History Matters, But…

Development Watch – Tarron Khemraj

A recent letter by Ms. Ryhaan Shah sparked a series of responses in the letter columns, causing it to be juxtaposed with another letter by the bright young economics student, Saieed Khalil.  Ms. Shah makes the point that youths should have knowledge of history as they decide to vote. No specific time period was given, just history in general. Just to recap, Ms. Shah once headed a serious group known as the Guyanese Indian Heritage Association (GIHA). The PPP was uncomfortable with this group as it was focusing on the serious matter of how to make Indo-Guyanese share equally in a multi-ethnic society. The PPP felt that she was intruding on their human property, the East Indians of Guyana and diaspora.

The PPP eventually displaced her group with the milder Indian Arrival Committee (IAC). The latter focuses more on mimicry as the conformist leaders of that outfit seem to think East Indians of Guyana – long separated from Bihar, Uttar Pradesh and South India – should mimic Bollywood culture. Business folks were threatened not to support the work of GIHA. Many complied and these days a song and a dance, a la Bollywood, are promoted as the only thing the rich heritage of Caribbean Indians has to offer.  

So, which historical events continue to have causal impact on Guyana in the year 2015? Which history matters? Does the banning of dhal and high gluten (diabetes-inducing) white wheat flour continue to have a lasting impact on society and economy today? Does election rigging continue to matter for economic and social outcomes in the year 2015? Why the people were denied local government election for 20 years? Does nationalization continue to impact on production structure to this day? What is the impact today regarding the strategy of economic sabotage conducted by PPP throughout the 1970s and 1980s? Did PPP encourage East Indians not to cooperate with the PNC government? How much of this self-discrimination (endogenous discrimination) in the name of PPP accounted for the employment structure of public service and composition of military and police? To what extent backward Party Paramountcy retarded favourable British systems of governance and negated the emergence of the developmental state?

These are obviously not easy questions to answer, although the political types may disagree. I am sure young students of political economy could make theses out of them. When I think of the impact of history on contemporary events, the first thing that comes to mind is current events and recent past have to get a higher weight than events that took place 25 to 40 years ago. Indeed, we have a fancy name for this in econometrics. We call it a Koyck lag structure (or Koyck transformation). It simply says further back in time we go, the events should get less weight in determining present day events. So I have to ask the question why was Laurie Lewis retained in 1992? Why did the PPP refused British help to reform the police force? Why was a drug dealer asked for help? What was the quid pro quo?

There are some historical events, however, which may continue to have lasting negative impact on the Guyanese society no matter the lag structure. These events are path dependent as they lock the society and economy into its present form. One of the first historical events go back to the middle of the 1700s when the Dutch realized that up river settlements were not viable for agriculture because the soil lacks certain nutrients. They also realized that gold mining was a perilous task and decided that they should drain the coastal plain for agriculture. They did so with African slave labour and set the stage for contemporary dispersed settlement patterns (hence high average cost for infrastructure), polder agriculture and sugar production.

Although the land in the coastal region is relatively more fertile, the polder system of farming requires high costs of production. This is why after the 1870s British Guiana sugar could not compete with that of Mauritius, Cuba, Fiji and elsewhere as Britain moved to free trade. The industry would survive in part because of the lobbying power of the Guianese planters, and of course by suppressing wages for almost 100 years. Frustrated workers – with toxic ethnic insecurities – were certain to emerge. Therefore, bad politics since 1961 compounds the bad hand of geography. 

A second event would be the nationalization of the 1970s. Nationalization by the Burnham regime was supported by Dr. Jagan and the PPP because the Cubans and Soviets urge the two socialist factions to work together. However, Singapore – which had a more favourable geography – preferred state ownership of only newly created industries. Reputable multinational corporations were cajoled to invest there, while the government concentrated on setting up new sectors instead of taking over dying ones. The leaders of Barbados stayed away from nationalization like it was the plague. Ditto the formative Prime Ministers of Mauritius. The problem with nationalization in Guyana is it drained the country of critical management talents, prevented management spill-overs and the government had to pay foreign currency reparation.  Both PPP and PNC were culpable here.

In response to rigged elections, the PPP inflicted a strategy of sabotage and subversion throughout the 1970s and 1980s. This could be a fertile area of study in self-discrimination. I have anecdotal evidence that all farmers, except one, in Leguan chopped down their legumes from seeds given by PNC after Dr. Jagan found out they were planting Burnham’s seeds. Similar anecdotes exist for a few rice farmers who refused to plant in solidarity with PPP. Of course, we are aware of the mysterious burning of sugar crops before they reached the peak sucrose content. Here is an interesting dynamic in which people act against their individual economic interests to protect the interest of their ethnic leader. These factors obviously negatively impacted the ability of the country to earn foreign exchange and repay its debt. We need much more than anecdotes, thus making this a fascinating thesis topic.

Banning basic food items was sure to result in a parallel underground economy. I believe this policy was well-intentioned for the purpose of promoting locally produced products, including agro-processing. It was not meant to victimize East Indians as Afro-Guyanese also eat a diet high in the banned items. However, an uncompromising law of economics kicked in. A class of smugglers emerged. It was adept at undermining the state apparatus and bribing the police. Of course, as some became skilful in smuggling wheat flour, it was just a matter of time before they deployed suck skills in smuggling the other white stuff. The developmental state was the casualty here.

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