Economic Miracles and Marshall Plans

Social Economic Consolidation

The budget of 23rd March 2015 was cast out as the harbinger of what was called the ‘Second Economic Miracle’. The word ‘second’ was obviously an oblique reference to the first economic overhaul which took place under the prime ministership of Sir Anerood Jugnauth from the early to the late 1980s. It was a period when employment was so full in the economy that it appeared Sir Gaetan Duval’s prediction about the mason asking his wife to bring his diary for him to consult it before deciding whether to accept an upcoming offer of employment, was vindicated. It may be said, en passant, that there was a subtle sense of refinement in politicians of those days, as this remark of SGD bears out!

Amongst others, the budget this year refers extensively to its Marshall Plan being put in place to deal with entrenched pockets of poverty in the country. It may be useful to recall that the original Marshall Plan of the US was introduced in 1948 to help finance the reconstruction of a Europe devastated by the Second World War from its ruined industrial facilities, infrastructure, transportation system, railways, docks, etc., due to heavy and extensive bombardments during the war.

The disastrous state of communications and defensive barriers to trade erected by individual countries, made it impossible to produce food for big swathes of populations from Europe to Asia in the aftermath of the war. Under the plan, America and Canada in particular shipped millions of tonnes of cereals to the war devastated countries in addition to machine and equipment. In other words, a Marshall Plan is needed in extreme situations. Read literally, this is what appears to be contemplated for the less well-off people of Mauritius under the current budget.

Taken together, the ‘Second Economic Miracle’ and the ‘Marshall Plan’ for the poor are expected to bridge the gaps which exist in terms of the country’s economic performance and harsh economic conditions faced by the poorest members of the population. Yet, a succession of our Ministers of Finance have been stating over a number of years now that, thanks to their clever economic management, Mauritius has escaped the dire fate it would have otherwise faced in the context of the economic crisis which began in 2007-08.

If the economic situation is such that a ‘miracle’ is now needed to make it produce at full steam, surely our policy-makers have not been tightening up the nuts and bolts that make for sustained economic growth and for a better balanced one at that. If true, such a state of affairs would also show that the path to economic recovery and a fair distribution of earnings in the economy is, at best, jerky. Many are thrown on the wayside in the process with little to hold on to, as amply illustrated by our deteriorating Gini coefficient since 2003.

How failed re-engineering debilitates economic agents

It is true that there has taken place a major through gradual transformation in the economic well-being of the population from the time sugarcane was introduced on the island. During the greater part of the last four centuries since the introduction of sugar cane, the economic condition of the sugarcane workers was nothing less than precarious. Many politicians of the 1930s generation took so deeply to heart this state of public distress that politics became for them a social vocation, not a means to self-enrichment and power-seeking. They fought on every possible front – workers’ wages, conditions of living, social aid, universal suffrage, access to education, healthcare, dispensation of justice, nutrition and so forth – to overcome the precarious state in which the majority of the people lived. This breed of politicians, it appears, has failed to bring up worthy successors, which explains why the poor are in need of a Marshall Plan today in the 21st Century.

As the economy modernized since the 1970s, the care and attention that those at the lower rungs of the ladder received previously was diluted down the years. New employment legislations were introduced the effect of which was to gradually take away trade union power from the people. Voluntary retirement schemes were introduced to facilitate agricultural establishments shed labour as they consolidated their operations into larger units. The way work became regimented along the lines which prevail in competitive capitalist countries, as the economy shifted away from its extensive dependence on agriculture to industry and services, took away in-built safeguards which had hitherto protected workers’ livelihoods. Precariousness came back therefore for workers who were not easily mobile from one occupation to another. In the global competition our economy faces today, it is far from certain that this trend towards precariousness will be mitigated soon enough in the absence of proactive actions.

It is worth recalling that, faced with the uncertainties of their daily occupation, sugarcane workers had historically set aside some savings with which they purchased from the large owners small plots of agricultural land averaging two hectares per unit. On these plots of varying sizes lying contiguous to their elementary living quarters, they planted their own sugarcane as a supplement to their income.

There was at one time upwards of 30,000 small sugarcane planters in the country from all ethnic groups, contributing nearly half of the country’s total sugar production. However, in the course of the recent decades, the small planter community has been in the process of disappearing, partly because rising input and labour costs have made agricultural exploitation by such small units uneconomic. Falling sugar prices have also contributed to their decline. At a certain stage during the last decade, even their direct tax exemption was scrapped altogether, thus removing the little protection they were given by governments past to compensate for their inability to reap economies of scale.

Faced with the situation, small planters have been abandoning their plantations or selling them off for real estate development. It is estimated some 6000 hectares of small planter land are lying abandoned, unmindful of our food security strategy. In any event, the safety valve the small planter occupation has constituted historically has been going away fast, creating in the process additional seekers of employment.

Creating additional scope

Despite this and the forthcoming end of Mauritius’ EU sugar export quota in 2017, no government has thought it fit to reorganize the small planters into a vaster array of related economically self-sustaining and efficient cluster of viable economic activity. Imagination was needed, as in the case of the larger sugar estate units, to make them part of a larger cooperative process in a wider range of profitable relevant productions alive to emerging new market forces.

The small planters could have been helped to produce genetically modified (GM) food products for external markets, for example, which are universally acceptable as not constituting any health hazards and not the subject of any monopoly in the hands of specialized big business laboratories. This would have yielded a richer harvest – and economic potential – than ever before. Some will dispute whether GM production is safe. Nature has itself been doing GM production on its own although the pace of its transformation has been much slower than what science permits today. Those who have been taking GM foods for decades now have not seen the feared health deteriorations. So, where is the harm, other than the prejudice in which such development is held by some conservative nations? But this is only one idea among others which experts in the field could have suggested if only to give a new lease of life to a sector that has been facing its slow disappearance out of sheer neglect by the authorities.

Just like the small planters, governments have a responsibility to uphold all other viable small units of production in alternative activities. They have to bring into them relevant knowledge and technology to overcome the economic hurdles they are faced with from time to time. If we keep recreating and constantly sustaining viable new sectors of activity, perhaps larger in size over time to keep up with the scale of international developments, we will be proceeding in the sense of greater social economic consolidation. There should be no reservation for a privileged few under such a model of development. All can join the successful mainstream on a shared basis.

For this to happen, politicians will have to take a longer-term commitment to the nation’s well-being than for the short term of their mandates. The question is whether we can raise such a breed of politicians in the present circumstances. If we can, we should once again be able to look to a phase of balanced development where part of the population will not be left behind to seek succour from any Marshall Plan except in the event of a major catastrophe.

* Published in print edition on 3 April  2015