Wednesday, April 13, 2011

PAIN vs. POTENTIAL PAIN Like most people, I had been looking at the recently concluded PSA dispute which was finally settled last Friday with a mixture of sympathy for the public servants and a strong desire for more information. I have been (and remain) very critical of the Minister of Finance for not giving us ... the general public ... the facts and gigures to justify his case for the 5 per cent. For make no mistake, the onus is on the Government side to justify the holding to the line of the 5 per cent, and in my view, they have yet to do so. What the Minister has basically done is to tell the unions and the rest of the population "that's it! We are holding teh line at 5 per cent, and those who don't like it can lump it!" It is an attitude that is unfortunate, to say the least, and one which no 21st century man or woman can condone or agree with. And, like most people, I am of the view that if we could afford to pay the public servants more then we should have done so. However, we ought not to let ourselves get bogged down in criticism of the Minister of Finance (no matter how justified that criticism might be), but should, as responsible members of society try to figure out and understand why the Government is hewing to such a tough line. Sir Arthur Conan Doyle put the following words in the mouth of his famous detective, Sherlock Holmes: "How often have I said to you that when you have eliminated the impossible, whatever remains, however improbable, must be the truth". If you take the sense of those words you could say much the same thing when it comes to the behaviour of Governments in general, and of this Government in particular,i.e., that when you accept that teh Government is not made up of mad or crazy people that there must be a very good reason why it is holding so rigidly to the 5 per cent line. The only answer that seems to make sense is that the Government is not very optimistic about Trinidad & Tobago's future and is quite concerned about our future economic well being. Let's look at some facts: 1) Oil production is declining at a time when oil prices are rising thus preventing us from taking advantage of what would normally have been a very nice windfall. Our oil production is now less than 100,000 barrels per day! 2) We are now a gas based economy. But there are several problems: - America can now produce gas for less than we can; - gas prices are not rising in tandem with oil prices; - our reserves are dwindling and what remains is deep down and difficult to exploit; - when we called for exploration bids last year only one bid was received - then we put out what might be termed "a sweetheart" call for bids and ended up with none at all! It is clear that the foreigners are saying to us "you keep your gas - it is too expensive!" So, the very serious questions arise: how much time do we have? What are we going to do? The Government appears to recognise the problem. Right now it is making serious efforts to try and revive the manufacturing sector, and the nation's number one salesman (actually, that should be 'saleswoman'), the Prime Minister, is getting off of her chair and is going out into the world at large to try and bring business to our shores. So far teh Government's success in this endeavour has been limited, to say the least. It is clear to any interested and well informed observer that we are in dire straits - and the Government is nothing if not interested and well informed! Clearly, the Government's thinking is that the country cannot afford to take on future commitments that it may not be able to hold on to. We have only to look over to Europe and observe what is happening to Portugal, Ireland, Greece and Spain (the "P.I.G.S."). All of these countries let their spending get out of control with the result that their respective populations are being visited with great economic pain and not little humiliation. The time has come at last to pay the piper! Portugal is now in the process of going cap in hand to teh European Union for a bailout. If it doesn't come then the trouble that they will face will make their current problems look like a picnic! Basically, the problem with all of the "P.I.G.S." is that they let their expenditure get bigger than their income. Put another way, they 'bet the farm' on being able to pay their debts "sometime" in the future. The future is now here! England too has not been spared. The new (almost one year old) coalition Government has been forced to make radical and drastic spending cuts in order to avoid going the way of the "P.I.G.S.". Some half a million jobs have been cut! Can you imagine that?! Five hundred thousand people are being thrown on the bread line! Only Germany has managed to survive. The Germans look at their European counterparts with scorn and derision, saying in effect "you fools living in a fools' paradise". They held the line and refused to let their spending get out of control even when it was politic to do so. But today they are the only Europen country that is prospering! And just in case we forget ... remember that lending coumtries and institutions (like the infamous IMF) tend to impose very strict and/or serious conditions on lons that they make rto bail out a country. Ask the people of Greece! Ask the people of Ireland! I could go on, but you get the point. It lokks as if we are where the "P.I.G.S." and England were a few years ago. With oil production dropping and gas not as potentially profitble as it used to be, the Government would be very foolish to go easy now. The alternatives would be one or more of the following: - lay off a lot of people now; - devalue the currency (a temporary panacea); - move into mre debt ... but then what? We cannot let go. No! As I said, I am ver critical of the neo-colonialist attitude of teh Mnister of Finance who obviously does not believe either in transparency nor in open Government. But it is clear that his thinking is that we have to hold the line. And on that score I agree with him completely and give him full marks ... a hundred percent! Unfortunately we have been completely profligate with our good fortune in the past ... too profligate, spending as if there were no tomorrow. We need to take a page out of the German approach and hold the line. If you think that what is happening now is painful ... trust me! You ain't seen nothing like the pain we will endure if we don't!

No comments:

Post a Comment