Opinion
- Editorial- Commentary
Dr
Morgan Job:
What
US $100/barrel oil may do to our economy?
US$100/barrel oil is great news for thousands in this
land of obeah and profound anti-intellectualism. For
them the future is a utopian place where Trinidad is
a nice, pleasant paradise. But near 10 per cent inflation
must mean pauperisation of hundreds of thousands already
poor, the wretched of this blood blighted earth, part
baracoon society playing developed country. TT is already
a developed country where fried chicken for breakfast
will kill thousands at developed country rates with
heart attacks, strokes and cancer, and ghetto gangs
replicate the social pathology of France's banlieu,
or the human dumps of ghetto USA.
Analysis of the impacts of high energy rents must
require the use of positive economics, which is distinct
from discussing the merits of what Mr. Patrick Manning
aught to do as implementing economic policy. Prediction
is not prophecy, but economic theory makes predictions
about TT's economy that subvert the sanguine prophesies
of Mr. Manning and his cabinet of economic neophytes.
"At least 60 per cent of those wanting a home
cannot afford the down payment," said Mr. Fifi,
CEO of HCL, (Morning Edition, TV6, 09-01-08). Billions
of US dollars converted to
TT
dollars and dumped on grateful traders, contractors
and connected citizens has not transformed this place
into a source of quality goods or services the world
wants that are not methanol, LNG, urea, or ammonia,
while for hundreds of thousands life in TT paradise
will increasingly be cruel, an unremitting struggle
to feed and protect life and limb.
Developed countries have developed minds, institutions
and a culture that sustains meritocracy, while our
cornucopia of wealth promotes mediocrity, incompetence,
crudeness, institutional failure, and the political
exploitation of racist prejudice as Indian or African
pride.
The non-oil sector deficit is now at least 15 per
cent of GDP, and growing, which means only the rents
from energy drives the economy. There is nothing in
the fact of US$100/ per barrel oil that necessarily
reverses this trend or its ineluctable consequences.
The massive devaluation of the TT US dollar assets
in the Revenue Stabilisation Fund in terms of purchasing
goods from Europe or Japan will not stop because gas
prices are at an all-time high. Secondary schools will
not stop inducting 10,000 illiterates into Form 1 every
year because the Government spends more billions on
education. About 90 per cent of the killers who slaughter
with impunity will not be put out of business because
TT earns more billions from exporting LNG.
These facts must beg the question: what is development
in TT, or what is developed country status? Globalisation
and the technologies that sustain it have no regard
for the obscurantist racist ranting of politicians
in Parliament, or the coded mobilisation of fear, or
nurturing of sinister prejudices and bogus identities
animating parties connected to fantastic ideas of Africa,
or India. Globalisation creates opportunities: as computer
programmers in the US and Europe who have lost jobs
to Indians have learnt. Indians have mastered mathematics
and physics that most UWI graduates shun or are ignorant
of. The world economy has no use for most of the graduates
of our secondary schools, and many UWI graduates. Merely
selling energy at record prices will not make our teachers
productive, or reduce the non-oil sector deficit.
Economic growth is happening in the criminal economy
of TT associated with licit economy growth fueled by
the energy sector. Citizens must focus on this correlation.
We must focus on productivity. We must focus on institutional
culture that incites rent seeking behavior, low productivity
and manifestations of the free rider problem, or the
tragedy of the commons, not entrepreneurship. Wealth
creation in Europe and North America, Japan, Singapore
or Korea is a manifestation of learning from millennia
of strife and struggle that state promotion of mediocrity
is rewarded by collective suicide: such leadership
in old times were captured or killed. They lost the
war because their institutions were not competitive.
High energy prices must incite a debate about the
meaning of development, distinct from political drivelling
about spending billions, mostly wastefully; and the
discussion must be about the impact of Globalisation
on our anti-intellectual society led by the political
ideas of attack calypsonians devoted to articulating
the sinister impulses lurking in blind prejudices and
radio talk show hosts preaching vulgar race pride from
dawn to dusk daily. Development is also about how populist
ideas get transformed into policy by politicians, and
the consequences or welfare effects of implementing
a particular policy.
Russia was transformed from a communist state to a
criminal state because the IMF failed to understand
the lessons of a thousand years of European history.
The IMF dumped billions on Russia where banks never
functioned to ration credit. KGB operatives and communist
party apparatchiks took the money and banked it in
the West leaving most Russians pauperized and controlled
by gangsters: the new politics of post communism, which
was the fate of most African failed states whose leaders
looted their mines and parked the billions in European
banks. Globalisation increased the power and wealth
of criminals in politics across the globe. Haiti, Mexico,
Venezuela, Peru, and Colombia are only a few examples
of the denouement with destiny as a narco state that
is an option for TT if we do not resolutely understand
crime as an economic problem or crime as economics
and how massive oil wealth can accelerate our descent
into decadence. Asymmetrical information and moral
hazard are necessary ingredients in the advantages
of the new nexus of crime and politics in the new world
of globalisation. Criminals do have better information
on their business than the Government. They usually
have superior technology and global contacts.
TT's future has to be determined by leaders that are
thinkers less driven by manipulating populist prejudices
or racist fear. Leaders in all estates must articulate
the alternative policies and their welfare effects
and costs. Leaders must act on the perverse incentives
oil wealth creates, not only on the opportunities to
build buildings, or social safety traps or raise wages,
incomes and increase inequality.
Development
is about life, all spheres of existence. US$100/
barrel oil must remind us about the last oil
boom. It must remind us of the Yankee invasion during
World War II and the bust that followed the boom. It
must tell us that expectation of a catastrophic fall
in energy prices may not be the thing to fear or as
damaging as the consequences of inflation and the ineluctable
fall in real income of the poor. It must remind us
to study William Demas' Imperatives of Adjustment done
with the collaboration of Eric St Cyr, Euric Bobb and
others. High incomes unrelated to productivity growth
characterised former booms. Inflation at eight per
cent and increasing is devastating to most TT people.
We must listen to the Governor of the Central Bank.
We must change our picaroon anti-intellectual culture
or as Isaaiah warned us: "Without vision the people
perish," whatever the price of oil and gas.
The
word is "denouement" as in "denouement
with destiny above".
Dr
Morgan Job was
a university economics lecturer and a former Minister
in the Ministry of Finance (mrganjob@gmail.com). Petroleumworld
does not necessarily share these views.
This
commentary was originally published by Trinidad Express,
on 01/17/2007. Petroleumworld reprint this article
in the interest of our readers. Petroleumworld does
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Petroleumworld
News 01/20/08
Copyright© 2008
Reynold Benjamin. All rights reserved.
