Dickson Igwe. Photo: Provided

The following story assesses the statements coming out of the two main political parties, over the past 3 years. It places each party onto an appropriate economic platform, based upon assertions from various politicians.

Now, this Old Boy Columnist was speaking with one of the country’s most astute bankers on Boxing Day. The extremely ‘bright guy’ was very concerned about consumer debt. He stated that he was having sleepless nights thinking about the high number of bank customers behind on their mortgage payments. He was worried about the economic fallout from large scale home repossessions. He was also scratching his head over the high level of motor vehicle payment defaults.

The banker was most concerned about the high level of credit card debt. He stated that there were too many people living on credit, and from paycheck to paycheck. Too much consumer debt could generate long term problems for the Virgin Islands economy, he asserted.

Before that, on Christmas Day, this Baby Boomer chatted with a senior government official. The man was very concerned about the economy. The Big Shot spoke of a new level of hopelessness, homelessness, and poverty, he had never before witnessed on the island. He stated that there were shocking pockets of poverty in the Virgin Islands.

He gave this Old Boy, examples of poverty in the country that were as bad as that found on the Caribbean island of Haiti. The man is member of a global organization that fights poverty, and he is personally committed to fighting poverty in the Virgin Islands. He stated that with a small population, there was no excuse for this poverty among a certain subset, evidenced by a rise in homelessness, and families going begging for food.

He further stated that the youth of the country were presently permanently locked out of the housing market, where a decent home these days started at the very least, half a million dollars.

He could not understand how some families lived in pathetic squalor, when the country supposedly possessed an income per capita of over 40,000 USD per annum, and harbored a number of international billionaires.

He stated that the financial services industry was mainly staffed by expats for the benefit of expats. Locals could only go so far in the industry. The culture in the industry was designed to keep Virgin Islanders locked out, or on the lower rungs.

He declared wealth inequality in the Virgin Islands a disgrace. Inequality was very bad for the community, according to the High Official.  He even wondered whether this was deliberate policy to create a class system in the country, by the ‘haves’ against the ‘have not’s.’

In fact, a pastor, who was once a banker, stated on December 28, 2014, at a dinner this Writer attended, that he believed the income per capita figure of the country was very misleading as a measure or indicator of the standard of living and the quality of life of the country. The pastor believed that there was no accurate correlation between the income per capita figure, and the true standard of living in the Virgin Islands which was much lower than the income per capita numbers indicated.  

All of this feedback told of one thing. Economics would be front and center in the debate leading to the General Election in early 2016.

Now, of the two political parties contesting for power, one has made it very clear what its policy on economics is. It is DEMAND SIDE ECONOMICS oriented. In fact a new Virgin Islands economic term has been created, based on the politician championing the theory: it is termed FRASERNOMICS.

The party, if elected, will spend on aspects of the economy that will build consumer demand and generate faster economic growth.

It sees Jack and Jill Average as the main engines of economic growth; the 90% so to speak. It intends to put cash into the pockets of the 90% so that they can pay off their debts and begin to spend. It will do this via the utilization of various devices.

One such device is a revamped and much more innovative petty contract system that ensures the widest distribution of petty contracts among the working population. Another is ensuring that citizens are employed to the fullest extent in major public projects, not just giving a major project lock, stock, and barrel to one contractor.

The aim is to ensure cash circulates widely, and finds the pockets of the struggling middle class, who spend that cash as soon as it comes in. Consumer spending alone will build economic growth by breathing new life into struggling small businesses.

The party sees the poor and middle class as the most important economic constituencies. It believes that slow demand among these two critical segments of the population is at the root of the slow economy.

It believes that providing a route into the middle class for the poor, and building middle class demand, alone will grow an anemic economy.

The second major political party has not declared which side of the economic fence it sits. Not unless this Observer missed something.

However, simple observation of its political rhetoric, assertions, and policies, will determine that it is a mix of both stimulus and austerity, also known as SUPPLY SIDE ECONOMICS.

It is putting enormous effort into certain projects that it believes will boost job growth. It sees infrastructure spending as the catalyst for growth in tourism and the wider economy. That is the stimulus aspect of its economic programme.

But at the same time it savors its fiscal prudence in building cash reserves. It is producer oriented, in that it sees building productive capacity in the economy as the way forward, over and above economic stimulus.

It appears to pursue the classic CHICAGO SCHOOL ECONOMIC THEORY.

To be continued

Connect with Dickson Igwe on Twitter and Facebook