On the Economic front

Jan 06, 2012 Editorial

Ordinary citizens can be forgiven if much of the economic news spewed out by the political elites either just passes over their heads or if taken in, just serve to confuse them further. All they know is that with Christmas just over, their wallets are empty.
Take the claims about inflation. For quite a number of years, the government has been boasting about bringing low inflation rates back into the country. Since the average citizen can only gauge inflation by the rise or drop in prices that are purchased on a regular basis, claims about ‘low inflation’ leaves them cold. It would take a most ingenious detective to track down a popular consumer item with a price that has not gone through the roof from a year ago.
Take the price of chicken: years after a huge tariff was imposed on cheap foreign chicken to allegedly give the local producers a chance to entrench themselves, grow and reap economies of scale that would see our prices plummet, prices are still sky high – and rising. To add salt to the wound, the bemused consumer saw their most popular source of protein at Christmastime rise to $400 per pound, contrary to the facile assurances of the subject Minister.
But what is especially troubling to the citizen who bothers to look at the international news channels that are so ubiquitous in our liberalised land, is that inflation is invariably much higher in countries that have high growth rates in their economies. Argentina, for instance. Is there a relationship, the thoughtful citizen wonders, between inflation and economic growth? Isn’t growth a good thing? Wouldn’t the benefits of a fast growing economy – increased employment, improved infrastructure, greater opportunities etc. – counteract and negate the effects of inflation?
And that brings the beleaguered citizen back to the business of chickens – which isn’t exactly chickenfeed. At the time of the imposition of the tariff on chicken imports, there were hundreds – if not thousands – of small chicken farmers across the country. The protected market was supposed to propel all of them along the path of growth – and with the economic dogma of increased supply, leading to falling prices, there would be the proverbial chicken in every citizen’s pot – at dirt cheap prices. There would be such a surplus of chickens that we would even be able to export the meat and bring in valuable foreign currency. A virtuous circle.
The reality, of course, is that a few big guns in the chicken business drove all the small farmers out of business, monopolised the trade and refused to bring down prices. With the domestic prices set on “high” they really cannot compete in the export market – hence, no breakthroughs in this area, contrary to the perennial promises. The mega-farmers would rather take the certainty of the astronomical profits in their (protected) hand than take a chance in the foreign bushes. Hence the inexorable rising chicken prices and the periodic shortages. Is it any wonder that citizens are more than a little sceptical about economic prognostications?
The economic reality for Guyana that the government (and the opposition, for some inexplicable reason) would want citizens to ignore is that we are floating dead in the global economic waters: sugar, bauxite and timber –major industries – are all depressed due either to the global recession or our own production ineptitude. Gold is booming but since its price rises with uncertainty about the dollar, the fall in the value of the latter correlates with the fall of our currency. A double-edged sword.
Apart from the workings of the drug trade and the subsequent laundering of its ill-gotten gains, we are kept going through the beneficence of our overseas brothers and sisters. Last year, they sent home US$400M. That’s the sad economic truth that we should all ponder. Our departed Guyanese are our economic keepers; their remittances allow us to survive and cope. Last Christmas as we broke open the barrels and collected the Moneygrams, we hope everyone sang their hosannas lustily.

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