Cash payments from oil should be given serious thought

Dear Editor,

Transfer of cash payments from the oil revenue should be considered seriously. I first advocated this in an interview with Carib Nation Television back in March of this year.  Let me be very clear, I am not suggesting Guyana make direct transfers, but I am suggesting that the idea should be investigated and given due consideration.

Editor, I believe most of the opponents of direct payments miss the point.  To even frame the debate in terms of a binary choice completely misunderstands what is being proposed. In other words, the argument is not development vs. cash transfer or a Sovereign Wealth Fund vs. cash transfers.  It’s all of the above.  Further, the proponents of cash transfers are not suggesting that the government uses its entire income from oil to make cash transfers. Rather the suggestion is to set aside, a portion of the monies to be used for direct transfers, somewhere between 10 and 15%. Moreover these payments do not necessarily have to take the form of cash. There are other creative mechanisms that can be employed, which can have the same effect of a direct transfer.  Incidentally, employing other means to effect direct payments may also alleviate the fears of those who argue that direct  payments will create a dependency  State and promote laziness.  Some have even suggested that the monies will be squandered… “they will drink it out says one person”. Well this kind of scolding seems a bit condescending and overly paternalistic. It also comes from individuals most of whom are speaking from a position of privilege.   Unfortunately not everyone has that luxury.

The cold facts are that in developing democracies, good intentions for the use of oil revenues have not produced good results. In spite of all the careful planning, oil revenues from those countries have not redounded to the benefit of its citizens. As proof, one only has to look at developing countries with large deposits of oil reserves and see that even with the best expert advice money can buy, a large percentage of the population in those countries still lives in extreme poverty. Good intentions are not enough, it’s necessary but not sufficient, much more is required. So why not try something different?

Perhaps in a perfect world “direct payments” are probably not the best use of oil revenues.  but that is precisely the point , we do not live in a perfect world.  Accordingly we should not let the perfect become the enemy of the good.  All options should be on the table and should be given serious consideration.

Yours faithfully,

Floyd N. Haynes

Around the Web

Comments