By Bill Lindo
Belize City, March 16th 2021: Belize’s news is currently dominated by the decision of the Briceno government to cut the wages of public servants by 10% for the next three years so as to save some $ 80 million dollars per year in an effort to comply with the dictates of the IMF to reduce by 2031 the public debt ratio from 134% of GDP to 60% of GDP or less.
Let’s be blunt. If Belize cuts back on its borrowing so as to reach public debt ratio of 60% of GDP under current conditions such that production continues to contribute the current 34% (agriculture, mining and manufacturing) then the local population will flee since Belize will become a real “hell on earth”. Our living standards will fall to one of the lowest globally. Yes, the current economic structure must change, but not the way the IMF and their flunkies want. This is not about doom and gloom; it’s real.
As I have been writing for the last two decades, there is always another way. But the major problem is that the PUP has been hijacked by persons who don’t know the Creed/Philosophy of George Price’s political party. These carpetbaggers, as Mr Price used to call them don’t know and don’t care. Their viewpoint/mind-set is that of the oligarchy – the enemy of George Price’s mixed economy.
In our world there are two versions of capitalism – the dominant British version and the American System of Political Economy. The structure of Belize’s economy can be divided into two. First, there is the real economy of current production and consumption, wages and industrial profits. Second is the FIRE section (finance, insurance and real estate) consists of land, monopoly rights and financial claims that yield rentier returns in the form of interest, financial fees, economic rent (unearned income), and monopoly gains.
The FIRE section sits on top of the real economy and lives off the work, sweat and blood of the productivity of the real economy of agriculture, mining, manufacturing, extracting close to 40% of the work of the real economy while doing no work. It’s just sitting there to collect.
For many years it was understood that one of government’s main functions was to regulate and tax away rentier income and interest from loans because they are unproductive income and a drain upon society. The “freeloader” doesn’t sow, but wants half of the proceeds for doing nothing after the worker has reaped. Even Western classical economists, such as Adam Smith and David Ricardo were against the “free loader” called economic rent– especially by landlords. They considered it a “free-lunch”. Why? Speculators always try to borrow, to create debt, to buy such rent extracting privileges. Instead of a “market” in which rent was paid as taxes, the “free-lunch” was capitalized into bank loans to be paid out as interest or dividends. Banks then gained at the expense of the tax collector, and thus, the lower classes lost as governments stopped spending and cut social services. Don’t forget, debt can only be repaid from the real economy of production.
When I was a teenager in the 1960’s everyone in Belize wanted to go live and work in the United States of America. Why? They used to say that the streets in the United States was paved with gold. At that time the United States paid its average worker the highest in the entire world. A man made enough money to feed, cloth, house his family, and owned a vehicle by working in a factory. The wife stayed home and raised the kids. The average family all went to church services on Sundays. Crime was low. The average size of the houses was some 1,200 sq. ft. with at least three bedrooms; and some 68% of the population owned a house. Debt levels were very low.
The question is how could the United States of America 48 years ago pay workers high wages, and yet manufacture goods of higher quality than the rest of the world and yet sell those goods cheaper than everyone else?
As I have written before, the fundamental differences of the American and British are some eight principles.
The most prominent difference between the British and American system of Political Economy is exploiting nature rather than men. The education system we inherited and retained from our colonial master is based on the proposition that the elites/the big man have the right to exploit the worker. A historical example of this American system in practice is Henry Ford and his model T. Mr Ford did several things different than his British counterparts. First, he paid his average worker wages that was 5 times higher than other workers of the time, he invented the assembly line and his model T was easily repaired. The result was that his workers could afford his model T and thus his profits increased substantially.
But to exploit nature means high wages for workers; tariff protection of the goods made by those workers; money creation must be a public utility; a view of soil fertility and agricultural productivity as a product of capital investment; technology and innovation will always create new methods to enter production and thus profits and wages don’t diminish but instead lead to higher productivity and thus higher wages to workers. Public infrastructure as a means to lower costs in an industrial society by introducing new methods of production and communications, and the public support of research and development. Remember agriculture and manufacturing industries need a glue to hold them together. That glue is infrastructure. And most important is government intervention in an economy. Government as the “brain” must put a bridle on corporate bodies, and must establish the pursuit of happiness as a natural right of citizens.
In Belize this principle is enshrined in the PUP’s Constitution as a sacred duty of government to create full employment and completely end poverty. The truth is that Belize’s private sector has created virtually no new jobs since Independence.
