The Ethno-income-wealth distribution problem and the no-confidence vote
By Tarron Khemraj OnIn Business Page |
It is no surprise to me that the legitimacy of the no-confidence vote is being challenged, led largely by the PNC section of APNU. The leaders of the minor parties were given personal privileges of 40% weight that far outstrips the 10% to 12% of votes they won. I am not saying that the 10% votes is without significant value. The PNC would not be in power without these votes. Indeed, there is a dominant branch of economics that says value is created on the margins.
However, the minor leaders from AFC, JFAP and WPA were expected to surrender policy space to the PNC since they were rewarded with personal privileges. They are at the intrinsic level careerists. Therefore, crafting a Cummingsburg Accord around some core policy principles was never on anyone’s mind at the level of résumé building and prados. Therefore, the members of the smaller parties are relegated to following the policies and dominant strategies of the PNC old timers who have launched a vociferous challenge to the legitimacy of the PPP-sponsored no-confidence motion. This was expected and to me reminiscent of the early steps of the destabilization strategies of the 1990s, starting from the moment the 1997 general election results were known – long before Roger Khan could be the PNC’s alibi.
Suddenly 33 is not a majority in a Parliament comprised of seats equivalent to the positive integer 65. Rumours of bribery are rife, just like the rumours of widespread drug dealing under the PPP, which no doubt provided credible reasons to fuel such rumours given one of its survival strategies in the long-term battle of tit-for-tat with the PNC. The PPP was baited into leaning left during the uprising (and after) and as a result it had no option but to rely on the way of the warlords as a dominant strategy. Some members of the security forces did not cooperate with the PPP government. Hence, the PPP turned to help from outside of the established institutions. In typical warlord fashion, those offering to stave off destabilization did so to further their dominant strategy of illegality. Note, I am using the term dominant strategy because it is an established solution method from game theory.
I don’t support these old extra-judicial strategies, nor do I believe the no-confidence vote is illegitimate as the government argues. I also do not agree that this is the best time for a vote of no-confidence; the APNU+AFC should have had their full term. However, as an academic who has followed the dominant strategies of the leaders of the two main ethnic camps, I have a duty to extract the long-term trend from the daily noise. This is why I mentioned I am not surprise. Even if the no-confidence vote never happened and if the APNU lost the general election, I don’t believe the PNC will give up power.
This is because the constitution – which promotes winner takes all – necessitates that the loser not cooperate and actively seek to undermine the winner explicitly or implicitly. This becomes even more toxic once we add the ethnic competition over scarce economic resources – the struggle for a share of the national roti, otherwise known as national income. The lure of oil – in spite of the bad contract, geopolitics and the price uncertainty – also enhances the stakes and makes the dominant strategy of undermining the winner a necessity. If not, the other side gets most of the privileges and patronage because of the logic of the strategic pro-ethnic vote.
Therefore, in my opinion, the no-confidence vote and the government’s response are just the latest manifestation of the persistent ethnic distribution problem. The political events are the prima facie factors. This includes the exacting of revenge by Mr Jagdeo for the loss of two years of his de facto term under Mr Ramotar. The PNC’s dominant strategy is to find all kinds of strange justifications not to give up power. Supporters of the PPP are making fun of some of the reasons given for what really constitutes a majority. However, that’s not the point. The idea is to find reasons to extend the life of the APNU+AFC government as long as possible into 2020, and after if necessary.
By distribution, I mean how the national income (or GDP) produced in a given year is distributed among the citizens. There is greater inequality when a small percentage of citizens earn most of the annual national income. The society is more egalitarian when most citizens share the largest percentage of national income. The ethnic distribution problem not only plays out in the distribution of national income, but also in the distribution of assets or wealth. There is more inequality when a small percentage of the society owns most of the wealth. By wealth, we mean things such as houses, marketable land, money in the bank, shares and bonds, works of art, gold and other forms of savings. The stock of embodied human capital, accumulated through education and foreign scholarships, can become an important source of wealth inequality that also produces income inequality over time. Those who control the political process can control who gets assets and eventually incomes. The problem of distribution becomes particularly problematic when assets and incomes are skewed in the direction of one ethnic group.
I have analyzed extensively the previous party-dominated distribution systems since the 1970s. I did so in several columns in Stabroek News and in two published academic papers: “Politics and Underdevelopment: The Case of Guyana” and “The Political Economy of Guyana’s Underdevelopment.” These papers not only describe, but also analyze the implications for long-term growth and development. Hence, I will focus here on the period since March 2015.
Since March 2015, the slowdown in economic activities reflects the PNC’s challenge to the private sector, which it incorrectly sees as pro-PPP and against its ethnic base and interests. Since 2015, the PNC has actively used its political power to further the economic interests of its base. Examples include an IDB loan for only farmers in African villages. The Small Business Bureau is being reorganized to cater for loans mainly to its base. The employment pattern of the civil service has switched back to pre-1992 levels of marginalization of East Indians, most of whom face exclusion at the middle levels.
Some of the energy-related policies we outlined in the 2011 AFC Action Plan for GuySuCo were not taken seriously because the PNC sees a successful sugarcane (not sugar) industry would help mainly Indians. The PNC also wants to exact revenge for the supposed bad treatment the PPP meted out against the bauxite industry. However, this is a completely erroneous view for several reasons, but I will mention two: (i) the final product bauxite produces can be recycled indefinitely without breaking down and (ii) sugarcane supports the public good of drainage of the coastal plain. Standard accounting valuations cannot deal with the latter. The Power Producers and Distributors Inc. has a strange view of local content which does not involve sugarcane as a feedstock. The PNC-reformulated PPD Inc. probably believes this will benefit the rural base of the PPP.
In closing, I see marginalization as the unfortunate inevitability given the present constitution and the pro-ethnic strategic vote. It is in this context, I interpret the no-confidence vote and the government’s response as a battle over the distribution of economic resources. The unfortunate thing about Guyana is we don’t have good data on income and asset inequality at the general level, let alone ethnic distribution. This uncertainty results in much speculation, accusations and counter-accusations of marginalization and discrimination. In spite of the data paucity, there are measures that can be implemented to build confidence. I will outline them in the next column.
Comments: tkhemraj@ncf.edu
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