TANA-NOMICS: Dutch Disease
Perhaps you’ve heard pseudo wannabe intellectual types use the term “Dutch Disease” at a J’ouvert party or T20 match to try to sound smart and you’ve asked yourself what is that and do I need to get vaccinated? Actually, Dutch disease is the paradox where the increase in the economic development of one sector (usually natural resources like energy) causes a decline in other sectors (like the manufacturing sector or agriculture). Basically, if a country discovers large chenette reserves, exports of chenette will increase significantly causing the value of the TT$ to increase sharply (more demand for TT$ to buy our yummy chenette), making exports of rasta belts and Shal Marshall songs more expensive so people buy less thus harming the broader economy.
“Sando by one”, “last week for Indian Expo”, “licensing officers checking inspection stickers”, “we need to diversify the economy”….uhh Alex, what are things that people say that don’t end up happening? Since Morgan Freeman was in primary school eating box lunch, drinking orchard fruit punch and sucker bag we’ve been hearing that we need to diversify the economy away from oil and gas. Yet we continue to prioritize the energy sector to the detriment of other sectors.
Recently the Ministry of Energy presented the Ryder Scott Report, which is an annual audit into the level of gas reserves in the country and has been conducted since the year 2000. The report showed that based on current production and should no additional gas be found, the country has 10 years of gas left based on its proven natural gas reserves. That seems like a short amount of time to me but the experts at the MOE say that it is plenty and what we need to do now is focus on exploration as well as production. But…excuse me…hello! What about focusing on moving away from being an energy based economy? To me we need cash now and don’t even have a structured settlement so we can’t call JG Wentworth at 877-CASH-NOW.
How many people know about the Economic Development Advisory Board or EDAB? How many people know that in January 2018, Dr. Terrence Farrell resigned as chairman of the EDAB? In an interview Dr. Farrell said the reason for his resignation was that they were wasting his time and frustrating he mudda... Ok, no, that wasn’t exactly what he said. What he said was “My own expectations of high-level engagement followed by swift implementation on these and other policy issues have not been realised. Working within the public service environment requires an acceptance of a certain pace of work and a degree of patience with which I am clearly not blessed. Others, better endowed with these qualities, may succeed where I, by my own standards, have not.” Boom! He more brutal than me.
His resignation was quickly followed by other board members and the eventual mothballing of the entire EDAB. Small ting…the EDAB was only responsible for “the development and advocacy of policies, programmes and projects which bear on Trinidad and Tobago’s long term development and transformation, and specifically, with those that promote the diversification of the economy”, nothing important like LED bulbs or anything. But at least you’ll soon be able to take yuh lil weed smoke in peace.
Fun fact, in 1960 Singapore embarked on its own journey of diversification driven by an institution it created called…drum roll please…dramatic pause….The Economic Development Board. Boom! What are the odds they have almost the same name?? Today, Singapore is one the world’s strongest and most competitive economies. We on the other hand continue to struggle with diversification as if we’re Joey Tribbiani trying to divide 232 by 13.
The Kingdom of Saudi Arabia (even their official name sounds impressive) is currently in the process of selling 1.5% of its monopoly oil company, Aramco, for just shy of US$25 billion giving the company a valuation somewhere around US$1.7 trillion. Aramco is their version of Petrotrin except that Aramco made US$111 billion in profit in 2018. The Saudis are selling this piece of Aramco as part of their diversification plan aimed at weaning themselves off of oil.
However, fear not my friends, our leaders have a plan. We have a National Development Strategy 2016-2030 known as “Vision 2030”, not to be confused with “Vision 2020” which I AM confused about because I have no idea where we reach with that. Anyway, having skimmed through the 156-page snoozer of a document, I think the people who developed “Vision 2030” should all go by Carter’s Optical to check their vision.
According to this plan we will “eradicate poverty”; “our society will be grounded in the principles of social justice”; “the healthcare system will be sustainable and modern”; “we will have an efficient and effective law enforcement system”; plus a whole host of other motherhoods and apple pies including a diversified economy, all by the year 2030 when we will finally become be a developed nation. I don’t know about you but I’m filled with so much confidence and excitement I could pee myself. I feel like Ross
..."This calls for a bottle of Israel’s finest!"
As it stands now, I think we need oil and gas to actually run out before we seriously take action to diversify the economy but by then it would be too late. As we boy Warren Buffett says “Only when the tide goes out you discover who’s been swimming naked”
TANA