Dear Prime Minister: A policy switch can help T&T though economic crisis

The following open letter to Prime Minister Dr Keith Christopher Rowley, which is titled ‘the leadership we require for these tough times’, was sent to Wired868 by author Keston K Perry:

Photo: President Anthony Carmona (right) swears in Prime Minister Dr Keith Rowley. (Copyright Reuters)
Photo: President Anthony Carmona (right) swears in Prime Minister Dr Keith Rowley.
(Copyright Reuters)

Dear Dr Rowley,

It has just been six months since your entry into this office as the fourth head of government in the Republic of Trinidad and Tobago from the People’s National Movement (PNM), which took us into independence with a heightened sense of nationalism.

I recall this moment in our history, because it is a prudent sense of nationalism that we now require to face these present challenges and the ‘adjustment period’ now before us.

Past PNM leaders have tried to work for the poorest and have done an exemplary job in many instances, but they have all failed in addressing the democratic deficit and challenging vested interests in our society. If you recall it was Dr Williams who had laid out in his treatise on education for a new society, that showed that government investment in education needed to address the inequities in our society at that time, as the arrangements then privileged a few while disadvantaging the masses.

You have time and again mentioned that you have personally benefited from this early philosophy of the Williams era, and that a hand up to the poorest is necessary.

Photo: Trinidad and Tobago's first Prime Minister Dr Eric Williams. (Courtesy Information Division)
Photo: Trinidad and Tobago’s first Prime Minister Dr Eric Williams.
(Courtesy Information Division)

These were also positions taken by our great trade union leaders, including Adrian Cola Rienzi, George Weeks and Uriah Butler who believed in the vision of the first Prime Minister and worked hard to secure the fruits of a newly independent Trinidad and Tobago.

From that time to now, there have been many changes globally and nationally that have eroded the ability of the State to address the needs of the masses. The major consequences have been the long paraded truth that the economy has not diversified significantly to provide the jobs, additional income and foreign exchange and new areas of investment where nationals can achieve a higher quality of life.

Indeed, no one can deny—not even the Opposition, if they are not being strangers to the truth—that the global turmoil in energy prices, and domestic factors, including poor policy choices, and more importantly the inability or unwillingness to challenge vested economic interests have led us to this point.

Your spokespeople have been at pains to describe the problems we presently face. But these issues have been a historical and long-term problem that did not start only five years ago.

Photo: Falling oil prices have damaged the Trinidad and Tobago economy. (Copyright CommodityOnline)
Photo: Falling oil prices have damaged the Trinidad and Tobago economy.
(Copyright CommodityOnline)

Indeed the PNM in its 39 years in government has undeniably contributed—while other parties have occupied office for the remaining 16 years—since 1961 when the first fully democratic government was elected ahead of complete independence in 1962.

In the last few days, I have paid close attention to your media interventions and wish to draw your attention to some issues as they have arisen from these presentations, and about which I believe your economic advisers should also be keenly aware.

I listened attentively to the interview on Wednesday 17 March 2016, hoping to hear you espouse a vision for these tough times. I do however say that I was disappointed as none was clearly and coherently articulated.

The present economic dogma of “free market” policies that your government appears to have adopted offer more leeway and advantage to businesses, less rules and protection for workers, less government intervention, and more fiscal restraint.

Though these principles all sound good, they trample upon the possibility of diversification ever taking shape in future, and are more damaging to the poorest.

Photo: Protest in La Brea. (Copyright Trinidad Guardian/Rishi Ragoonath)
Photo: Protest in La Brea.
(Copyright Trinidad Guardian/Rishi Ragoonath)

In contrast, it is only smarter government intervention that does away with the egomaniacal and fanciful projects of past regimes, can ensure that people are lifted up and the economy recovers.

I wish to highlight two recent examples of where these types of policies have caused more harm than good. For example, implying that the government cannot provide more protection for workers and cannot do any to protect the welfare poorer families, while BP pays less or no taxes for the current year gives into this ideology.

It is also an untenable position to state that the only role for the State is for the law to take its course when unscrupulous businesses seek to take advantage of poorer families by hiking up prices due to an increase in value added tax.

We all know that the law has not always worked fast enough or done a fair job for people without the means to access it or seek recourse from it.

