession in tourism to boot! Never was there worse economic mismanagement.
It is clear then, that public investment is now below maintenance levels, and the country’s creditworthiness has deteriorated – both, in consequence, having a direct impact on investment. The Lester Bird government imposed new taxes, including the tourism sector, thereby further reducing cost-competitiveness in the key tourism sector. Economic foolishness multiplied.
I have made my point, using facts and figures, so as to make put my point beyond all reasonable doubt. The Lester Bird administration choked off the economy.
What is to be done? A new administration is called for, as a matter of national necessity. Now and not later.
This new regime must reduce spending in the public sector. It has to tailor expenditure to revenue. It has to create public savings, therefore it has to abolish waste and mismanagement, not to speak of corruption. That is not just a question of morality in public affairs. It is a matter of economic necessity.
The incentive scheme, as currently administered, operates against small and medium-sized business, especially manufacturers. It has to be reviewed to correct that gross imbalance.
At the same time, a new government has to lower tariff rates, i.e. customs duties, so as to stimulate demand, lower the cost of living and end this nation’s over-dependency on import tariffs which is a major stumbling block towards a more open trade regime.
Needless to say, this policy move will make Antigua & Barbuda’s tourism more cost-competitive, and immediately improve tourist spending in the economy, improving foreign exchange earnings.
New employment has to be created in the manufacturing sector, aimed at CARICOM and beyond, with new production relations. The manufacturing sector in the ensuing 4 years to the new millennium, must reach 12 per cent of GDP, that is, four times its current level. Similarly, for the agro-industrial sector, emphasising, vegetables, fisheries and livestock. Key to this, is to make Antigua and Barbuda the craft centre of the region, thus boosting manufactures.
The prerequisite to all this is an accountable government, free of scandal, which can mobilise the public for the economic tasks at hand. Nothing else will do. The more we wait, the worse it will become. Time is against us. A scandal-ridden regime, cannot, repeat, cannot, mobilise any nation, anywhere, anytime. Need I say more? The economic writing is on the wall, for all to see and read. Those who will not hear, the old adage goes, will feel. Nothing educates like feeling.
Last updated on 9 February 2022