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BUSINESS GUARDIAN guardian.co.tt AUGUST 10 • 2017
and private sector
The Prime Minister's press conference
in which he attempted to explain his
government's recent action on CL
Financial (CLF) exposed his limited
appreciation of how the economy
operates and a government's role
particularly in times of economic disturbances.
The PM revealed that when the Manning adminis-
tration chose to bailout CLF he was not in that gov-
ernment's Cabinet, so much so that he demanded
precise information and the constraints of the in-
tended bailout---then $5billion---before he cast his
approving vote in Parliament.
He made it clear that he did not really favour the
bailout and to highlight this position in his press
conference he insisted that the bailout was the use
of taxpayers' money to fund a private company; his
tone suggesting that this was absurd.
The Prime Minister also appeared to disagree with
the PP government's expansion of the bailout to in-
clude the small pay-outs to some EFPA investors and
long-term bonds to the others. His reasoning was that
these investors took the risk in return for a promise
of higher returns. Hence in fairness to the taxpayer,
they---the investors---should simply lose their in-
vestments. He even said that Prof Patrick Watson,
then a PP senator, objected to this taxpayer funding
of the investors.
In summary, the PM's view appears to be that CLF
should have been left to go to the wall and its inves-
tors suffer their loss since CL Financial is a private-
ly-owned company and government funds, taxpayers'
money, especially when government had to borrow
money to make ends meet, should not have been used
for this bailout.
What seems to have evaded the PM---and this is
understandable given that we are a petroleum-based
plantation that depends almost exclusively on for-
eign exchange income from the foreign investment
dominated energy sector---is that the on-shore pri-
vate sector (crippled by its plantation history) has
to be encouraged to develop globally competitive
exporting companies. This is crucial given the cur-
rent depleting state of the energy sector resources
and their low prices.
Further, world experience shows that the success
and sustainability of this kind of economic recon-
struction depends on the integrated effort of the triad
of government, private sector and the R&D institu-
tions. CLF in its glory days was a company with some
65 companies in 35 countries, a company that innova-
tively used local and regional low risk-capital to build
a global conglomerate that earned foreign exchange
for the region. Hence it is not only in the interest
of CLF and its shareholders that it should continue
to exist, to earn foreign exchange, but the on-shore
economy that imports virtually all that we consume,
needs this foreign exchange to provide also on-shore
employment to 95 per cent of the labour force.
Hence the use of taxpayers' money to bailout CLF,
a private company, was not as absurd as made out,
but an action that could preserve for the future a ca-
pacity to provide foreign exchange, the lifeblood of
the on-shore economy.
The current situation of a generally risk averse pri-
vate sector and an energy sector that is contracting,
needs an intervention by the government to build
new exporting companies which will initially require
government funding, the use of taxpayers' money,
to finance the necessary R&D, the start-ups and
enhancement of existing companies, the marketing
and market development that are necessary to build
the new economy.
The Finance Minister recognised that the task of
diversifying the economy will be difficult and this he
intends to address after he has stabilised the econ-
omy in this long-term recession. Stabilising in this
context means reducing aggregate demand for for-
eign exchange to that which is being earned mainly
by contracting the economy. However, the building
or diversification of the economy will increase ag-
gregate demand for foreign exchange and as such is
a task which has to be addressed in parallel with the
reconfiguring of the economy.
CLF has a major part to play in this new economy.
MARY K KING
One of the key pil-
lars of a sustainable
economy is a thriv-
ing business sector.
The role of the State
should ideally be one
of facilitator rather than player in this
scenario. Given the current economic
downturn and related challenges facing
the country, what opportunities there-
fore lie for the larger groups of affected
workers such as the employees of the
largest employer in the land, the Gov-
It cannot be business as usual, where
workers are blindly led down the streets
of T&T shouting after a dead horse,
believing that the only definition of
production is some nebulous entitle-
ment to becoming and or remaining an
employee of the government.
