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The Entitlement Trap
Dear Editor,
The economic tragedies that are currently unfolding in our two largest neighbours, Brazil and Venezuela are all too reminiscent of the 70’s and 80’s era in Guyana. Socialist governments in both of our neighbouring countries have catered shamelessly to their constituents at the expense of the productive sectors of their economies.
Rather than working hard to encourage growth in their economies, they took the easy route by spending recklessly on entitlement programs paid for by the high price of oil. With falling oil prices, they are now left with an enlarged entitlement burden and a shrinking economic pie.
Venezuela is at the end stage of this entitlement trap with food lines, endemic shortages of drugs and a despondent and desperate population.
Brazil is in an economic freefall. Its economy has shrunk 3.5% last year and is expected to shrink 4% this year.
It is currently loosing 150,000 jobs per month! Nearly 75% of its budget is earmarked for welfare and entitlement expenditures and with a further 25% for interest payments on debts (rated junk status), there is little left over for development. The dreaded IMF beckons.
Guyana has been in that dark corner before. We should have learned our lessons. We should put a premium on and incentivized economic activities that generate foreign exchanges for in the end, these pay the bills. And we should never rob Peter to pay Paul for this is the surest and shortest route back to that dark corner.
Mohabir Ramjeesingh
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