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Home > News > 2014 07 15 > AUSTERITY-THE BUZZWORD OF THE MODERN ERA

I never knew the word “austerity” existed until a few years ago when the effects of global meltdown started to hit hard in several European countries and there were protest marches against Government policies and some placards read “An end to Austerity measures.” After a quick flick through the pages of my Oxford dictionary I was suitably enlightened as to the meaning of this Draconian word, which has now become a buzzword in the modern era. 

 

There are several meanings of austerity, but the one that is commonly coined in economic circles describes policies used by governments to reduce budget deficits during adverse economic conditions. With this in mind it is little wonder that virtually everyone in Barbados these days could spell austerity backwards given that it has become a part of our everyday life. 

 

Our much-maligned Government was dealt a bad hand when it took office during the worst economic period since the 1930s, but its fiercest critics will still feel the DLP leadership has failed to steady the ship with their self-denial and unpopular policies of taxing their way out of the crisis. Most of their remedies seem to be at the taxpayer’s door, which is a flawed and totally negative strategy in the face of adversity. After all, balancing the books is a straightforward process of reducing expenditure by controlling costs and outlays or increasing revenue. Everyone in life has to do it whether in business or in their homes. Of course, Government has huge responsibilities within this process, but at the end of the day the principle remains the same-you have to work at both ends of the Balance Sheet to turn a loss into profit.

 

And therein lies the dilemma. 

 

Politics is a complex arena and although many articles have been written on the current economic situation in Barbados, only the Government has the power to make things happen. It is lovely democratic ideology to believe the people hold the power because they elect their leaders, but in reality they have one bite of the cherry every five years and have to sit it out until each term is over before they are enfranchised once again. To think otherwise is living in Cloud Cuckoo land. Of course, we can always protest and agitate, and the value of peaceful protest is currently being shown against the Solid Waste Tax, another Government fundraiser on the back of others that have failed to generate the funds needed to balance the books. It remains to be seen if this is “the straw that broke the camel’s back,” but surely the time has come for a review of the bigger picture?

 

Barbados has a population just under 290,000 and is 166 sq miles in size. In the economies of scale it is small, yet our Exchequer carries the burden of a large public workforce, and numerous ministries and politicians. Virtually every elected member of the Government has a ministry so we have to question the merit in so much governance within a small country. Surely Barbados could be run within 15 constituencies rather than 30, and surely 15,000 civil servants could meet the island’s requirements rather than 28,000? The cuts may seem drastic measures, but this is all part of austerity action and where best to start the process than within?

 

Creating unemployment is not something that should be taken lightly, but many of the government and statutory services could be sold off to private enterprise, which would create more efficiency and quality within the workplace, areas which are heavily criticised within the Civil Service. I recently did a mortgage for a Civil Servant and she was mortified that she had to provide a job letter because she was a “civil servant and had a job for life.” Unfortunately the banks are a lot more discerning these days so the job letter had to be produced. 

 

We live in a completely new world and have to adapt to the changing circumstances. Prosperity will return, but only if we recognize that austerity begins within and moves outwards. And it doesn’t have to be completely one way. A visionary administration will invest in measures to stimulate the economy and boost enterprise if it is freed from the shackles of debt and austerity. 

 

Are our leaders up to the challenge of a new world or is there another fundraising tax in the pipeline?

 

Clarence Hiles is a local businessman with extensive experience in banking, real estate, journalism and sport. He is currently the Editor of Caribbean Property Magazine and managing Director of Caribbean Mortgage Services. 

  

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