By Dr. Francis Smith, Orthopedic Surgeon

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Sunday, August 17, 2014

The UDP victory of 2008 was a historic political-economic watershed for Belize. It marked a major change in the Belizean mindset regarding the role of government. The UDP victory coincided with the end of Thatcherism and Reaganomics, a thirty-year period of financial deregulation which was crumbling in spectacular fashion. The People’s United Party government had subscribed to this global trend and paid the price. The UDP accused the PUP of corruption, of borrowing massively and recklessly, and squandering resources extravagantly. The UDP was swept into power with a fresh face, exuding hope and optimism, promising to stamp out corruption, cut waste in government and to balance the budget. From belief in individual responsibility, the free market economy, and a decentralized, limited government, the UDP switched to Keynesian social responsibility, big, centralized and powerful government.

The global recession that started in 2007 was a direct consequence of the deregulation of the financial sector and was sparked by the U.S. subprime mortgage crisis. Thirty years prior, neoclassical fundamentalist market economists such as Milton Friedman and Friedrich von Hayek convinced world leaders, Ronald Reagan and Margaret Thatcher, to deregulate the labor and financial markets and to privatize government function and services. They argued that unbridled competition, greed, and selfishness operating in the free market, would make countries get richer and the wealth would “trickle down” to the poor thereby creating jobs and prosperity.

In the U.S., financial deregulation saw the Glass-Steagall Act being replaced by the Gramm-Leach-Bliley Act, legally permitting banks to gamble with consumer savings and deposits. Banks such as Bear Stearns, Credit Suisse, Goldman Sachs, J.P. Morgan, Deutsche Bank, Morgan Stanley and Citigroup were later charged in U.S. courts and had to pay hundreds of millions of dollars after being criminally charged for money laundering, fraudulent bookkeeping, and outright swindling of their customers. The banks created complex financial products called “derivatives”. They pooled assets such as mortgages, bonds and loans, into collateral debt obligations (CDO’s), and, in criminal collusion with insurance companies and rating agencies (Standard and Poor’s, Moody’s and Fitch Ratings), swindled unsuspecting customers by selling insured derivatives called “credit default swaps” and “mortgage-backed securities” (MBS) to investors and other insurance speculators. In September 2008, the U.S. investment bank, Lehman Brothers, went bankrupt and the world’s largest insurance company, AIG, triggered a global financial crisis, costing the world tens of trillions of dollars and rendering 30 million people unemployed.

In Belize, from 1998 to 2008, the PUP was ensnarled in this political conviction of deregulation, privatizations and “trickle down” economics. The Belizean people were angered by this neoliberal economic thinking, and, on the 7th February 2008, voted overwhelmingly for the UDP, granting them a three-fourths majority in the House of Representatives with the absolute political power to pass any motion, bill or constitutional amendment, so desired. After losing the National Elections in 2008, former Prime Minister of Belize, the Hon. Said Musa said, “There is this feeling that some people took advantage of the situation, some well-to-do people…that in terms of translating the benefits of growth, that it was not spread sufficiently across-the-board. I will readily concede that…”.

Prime Minister Dean Barrow and the UDP assumed the reins of power after a landslide swing, with the promise of transparency and accountability, convincing the Belizean people that their obligation was to Truth, and first loyalty, to the citizens of Belize. In February 2008, at the inaugural ceremonies of the National Assembly, Mr. Barrow signed a promissory note to which every Belizean was to fall heir: “There is no room for failure. We know that there is no room for anything other than to walk the straightest, truest governance course ever on behalf of the people of this country…We will lower GST. We will reduce the cost of living. We will bring down the price of fuel. We will distribute land to the poor. We will expand free education. We will create jobs. We will do this, Mr. Speaker, while stamping out ministerial corruption and creating an administration properly policed by the Contractor General, the Auditor General, the Ombudsman, and the Upper House.”

The UDP’s political-economic philosophical conviction appeared to be the view that the function of government is to protect individuals from the vicissitudes of fortune and to control the operation of the economy even if it involved government ownership and the operation of the means of production. P.M. Barrow said, “We have been forthright in embracing and promoting – indeed proselytizing – the role of the state in driving economic development; in stimulating demand; in stepping into the breach always, but especially when there is any slackening of private sector activity. It has been our practical and philosophical conviction that big government is a necessity for small countries. We will therefore continue to ramp up the public sector investment program.” The Barrow administration implemented the two main Keynesian policies of (1) reducing interest rates (monetary) and (2) investment in infrastructure (fiscal). Mr. Barrow boasted, “And there is a sixty- million- dollar infrastructure package to be financed and implemented via the newly-registered, wholly GOB-owned, private company called Belize Infrastructure Limited. This is the special-purpose vehicle that will create jobs, stimulate demand, purchase private sector material and supplies, and generally raise that tide that will float all Belizean boats.”

