Vanus James

Let us be clear. The coun­try has en­tered Kam­la II’s reign in 2025 with a bad eco­nom­ic and po­lit­i­cal hand – a los­ing hand based on the his­tor­i­cal record.

The con­sti­tu­tion ul­ti­mate­ly says that the prime min­is­ter is re­spon­si­ble to play the hand, but so far, no prime min­is­ter has suc­ceed­ed. It is al­so worth not­ing that no To­ba­go House As­sem­bly (THA) chair­man or chief sec­re­tary has de­liv­ered suc­cess in To­ba­go ei­ther.

What­ev­er the ob­fus­ca­tions of the con­sti­tu­tion or the THA Act, it is in fact the col­lec­tive re­spon­si­bil­i­ty of cit­i­zens to work out why we are fail­ing and the way for­ward. So, let us take a shot.

First, the in­her­i­tance. T&T is still run­ning what Best called an al­most pure plan­ta­tion econ­o­my, fea­tur­ing ex­ces­sive de­pen­dence on a high­ly cap­i­talised oil and gas in­dus­try that is op­er­at­ed by in­ter­na­tion­al cor­po­ra­tions. It pro­duces and ex­ports a pri­ma­ry or in­ter­me­di­ate prod­uct that main­ly ser­vices in­ter­na­tion­al in­ter­me­di­ate con­sump­tion. Every Mon­day morn­ing, it is buf­fet­ed by ei­ther sharp price in­creas­es that cre­ate a “gold­en age” ac­com­pa­nied by a false sense of suc­cess or a col­lapse of prices that pro­duce “gall and worm­wood,” an­oth­er term Best used to de­scribe se­ri­ous so­cial and eco­nom­ic trou­ble.

Even the Her­itage and Sta­bil­i­sa­tion Fund fund­ed by oil sur­plus­es in good times is not suf­fi­cient in­sur­ance against that kind and scale of tur­moil.

The his­tor­i­cal record is full of sim­i­lar eco­nom­ic and so­cial gy­ra­tions and dis­rup­tions caused by de­pen­dence on sug­ar, co­coa and co­conut, to name a few plan­ta­tion in­dus­tries.

Sec­ond, in the rest of the econ­o­my there are still large pools of un­der­e­d­u­cat­ed and, more gen­er­al­ly, un­der­cap­i­talised work­ers in ac­tiv­i­ties such as agri­cul­ture, re­tail, and “make work” gov­ern­ment pro­grammes, like CEPEP, URP and oth­ers.

Over­all, about 60 per cent of the coun­try’s labour force is un­der­e­d­u­cat­ed and un­der­cap­i­talised. In To­ba­go, that un­der­e­d­u­ca­tion rate is clos­er to 68 per cent and most are un­der­em­ployed by the Gov­ern­ment sec­tor. In all these ac­tiv­i­ties labour ef­fi­cien­cy, when prop­er­ly mea­sured, is very low.

Our most fa­mous Pro­fes­sor of Eco­nom­ics, Arthur Lewis, de­scribed that in­ef­fi­cien­cy as a “mar­gin­al prod­uct of labour that is near ze­ro and some­times even neg­a­tive”.

These con­di­tions make eco­nom­ic trans­for­ma­tion away from oil and gas both nec­es­sary and dif­fi­cult, but they al­so point the way for­ward.

Two ba­sic prin­ci­ples

Now, there are three ba­sic prin­ci­ples of eco­nom­ic trans­for­ma­tion and de­vel­op­ment that emerge from the life’s work of the two es­teemed pro­fes­sors re­ferred to above.

The first ba­sic prin­ci­ple is that we must find a way to grow ac­tiv­i­ties that pro­duce cap­i­tal – out­put used to pro­duce out­put - faster than the ac­tiv­i­ties that pro­duce con­sumer sup­plies.

And, we must grow labour pro­duc­tiv­i­ty in the con­sumer sup­ply ac­tiv­i­ties while re­struc­tur­ing.

For easy ref­er­ence, cap­i­tal-pro­duc­ing ac­tiv­i­ties re­fer here to those that pro­duce ed­u­ca­tion, health­care, fi­nan­cial ser­vices, cre­ative out­put (like the Car­ni­val in­dus­tries), hous­ing stock, phys­i­cal and dig­i­tal in­fra­struc­ture and the like.

The sec­ond ba­sic prin­ci­ple is that we must in­creas­ing­ly ra­tio­nalise our in­ter­na­tion­al trade to­wards in­creas­ing ex­ploita­tion of the coun­try’s struc­ture of com­par­a­tive ad­van­tage. Struc­ture, be­cause ul­ti­mate­ly, what is at is­sue is the abil­i­ty of the coun­try to un­der­take many ac­tiv­i­ties and so pro­duce types of out­put much more ef­fi­cient­ly than oth­ers.

In par­tic­u­lar, leav­ing aside oil and gas as in­her­i­tance, we can pro­duce the cap­i­tal ser­vices men­tioned above much more ef­fi­cient­ly than the con­sumer sup­plies, so we must shift our trade in­creas­ing to­wards those.

