Belize City: Jan 21, 2020: — Recently I have been writing articles in Belize’s leading newspaper – Amandala, in which I have been trying to educate Belizeans that the reason why first the United States of America, and later Germany, Japan, South Korea, Taiwan and today’s China, have been able to supply a high standard of living for their citizens was because every one of them followed a version of capitalism that was known during the nineteen century as the American School/System of Political Economy. In Belize we known it as George Price’s Mixed Economy.
The major concepts of the American School that distinguish that version of capitalism from the British School are:
a. Exploiting nature rather than men.
b. Tariff protection of local agriculture and manufacturing, as free trade has always benefited the strong at the expense of the weak.
c. High wages to workers, because as E. Peshine Smith, wrote: “In order to make labour-cheap, the labourer must be well-fed, well-clothed, well-lodged, well-instructed.”
d. Money creation is a public utility and should be under the control of elected representatives of the people, not controlled by private individuals for private gain and control.
e. Technology and innovation always cause new methods to enter production, and thus profits and wages don’t diminish but instead lead to higher productivity and thus higher wages to workers. Therefore, the theory of Diminishing Returns is not valid to physical reality.
f. A view of soil fertility and agricultural productivity as a product of capital investment – not nature. Science is the way to solve the problem of “mining the soil”.
g. Public infrastructure as a means to lower costs in an industrial society by introducing new methods of production and communications, and the public support of research and development.
h. Government intervention in an economy. Government as the “brain” must put a bridle on corporate bodies, and must establish the pursuit of happiness as a natural right of citizens. In Belize this principle is enshrined in the PUP’s Constitution as a sacred duty of government to create full employment and completely end poverty.
Next week I will continue to explain in some detail the meaning of the eight principles that distinguish the American School from the British School. I will explain number c. – High wages to workers and why it’s necessary. But today I will explain why our economy is in the current state it is in, and how to fix it. I will speak truth to power.
All students in most schools in the Western-denominated world are taught the opposite version of capitalism, the British version, as the only version, or as it’s called today – neoliberalism. This brain-control of our population creates serious problems for our country.
Belize is run in theory by elected politicians in the House of Representatives. But as in all countries which practice democracy, the so-called “big boys” – the 12 families control today’s Belize. This is because the cost to run in national elections is very expensive, and most candidates or their families don’t have access to that amount of cash money. And we all know, who pays the piper calls the tune.
Now, the subject that my detractors like — the coming collapse of the global financial system. Read any of the financial press and you will be struck by the fact that every one of them knows the crash is coming. For those who are interested – www.bonnerandpartners.com; https://wallstreetonparade.com; www.zerohedge.com; and others speak of the problems in the FIRE (financial, insurance and real estate) sector which acts as a parasite by attaching itself to the real physical economy. Debt cannot be created without the physical economy’s ability to repay the debt. The late physical economist and statesman, Lyndon LaRouche’s “Triple Curve” describes the situation when the physical economy of agriculture, manufacturing, wages, profits is contracting, but both financial aggregates (debt) and monetary aggregates (money supply) are rising at a rapidly increasing rate. At the point where these curves cross (because the money supply must head for the sky to replace cascading losses in debt assets), the financial system is set for an early collapse. Only God knows the time.
Now, Belize’s economy. Agriculture is down. For the last 3 years, production and prices are down. In the largest crop – sugar, prices have fallen some Bz $48 million dollars, and this season prices are expected to fall another Bz $29 million dollars. With a proper nutrition program based on science, this effect of drought could have fallen to about Bz $5 million dollars in losses, but that’s another subject. (Read my article of Dec. 20th 2019 in Amandala).
Citrus earned some Bz $110 million dollars in the year 2009. Then it started to fall. In 2018 it was some Bz $ 71million dollars in earnings. Last year it was about Bz $54 million dollars. This is blamed on HLB disease, which can be solved if the big boys permitted. This current crop now being harvested will fall again and will be blamed on HLB disease and the drought of last year. But those could have been prevented if science was applied in the growing of the crop.
Local manufacturing is less, as Belize follow the dictates of the big boys who in turn listen to the Western school men/women, multilaterals, experts, etc. A direct result of this disregard for manufacturing is the low wages and productivity of Belizean workers. This sector of Belize’s physical economy contributes about 16%. In a properly functioning economy, the industry sector should be at least 38% of the GDP.
And lastly, the overhead sector of the national economy. In Belize it’s about 70% of the total economy. It’s far too high. Government, the brain of the economy, contributed about 12% of the total of Belize’s GDP. This includes most of the education and health sector as necessary overheads. The other 58% of GDP includes tourism, professional services, trade, and the FIRE sector.
The local propaganda is that tourism is the beginning and end of Belize’s economy; in other words, it is the most important sector of the economy. But figures tell another story. Tourism is about 11% of GDP and employs about 18% of the labour-force, according to SIB for 2018.
