A self-inflicted economic crisis cannot “right” itself

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When Finance Minister Winston Jordan said that the economy would mysteriously “right itself”, perhaps he was referring to Adam Smith’s free market invisible hand theory, which suggests that private investments from individuals and businesses resulting in voluntary private markets are more efficient in stimulating economic growth than a government-run economy.

However, the idea that self-driven individuals contribute – whether consciously or unconsciously – to the economic growth of a society can only materialise if they’re given space to thrive and invest. Such an environment, in turn, must imperatively be modelled by Government through the creation of favourable economic policies and market regulations. But if this is what Jordan meant when he alluded to Guyana’s economy eventually “righting” itself, then evidently he has underestimated the conditions required to make this possible.

Unfortunately, Guyanese are confronted with an economic dilemma which continues to literally suffocate businesses; it results from the Government’s disastrous policy-making. If Jordan really wishes the economy to “right itself”, then he must make a first step in this direction by reversing the harsh economic measures that were forced undemocratically upon the Guyanese people. Otherwise, how would the economy “right itself” for the small woman and man?

For instance, the small cash crop and poultry farmers living in Canals Polder 1 and 2, who now have to integrate the charges of a 14 per cent VAT increase on water and electricity into their production cost, are also confronted with the massive job cuts resulting from the closing of the Wales Estate. Subsequently, as prices increase for local production, the demand has simultaneously declined on local markets situated on the West Bank Demerara; as well as in Bourda Market, which sources fruits and vegetables primarily from the Canals, Parika Backdam and West Berbice. As a result, farmlands are being abandoned and the livelihoods of people are under threat. This unfavourable environment leaves no room for economic growth for the small woman and man, and therefore cannot miraculously resolve itself on its own.

But if those at the bottom suffer, the big businesses have eventually come to feel the backlash from the domino effect of detrimental economic policies. Businesses across sectors such as Barama, Digicel, and now Alesie are closing shop and cutting thousands of jobs. As a matter of fact, we are yet to determine how many jobs have been lost in the private sector, considering that Barama and Digiciel alone laid off 2000 employees. Alesie’s decision to close down comes as a shocker, since its owner, Turhane Doerga, was one of the Coalition supporters who, during the presidential campaign in 2015, climbed the podiums to promise rice farmers $10 000 per bag of paddy – a promise which was never forthcoming. Ironically, the same Doerga is now being driven out of business on the local market, and forced to admit that the Coalition has mismanaged the economy, stifled growth, and reduced space for development.

The massive tax increases slapped on every single sector imaginable in Guyana without prior national consultation or periods of progressive adjustments and transition resulted in thousands of job cuts; the loss of consumer purchasing power, which is the driving force of any economy; and the loss of both local and foreign investments; a foreign currency crisis, and the loss of public trust. These are not the consequences of world market or regional trends, as Minister Jordan is trying to make us believe. These are the immediate results of the APNU/AFC’s irresponsibility and incompetence; and moreover, its penchant for anti-democratic military-style leadership, which has no place in a growing democracy.

The economy prior to the Coalition’s installation in 2015 benefited from nine straight years of sustainable growth, fluctuating between 3.3 per cent and 7.2 per cent, with the exception of 2008 (due to the world financial crisis). This sustainability was obtained not because of an invisible hand, but because business investments – both local and foreign – were encouraged, while those who pillar the traditional income earning sectors, the rural people, were guaranteed State protection. It was also rendered possible because the Government at that time explored new solutions to boost local industry and production, such as the LCDS-funded Amaila Falls Hydroelectric Project, which would have been at little cost to taxpayers while liberating the country from its dependence on fossil fuel. The said project was scrapped by the Coalition.

Au finale, it seems that besides selling cook-up and waiting for things to clean themselves up, the Coalition has no vision to uplift Guyana from this self-inflicted crisis.