In fact, there is an or­der­ing of ef­fi­cien­cy of the prod­ucts which is in­formed by the in­ten­si­ty of use of high lev­els of knowl­edge, skills, and self-con­fi­dence used to pro­duce them, the high rate at which val­ue is added, and the reg­u­lar­i­ty of in­no­va­tion and cre­ativ­i­ty dur­ing pro­duc­tion.

The or­der­ing runs from ter­tiary ed­u­ca­tion, health­care and fi­nan­cial ser­vices, through the cre­ative in­dus­tries to the ser­vices of as­so­ci­at­ed plant and ac­com­mo­da­tion fa­cil­i­ties, on to tourism which pro­vides a plat­form for ex­port­ing the oth­er ser­vices. At the low end of the or­der­ing are man­u­fac­tured con­sumer sup­plies.

The or­der­ing is re­in­forced by the fact that as lo­cal and glob­al in­comes grow, an in­creas­ing share of it is spent on the high­ly ranked prod­ucts. In­no­va­tion and cre­ativ­i­ty cause some in­dus­tries to jump the queue; in our case, the cre­ative in­dus­tries would up­set the or­der, jump­ing the line from time to time.

In prac­tice, we have cor­nered our­selves near to or at the bot­tom of this list but there is room at the top. And, from the avail­able ev­i­dence, there are coun­tries right here in the Caribbean that are suc­cess­ful­ly ex­ploit­ing that room.

St Kitts/Nevis is mov­ing in­creas­ing­ly in­to the pro­duc­tion and ex­port of ter­tiary ed­u­ca­tion to com­ple­ment their beach tourism in­dus­try. The Ba­hamas has been mov­ing in­to fi­nan­cial ser­vices to un­der­write their long-stary tourism prod­uct. Both Cay­man and Bermu­da have found a way to pen­e­trate the glob­al fi­nan­cial ser­vices in­dus­try and op­er­ate as lead­ers in it, al­beit with British cov­er. All four cas­es are achiev­ing growth with de­vel­op­ment and with­out the in­sta­bil­i­ty ex­pe­ri­enced by T&T which can on­ly grow with­out de­vel­op­ment. If we fol­low their lead, the econ­o­my could be put on a path to growth with de­vel­op­ment in un­der 50 years.

Lewis point­ed out that cap­i­tal pro­duc­tion by Caribbean coun­tries makes com­mon­sense as well as eco­nom­ic sense. It is not wise for a peo­ple to spend scarce for­eign ex­change on im­port­ing stuff it can pro­duce ef­fi­cient­ly, even if with in­ter­na­tion­al help, and it makes sense to ex­port some of what is pro­duced as a source of for­eign ex­change.

A key clue here is that the gains from re­struc­tur­ing out­put and trade are ris­ing wages and ris­ing prof­its and prof­it rates. Ris­ing prof­its and prof­it rates can at­tract in­ter­na­tion­al prof­it-seek­ing risk-fi­nance and for­eign di­rect in­vest­ment, so we need not think of do­ing this alone. It is pos­si­ble to at­tract in­ter­na­tion­al col­lab­o­ra­tion to un­der­take the trans­for­ma­tion. What is more, a care­ful look at the his­tor­i­cal record will re­veal that no coun­try has made the trans­for­ma­tion with­out in­ter­na­tion­al col­lab­o­ra­tion main­ly achieved through cap­i­tal and skill in­flows; not Ba­hamas, or Cay­man, or Chi­na, not Japan, to cite just a few. Even so, we must be clever when go­ing about all this.

By and large, this is the agen­da of eco­nom­ic trans­for­ma­tion that must be un­der­stood and em­braced by Trinidad, by To­ba­go, and by Trinidad and To­ba­go, and es­pe­cial­ly by the new gov­ern­ment of Kam­la II.

The crit­i­cal third prin­ci­ple

Fail­ure to un­der­stand these is­sues has pro­duced ex­ces­sive de­pen­dence on oil and gas (be­fore that sug­ar), and sys­tem­at­ic fail­ure to pur­sue a rel­e­vant de­vel­op­ment agen­da over sev­en decades. That fail­ure rests on un­der-ap­pre­ci­a­tion of the crit­i­cal sig­nif­i­cance of the third prin­ci­ple of trans­for­ma­tion­al growth ar­tic­u­lat­ed in dif­fer­ent ways by both Lewis and Best – the need for sound and well-in­formed fa­cil­i­tat­ing pub­lic poli­cies.

When run­ning an un­der­cap­i­talised econ­o­my, mar­kets can­not be left alone to pro­duce the re­struc­tur­ing of out­put and trade need­ed to solve ex­ist­ing prob­lems. There are too many bar­ri­ers and bot­tle­necks to al­low the mar­kets to do the job of mov­ing re­sources around, all root­ed in cap­i­tal sup­ply short­ages.

For ex­am­ple, a straight­for­ward mat­ter like the lack of avail­abil­i­ty of cred­it at suit­ably low cost could block the ini­tia­tives of en­tre­pre­neurs in the cre­ative in­dus­tries. The same ap­plies to phys­i­cal and dig­i­tal in­fra­struc­ture.

