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.
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.
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.
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”.