PRODUCTIVITY PROBLEM FACING COUNTRY
Wednesday, February 10th, 2010DENIS KELLMAN’S COLUMN – THE DEBATE
JUNE 21, 2007
Small developing countries have over the years have seen expansion of capital and disposable income of workers as negatives. This approach, even though appreciated prior to Globalization, should have been drastically restructured.
The Democratic Labour Party, the Private Sector and the Union need to be congratulated for their foresight in the nineties in negotiating the Income and Prices Protocol which was a policy to deal with Globalization. This together with the initiation of plans to shift from direct to indirect taxation was a master stroke that the Sandiford Administration should have been praised for, instead of being punished.
The shift to indirect taxation should have allowed Government, the Private Sector and the workers to have an arrangement amicable to all. Instead, we saw a situation where Government and the Private Sector doubling their intake and workers lagging far behind.
This resulted in a situation where the two sectors that had to depend on the third, causing it to suffocate. This stifled their ability to attain genuine growth in the traded sectors where workers production was affected by the frustration created by the other two, who did not understand the effect of frustration on workers production.
The restructuring of the economy should have continued as planned and workers and the private sector should not have been complaining about high taxation and inflation. Those of us who have had a long time studying the economy and offered our opinions should not have been ignored.
What we have seen over the years was an attack on workers as far back as the eighties which saw workers being replaced from the production line and placed before the television to absorb soap operas and being compensated by unemployment benefits. This has seen the Bajan worker, who was very productive and built Barbados, indoctrinated to a culture to protect unemployment statistics.
The Government needs to understand that in order for the Bajan workers to regain their productive advantage, that an intervention from Government is needed. The productivity problem facing this country can squarely be placed on the shoulders of the unions and the Government of Barbados. They cannot escape the blame because I have done everything possible to demonstrate to them that they were going in the wrong direction. Instead of listening, they set about to make disparaging remarks about my ability to offer advice.
I have been blessed to be able to speak about many things based on theory and practice. These persons who are so caught up in their theoretical approaches have no room for persons who are complete and do not want to be one sided.
It is known by some that I do not carry strong opinions on anything unless I have convinced myself. Advice offered should be accepted because it has been carefully vetted.
There was a time when direct taxation was the key and this was when we depended on wages and profits. The economy of Barbados has shifted in its intake and direct taxation is not progressive anymore, but very much regressive.
It was very refreshing to hear an economist that previously called Kellmanomics foolishness espousing it as if it were now the accepted economic theory of his profession. A couple weeks ago, I wrote that I was told that Kellmanomics would allow the rich to create capital flight. What the economist did not realize was that our largest and most productive companies were being absorbed externally. These persons are more interested in protecting foreign investment than protecting the jobs of locals.
Those archaic taxation policies are the result of productive businesses on the West Coast shifting from creating profits to capital gains that are one-off instead of creating recurring profits. These persons seem not to understand that the easiest way for capital flight is through the sale of property. These decisions do not benefit Government or workers. It creates short term gains for the former owners but removes and depletes the productive sectors.
Globalization has seen mergers and technological changes impacting negatively on employment. These comments seem strange at a time Government is reporting low unemployment figures. What has been overlooked is the fact that unemployment is only a statistic. It takes three inputs to calculate the statistics and if you know two, you can calculate the third. It is for this reason that if you want the true price of cooked meat, you have to weigh it.
A careful analysis of the employment statistic will demonstrate a significant decline in the base, and not an increase in the employed statistics. This point should also be an indicator to Government that direct taxation is not as dependable as indirect and that it is now becoming anti-productive at a time when the country needs to increase production.
Before direct taxation was a sure source of revenue in time of crisis, but now that we have VAT the shift has allowed Government to accumulate taxes better in times of crisis. Years ago, this argument was true, but the shift from man to machines has shifted the impact. As the work force decreases, Government’s intake will decrease with direct taxation. Even the dead have to pay indirect taxation. The lowering of the age for retirement has helped to reduce the unemployment statistics twice, providing Government has replaced the workers. What we want in Barbados is an increased in persons employed and not a reduction in those employable. The BLP has used this strategy since 1976 to manipulate the unemployment statistics. This strategy can create an atmosphere where imported labour can be abused and Government finding itself not being able to defend the unemployed because of its statistics.
Man has become so smart that he is now replacing himself at all levels believing that because he has kicked down the ladder that technology cannot reach him. The merger of BS&T should teach all ladder climbers a lesson. A vendor employs himself and can only be fired by himself.
Peace, love, unity, humility, Kellmanomics, wisdom and understanding.