According to the Statistical Institute of Belize (SIB), Belize’s economy is in recession. But this means little to the average citizen of Belize. SIB also says the average income per month for the 190,000 labour-force is Bz $1,134 or about Bz $56 per day. But we know that about 74,000 or 39% of the total labour-force earns some Bz $695 per month, or $34.75 per day, or Bz $4.34 per hour. But there’s another 36,000 (19% of workers) whose monthly income is about Bz $520 or Bz $26 per day or Bz $3.25 per hour. And some 10,000 men and women earn more than Bz $3,000 per month or about $750 per week. This is about 5% of the total labour-force. We can take the methodology that was used in the 2008/2009 Halcrow study on poverty in Belize and using data from 2016 from SIB, and the result is 60% of our population is living in poverty. That, Belizeans, is more than 202,000 citizens. Shame on you, Belize!
Belize’s problem is how to make sure that the 74,000 workers who earn Bz $4.34 per hour and the other 36,000 workers who earn about Bz $3.25 per hour are paid at least Bz $10 per hour or say Bz $400 per week? This will end poverty in Belize.
Don’t say it cannot be done. Just last week, China announced that they have moved 850 million Chinese citizens out of poverty, and that by the end of this year, 2020, the remaining 11.5 million Chinese still in poverty will be free from this scourge.
I am the chairman of the PUP Research & Development Committee. A panel was put together in June 2018 to work on this poverty elimination for Belize. A report was submitted to the Party in February 2019 and copies were sent to the unions of Belize, Better Business Bureau, the Chamber of Commerce and others. Except for one member of the Chamber, no reply or comment was received on the proposal to eliminate poverty in Belize. This is how Belize works. The 12 families who control Belize always kill any plans that will change Belize for the better.
But what is in this proposal that makes the 12 families so afraid?
First, raise the minimum wage for all Belizean workers to Bz $5 per hour or Bz $200 per week. Already the Belize City Council is paying this to its workers. And within 5 years, double it to Bz $10 per hour or Bz $400 per week.
At the same time, throw that curriculum out of our schools. It was designed to stop most children from learning. Money is not the problem, except to pay the teachers more for their work in helping to develop our beloved Belize. Instead of graduating 450 business students per year, UB needs to put out some 600 scientists and engineers per year.
Government must promote a healthy lifestyle with quality foods of high nutrient-density. Implement NHI nationally. Produce certain generic drugs locally and make sure no citizen dies because of lack of money for health services. This is a basic right.
Every year some 5,000 persons join or attempt to join the labour force. And we currently have 110,000 workers below the poverty-line. Government exists because we need a “brain” to run an economy. Government must create or cause to be created at least 11,000 new jobs each year in Belize. Where? In the military; research; education and health; manufacturing; infrastructure to build roads, canals, buildings; youths, and especially family farms. These new jobs must pay more than Bz $400 per week, and the family farm must earn at least Bz $28,000 per year.
Look, Belize cannot pay its average low-skilled worker Bz $10 per hour and remain competitive in today’s world. The minimum can now be raised from $3.25 to $5 per hour. In the real physical economy, wages depend on the intelligence of the worker and on the level of technology used in the process of production in agriculture and manufacturing. NOTE: technology is not computers or IT. Belize needs to “leap-frog” to new technology such as CNC machine tools, robotics, and automation. Any machine we buy must be of the latest technology.
Now to create those 11,000 new jobs will require at least Bz $1 billion dollars per year in new investments. And where will Belize get it from?
The government must borrow Bz $450 million per year (USD $225 million) from foreign countries such as Brazil, USA, India, China, Germany, Russia, South Korea, and Japan to buy machinery and equipment – to buy technology – not water or goods we can produce ourselves. The Central Bank will increase the local money supply by some $175 million dollars per year (free money – no interest). The National Bank of Belize (our financial independence) will create as debt (loans) some Bz $375 million dollars as long term loans at 1.5% to 2% interest per year for only — agriculture, manufacturing, infrastructure, and research.
The regular credit unions and commercial banks should continue their regular services to Belizeans. Banks are not in the business of giving away money, so the person with a new idea never gets funds to experiment or try his new venture. Only government can perform that service. And when it’s time to tear up loan contracts, only government can do that, as PM Barrow showed in his first term in 2008–2012.
And remember that Belize cannot print or create United States dollars. Therefore, if our Central Bank and National Bank print and create some Bz $550 million dollars per year, then at least Bz $385 million dollars must be cut from imports in order to protect our dollar peg.
Government must practice the policy of capitalist dirigist methods to create the conditions to end poverty, defend Belize, and create full employment for all citizens at high money-wages, thus making our Constitution true – life, liberty, and the pursuit of happiness.
As I am optimistic, if any reader is interested in the details of the plan to end poverty, contact me at: [email protected]