To keep the Nordic Model. . .

Today, we bring the sec­ond and fi­nal part of this article. Part 1 was car­ried in yes­ter­day’s MID­WEEK NA­TION.

Daily Nation (Barbados) - - Comment - By RALPH JEM­MOTT

THREE FEA­TURES CHARACTERISE the Nordic Model. Firstly, its uni­ver­sal wel­fare pro­vi­sions based on high tax­a­tion lev­els and high lev­els of gov­ern­ment spend­ing. The over­all tax bur­dens in the Scan­di­na­vian states as a per­cent­age of GDP are the high­est in the world. In Swe­den, it is 51.1 per cent, in Den­mark 46 per cent and in Fin­land 43.3 per cent. Even those of the medium to low in­come pay a rel­a­tively high level of tax­a­tion.

Sec­ondly, its rel­a­tive so­cial equal­ity based on a pol­icy of in­come re­dis­tri­bu­tion, and thirdly, its so­cial sol­i­dar­ity-based rel­a­tive de­mo­graphic ho­mo­gene­ity, the no­tion of ‘‘we-ness’’ and on a tri­par­tite part­ner­ship be­tween gov­ern­ment, pri­vate en­ter­prise and labour.

To our na­tional credit, these three fea­tures have char­ac­terised much of the Bar­ba­dian post-in­de­pen­dence model as well. How­ever, the cur­rent so­cio-eco­nomic in­di­ca­tors in all three ar­eas would sug­gest that Bar­ba­dos is strug­gling to sus­tain the so­cial safety net it has de­vel­oped.

Eco­nomic chal­lenge

The first con­cern is, of course, the eco­nomic chal­lenge. Dr Daniel Le­d­er­man of the World Bank, de­liv­er­ing the Caribbean De­vel­op­ment Bank’s An­nual Wil­liam De­mas Memo­rial Lec­ture in the Turks and Caicos, noted that Bar­ba­dos’ debt bur­den stood at 111 per cent of GDP at the end of 2016. He con­cluded: “On the fis­cal side, once you you’ve en­tered into this painful dy­namic of ris­ing debt, which means that over time it be­gins to eat away at your abil­ity to de­liver pub­lic ser­vices to your peo­ple be­cause you have to pay more and more in­ter­est pay­ments, it is a very tough sit­u­a­tion.”

Bar­ba­di­ans can hardly af­ford higher lev­els tax­a­tion. In­deed, cur­rent lev­els ap­pear to have been coun­ter­pro­duc­tive. A Maria Brad­shaw re­port noted that since 2008, Gov­ern­ment had im­posed as many as 40 new or ex­panded rev­enue­mak­ing mea­sures, tak­ing in some $23 bil­lion.

If Bar­ba­dos is to sus­tain the Nordic Model, it will have to sub­stan­tially and con­sis­tently grow its econ­omy, but growth rates have been anaemic at best. The de­cline in agri­cul­tural out­put, slow man­u­fac­tur­ing growth and the fall-off in for­eign earn­ing from the in­ter­na­tional busi­ness sec­tor have de­prived Gov­ern­ment of the cap­i­tal to sus­tain the kind of so­cial in­fra­struc­ture that would con­duce to the rea­son­able level of equity that has saved Bar­ba­dos from the ex­tremes of poverty wit­nessed else­where in the re­gion. To prac­tise re­dis­tribu­tive pol­i­tics re­quires the pro­duc­tion of the eco­nomic re­sources to be re­dis­tributed. Al­ready, the much-touted free univer­sity ed­u­ca­tion has fallen vic­tim to fi­nan­cial strin­gency.

The Nordic Model works within the frame­work of free en­ter­prise cap­i­tal­ism, pri­vate prop­erty, free trade and pri­vate sec­tor/pub­lic sec­tor part­ner­ship. It em­braces glob­al­i­sa­tion and trade lib­er­al­i­sa­tion and the ease of do­ing busi­ness. In fact, it sup­ports much of the neo-lib­eral agenda to which the rump of the Caribbean left re­mains op­posed. Glob­al­i­sa­tion may be the only game in town but it is still not clear that be­yond the rhetoric, it can pro­duce the kind of growth needed to sus­tain small vul­ner­a­ble economies in the long term.

In the SUN­DAY SUN of April 16, 2017, Patrick Hoyos posed the ques­tion: “Can the pri­vate sec­tor de­liver pros­per­ity?” He quotes a March 2017 IDB re­port as speak­ing to “a lack­lus­tre pri­vate sec­tor” and ques­tioned its abil­ity to turn around the re­gion’s growth per­for­mance. It may be easy to talk about a Nordic Model, but is in­vest­ment and pro­duc­tiv­ity in the Bar­ba­dian and re­gional pri­vate sec­tors sys­tem­i­cally high enough to sus­tain any­thing com­pa­ra­ble to that of the Scan­di­na­vian states?

In fact, ques­tions have been raised as to whether one can speak of a real Bar­ba­dian pri­vate sec­tor. Else­where, ques­tions have been raised as to the re­gional pri­vate sec­tor’s com­mit­ment to the re­gion and its peo­ple as a whole. On the other hand, the pri­vate en­ter­prise in Bar­ba­dos may have some le­git­i­mate is­sues with the con­sis­tency and co­her­ence of Gov­ern­ment pol­icy.

Pri­vate sec­tor-driven

The Nordic Model is pri­vate sec­tor­driven with an em­pha­sis on the ease of do­ing busi­ness. In­vest­ment-wise in Bar­ba­dos, apart from the talk, there is lit­tle ev­i­dence of that ease in do­ing busi­ness. A few years ago, St Lu­cia was rated at No. 58 in re­la­tion to the ease of do­ing busi­ness. Bar­ba­dos was rated 30 points lower, at a woe­ful 88. Bar­ba­dos con­tin­ues to be plagued by bu­reau­cratic lethargy and un­con­scionable ad­min­is­tra­tive bot­tle­necks.

Then, there are the is­sues of low pro­duc­tiv­ity and a ques­tion­able work ethic with a not in­con­sid­er­able de­gree of dis­en­gage­ment from work. Then, there are ques­tions about ed­u­ca­tional qual­ity in re­la­tion to both hard and soft skills, and is­sues of rel­e­vance. In con­trast, the Scan­di­na­vian coun­tries and Fin­land in par­tic­u­lar rank con­sis­tently high among the world’s best ed­u­ca­tional sys­tems.

Per­haps a more sig­nif­i­cant fac­tor is a per­sis­tent dis­trust of the pri­vate sec­tor among cer­tain sec­tions of Bar­ba­dian so­ci­ety aris­ing out of a his­tor­i­cal an­i­mos­ity be­tween white cap­i­tal and black labour. The fact that much of the lo­cal cap­i­tal seems con­trolled by a small white mi­nor­ity breeds dis­trust, even un­nec­es­sar­ily so. In fact, in the global mar­ket­place, it may be for­eign cap­i­tal op­posed to trade union­ism that is likely to be more ex­ploita­tive of lo­cal labour. Small de­pen­dent economies like Bar­ba­dos may pro­vide what the Wild Coot calls “easy tar­gets” or, in Bar­ba­dian par­lance, “easy pick­ings”.

DR DANIEL LE­D­ER­MAN (FP)

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