Guyana is condemned to move two steps forward and one step backward

Dear Editor,

After twenty-three years of the PPP, I thought a change of government was necessary.  Our ethnic-political cycles simply cannot be decades in length.  Corruption and the pursuit of tribal-ethnic interests are the inevitable result of prolonged tribal government. Two four-year terms are about sufficient for any government in Guyana.  Based on the massive corruption of the PPP and the expressed position of the opposition to treat all Guyanese, regardless of ethnicity, fairly and justly, I supported the opposition. Many others did and the PNC-dominated government came into office with considerable goodwill, but squandered it in less than six months.  Ethnic politics, and the concomitant spite, vindictiveness and tribal short-sightedness it breathes, dooms robust and prolonged growth.  If there is one lesson of Guyana’s post-Independence economic history it is this: the country is apparently condemned to move two steps forward and one backward.  Thankfully, the positive movement is helped considerably by a declining population, made possible by migration and a falling fertility rate.

What is the basis for my ‘two-fo-one’ growth assertion? The simple answer is that ethnic politics and all of its nastiness is anathema to growth and the equitable sharing of the fruits of growth. Economists talk about whether growth lifts all boats or whether it does not; whether growth leads to rising prosperity for all or for only a small privileged class. In the case of Guyana, both growth and the just distribution of its fruits stand on shaky ground; growth certainly does not lift all boats. One may argue that the reasons for lacklustre economic performance go back to colonialism, but we have had half a century to correct this aspect of the colonial legacy.

The transition from colonialism to independence is thus incomplete.  The principal hurdle is ethnic politics, which seems to have locked the country into two options.  The first is relatively strong growth above historical levels accompanied by rising inequality; that is, immiserising growth. The second is stagnation/ contraction/tepid growth that is also accompanied by growing inequality; that is, stagnation and immiseration. If we start from Independence or 1964 when the PNC came to office, the economy expanded by 1 per cent annually. It contracted by an unbelievable 3.3 per cent during the 1980s, which is our lost decade.  That was a period when the economy was in shambles, and violent crimes rampant especially against Indians – both of which helped to swell the migration tide.

It is difficult to assess the extent of poverty and inequality during these 28 years because of the absence of periodic and credible data. However, a long quote from a World Bank (1994: 1, 2-3) report captures well the Burnham devastation during the lost decade:

“During the mid 1970s, Guyana adopted what it called ‘cooperative Socialism,’ which increased state intervention in the economy.  All major economic activities were state-dominated, either directly through state ownership or indirectly through price, credit, and foreign exchange controls. By 1988 the government controlled over 80 per cent of recorded import and export trade and 85 per cent of total investment.

“Guyana’s macroeconomic performance following independence was dismal.  Real GDP grew at an average of only 0.4 per cent per annum during 1966-1988 – less than population growth.  The benefits from the sugar boom of the early 1970s were squandered by the government.  The sugar and bauxite industries, two pillars of the economy, weakened significantly after being nationalized.  Economic performance deteriorated even further by the early 1980s.  Policies were expansionary, the real exchange rate appreciated, and the government relied increasingly on price controls and quantitative restrictions on trade. This further reduced the performance of industry, while spawning a parallel market rate for foreign exchange that increased rapidly and fed inflation.”

Clearly, then, the  government, having squandered the goodwill of the ABC countries and the gains from the short-lived sugar boom, destroyed the economy but did not know how to fix it.  The World Bank continues:

“With the economy in ruins, the government became increasingly unable to meet its commitment to providing basic social services. Schools, health services, water services, and sanitation all deteriorated.  The government also neglected physical infrastructure, including roads, sea defenses, and the system of drainage and irrigation.  The severe decline in living standards led to extensive migration of talented Guyanese to jobs abroad …”

These are all clear indications that Guyanese of all races were becoming increasingly impoverished.  The World Bank further explains:

“The drop in living standards during the 1980s is demonstrated by partial data on health and sanitation.  During this period infant mortality rates increased sharply, as did diseases spread by vectors and those caused by environmental problems. Between 1978 and 1988, infant mortality rose by 17 per cent.  Reported cases of gastroenteritis nearly doubled between 1984 and 1989, typhoid fever tripled, and from 1984-1991, reported cases of malaria increased nearly twelvefold.  These increases in morbidity are attributed to the breakdown in basic services, particularly potable water delivery, waste removal, and provision of adequate sanitation.  In education, the pattern was similar, reflecting deterioration in the quality of services provided.  Secondary school enrollment rates declined by almost 40 percent from 1980-1990, while the percentage of students passes in the Secondary School Entrance and CXC dropped significantly over the decade.”

During the PPP term of government from 1992 to 2015, the economy expanded by 3.6 per cent per year, but anecdotal evidence suggests a sharp rise in inequality. The requisite data for the assessment of poverty and inequality are simply absent, but the spread and depth of corruption, marginalization of Africans, vindictiveness against Indians who did not support them and ignoring its ordinary Indian supporters – these and more offer insight into the depth of inequality during the PPP term.

While available data from Indepen-dence to now suggest a falling poverty rate and declining inequality, casual observation contradicts this view. Massive and widespread corruption during the last five decades enriches a few ‒ via government contacts for construction works and drugs (medicines) and massive fraud at customs, for example ‒ and impoverishes the majority, regardless of race. It is grand and state corruption, which benefits the few, rather than petty corruption, which suffers and impoverishes the majority, that harms growth and human development. While petty corruption greases the wheels that turn the economic engine, grand and state corruption wreck the economic apparatus.  Is it time for the country to legalize corruption ‒ to make it legal to give a bribe but illegal to take a bribe but with a heavy penalty ‒ and to go after the upper 20 per cent of the population to ensure that it submits an annual tax return.

Frankly, the just-ended PPP government from 1992-2015 was arguably more corrupt than the PNC government from 1964-1992.  Yet the PPP was able to deliver a higher rate of growth.  Luck was certainly only its side, but this was also true of the last PNC government.  Unfortunately, the latter frittered away the enormous goodwill of the ABC countries and embarked upon radical and corrosive foreign policies and depressive domestic policies.  For example, it taxed and transferred a huge share of the surplus of the rice industry to the public coffers.

Yours faithfully,

Ramesh Gampat

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