An Orderly Rebalancing Needed

It is imperative to bring about a dynamic, more open and just society – a more inclusive and caring economic model of development

It may be said that the whole world is waiting with apprehension the fallout from recent unexpected global events – like Brexit and Donald Trump’s election in America. Given the popular resentment expressed, will a drastic rolling back of “free market” policies become the norm worldwide? If erstwhile powerful countries were to endorse a new isolationism and protectionism, what will be its consequences on the well-being of individual economies like Mauritius?

No one has the answer. Perhaps no one in power will want to jolt the international edifice so much as to eventually harm themselves. But it is certain that things are not falling in place so soon. Central banks have unsuccessfully exhausted the ammunitions they had to help key economies renew with past periods of growth. Governments are afraid of taking the expansionist policies which they have reviled for decades in the name of fiscal austerity.

The problem the world over is that not many are concentrating on giving back to people the basic welfares they have lost when policy makers were busy looking simply at how to keep pushing up economic growth, unmindful of its perverse distributional impacts on the majority of people. While the need to push frontiers of growth was being emphasized these past decades, little attention was given to simultaneous worsening societal cleavages, exacerbating inequalities and workers being left to themselves on the other side of the bargain.

Mauritius has followed this international recipe to an extent, at the risk of being marked down by those who rate individual countries’ business practices. The silver lining in our case is that we have not fully abandoned our less well-off members of the population to fend for themselves against the barbarian ultra-liberalism which was fast becoming the international norm. We preserved free education, free health care, welfare benefits, for example.

Even then, we could not do much against the so-called liberal regime that was being put in place. So, we lost our filet de protection such as the Multi Fibre Agreement, forcing us to go into direct competition against low-cost producers of textiles and garments like China, Bangladesh and Vietnam. We lost the Lomé Convention for our sugar for the sake of “free trade”.

Since we are living in this environment and perhaps worse to come in the present uncertain global situation, we will need to keep looking to both sides of the equation. We will face the exigencies of international markets, on the one hand, by developing our cost-competitive edge and by developing an edge – in any other activities we undertake — other countries will be able to match with difficulty. We will need to keep protecting the more vulnerable members of our society, by skilling them adequately and not withdrawing from them social safety nets where most they need them. That will require a sounder management of our national finances.

Prioritising

It is true that the foundation on which we were able to leverage our social policies have been undermined, on our part, by a lack of drive and a lot of mismanagement of public affairs in past years. Redressing all that has gone in the wrong direction is a priority. It will form the basis for sustaining a reasonable future despite the current and foreseeable upsets at the international level.

Here are two examples of how things get out of hand at the level of rebalancing matters at other levels.

Water

We are being informed that rationing of water has started in certain parts of the island. Rodrigues is facing a similar problem. Yet the statistics show that the average rainfall in Mauritius increased by 13.5% in 2015 from 2,094 millimetres in 2014 to 2,377 millimetres in 2015. That 30% of it was lost due to evaporation (inevitable to a point) and 60% due to surface run-off in river ways, show that there was scope to do better.

Had water storage been a priority, the construction of the Bagatelle Dam, adding a potential 14.5 million cubic metres to our store, would have been completed. It wasn’t. It is said construction cost has escalated in the meantime from the initial estimate of Rs 3.1 billion to now double this amount.

We are informed that water management needs to be dramatically improved. No doubt. This should not be a mere matter of profit and loss. It is in a global context forecasting impending severe water shortages across the planet from the US to Australia due, among others, to on-going climate change that we need to take action before it is too late. If all of those are vulnerable, so could we be.

The required response was to rationalise water use to different purposes and to sharply reduce the unaccounted for annual loss (45 to 55%) of treated water. It is taking too much time to happen, the focus at the moment being at the level of water tariffs. Water is vital for human survival. Without water, there is no GDP. It is easy to guess why we should have focussed attention on efficient water collection and its proper use by different sectors.

The social factor

If we realise that the upset which is currently occurring in Europe and America has its roots basically in social uprising against the few at the top, we will prioritise a fairer social balance. Economists know that this is not achieved by handing one-off freebies to those feeling left behind. It is achieved by empowering them to durable, decent and independent living conditions.

Given the prevailing technology shift in production, jobs are becoming increasingly vulnerable. We are not exempt from this global phenomenon. Our now shrinking manufacturing sector has thrown up the signal. The aim should be to prevent the feeling of disempowerment among those who face such a situation. Strong public institutions would not only have identified layoffs before they occur in certain sectors; they would have worked up alternative solutions to prevent the concentration and inequality at the root of so many revolts in so many parts of the world due to such factors.

The long term should be prioritized. Are we there? Not really. Why? A mundane example can illustrate how ordinary consumers are being left to themselves. The price of the toilet soap you buy has remained more or less the same on shelves but no one informs you its weight has been scaled down from 100 grams to 75 for the same previous price. Another example? Your chocolate slab is still selling at Rs 80 a piece but its weight is down from 100 grams to 80. These are but a couple of examples amongst many. In other places, exorbitant service costs are confronting the helpless consumer, shifting purchasing power from the larger set of people to a few others.

The same concentration of business power which has sparked current global economic uncertainty is at work in Mauritius, perhaps on a smaller scale but it is here, undermining the social fabric. If we are looking to avoid the same problems over here, it is imperative to bring about a dynamic, more open and just society – a more inclusive and caring economic model of development.

Anil Gujadhur

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