REPORT #48 Feb 1999
BELIZE ECONOMICS VERSUS POLITICS!


Produced by the Belize Development Trust
The Senate Hearings with Greenspan again today, reiterate two new factors that seem to have evolved since the end of the Cold War. And these things seem universal to all countries, including Belize.

To stimulate the economy, you can reduce the debt ( the USA spends 35 to 40% on it's budget on paying interest on the debt ), or you can cut taxes. When you cut taxes, you inevitably reduce government. At least in the centralized sense. You disperse it to cheaper methods at local level.

The arguments put forth by economic ministers in many countries, take many forms, but essentially the nut of the issue, is which is better to do? Reduce the National Debt, or cut taxes. Greenspan has testified that between the devil and the deep blue sea, he thinks that reducing the National Debt has priority over cutting taxes for a big economic effect.

In the Belize context, the PUP have said they are going to cut taxes ( but not the government-GOOD TRICK IF YOU CAN DO IT!), but are in fact increasing and probably going to double the debt in five years (100%).

In the light of the new world economic order, the low commodity prices and low oil prices in particular are making this course have some legitimacy. But should oil prices suddenly rise, we are going to be one sorry country, if the debt has not been reduced.

In the argument for stimulus and economic activity, Minister Fonseca has pushed the so called GROWTH ECONOMICS plan. Which means greater government spending. Plus increased national debt.

Yet at the Senate Hearings in the USA, empirical evidence shows, that around the world, since the end of the cold war, the putting of what was military budgets to private use in the public sectors; such as Community Colleges that have re-orientated their educational programs to courses and degrees of substance to the economy, is producing this 8 year boom in the USA. It is often argued that government spending, either in the military, or other ways, is needed to boost an economy. On the contrary, says Chairman Greenspan to the Senate Committee. Government spending in the military as an example has proven to be wrong, for those senators arguing for more military budgets to boost the economies in their states. Putting the same dollars of the budget into progressive education has been more productive. Military spending while necessary, is a dead end economically and does little for the country. This has been proven since the end of the Cold War around the world.

One of the unusual debates that should be held for the future, is how do we regard Belize today? It is obviously a Third World Country. It will continue to be so, should it become wealthy. But is it an underdeveloped country?

To answer this question, for those of you like me, who have lived through the changes from Colonialism to self government, to independence, is complicated. For one thing the population has grown four or five times. Yet, I now see telephones most places. Electricity most places of a sort, roads to most places. Given the infra structure developments and the level of population, I am of the opinion that Belize is no longer underdeveloped. It is not an undeveloped nation compared to the numbers in the population.

Of course we need to pave some highways, fix the southern highway, get more hydro electric dams. But these things are improvements on what basics we already have. Only if population was to explode some more, through immigration, would we be shoved as a nation back into the status of an undeveloped nation. As it stands now, we are basically developed and any new improvements in infra structure are needed to stay abreast of population growth. Or improve those things we already have. I used to go to Punta Gorda on the coastal freighter Heron H, then the Honduran and now you can fly, or go by road. Xaibe was a long hike with a mule to Orange Walk then.

If Belize is not classified now as an undeveloped nation, but a developed nation with improvements to be made in existing infra structure and expansion of same with natural population growth, then what should the economic policy be? What changes, including political re-structuring can we do, to more effectively make Belize the nation a strong place? As a developed thirdworld nation? Education is already changing and needs to accelerate.

But how much should we spend on the support of a colonial style political structure that is inherently seasonally wasteful? How much military is enough and to what expense? What medical services can be supported and should be supported as preventative medicine, in the social context and at what portion of the budget? How do we get the national debt to disappear? Working on a balanced budget with surplus in reserve?

The old political party battle cry, of infra structure and development, no longer rings true with the same force of the shouts of political party posturing of yesteryear. Shouldn't the cry now be political restructuring and reducing the National Debt? Isn't it in our best interest to position ourselves for what is going to be an inevitable cycle of a decline in world economics? Shouldn't we be doing this now?

Back to Main Belize Development Trust Page

Maintained by Ray Auxillou, Silvia Pinzon, MLS, and Marty Casado. Please email with suggestions or additions for this Electronic Library of Belize.