Running from what?

Sep 19, 2017 Features / Columnists, Peeping Tom

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When one is in primary school, one is introduced to a concept called Simple Interest. This allows students to make a calculation on the interest that would accrue based on a given rate of interest over a particular interval.
One can also use the Simple Interest formula to calculate the sum of money needed to be invested to earn a certain interest after a set interval. Simple Interest is used, for example, to calculate the interest earned in your bank book each year.
Suppose, however, that instead of withdrawing all the interest you kept it along with the capital in your bank book, and suppose that you decided to continue each year to add the interest to what you have already. You may, in such a situation, wish to determine how much money you will have at the end of a number of years.
There is a formula which can be used to calculate this amount and the formula is called the Compound Interest formula.
It is so named because the interest rate is compounded after each year by adding it on to your principal and then calculating the interest on this increased sum.
Using the Compound Interest formula, any banker or investor can tell a client just how much money they will have after a certain number of years. They can, for example, inform a client that at 4% interest rate compounded, a certain sum of money would increase to a certain amount over a given period of time.
The Compound Interest formula is also used by economists to determine just how much a country needs to grow in order to achieve a certain per capita income or vice versa to determine what will be the per capita income of a country if it grows at a certain rate of growth over a number of years.
In 1992 when the PPP assumed office, the per capita income of Trinidad and Tobago was ten times that of Guyana. It was calculated that even if Guyana enjoyed economic growth at an astronomical rate, it would take in excess of fifteen years for our country to catch up with the per capita income of Trinidad and this was based on the assumption that Trinidad would not enjoy any growth.
Therefore, so long as growth in the twin-island Republic is on par or close to that enjoyed by Guyana, a situation that is quite realistic, then Guyana could never achieve the per capita income of Trinidad and Tobago.
However we twist it or turn it, the fact remains that Guyana slipped economically under the PNC to the point where we were the second poorest nation in the Western Hemisphere, and to the point where regardless of whether we enjoyed consistent economic growth we would never within fifty years be able to catch up with an economy such as Trinidad & Tobago.
I make this point to illustrate what I mentioned in a previous article.
I make that point to highlight that it is precisely because Guyana had such a low per capita income in 1992 that it is impossible for there not to be pull factors luring Guyanese nationals to other islands in the Caribbean, in the same way as the nationals of those very countries to which Guyanese run seeking employment also migrate to countries in which the per capita income is far higher.
Thus it is fallacious to argue that it is because the government is not providing jobs that people are running away. There is no way, for example, that the government of Guyana would be able to pay the sort of salaries that are paid by the Bahamas, and therefore there will always be Guyanese teachers going there to teach.
And this goes to the very heart of what is taking place in Barbados.
There is no way that Guyana would ever within the next twenty years be able to catch up with certain countries in the Caribbean and therefore there will always be that pull factor. We simply cannot, and Compound Interest confirms this fact.
Now suppose that the government was able to do all the things that people are saying should be done to avoid persons migrating. Then it would mean that Guyana would be in a state where it needs no one and that is a fantasy by itself. Those who ran from Guyana after 1992, were running from what was created long before.
And, of course, there would be no need for a single economy within the Caribbean because labour would not be migratory. And this is what goes to the heart of this column’s criticism over what is taking place in Barbados.
We cannot have a single market if labour is not part of the trade between countries. You can also never have economic efficiency if there is no competition for labour skills. Guyanese are filling an important void in the economy of Barbados and in so doing are demonstrating how critical the free movement of skills is to the very existence of a single economy within the region.

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