What about a budget to create wealth?
By Dr. Winford James
October 09, 2005
Posted: October 22, 2005
Quick, tell me: What is there in the budget to create wealth for the country? More disposable income in people's accounts? Is that it? No ideas for the diversification of the economy? No ideas about how people can move from saving to wealth creation? If you experience a golden bubble in a context where you have been traditionally heavily dependent on imported goods, services, and technologies, and where your bill for imported food is a giant millstone around your neck, won't you seek to make that gold bring in serious income for you before the bubble bursts? Why then is the budget for fiscal 2006 devoid of ideas and initiatives for wealth creation?
And why is the response of the opposition equally devoid of such ideas and initiatives?
With $34 billion, you would expect a government to do far more than leaving people with more spending money. You would expect the government to explore ideas about how to move people from the status of state-dependent employees and exclusive consumers to the status of business owners, operators, and entrepreneurs. You would expect them to pursue a discourse that vigorously rearticulates the conditions and resources that are currently available for, and facilitative of, business ventures, and that proposes new conditions and resources. You would expect the discourse to present such an articulation against a background in which the acquiescent economy we have running in this part of the world was profiled in such a way as to show that we are far too dependent on adopted technologies and innovations, that far too many of us are out of the serious wealth creation loop, and that there is an urgent need to develop and commercialise our local knowledge in the various shapes and forms that it comes in. You would expect serious practical proposals about how people who have been far too long out of the loop could use the extra income they were being given to enrich themselves, whether in individualized or collectivized enterprises.
Instead, what you had, apart from the expected pacific allocations to crime fighting and those allocations that would sustain the status quo, was the largesse of more disposable income unsupported by any ideological or operational machinery. And even that largesse is suspect.
There is no doubt that more money in one's hands is better than less money or the same amount, and some of the budgetary measures will indeed put more money in many people's hands. So, removing thousands from under the tax burden, reducing the income tax margin to 24 per cent across the board, regaling us with a personal allowance of $60,000 (an increase of $35,000), and returning the country to the situation of free tertiary education - all of this will make more money available. But if you also take away the allowances for alimony, annuities, mortgage interest, and savings in credit unions, many people are going to end up either having less than they had before or having just a mite more. It is when they do the nitty-gritty calculations that their eyes will be opened. And to compound matters, they will be none the wiser about why certain benefits were removed and others created.
(Why, for instance, were the credit union and insurance benefits removed?)
But even allowing that more people will be net winners rather than losers, our history tells us that they consume the increase in income far more than they invest it, sustaining their poverty and fuelling inflation. Knowing that history and knowing also that more and more people are buying everything they need from supermarket and store shelves (moving away from growing their own food and making their own clothes, for example), the government should have realized the importance of engaging the population, especially those outside the wealth creation loop, with a body of ideas that would help them optimize the use of the increase in income.
It is this omission that makes me fret most about the budget. There is this intellectual laziness in it, inspired in part by the golden windfall and in part by notorious PNM fixation with the short term, that almost makes me despair. There is as well this philosophical stasis, mostly supported by racial / ethnic voting, that absolutely alienates me. Why, for example, as the economist Eric St Cyr has pointed out, can't the government see that local knowledge in the form of music (which, by the way, is a multi-billion-dollar industry worldwide!) is an area that promises to generate great wealth and should therefore receive a strong investment focus?
But even more worrying and alienating is the prospect that the alternative government will not do better as their off-the-mark budget responses so amply demonstrated.