The PPP has just unveiled its manifesto, days before the election, while the main opposition alliance is yet to do same. For the 2011 election, the AFC outlined its Action Plan or manifesto in January of that year, a good 10.5 months before the election date. Now, that was confidence! What are some features of a visionary manifesto? What are some principles on which the manifesto should be based? In general, it should indicate broad and consistent vision of where the political party intends to take the country. It must have some economic logic tying together the broad proposals.
First, the manifesto must have some basic ingredients of how to tackle the chronic problem of the shortage of human resources. At minimum, therefore, it should include a vision of upgrading post-secondary education. It must show an understanding of how the University of Guyana (including CPCE) can help to improve the education standards at the primary and secondary school level.
The document must clearly outline sensible measures of physical security, so that human capital is not wasted in the underground economy, compelled to migrate or get killed by bandits and drug runners. Superior healthcare will also improve human capital. Voters should read the documents to see which party has a vision such that Mr. Jagdeo or Dr. Luncheon will confidently stay at home for medical treatment and surgery, like Mr. Burnham who chose thePublic Hospital. A diaspora policy or principle will also indicate the party is seriously thinking about the human resource shortage. Of course, a credible plan to reform the police force will signal the party is serious about allowing Guyanese human beings to reach their true potential.
Second, one of the main problems facing Guyana is the public service and the semi-autonomous agencies like NICIL are captured by politicians and special interests. Hence, there is no developmental state in Guyana. The leadership of the public service lacks credibility as information and data are withheld from the people. A mere plan to increase public servant wages will not cut it. There has to be a vision to make the service credible and capable of implementing big projects. For example, what plans are given to prevent NICIL from being captured by special interests?
Which party promises to place a non-political figure at the Head of Presidential Secretariat? Are Permanent Secretaries going to be politically neutral? Will people be employed at semi-autonomous agencies like NICIL and the general public service based on merit? Will they have to take a rigorous exam before getting employed in the public service? A developmental state is the second pillar of economic growth, as important as the private sector, as the Singaporean, Korean, Japanese, Taiwanese experiences showed.
Third, the manifestos should signal that the parties will address the numerous coordination failures endemic in the Guyanese economy. One way to address coordination failures is to encourage production linkages using clever incentives. For example, a housing programme can serve as demand for domestically produced prefabricated building components. Sugarcane and coconut can become feedstock for numerous industrial applications, including renewable energy and food inputs.
Fourth, the parties should persuade readers that they are serious about maintaining stable exchange rates and expected inflation. It does not matter how much we talk about well-intentioned policies relating to youths, elders, gender equality and the like, a 50% depreciation – for instance – will make life unpleasant for everyone. This is the principle of a stable macro-economy through sensible monetary and fiscal policies. The taxation and spending proposals of the parties will say a lot about whether the rhetoric is credible.
Fifth, hinterland development has been elusive since the Dutch settled in the Essequibo and Berbice in the seventeenth century. Several colonization attempts (in particular the Jewish and Assyrian settlement plans) failed for various reasons, but partly because of the exorbitant financial costs of linking the Rupununi with the Atlantic. This one will not be easy, but it does allow the political parties to dream big by indicating credible systems of settling the hinterland. And how are the goods from the hinterland going to be transported to the Atlantic or North Brazil? The population of North Brazil is not as large as one might believe. It is also much dispersed, thus it might not allow for gaining large scale production advantages, unless they find a way to transport products up north. Of course, everything is possible once we can fork up tens of billions of United States dollars in an approximately US$3 billion economy.
Sixth, the political parties should explain how they plan to enhance financial intermediation, which means channelling the society’s savings to investors, so that the latter can take risks and employ people. It is simply not possible to have a modern economy without financial intermediation. The question remains whether the government will need to take on a more active role through development banking, which complements (not replaces) the private commercial banks – possibly through loan syndicates – or should it be done by micro credit schemes and more private commercial banks. Should government be thinking more about privatization through the stock market so as to encourage more financing through capital markets?
On the surface it sounds appealing that allowing more private commercial banks will bring competition and drive lending rates downwards. One point to note is banking systems around the world, including the United States, are becoming more concentrated (what economists call oligopolies). Dividing up a small loanable market like Guyana’s will not necessarily reduce interest rates since banks have to mark-up the rate taking into consideration marginal cost and risk. If a bank’s share of the market demand for credit is smaller, then they will have to increase interest rates to preserve current profit levels. It also implies they will have to operate at a higher unit cost (on a higher segment of the long run average cost curve). They are not evil for doing so.
The only way of reducing interest rates is for the new private banks to be subsidized by government. That raises a whole lot of political questions. Who gets the new bank licenses? And who gets the subsidy? Of course, micro finance makes for good political headlines, but that’s about it. This leaves us now with development banking (or private-public loan syndicates), stock market and bond market as options.
Seventh, constitutional overhaul is crucial given the hostile politics and the divided country. This election season has certainly worsened race relations, thus making constitutional overhaul much more needed. Of course, the parties should signal credibly that they will tackle corruption by committing to local government elections, the Procurement Commission and other measures. The local government system in numerous villages has become a system for trickling down patronage to PPP village organizers.
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