The present ArcelorMittal situation also points to a preference for protecting large corporates than to addressing the needs of the poorest.

Photo: Steel tycoon and Indian billionaire Lakshmi Mittal is the owner of ArcelorMittal. (Courtesy Rediff)
Photo: Steel tycoon and Indian billionaire Lakshmi Mittal is the owner of ArcelorMittal.
(Courtesy Rediff)

As you are most likely aware, the policies that led to the private leasing of the Iron and Steel Company in 1989, which was later sold to Mittal at a cost of TT$70 million under the National Alliance for Reconstruction and continued under the PNM during the 1990s—less than 500 percent the cost of its assets at the time, which it recouped in less than a year.

The deal that was struck to ensure the company stayed in Trinidad gave it concessions in terms of tax breaks, significantly lower electricity costs, and other indirect subsidies provided by the state.

To a certain extent, I understand the diplomatic position so far taken, that does not take the company by its horns, because of global rules and other ‘unknowns.’ But perhaps there needs to be a fairer and more open levelling with the public on this deal.

And perhaps we need to consider action to recoup the cost of all the hidden benefits the company has enjoyed over the past two and a half decades from lax policies.

Let us also go back to the global financial crisis of 2008 which gripped the world, and led to the failure of many global corporations.

Photo: The economic rainy day is here. And it's a bad one. (Copyright UK Telegraph)
Photo: The economic rainy day is here. And it’s a bad one.
(Copyright UK Telegraph)

Many learned analysts that have weighed in on this matter concluded that the lack of regulation of financial interests and the free flowing ability of global capital are what led to the failure of these banks all over the world. The subsequent action taken by the US government that led to its quick recovery was more government investment, not less.

We also saw the effects of this crisis at home. It was less government regulation and more help for corporations in the CLICO affair that caused its failure, where to date an estimated TT$25 to 30 billion has been spent.

In this case, the company was allowed to make all sorts of risky, high-return investments due to little or no regulation and silent support from government over many years. It was more government that saved depositors their monies and not less.

In T&T, we do know that there have been many government projects that have led to little social return but fed the egos of past leaders.

Photo: Former Trinidad and Tobago Prime Ministers Basdeo Panday (left) and Patrick Manning have a chat at a Presentation College reunion. (Copyright Taran Rampersad/Flckr)
Photo: Former Trinidad and Tobago Prime Ministers Basdeo Panday (left) and Patrick Manning have a chat at a Presentation College reunion.
(Copyright Taran Rampersad/Flckr)

However, that is a separate matter from turning a blind eye to better regulation that protect workers and their families, and public investment—especially in areas such as education, healthcare, and industrial sphere—that have led to successes like the National Gas Company, Unit Trust Corporation, and many other state investments in Point Lisas.

Dealing with the challenges before us require a smart and inclusive approach that has people’s needs at the centre, especially the poorest and most vulnerable.

The State must act as an arbiter for people and not only express this and provide reassurance but meaningfully ensure that they are not exploited, with additional regulation if necessary, especially since current regimes are ineffective.

The present approach seems out of touch with these concerns and lacks compassion and empathy. It is what led to the NAR’s electoral defeat in 1991, and its complete decimation from the political landscape in T&T.

Perhaps it is still early days yet before you establish your own leadership imprint on the society of Trinidad and Tobago, but I daresay it is not yet too early to think about the legacy you wish to leave for future generations.

Photo: Prime Minister Dr Keith Rowley. (Copyright News.Gov.TT)
Photo: Prime Minister Dr Keith Rowley.
(Copyright News.Gov.TT)

It may be difficult to think about this now, given the immediate financial burdens and economic constraints that befall our beloved country. But it may help to think in this long-term way to guide the actions of state that stay true to the philosophical beginnings of the PNM and its world renowned forefather.

Yours truly,

Keston K. Perry.

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  1. The Chamber reminded us that there are lots of companies that have been looking for staff for the longest while. It will be up to the persons who want to work to go out and apply. When those jobs are filled we will have a better idea of our employment status.

  2. IMF Article IV statement was published today:

    “With substantial financial buffers and low, albeit rising levels of public debt, Trinidad and Tobago is not in a crisis. Nonetheless, in recent years, taking into account the size of energy revenue windfalls, the country has under-saved and under-invested in its future. As a consequence, the imbalances that are now starting to build up could lead the country to uncomfortable levels of debt and external financial cushions absent further action.”

