Part 1
Commenting on the Sonu Nigam concert, Mr. Romain Khan wrote a very perceptive letter titled `The Nigam concert and false consciousness’ (Stabroek News on May 12, 2014). The letter does not disparage East Indians in any way, even though some have tried to label it that way. It never said East Indians must stop practising the religions they brought from India. It never argued against East Indian cultural tastes as evolved since 1838. My interpretation of the letter is it calls upon East Indians to not only recognize the sentimental and cultural aspects of life, but also the political and economic context within which their culture and traditions have to be practised. Indeed, many economists have argued culture as a form of institutional construct can shape economic outcomes. This essay, however, is not focused on that. Instead this column and the next one will outline some of the political economy considerations that East Indians should consider since these directly impact on their freedoms and ability to participate in culture.
Before we can do so there has to be some historical context. The Slavery Abolition Act of 1834 meant that African slaves would be free to mobilize in the labour force at the time. However, that would not be the case as indentured immigrants – of which East Indians comprised the largest group – would alter permanently the nascent labour market. The new immigrants increased the supply of labour and added competition in the nascent market. It would have a permanent implication for wages of immigrants and freed slaves alike, including the distribution of the planters’ aggregate wage bill. In addition, as immigration pushed the wage rate towards the subsistence level, the planters or capital owners were able to extract an ever larger surplus, while ex-slaves and immigrants shared the relatively small wage bill.
In this setting the seeds of conflict over limited economic resources in a country were planted. Guyana is not as resource rich as we tend to believe. A brief period of political cooperation took place between the two main ethnic groups under the united PPP in the 1950s. When the split in the PPP took place the masses of East Indians and African Guyanese parted company to support the PPP and PNC, respectively. There have always been a minority of Guyanese from all the ethnic groups who are willing to act as the middle group and vote for a third party. Their voting pattern has perhaps the highest degree of randomness and therefore is up for grabs by a political movement with a message that can excite this group while not alienating the ethnic base.
There has always been a struggle for scarce economic resources between the masses of the two main ethnic groups. The PNC part 1 tried to distribute resources through cooperative socialism and party paramountcy. With the death of Mr Burnham in 1985, PNC part 2 unleashed a series of free market reforms consistent with the ad hoc manifesto known as the Washington Consensus. Under PNC part 1 the economy stagnated for various reasons including bad economic policies, external shocks like the two oil crises and non-cooperation and sabotage by the PPP, which had behind it the support of the masses of East Indians. Growing up in village life, I know the going sentiment among East Indians was never to cooperate with anything the PNC did. This was their response for the perceived election rigging by the PNC. The then awesome mobilization machinery of Dr Jagan’s PPP was able to keep most East Indians from cooperating. Those few in my village who joined the National Service or worked for the public sector were viewed with suspicion and sometimes avoided.
Therefore, many of the visionary ideas of Mr Burnham could never work. Even rice flour, today celebrated for its gluten free property, was seen as oppressive to the East Indian diet. As far as I know, all groups ate a diet in which wheat flour is a basic carbohydrate. That the PPP succeeded in motivating East Indians from staying away from the public service raises an interesting concept which I will call endogenous discrimination. To what extent the low representation of East Indians in the public institutions in those days represents active discrimination by PNC part 1 or fulfillment of the PPP’s strategy of non-cooperation? We therefore have here a classic problem of endogeneity (to use a favourite term of economists) that needs to be uncovered. It will require painstaking historical research, with sound cliometrics, to figure this one out.
The next President, Mr Hoyte, unleashed a different set of policies under PNC part 2. This included massive economic liberalization and a clamp down on criminals. Many were jailed including the head of the House of Israel who ironically was later set free by the PPP after it won the election in 1992. Party paramountcy and cooperative socialism were quickly replaced by free market policies and efforts to create an independent public service. Again the PPP leaders were never going to cooperate because of the fraudulent 1985 election and the added flavour of a PNC moving towards free market capitalism that elicited great scorn from Dr Jagan. The East Indian masses were again mobilized for non-cooperation, sabotage and several in the diaspora and in Guyana (the Catholic church in particular) played an independent role to get the Carter Center involved in Guyana. Free and fair elections finally came in 1992 and PNC part 2 was displaced by PPP part 1 under Dr Jagan.
Although not in great shape, the economy turned the corner under Mr Hoyte. GDP growth in 1991 and 1992 averaged over 7%. PPP part 1 never made the crucial reforms that were needed in its early life, including reforming the police force. The same commissioner was retained. Some have questioned why. PPP part 1 appeared to be going through the motions without a serious vision for the economy. Even under relative stability, foreign investments were slowing down. The PNC, now in opposition, was never really going to cooperate either. A major dilemma would result for the PNC if PPP part 1 was able to make serious moves in the area of economic development. Indeed when the PPP was in opposition it faced the exact dilemma; hence, the incentive for non-cooperation and sabotage by the leaders backed by their respective ethnic masses.
An opportunity to oppose the PPP came with the announcement of the Beal Deal, a private rocket programme that was intended for Essequibo. I was able to observe several of the opposition commentaries at the time since I was a young economist working at the Bank of Guyana. Most of the opposition to the private rocket programme made little sense to me. However, PPP part 2 under Mr Jagdeo provided ample opportunities to oppose the government. Mr Jagdeo provided many low-lying fruits. Indeed, any credible opposition had to oppose given the deep deficit of good governance. The Amaila project started off on the wrong foot with the road fiasco. The Marriott project made little sense as the insolvency of Tower Hotel last week shows. The same can be said about the eight-gate airport terminal.
In the next column, I will outline some of the specific issues East Indians should consider that will enhance their social and cultural experiences. I would also use some analytical tools of economic science to explain why the present constitution produces the incentive for non-cooperation and therefore a non-development trap.
Comments: tkhemraj@ncf.edu