If we accept that government's pri-
mary role is that of facilitator of busi-
ness, we should equally accept that gov-
ernment's role is not that of providing
employment in a non-business sector
which, in turn, only serves to create
deeper demands on the smaller por-
tions of taxpayers from whom it (the
Government) otherwise earns the bulk
of its revenue.
If an organisation cannot sustain its
employee complement, and retrench-
ment is inevitable, there is nothing any
government can or should do to stave
this off save that of ensuring that the
laws protecting such workers are en-
forced, and that all required steps are
taken to also ensure that employers pay
to such workers their severance and
other termination benefits.
The legal framework to achieve these
protective measures is not one that must
be developed (or redeveloped, as the
case may be), as a knee-jerk response
to a weak economy, but one that must
be put in place even before tough times,
as to do otherwise would easily be seen
as driving a nail in the proverbial coffin.
Here's the idea.
The members of the trade unions (and
the trade unions as a group of associa-
tions) can use the synergies of associa-
tion membership to transform the out-
dated---and I dare say, obsolete---mantra
of "no job must go" to one of "putting
their money where their mouths are."
They must grasp the opportunity to lead
by example, and only then can they jus-
tifiably claim to have the moral and oth-
er authority to criticise poor governance
practices and blindly level accusations
of mismanagement without raising the
discourse to one that has the potential
for organic growth.
It is easy to stand for the masses from
the outside and criticise those who
control or manage. The question that
perhaps needs to be posed is: how much
of business do the trade union leaders
They spout the rhetoric of "manage-
ment must go" yet their silence is deaf-
ening in relation to the core factors that
keep an economy afloat, such as pro-
ductivity and returns on investments
for investors. Like it or not, these are
valid considerations as without inves-
tors, there would be no business. Period.
One mechanism to consider in this
context is the co-operative model of the
business corporation, a model which
has seen certain degrees of success such
as in the case of the La Lega coopera-
tives in Italy and the Mondragon group
This model is one in which the owners
of the corporation are also the managers.
In this system, founded upon co-oper-
ative principles (such as what obtains
in credit unions), the managers are in
control of their own investments, un-
like the case in the stereotypical private
limited liability company in which the
owners appoint "agents" as the manag-
ers of their investments and (in varying
degrees in the latter example), they cede
control to the managers, increasing the
cost of monitoring so as to prevent the
abuse that tends to take place when the
managers are not spending their own
In the co-operative model of the cor-
poration such as what is seen in Italy and
Spain, individual members are commit-
ted to the success of the enterprise, as
they are active decision makers and
participants in the enterprise.
Their push is that of balancing short-
term gains from their investments (eg
through salaries and other benefits de-
rived from cooperative principles) with
their long-term interest in ensuring the
long-term viability of the enterprise.
The nexus between owner and man-
ager in this model lends itself to reduced
"monitoring" costs which are typical-
ly much higher in the limited liability
model of the corporation.
Though not without disadvantag-
es, in the worker owned and managed
cooperatives, worker/owners are bet-
ter informed about decisions taken by
managers. There is also the tendency
to utilise voluntary dispute resolution
mechanisms to resolve conflicts than
Additionally, accountability and
internal monitoring are achieved at
lower cost, and last but not least, the
narrowness of the gap between work-
er and manager in this model leads to
higher morale in the workplace.
These are not pie-in-the-sky ideals.
They exist in the models which have
thrived in Spain and Italy and, to some
extent, in the credit union movement in
T&T, as this sector has thrived in com-
petition with the larger banking sector.
I suggest that the trade union move-
ment in particular should apply some
of the increasingly scarce resources
towards exploring the opportunities
which this model presents, not only for
the benefit of its members, but for the
benefit of the wider society as a whole.
The opportunities are ripe in the
country, for the application of this mod-
el of enterprise to sectors such as the
agricultural sector, especially in terms
of increasing production for the purpose
of export, as well as that of satisfying
local demand. The markets are there.
The challenge isn't that of embracing
the opportunities that are staring us in
the eye: it is about how and when are we
going to change the discourse from that
of shouting to one of informed listening.
A case for worker
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