Here’s one solution to the current budget deficit. During the last quarter of the year 2019, the previous Prime Minister, Dean O. Barrow introduced two bills for write offs. One for some $ 90 million dollars in land taxes to Belize’s one percent and the other write off was for some $ 40,000.00 for young Perdomo. The majority of Belizeans went crazy against Mr Perdomo with their bad-mind. But these same Belizeans had nothing to say about the $ 90 million which was 2,250 times more than the measly $ 40,000.00. But it shows the mind-set of the average Belizean. Only the current Deputy Prime Minister, Hon Cordel Hyde had a comment in the House of Representatives in late 2019. Hon Hyde was against the write-off to the big boys.
Carpetbaggers, leave the workers alone, especially now with the economic fallout of COVID-19. We need to create about 14,000 new high paying jobs using Price’s mixed economy each and every year for the foreseeable future – that’s why the Belizean people elected the PUP – not for more austerity. Belizeans are tired of austerity.
Instead of punishing thousands of hard working Belizeans, let the elites pay the $ 80 million. Put back the land tax of $ 90 million that was given away in 2019. That land tax will fall on the thirty or so large landholders – the elites who can easily afford to pay.
The government can also tax the 40% of unearned income ($ 1.4 billion dollars) that the FIRE section of our economy gets by not working. If government puts a tax of 15% on the useless FIRE section of our economy some $ 210 million dollars will be available to reduce the public debts and pay the workers. Or we can tax capital gains. Every other country in the world has a capital gains tax except Belize. Speculation does no good for an economy, except puts the burden on the ones who create the wealth of the country – the workers of the nation-state.
Now the carpetbaggers will say that in a recession or depression it’s not wise to raise or increase taxes. This is one of those misconceptions about economic theory that has Belize in economic trouble. It is a moral duty to increase taxes on speculation, economic rent, interest charges, and all illegal activities. These incomes are all unearned and contribute nothing to society and for common justice should be taxed. But the economists of the British school of thought will usually go after the worker, to put the burden on him while the big fish laughs all the way to the bank.
And Mr Carpetbaggers, let’s stop the blackmail of our Belizean citizens. It is not either the IMF draconian austerity or a local home grown austerity. They are the same. In 2005 Hon Said Musa decided to follow the advice of Belize’s G-7 movement and their home grown austerity measures. The result was one of the worst defeats the PUP suffered. Austerity never works. It is against human nature. Austerity has NEVER fixed the economy in any country. It destroys. Its purpose is to steal the little that the poor and middle-class have and to transfer wealth to the elites/the big boys. Austerity has never work in the last 30+ years it has been tried and it never will. Tell the IMF to go fly a kite!
The solution to Belize’s economic problems if we wish to have a high standard of living for our people is to industrialize Belize.
We also seem to forget a fundamental truth. The truth is that the baby-boomers, who are the leaders of today, and who all mostly went to universities, were indoctrinated. They believe with their whole heart the nonsense that the private sector is the sole creator of wealth. “The sole source of wealth is the rise in the productivity of human labour effected through technological progress” (Lindo, 1995) Money is NOT wealth. Wealth is saved labour. Money is a means to exchange wealth. Wealth can only be created by human beings through the mind, since we are created in the image of our Creator.
We as a people and country have come full circle. Instead of the glorious dawn of a new Belize promised by our founding father, we are willingly returning to our colonial past. I am sad, but will end by repeating what I wrote before.
The “key” to genuine development and full economic independence, which will not reduce but rather eradicate poverty and create full employment in Belize –the objective of the philosophy of the nationalists of Belize, the George Price way — is to advance developments in basic economic infrastructure combined with rapid increases in energy flux densities per capita and per square mile. Government is the only institutional force which can implement rapid increases in energy flux densities and rapid advances in basic economic infrastructure. But advanced developments in both basic economic infrastructure and energy flux densities per capita and per square mile can only be “squeezed from the human brain” as Walker Lee Cisler (prominent American engineer) said, which means you need high-quality (or highly skilled) scientists and engineers. Genuine development is an act of human creation – it is a complete change of our present culture – a reversal from hopelessness and hedonism to one of progress, but it is hard work, not easy work.
We have to think our way out of the mess we are in.
The above is the world we live in – rule by the 1%, the Rockefellers, Morgan’s, and the Rothschild’s
Bill Lindo blog 