Home' Trinidad and Tobago Guardian : May 18th 2017 Contents BG16 | FINANCE
BUSINESS GUARDIAN guardian.co.tt MAY 18 • 2017
"Those within (welfare
system) grow up
with a series of ex-
pectations: you can
have a home of your
own, the state will
support you whatever decisions you make, you
will always be able to take out no matter what
you put in. This has sent out some incredibly
damaging signals. That it pays not to work.
That you are owed something for nothing."
Can you identify the politician and the coun-
try where the above quote was made? With so
much of our national budget centred around
entitlement provisions, this quote could easily
be about T&T.
Everyone in society enjoys some measure of
the following subsidies: unemployment relief,
free housing, free healthcare, free education,
free medication, subsidised water, fuel and the
list goes on. Yet, despite such high levels of
entitlement spending the required govern-
ance structures and economic development
programs that allow a country to consistently
afford such entitlements have not been insti-
Today in T&T, just as in other parts of the
world, it is clear that those spending patterns
have to be changed and the dislocation will
have political and economic consequences.
The fact that these changes are underway is
commendable. The big question, of course,
is whether we will actually stay the course.
Appreciate, though, that old habits die hard
and so the big story after the mid-year budget
review was that the fuel subsidy stays with the
implication that fuel prices are unchanged. The
signal from the population and what has been
mirrored back to them via the media is that
the longer we can hold on to these entitlement
programmes the better. If only that were true.
The above quote is from British Prime Min-
ister David Cameron as reported in The Aus-
tralian of July 7, 2012. It should, therefore, be
clear that the entitlement culture is not unique
Referencing the same article Cameron high-
lighted the young couple both employed full-
time in service industry jobs, together earning
24,000 pounds versus a couple who have never
worked, have four children, get paid 27,000
pounds by the government.
Here in T&T we have a choice: do we let go
of the entitlement culture gracefully or have
it forcibly removed from the national land-
scape through some external mandate in years
The Government has stated its intention as
it can no longer afford to carry these subsidies.
However a necessary prerequisite is ensuring
that our institutions function properly so that
people can get by, accomplish and innovate
within the system as opposed to having to
continuously try to eek out a benefit or an
After the Government is the question of
whether every single citizen is prepared to
accept and embrace a concept called personal
At its core, personal responsibility means
the rejection of entitlement. If an individual
chooses to work hard and obtain a decent job,
this means they are earning their income, not
receiving it as a handout; and they expect their
compatriots to do the same.
A culture of entitlement can only exist in the
broad society if it becomes clear that everyone
is enjoying a benefit from something they have
not earned. This is clearly the case in T&T. We
are a nation that thrives on unearned benefits
and are disappointed even to the point of vio-
lence if those "benefits" are not administered
as and when demanded.
So, instead of diligently developing skills and
seeking employment we line up for a CEPEP
contract and work for half the day for a full
Instead of studying for a scholarship we line
up for GATE. Instead of purchasing a car we can
afford to drive we over reach relying instead on
the fact that fuel is subsidised. Now that these
things are being cut back we complain because
our lifestyle has already been calibrated to cater
to the subsidy.
Instead of living a healthy lifestyle we party
hearty, consume alcohol, then eat some fast
food to sober up and come next week we are
at it again.
Healthcare and, for some, medical supplies
are free so who cares. The long term conse-
quence is the burgeoning cost of health care
and an overburdened hospital system that we
are no longer able to afford.
Instead of innovating our way to success or
striving to be best in class, every business seg-
ment from contractors right down to attorneys
seek out contracts from the State and those
with the closest links for the longest period
of time also seem to be the wealthiest.
When prices rise instead of cutting back we
ask for more money, that of course equates to
inflation, in an inflationary environment the
best investment is property so the demand for
property rises, plus the increased cost of labour
means that house prices rise.
Now some are getting taxed on these arti-
ficially increased valuations. I say artificial in
the sense that you don't see a rise in property
as we have experienced from 1997 to 2017 (20
years) without significant external and unsus-
tainable factors, what in simple language you
will refer to as a bubble.
The solution to the overpriced property
market that is beyond the reach of the aver-
age citizens is not a push back on those that
mismanaged inflation and dumped excess li-
quidity into the system and did not facilitate
the development of the capital markets so that
there were adequate investments for the flow
of capital. No, the simple solution, of course,
is free or subsidised government housing.
As with the above housing market example
when challenges arise due to lack of economic
foresight then the solution is to pour on more
subsidies either directly or indirectly. An ex-
ample being when the Central Bank cuts in-
This punishes savers and rewards borrowers
but it also drove consumption and allowed for
people to purchase property even at the ele-
Everyone sees their income and lifestyle sub-
sidised in some way so personal responsibility
takes a back seat. The problem is that subsi-
dies over time also reward the most deviant
behaviour. The gang culture, the corruption,
the squander mania are all symptoms of the
Many have asked how come T&T has a crime
problem when it is such a wealthy country. I
am no criminologist but plot a chart of Gov-
ernment spending on transfers and subsidies
and the murder rate. The only question here is
if the correlation is causal or casual.
The problem is that our politicians have
brainwashed us into thinking that they offer
handouts and subsidies because "they love
. What goes by unnoticed is that subsidies
are tools of political patronage and political
patronage translates into votes. What we have
experienced is not action for the betterment of
T&T but rather a selfish action to ensure po-
litical longevity. I am no political scientist but
is it any coincidence that the two politicians
with the longest tenures as Prime Minister have
also been the two who have doled out the most
"freebies" to the citizenry.
In my opinion there is no substitute for al-
lowing market forces to be the majority de-
cision maker for any proposed outcome. Of
course, this means the politician relinquishing
control and the people having more of a say
in their desired outcomes but longer term it is
better for the functioning of society.
The removal of the gas subsidy, for example,
can actually benefit of the population. Since
it affects everyone it can force all of us to sit
up and take notice of the beneficial role that
market forces can play in our lives and if market
forces can prevail over political patronage then
we can actually become wealthier. For no other
reason except that it is directly linked to the
fuel subsidy I will use Petrotrin to illustrate
The removal of the gas subsidy and the
opening of the market means that you either
innovate or die, you either produce or you close
down. An unreasonable labour climate will di-
rectly affect the population in their wallets via
the price of gas and transport.
Suddenly the dynamic has changed. The
idea that "if I am working hard to be able to
afford gas for my car, then everyone else had
better be working just as hard to ensure that
the price is kept as low as possible" is now at
hand. That is personal responsibility and is
sadly lacking in T&T at this time.
T&T can respond to this challenge by gov-
ernment evolving into enablers rather than
controllers for the sake of political expediency.
Ultimately, this means government must
reduce its presence in the commercial space
and restrict itself to providing infrastructure,
security, regulations and education. Develop-
ing the forces of the free market is the best way
to reduce this culture of entitlement.
Ian Narine is an investment adviser registered
with the SEC and can be contacted at ian.
Our culture of
We are a nation that
thrives on unearned
benefits and are
disappointed even to
the point of violence
if those "benefits" are
not administered as
and when demanded.
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