The 2012 preliminary census report – already two years late – is probably more famous for what it conceals than what it reveals. The report invested great effort in emphasizing the housing building stock, but nothing was said about the ethnic composition of the society, religious composition or anything dealing with the labour force that could possibly reveal the unemployment rate or labour force participation rate. This column has argued on several occasions a population census is not the best tool to study the labour force or unemployment given the cyclical component of unemployment. A census is most likely to give structural unemployment but not the frictional and cyclical aspects. Nonetheless the census is the best we’ve got for gauging the unemployment rate that is now hidden on some computer hard drive at the Bureau of Statistics.
Economists, political scientists and others make their living studying data. It is hard for me not to come away with the feeling that this report was deeply influenced by a political invisible hand, instead of providing the society with an essential public good – raw data. The column on GDP growth (May 15, 2014) gave the Bureau the benefit of the doubt. But this report will dent public confidence – at least mine – in the data produced by the Bureau of Statistics, including the national accounts statistics. Of course there is a big difference between raw data and information. The analyst is expected to utilise an econometric or statistical tool – descriptive or inferential – to convert raw data into information. Once carefully gathered, data cannot lie but the analyst can. If the analyst’s work is not believable one can always go back to the data to verify his argument and methodology. But how are we to test narrative subjective analyses that are opinion based? Therefore, those who keepmentioning the suspicious statement “lies, damn lies and statistics” fail to appreciate the crucial difference between raw data and information.
The census report shows a decline in the population after taking into account birth rate, death rate, emigration rate and immigration rate. The overall population decrease and in particular the decline of the population of Region 6 have serious political implications for the ruling PPP/C and the opposition. The political implications have to be left for another column, with this one focusing on a few economic themes. The population decline is attributed to significant net outward migration of Guyanese. As the government talks about projects and housing, Guyanese have responded with their feet fleeing with Caribbean Airlines, Suriname Airways, Delta and dodgy airlines for which Guyana is a magnet. The decline in population also explains, somewhat, why the per capita income (in current US$) increased so much between the year 2000 to 2013. The aggregate GDP growth rate (and growth in aggregate gross national income) does not justify an increase from US$880 in 2000 to US$3750 in 2013 (this data is obtained from the World Bank’s dataset). The numbers imply average Gross National Income (GNI) more than quadrupled over the said period. Inflation in the United States certainly did not grow at that rate to explain this outcome. We have to consider the US inflation rate because the average Guyanese income is measured in current US dollars in the World Bank’s dataset. The period 2000 to 2013 intersected with the Great Moderation, an era of low inflation and reduced GDP volatility in the United States.
The significant increase in average or per capita income could partly be explained by the fact that the Guyana population is growing negatively. Recall per capita income is simply GNI divided by the population. Therefore, if GNI grows positively and the population is declining then average income has to grow at a higher rate. While the shrinking population explains some of the increase in per capita GNI, I still believe this figure is also inflated by the invisible political hand operating in Guyana. The increase from 2000 to 2013 would imply a compound growth rate of 11.8 per cent, obviously unrealistic and very likely an invention given the low US inflation, low average growth of aggregate GDP (and GNI) and the marginal decline in the overall population. Furthermore, the increase in average income is not entirely the result of organic economic development, but has partly to do with a declining population.
Artificially inflating the number for political reasons is short-sighted. Several global organizations allow concessional exemptions for poor economies. The World Trade Organization (WTO) allows certain protection for nascent industries in low income economies. The World Bank has concessional financing for poor economies.
The Bank these days also attaches the preconditions of good governance and democracy for financial support, perhaps explaining why the Bank is kept at arm’s length by the Guyanese government which shows a preference for natural resource sharks from Asia. A new government should revisit the per capita income so as to be able to simplify economic policy in the globalized economy.
The preliminary report takes pains to show the housing stock has increased significantly. No one is going to dispute the fact that housing development has occurred. This aspect of the report certainly fits the government’s narrative of what development means. But some of the propaganda in Guyana Times and government media is conflating a stock and a flow. If the flow of average income is not doing that great as is argued above, then how is the stock of housing (a main aspect of the stock of wealth) increasing? What percentage of the mortgage debt (another stock) is financed by the flow of legal incomes earned in the official economy compared with the underground economy? What percentage of the mortgage debt stock is backed by the inflow of remittances? If the government was forthcoming enough to provide the society with labour market statistics, we would have a better idea of whether the increase in the stock of wealth is supported mainly by legitimate work.
Another fiddle showing up in the Guyana Times (see July 7, 2014) goes like this: emigration of Guyanese is not all that bad. Without recognizing the difference between a cross-country study and a case study, they cited a work done by a researcher at Oxford University to add credibility to their emphasis. The newspaper argued that migrants send home remittances and ease social tensions because of high unemployment in Guyana. Moreover, the newspaper mentioned that the inflow of remittances is predictable and therefore helps to ease foreign exchange pressures. The latter argument was made in the very first Development Watch column (July 8, 2009). However, the first column noted that while remittances ease short-term volatility in the foreign exchange market, they cannot compensate for the loss of human capital, especially since Guyana does not have a diaspora strategy. Nevertheless, it is understandable why Guyana Times will see migration and remittances in this light. The newspaper engineered to represent the interests of Mr Jagdeo’s Newly Emerging Private Sector (NEPS) will no doubt be very anxious to juxtapose a stable source of foreign currencies and human development. This behaviour is consistent with global plutocrats who tend to place financial stability ahead of social mobility of the middle class.