Mr. Barrow’s good intentions have largely remained just that. In Belize, poverty and inequality are growing even in the midst of plenty. The centrally-led UDP government, with its top-down development policies and programs, continues to pursue an unrealistic and vulnerable debt-led consumption-promoting and import- intensive growth strategy, failing to invest in domestic capacity- building. The UDP government throws millions of taxpayers’ dollars into a sinkhole of bogus poverty reduction and social protection mechanisms, accomplishing nothing. These include Gang Truce, Restore Belize, Food Pantry, Conditional Cash Transfers (BOOST), Christmas and pre-election $50,000 dollars lump- sum transfers to UDP standard-bearers and ongoing monthly paying of water bills, electricity bills, and house rents to loyal UDP voters, especially in the Belize City south-side constituencies. This pork barrel system of distributing benefits in kind and in cash is saliently wasteful and inefficient. Half of the food rations, donations and money disappear into the pockets of the politicians, their families, political appointees and party stalwarts.
The waste is distressful, having a searing effect on the fabric of the society. They weaken the family, reduce incentive to work, save and innovate and reduce the accumulation of capital (reduce domestic savings). There is declining primary school attendance especially in the most vulnerable south-side constituencies and rising primary school dropout rates. There is increasing absence of male role-models who could motivate young boys to stay in school, high levels of female-headed, fragmented households, and low parental capacity to provide the structure, stability and information needed to establish and maintain effective discipline and support the building of life skills in their (often numerous) children.
UDP- owned consultancies and companies involved in construction, pharmaceutical and hospital supplies procurement, and other government projects are raking in millions. Political appointees and contract officers receiving salaries, at and above pay- scale 23, have increased by the thousands since 2008. Social Security and NHI are continually being scaled- back due to “lack of funds”, providing inadequate benefits and insufficient population coverage, yet upward of $50 million dollars have already been taken out of workers’ Social Security to subsidize the nationalized B.E.L. and B.T.L. companies.

Through the coercive power of “Big Government”, Prime Minister Barrow has created a UDP clique of political entrepreneurs, a Belizean nouveau riche, so- called businessmen with monopoly status and subsidized by the government. Prime Minister Barrow presides over a Belize that now jettisons and endures the foulest rule yet, in the form of the Noh Mul and rosewood scandals, a grossly corrupt and mismanaged public health system, a hotbed of corruption in the Ministry of Lands, the passport and visa scandals, Social Investment Fund contracts-peddling, bribery and influence-peddling, and unprecedented gang violence and crime giving Belize the third highest murder rate in the world.

Corruption is defined as an act in which the power of public office is used for personal gain in a manner that contravenes the rules of the game. Prime Minister Dean Barrow and the kit and caboodle of the UDP have proven to be nothing more than self-aggrandizers and self-perpetuators who subvert and debauch key institutions of government to serve their interests and not that of their people. It is obvious today that the Prime Minister has defaulted on his promissory note, giving the Belizean people a bad check.

Belize now finds itself in a social as well as economic crisis. The current government has failed to identify the shared root causes of the current social ills: poverty and inequality. Pope Francis has said, “As long as the problems of the poor are not radically resolved by rejecting the absolute autonomy of markets and financial speculation and by attacking the structural causes of inequality, no solution will be found for the world’s problems or, for that matter, to any problems.” All Belizeans must take collective responsibility for a Belizean society that has become selfish, exploitative, corrupt, and hopeless. Resigning oneself to victim status within the present unfair system and resorting to reckless living is no solution. All Belizeans must recognize that political parties and politicians will not disappear in the near future. All are obliged to participate in politics and be protagonists of a new historic movement. Belizeans must become participants, forcing politicians to respond to the will of the people. There must be a shift from consumption-led to investment-led growth with domestic capacity-building. Government must have sound fiscal policy, policy certainty, and clear rules of engagement with the private sector. A clear and predictable policy environment enables the private sector to invest more sensibly, by better planning long-term investment strategies. We must find ways of returning far more of our dependent people to independence, returning them to a participating and productive role in the community, doing sound and useful work.

PUP Leader, the Hon. Francis Fonseca best describes the core functions of government as (1) the delivery of reliable, quality and affordable public services,(2) the regulatory and enforcement functions, and (3) public security. Fonseca reiterates that the private sector should not be a source of ever-increasing, crippling taxes to fund sprawling government projects and ambitions, but that government should be a source of creating an enabling environment for the private sector to attract and undertake investment, grow business and create employment. Government must use its fair share of taxes to provide essential public services in health, education, personal security, infrastructure and Belizean sovereignty.

What will it take to lift our nation up from the quick-sands of corruption, injustice and bad governance? It cannot be about the UDP or the PUP. It is about Truth. It is about first loyalty to Belizean citizens, before loyalty to party. It is about ending inequality and greed. It is about overcoming the love of power with the Power of Love. It will take a joint enterprise of the media, civil society and all persons of goodwill to recover for Belize, the moral, political, and social high ground. We will not be satisfied until “justice rolls down like waters, and righteousness like a mighty stream.”