    • I’ve read it and my professional opinion says it’s propaganda. What economy which is not in crisis has a cash flow shortage, is unable to fulfil its bills, cannot pay civil servants their full salaries for months now and retrenches upward of 5000 persons in a few months? The government has even admitted there is a cash problem. Iraq, Venezuela, Russia and Nigeria in crisis – all oil economies and we are standing out as an angel of the night. Please.

    • There’s a difference between having to cut back and being broke. It’s pretty simple. We have to cut back. We aren’t broke.

    • I never said anything about broke. If things were rosy there would be no need for cuts.

    • The statement never said things were rosy.

    • Keston K. Perry, so they made an error in a country on the other side of the planet 5 years ago. I didn’t say they were infallible.

      The PM was saying on TV last night that we were not out of money but we had to cut spending because we were borrowing too much and the future was uncertain. I don’t see why you find this so unreasonable.

    • Oh and concerning the countries you named. Two of them (Iraq and Russia) are at war. One of them (Venezuela) has been spending money at insane rates for over a decade and has shortages of food and toilet paper. I don’t really know anything about Nigeria so I will defer to you there. But Mexico is not in crisis. Norway either. Or Iran. So we are not the only “angel of the night” as you put it.

    • Dan Ethan Martineau if you READ a little you’ll see that ‘austerity’ in the article means cutting spending? This is not the only country it has got it wrong. It’s probably the most recent and only Western European country where it has admitted error of judgment but for many African and Eastern European countries it’s normal to have been victim to IMF error. So what is the point of this discussion? To prove something the PM said? Or the IMF said? I’m not dogmatic. I just think it is false sense of hope when many local economists have suggested we’re in dire straits and people like myself who have been researching for the past 3 years what’s happening in T&T say that we can’t set ourselves up. Any positive outlook is misguided. Bless and good night!

    • Keston K. Perry, I don’t think anybody is creating a “false sense of hope”. They are saying that there is no need for a false sense of doom. There is a world of difference between the two.

      The government needs to stabilise its finances before it can try to boost aggregate demand. Right now they don’t even know what they owe, if the PM’s statement is true.

      I read the article. It’s really not necessary for you to imply otherwise. In fact I’ve read that article before. I’ve been following the Greek situation closely since it started. Greece’s best bet is to leave the Euro. Just like ours is to devalue massively. But politics intervenes. At any rate, the sky is not falling. We overspent in the good times and now we can’t continue to live that way. Calling “not in crisis but the economy has problems which could become serious” a “positive outlook” is really a gross exaggeration.

  3. Yep. I anticipate increased crime, social unrest and demonstrations before year’s end. Could we manage 2 to 3 years of this?

  4. It is scary the growing number of people on the breadline. It is bound to affect our society sooner or later. And it won’t be pretty.

  5. I’m thinking about writing a post-script re the IMF release. Nowhere does it mention the thousands of people now on the breadline. Rather it sees it as collateral damage for the better efficiency of the labour market. It’s ideological propaganda at its best.

    • not just ideological.
      I see it as a bit interesting “imf” put that statement out after pr stints. I would like to know the name, location and circumference of that “imf”. and how they define crisis. but it is all very telling. those retrenchments and unemployments appear to be collateral for the pm as well > to hear his several months old responses to spurring the economy have zero nothing to do with regular working people. who among those going and build hdc houses? i forget his other lame examples

    • The Imf did a poor job with that report. You have to wonder who they spoke to and what data were they given. Their estimates seems very conservative. They said something on the foreign exchange which to me amounted to nothing as they did not say what they found.Our major problem is the availability of foreign exchange. Wirhout foreign exchange to purcchase goods several businesses will close which will lead to higher unemployment and contraction of the economy. A 1%estimate given is very conservative in my opinion.

  6. Strong words here – “The present approach seems out of touch with these concerns and lacks compassion and empathy. It is what led to the NAR’s electoral defeat in 1991, and its complete decimation from the political landscape in T&T.”

  7. what economic crisis? “IMF” . smh.
    do we see schemes and plays when they appear?

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