Monday, February 22, 2016
Somebody asked me a few weeks ago 'who profits from the non-diversification of the economy'? Thinking about it I realized that this was an excellent question which most people were more comfortable with ignoring rather than facing it frontally ... a typical West Indian trait! I never got a straight answer but did find that this was a question that certain persons as far afield from Trinidad as the Bahamas, are asking. Well, I am certainly not an economist and those economists that I did ask could not give me a straight answer but gave instead lot of unintelligible "mumbo-jumbo".
So? Who benefits? Because in more than fifty years of independence somebody (or 'bodies') must have benefitted. After all, money, like water, will always obey gravity and will accumulate wherever it is easiest. Having looked at it with my admittedly inexpert economic eye I have come to the (not surprising) conclusion that the fault lies with that commercial class which Dr. Eric Williams once scathingly referred to as "commission agents", i.e., those so-called businessmen who add little or no value to imported products, but simply mark up the goods and re-sell them at a huge profit.
There has been so much oil money floating around that these guys have become quite adept at making money off of foreign goods and ideas. Take one of our more profitable public companies, Prestige Holdings. This company has the KFC and TGI Fridays franchises and makes millions from them. The service in these places is lousy, but who cares? Nobody. The company makes a fortune and every year pays huge sums in franchise fees to the American owners. Oh, I know: Prestige will argue that they employ lots and lots of people and pay lots and lots of taxes. But the company adds no intrinsic value to the economy. It doesn't make or produce anything. Another popular and profitable company is Pricemart. The list goes on and on, but you get the point. If you want to make a lot of money import something from abroad for pennies and sell it locally for dollars. If you follow this tried and proven formula you will succeed beyond your wildest dreams.
Don't believe me? Go into any Massey store that used to be known as Hi-Lo and buy a DiGiorno pizza there. You will pay about TT$100 for it. Go into a supermarket in the States and the same pizza will cost you US$5.00. That's about TT$32.50 if you convert at US$1.00 = TT$6.50 (which is more than the official rate today). In other words, there is a lot of profit in this particular product built in for the importer who clearly will not be buying the product at the retail US$5.00 price but for much less!!
Put another way, we, the general public are being ripped off by the greedy and unscrupulous commission agent class and nobody has done anything about it for more than fifty years!! Dr. Williams (to give him credit) did try once when he, for example, prevented the importation of foreign assembled vehicles in order to try and start an assembly industry here. But that effort failed. The local businesses were unable to meet the demand and the quality of the locally assembled cars was worse than abysmal. Since then, nobody has seriously tried to force the commission agents to become more entrepreneurial. Oil money has flowed like water and calls to diversify are met with 'oh yes, that's a great idea', but nothing else.
I must blame also the University of the West Indies. Nowhere have I seen or heard any real or good workable ideas from the 'think tank' that the University ought to be as to how to achieve this purpose. UWI has failed this country and the region terribly. The professors and lecturers have been by and large completely incompetent and incapable of providing the kind of modern and progressive thinking that is so badly needed to get us out of the economic doldrums. They are very good at talking though! But then most West Indians can do that fairly well even without a university degree.
No. The only test for leadership is leading and leading vigorously. Sadly, throughout the region there is a dearth of leadership which has resulted in our Third World thinking and the fact that because of this we will continue to allow the 'commission agents' to continue to rip us off. And our economies will continue not to be diversified.
Posted by Robin Montano at 12:24 PM