Opportunities in downturn

Oct 20, 2008 Editorial

With the incessant coverage by the media of the evident recession in the US and its negative spillovers into economies all across the globe — even in ones as remote as ours – conversations and moods are becoming increasingly dour, if not sour.

The major source of the doom and gloom in Guyana are the fears that if our remittances, especially from the US and Canada, are drastically slashed in the next year or so, we are going to experience severe withdrawal symptoms and many may decide to actually jump off the carousel.

The other articulated effects of the global downturn, such as tighter credits for businesses, less development aid, less trade and production, loss of jobs etc, have not even contributed at this time to the murkiness in the national mood. Such prognostications, after all, were bandied about by politicians and columnists, whose utterances are always taken with a substantial grain of salt.

On the other hand, the prophecy of lower remittances came directly, so to speak, from the horses’ mouths: the relatives at the end of the Internet phone lines in the developed countries.

With their annuities and nest eggs, not to mention the very roofs over the heads of many under direct threat of being wiped out, those fairy godparents have made it clear that a round of belt tightening is in the offing for us.

And that belt-tightening can get nasty. With remittances last year totalling almost half of a billion US dollars, one does not have to be a Nobel Prize-winning economist to imagine what the possible impact of a slash would be on an economy that is just a little double that amount.

We would not be able to build, rebuild, fix-up, touch up, or generally improve our abodes, which under the influence of the foreign dollars have become not so humble any longer. There is nary a housing improvement undertaken in the last decade in Guyana that was not supported in the main by “outside” help.

This foreign-funded housing boom created quite positive waves in the economy that would now hit a very rocky wall: hardware businesses, masons, carpenters, helpers would all be scrounging around to share a smaller pie. We can project these effects into several other areas of economic activity.

We have had reason in the past, however, to identify a quite insidious effect of remittances on the development of our country. Very bluntly, the remittances created a wide swathe amongst our populace of “not-working millionaires”.

Up and down our coast there are any number of able-bodied men (the job market for women is not that hot) who refuse to seek gainful employment because their laid back lifestyle is funded through Western Union or some other money delivery service.

Those who do shake off their lethargy for one reason or other (mainly when there is a shortfall in the flow of funding) demand wages that are far out of line with our country’s international economic profile.

This wage-bubble caused by remittances has been a severe deterrent to companies that may have considered locating their operations here. A helper on a building site, for instance, cannot be found that would condescend to work (if that is the appropriate term) for less that ten US$ daily.

Once the bubble is punctured with the drop in remittances, one wonders what would be the reaction of our lounge lizards. We doubt that they will be willing to work for reduced wages. They will probably pine for years for a return of the “good old days”. The rot had been allowed to fester for too long.

A worldwide recession should force us as a nation to match our expectations for the good life with a willingness to do whatever is necessary to create it, and not have it handed to us as largesse.

The lesson that is being spelt out right now is that such a situation is always transitory. In the period of accumulating capital for a sustainable takeoff in a developing country like ours, wages have to be sensible and built on productivity, and not our ability to wangle funds from our relatives abroad.

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