Where will it all end, Mr Pilgrim et al?
We would like to get into the head of the General Secretary of the ruling Democratic Labour Party, George Pilgrim, to try to figure out what exactly was he thinking yesterday when he treated the printing of money as if it were merely an everyday pleasurable exercise. What was he trying to achieve when he flippantly dismissed those who warn of the dangers of such a practice?
Come to think of it, the printing of money to pay wages and finance Government programmes might indeed be an everyday exercise for this administration. But it is more difficult to figure out how it could possibly end up being pleasurable for the country, based on the advice of most of the best economists we have.
We say most because yesterday Dr Don Marshall said “most of the commentators who have been speaking about the deleterious impact that printing of money can have, actually overstated the argument about it putting pressure on the currency peg”.
We would like to get into his head as well, to try to find out what it is that he knows that other economists, including the now fired Central Bank Governor Dr DeLisle Worrell, do not know? Why is it that everyone but him is marching out of step?
Right now it is Mr Pilgrim who must rationalize meaningfully, what the DLP is trying to do to fix the moribund economy, and why he felt the need to diminish the potential impact of something as serious as the seemingly endless printing of money.
Mr Pilgrim told reporters at a press conference at the DLP headquarters the policy was necessary in order to make up the shortfall in reduced revenues so public officers could be paid. His reasoning?
“Corporation taxes declined mainly from the offshore sector since 2009 by $200 million per year, transfers are up by only $50 million over the period we were in office [nine years]. Commercial banks are not buying Government paper, which helps create the shortfall, hence the Central Bank picks up the slack, hence printing of money.”
This defies analysis and cannot possibly be routed in time.
What the leading party official needed to announce to Barbadians were concrete and workable measures to bring the intake from corporate taxes up again; and to create confidence among the commercial banks so they feel assured enough to buy Government paper again.
But Mr Pilgrim was not finished. He argued that money was being printed to ensure this country’s “fabric” and its people were secured, while insisting that Government has bills to pay.
“Salaries and wages of public servants translate to families and homes surviving in this society and why should this party apologize for keeping public servants in jobs,” the general secretary added.
Again, this defies analysis.
But we have questions. How long does Mr Pilgrim suggest the printing of money should continue? How much more must be printed? Where will Government stop? Will it ever stop? Can it stop now that it is now so deep into the printer?
It has been over a year now since the administration has been telling us that the economy is turning the corner, that the homegrown austerity measures were working, that all would be well.
But the environment around the never ending corner is stifling, the home has lost its foundation and the medicine feels a lot like venom without an antidote, as the administration struggles to establish any credible reputation for economic competence.
But don’t tell Mr Pilgrim or top DLP officials, including those who must face the electorate whenever Prime Minister Freundel Stuart decides to ring the bell.
They go about describing those who complain as peddlers of doom and pushers of fear; they speak confidently of winning a third term on the shoulders of long promised projects such as the Hyatt and Wyndham hotels and they ignore the warnings from those in the know, such as former Prime Minister Owen Arthur and their own Dr David Estwick, who has been telling the administration since 2014 that the printing of money was not sustainable.
There was also Dr Worrell, who was fired today at the end of a tumultuous few days, which included a public row with Minister of Finance Chris Sinckler.
After seemingly being a willing complyer all these years, Dr Worrell warned last month the printing of money had to stop because it placed the Barbados dollar at risk of devaluation.
This put him at odds with Mr Sinckler and would have contributed to his firing.
Why, then, must this administration continue the practice? Virtually every economist, and business leader, has said decisive action is needed and that whatever measures are taken will be painful.
Heaven knows we have suffered enough economic pain over the past eight years or so and we cannot be sure how much more Barbadians can bear.
However, the DLP Government must come up with a credible programme to reduce the deficit, bring down its debt, shore up the foreign reserves and get the engine of growth working again.
It may already be too late to save the administration, but Government cannot pretend that the printing of money is not a problem. And it certainly cannot believe it won’t be a problem politically. Failure is likely to be costly. To think otherwise is to leave us wondering what is in their heads.