Tuesday, January 28, 2014

Caribbean Countries Reeling From Top Heavy Government Structures

Barbados, St Vincent, St Kitts and Nevis, Belize and Grenada along with other Caribbean countries are the latest victims of top heavy government bureaucracies that have crippled their economies; bringing them to the brink of financial insolvency. 

Although the politically connected intellectuals and media are quick to point fingers at exogenous factors; including the global financial crisis, declines in tourism etc., they neglect to highlight the state's complicity in dragging their nations into national bankruptcy. The reality remains that their economies and populations are too small to sustain the massively bloated government apparatus that is maintained at the expense of the working population. 

An election pamphlet from the New Zealand National Party in 1949.
Smaller countries in particular are saddled with the burden of maintaining at a high level a Prime Minister, his personal assistants, special advisers, security, his office, travel expenses and living expenses etc. Similarly numerous members of the political hierarchy including ministers, diplomats, heads of government departments, agencies and corporations are also offered similar perks all at the expense of the meagre taxpayer. These hefty compensation packages and administrative structures are not financially viable in the private sector yet they are cheerfully bestowed in a government setting and form a massive drag on the economy as limited resources are spent unproductively.

To add insult to injury as the state bureaucracy grows and agencies attempt to validate their existence they layer more and more wet blankets of usually useless rules and regulations on the real economy -the private sector. This further slows economic growth and development.

Barbados is a prime example of this with a relatively small population of 227,000 they feature (from a quick on-line search) 30 Members of Parliament, 21 Members of the Senate, 21 Members of Cabinet, 23 Ministries, 198 Departments and 232 Agencies. Consequently government expenditure as a percentage of GDP is 41.3% ranking them 45th highest out of 180 countries. With this disproportionately large number of bureaucrats no wonder they are experiencing severe budgetary deficits and wish to impose austerity on the population. 

Even though austerity is the bitter tasting medicine that must be swallowed it should first be placed squarely on the political oligarchs and on the opulent perks and benefits they receive. Similarly, the lucrative contracts handed out to political comrades should also be rescinded. Next steps should be to immediately scale back the size and scope of the many unessential elements of the government apparatus. 

Odious Debt

Last but not least, the bajans et al should consider releasing themselves of some or all of the original debt obligations by classifying their national debts as odious or illegitimate debt. A legal theory that holds that the national debt incurred by the state did not serve the best interests of the nation,and should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred them and not debts of the citizenry. 

Though it may sound extreme such an arrangement would limit future government spending while at the same time discourage errant international lenders from enabling reckless spending by prodigal governments. 

1 comment:

  1. Hmm… You should do a similar analysis (Parliamentarians, Cabinet Ministers, Government Agencies etc.) for Trinidad. Maybe a cool info graphic?

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