Sound poli­cies and in­ter­ven­tions of ac­tive gov­ern­ment are need­ed to mo­ti­vate and fa­cil­i­tate the move­ment of lo­cal and in­ter­na­tion­al cap­i­tal with knowl­edge­able and skilled work­ers in­to the right in­dus­tries.

Ac­tive gov­ern­ment it­self may al­so have to be en­tre­pre­neur­ial, even if that is un­like­ly to be suc­cess­ful at the lev­el of the Cab­i­net in Trinidad or the Ex­ec­u­tive Coun­cil in To­ba­go. More like­ly, com­mu­ni­ties will have to be lib­er­at­ed and em­pow­ered.

Sound poli­cies re­quire an ad­e­quate flow of da­ta, in­for­ma­tion and knowl­edge to de­ci­sion­mak­ers and law­mak­ers along­side rapid learn­ing on the job.

Da­ta, in­for­ma­tion, knowl­edge and fast learn­ing are like the fu­els on which an econ­o­my and so­ci­ety runs.

So, a huge prob­lem con­fronting the coun­try is that the cur­rent con­sti­tu­tion­al arrange­ments in Trinidad and in To­ba­go amount to sys­tem­at­ic bar­ri­ers to the nec­es­sary flows.

T&T has his­tor­i­cal­ly run a con­sti­tu­tion­al­ly man­dat­ed ex­ec­u­tive Gov­ern­ment. Cab­i­net has run the coun­try un­der var­i­ous in­car­na­tions of the cur­rent Sec­tion 75(1) with no arrange­ments for leg­isla­tive over­sight and thus in­ad­e­quate arrange­ments for rou­tine and sys­tem­at­ic da­ta, in­for­ma­tion and knowl­edge shar­ing and com­mu­ni­ca­tion. The pub­lic ser­vice is a use­ful but very in­ad­e­quate de­vice for this pur­pose.

Sec­tion 34 of the THA Act #40, 1996, pro­vides sim­i­lar­ly for au­thor­i­tar­i­an Ex­ec­u­tive Coun­cil rule in To­ba­go.

The re­sult of this de­sign was cor­rect­ly char­ac­ter­ized by Gyp­sy dur­ing the reign of ANR: “Cap­tain you tell we what to do” even if you do not re­al­ly know the state of the ship and that it is sink­ing.

Over the past 69 years, these arrange­ments have pro­duced a se­quence of gov­ern­ments that have all failed and have all left of­fice un­der cri­sis and cloudy con­di­tions – all have failed to ad­dress ei­ther the con­sti­tu­tion­al or eco­nom­ic im­per­a­tives of the coun­try’s de­vel­op­ment.

The ev­i­dence is there for all to see. The dark clouds of en­er­gy price col­lapse and re­lat­ed bud­get crises have re­curred in 5 or 10 year cy­cles, de­pend­ing on how you count. The his­to­ry of To­ba­go is broad­ly sim­i­lar, with sim­i­lar caus­es and a track record of chron­ic de­pen­dence on Trinidad.

A word to the wise

This his­tor­i­cal record is a warn­ing to KPB and the coun­try that she has again in­her­it­ed “a los­ing hand,” as pok­er play­ers would say. She has in­her­it­ed con­di­tions that are eeri­ly sim­i­lar to those in­her­it­ed by ANR in 1986.

Mid-term bud­getary re­views are on us, and the specter of au­thor­i­tar­i­an re­spon­si­bil­i­ty looms large for KPB. She can­not fold and she can­not win un­less she buys new cards.

Her on­ly path to suc­cess is to learn from the past and move im­me­di­ate­ly to ini­ti­ate ac­tion to ad­dress both sources of re­peat­ed fail­ure:

(i) leg­isla­tive­ly man­dat­ed arrange­ments for ef­fec­tive da­ta, in­for­ma­tion and knowl­edge shar­ing and com­mu­ni­ca­tion with all stake­hold­ers; and

(ii) leg­isla­tive­ly man­dat­ed ini­tia­tives to push to­wards eco­nom­ic re­struc­tur­ing and trade in ac­cor­dance with the struc­ture of com­par­a­tive ad­van­tage.

It is on­ly in that con­text that the coun­try can work out sen­si­ble and po­lit­i­cal­ly fea­si­ble risks and ap­proach­es to mid-term bud­get­ing and the up­com­ing 2026 bud­get. On­ly in that con­text can the so­ci­ety dis­ci­pline stake­hold­er in­stincts to pur­sue self-in­ter­est and want more with­out re­gard to af­ford­abil­i­ty. That path is very nar­row and mined with an au­thor­i­tar­i­an cul­ture, so walk­ing it re­quires ap­pro­pri­ate pol­i­tics on the part of KPB and the stake­hold­ers of the coun­try.

We know what is to be done but whether we can grap­ple with the chal­lenges of au­thor­i­tar­i­an­ism while try­ing to do it is quite an­oth­er mat­ter that re­quires clever de­vices of na­tion­al dis­course and give and take.