Jagdeo is being fallacious and flippant

Dec 27, 2023 Features / Columnists, Peeping Tom

---

Kaieteur News – At his last Press Conference, Second Vice President, sought to draw an analogy between running a home and running a country. He argued that in the same way as a family will not spend all its income on consumables – food and clothing – so too a country cannot dispose of all its revenues into paying wages and salaries.

A deeper look at this analogy will unearth a fundamental flaw in Jagdeo’s reasoning. He says, for example that the family also has to spend on the roof and on the physical structure of the home and not only on consumables. In this regard, he is referring to the need for government to spend on infrastructure and not only on wages and salaries.

But what Jagdeo misses, conveniently is that a family can only invest in improving its home to the extent that its income allows it to do so. How many ordinary public servants today have the incomes that would allow them to set aside monies for maintaining and improving their home?

Most of the ordinary public servants live paycheck to paycheck. They budget every   single dollar that they earn. This is why when the cost-of-living increases, as it as has been doing over the past few years, it throws the budget of public servants askew.

With inflation eroding the salary increases offered by government, public servants find themselves worst off each year. The 6.5 percent increase offered this year cannot buy or pay for the same essentials which were bought or paid for one year ago. Even with the 6.5 per cent increase, offered by government, public servants are worse off this year than they were last year.

It is true that a country needs roads and social services. But in any economy, people should come first and unless investment is made in people, the infrastructure the quality of social services will decline.

But to get back to Jagdeo’s analogy between running a country and a household, it should be noted that domestic investment comes from savings and borrowing. This is basic economic theory. However, the average public servant is saving very little when the month comes. As such, when that public servant wants to do any work around the house he or she cannot.

Public servants therefore either have to borrow or throw a ‘box-hand’. Jagdeo would be surprised at how many ordinary public servants are engaged in throwing box-hand. They may have to go and borrow from the banks. But where will the income come from to repay the loans when so little, if any at all, is left after their expenses?

Workers who do not have savings cannot borrow. Where therefore will they find the sums needed for basic maintenance much less for improvements and expansion?

Jagdeo’s position is therefore both fallacious and flippant. But that happens when you are divorced from what is happening on the ground.

He should be encouraged to take a drive down to any ATM on payday. He will notice the urgency with which public servants rush down to obtain monies to pay their bills. Most of the ordinary public servants withdraw their entire salaries to meet expenses. Not much is left for savings.

Jagdeo says that a country cannot spend more than it has. It cannot spend all that it has, it cannot spend all that it has on one item. Jagdeo is being disingenuous in suggesting that the call is for his government to spend more than it earns, all that it earns or all that it earns on one line item – wages and salaries.

The fact of the matter – and Jagdeo knows this all too well – is that the government has the capacity to pay more. Affordability is not the problem. He also knows that a 10% wage increase to workers is not only affordable but will not break the bank.

At his press conference two weeks ago, he said that the government was spending G$89B on wages. He implied that the government has considered sustainability. But the government’s own forecasting shows that it planned to spend $106B for this year on central government’s wages and salaries.

This is according to the forecast published in the recent IMF review of the economy. Wages and salaries were projected at a mere 12% of central government expenditure and about 22% of the government’s capital expenditure. Increasing wages for public servants, therefore, would neither make the wage bill unsustainable or unaffordable.

Jagdeo says that there are now 54,000 public sector workers.  Twenty-five percent of this number is because of his welfare programme, known as the part-time jobs programme, an initiative which sees many workers malingering around hospitals and neighbourhood democratic councils for hours without much productive output.

Jagdeo should confess that the only reason why public servants could not be paid a higher wage this year is to save the private sector from having to do the same for its workers.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

---

• consumables, Jagdeo, Peeping Tom, Press Conference, Vice President

---