25 October, 2002
...And it came to pass
Ten years ago, on 9 October 1992, The Chronicle published my article "Hard Times Ahead", warning of the domino effect that the decline of bananas would ravage upon the economy and society of Dominica. It was written on the eve of the departure of the then Prime Minister, Eugenia Charles, and her negotiating team, for the first round of talks in Britain and Brussels to lobby for ways of ensuring continued protection of the banana industry. The article caused a little stir at the time. I saw a copy pinned up in a ministry in government headquarters with relevant bits underlined in red.
I had expressed concern in the article that there was no economic safety net in place to shield the fall that we were going to experience. The Prime Minister's speechwriter took note of this, for in the PM's independence address in November 1992 she responded by referring to several "safety nets" (tourism, diversification and economic citizenship among them) that were said to be in place. But as things turned out, and as I could see clearly at the time, such "safety nets" were made of straw. By November 1993 her independence address indicated that she was realizing this, even if the nation did not, and that things were already on a slide.
It may be of interest to refer to some of what I wrote then so that we can view it now with the benefit of hindsight. "We shall see then how the fingers of the banana industry touches the economy as we know it today. Every commercial enterprise will feel the shock. Expensively dressed office clerks and urban workers who have never touched a banana plant shall have their lives irrevocably changed."
Under the heading "Banks Foreclose", I wrote: "Sale of consumer durables slows. Government revenues from customs duties drops as imports slows down. As a result provision of medical supplies and public works projects are seriously affected. Severe pruning of the Civil Service begins. Private businesses begin to lay off large numbers of their work force."
"Banks foreclose on unpaid loans. Scores of homes built on loans taken out during the bank liquidity years of the 1980s are seized or put up for sale by their owners. Second hand cars flood the market. Land prices drop sharply. But even so, few people have the ready cash to take any advantage of these deals."
In two cases above I misjudged the turn of events (so far): I had expected that the laying off of Public Servants would be necessary and also that land prices would drop as people, desperate for cash to pay off loans, got rid of their assets. But I have learnt in the last ten years that Dominican economic thinking is steeped in cultural traits that do not follow classic laws of Western economics. Here, keeping the machinery of the Public Service ticking over (even to the point of paying 4% of ones salary to keep it so) is more important than output and that land prices, like jewelry stored in a box, stays high no matter what.
I continued: "Utility companies become affected. Unpaid bills mount up. Many people give up having telephones or are cut off. Marpin TV suffers heavy losses as subscribers give up the service. Mass disconnections by DOMLEC and DOWASCO. Staff of utility services cut as a result." Here again local culture, rather than economics holds sway, because people will sacrifice water, toilet facilities and much more before they give up "their Marpin".
"Effects of bank foreclosure on unpaid loans on buses and vans causes havoc among taxi drivers ... The effects of this economic dislocation and widespread unemployment are also causing social and political upheaval. Protest demonstrations and calls for the government to resign intensify. Under membership pressure, union bosses and opposition parties link up ... But this solves nothing because it cannot change the external causes of the crisis."
"Crimes, particularly hold ups, theft and burglary become chronic. The police are hard put to deal with the situation and are in most cases ineffectual ... In wild desperation the government offers even more slavish concessions to attract foreign investors. But apart from a few crooks and eccentrics, serious investors keep away. By then the international economy has still not stabilized and real investors are hesitant."
"The hoped for Chinese economic miracle has not materialized as expected ... As the economy falters, government finds it impossible to service mounting national debts and subscriptions to regional and international organizations ... The expensive National Development Corporation (NDC) is closed down and replaced by a couple of staff in the Ministry of Trade. The exaggerated expectations of the 1980s are laid to rest ... Those who have accustomed themselves to be happy living as simply as possible within their means, will be the ones who will survive the best."
In the ten years since this was written new factors emerged to further aggravate the situation. There was the masquerade economics of the late 1990s when the Ministry of Finance raided the Social Security and National Commercial Bank so that Public Servants would be paid on time to make it appear that all was well and it was business as usual. DOMLEC was sold, massive loans were taken out and ill-conceived agreements were made which sunk us deeper into indebtedness. Even so, the scenario that I sketched out in 1992 is yet to play out its final act. The problem is that all 70,000 of us are the performers in this show and short of walking out, as many are doing, we cannot switch off the TV set or ask Marpin to cut us off. We are the soap opera!
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