No justification for cash transfer programme in Guyana

Dear Editor, Cash Transfers/Universal Basic Income/Freedom Dividends, used euphemistically by politicians for “free money” promises, have no justification in Guyana. It is simply made to “buy” votes. There may come a time when the concept is rational but now is not that time.

The concept of paying citizens a periodic income from government coffers has its origin in Switzerland in 2013. A referendum on this motion was held in mid2016 and was soundly defeated with only about 23 per cent of the voters agreeing to it. Now Andrew Yang, presidential candidate in the US, has renewed the concept under the banner “Freedom Dividend.” With both Switzerland and Yang, the impetus for the proposal is the impending disruption to these high-wage economies from technological changes.

Labour in these countries is over-priced from governmental inflationary policies and it is quickly becoming obsolete despite rosy unemployment and GDP growth statistics. Low unemployment and increasing GDP are no longer indices of wellbeing as employment does not guarantee adequacy (the working poor segment is expanding) and growth in output is driven strictly by debt. In addition, the US public debt has become unsustainable growing at US$1 trillion annually and amounting to about US$65,000 per capita in a country where 40 per cent of the population don’t have savings of US$400 and 68 per cent live paycheck-to-paycheck. This debt cannot and will not be repaid; the definition of bankruptcy. Under these conditions, a cash transfer has some merit as a temporary measure while strategies to deflate the economy take effect. Deflation reduces the cost of living and by so doing, increases the competitiveness of labour.

But this is not the case in Guyana, a low-wage country. As a matter of fact, rolling out a cash transfer programme would have severe repercussions for the country. Guyana is a net importer of consumer goods and so marginal consumption here benefits exporters and employees in foreign countries more than those in Guyana. The impact on Guyana would be a deteriorating balance of trade and worsening of its foreign reserves, a formula for inflationary forces. Further, the level of the transfer being touted would push many into the used-car-affordability range, increasing congestion on our already narrow roadways. So, cash transfers have detrimental consequences that only benefit politicians promising to use public funds to gain office.

That is not to say that the country should not address the plight of its poor. But this can be accomplished with programmes that target the indigent among us with food and housing subsidies in the form of coupons/vouchers.

Politicians should focus on ideas that address problems the country faces and programmes to ensure rapid economic development, the rising tide that lifts all boats. Some of these are protecting coastal communities from sea rise due to climate change, reducing energy costs within the context of a green economy, eliminating congestion within the capital city from narrow-designed streets and an excessive number of vehicles, development of hightech skills and provision of advanced healthcare required for rapid national development, supporting the local currency given the precariousness of fiat currencies worldwide, interconnecting transportation-wise with neighbouring trading partners, leveling the field for local manufacturing considering protectionist measures adopted by other countries, improving access to government services through electronic platforms and brick-and-mortar structures, creating the environment for full employment of labour, and expanding the provision of high-speed internet service throughout the country.

These and others issues should be the focus of local politicians instead of the problematic cash transfer. Yours faithfully, Louis Holder