I was listening to the This American Life episode called “Social Contract” a few weeks ago, in which they noted the disparity between the economies of Barbados and Jamaica. Jamaica and Barbados have had similar economic histories, but today Barbados is in a much better position than Jamaica. NPR explained the difference with this story: In the 90s, Barbados’ economy began to go into recession and the government requested help from the IMF. The IMF agreed to help under the condition that Barbados limit the amount its citizens spend on foreign goods (because it is an island, Barbados was forced to spend a lot of its money on bringing foreign things in). The IMF’s goal was to implement a policy that would ensure more money stayed in Barbados in order to avoid a bigger recession. Towards this end, the IMF proposed devaluing the Barbados currency, so that people wouldn’t be able to afford foreign goods.
Wary of devaluing the currency, Barbados decided to propose a different measure to the IMF. Barbadian workers and businesses held meetings with the government to discuss the IMF’s measure and agreed on a different strategy. Workers would take a 9% wage cut, with the understanding that devaluing the currency could have potentially more long-term and deleterious effects, such as inflation. The Barbadian government proposed this plan to the IMF. They accepted it, and the Barbadian currency remained untouched.
Jamaica also suffered a recession and requested assistance from the IMF, but instead of cutting back it allowed its currency to be devalued several times. In the end, Barbados’ economy bounced back, and today is prospering, while Jamaica remains very, very poor.
So what can people and particularly Greece learn from Barbados? “Trust,” was the answer in the This American Life episode. It’s a simple concept, and it may sound like a trite answer, but trust between the workers, business owners, and government was really at the core of Barbados’ strategy and allowed it to survive its recession. Barbadian workers voluntarily accepted less for the collective well-being of the country.
That kind of conversation and collaboration will never happen in Greece though. Greece has a long history of government mismanagement and distrust. Undoubtedly politicians have helped themselves to Greek coffers. As a result, workers in Greece seem to believe that any sort of withholding on the government’s part is a result of greed, and not of real economic necessity. But if Greeks accepted cuts to the public sector, insisted on privatization and lighter barriers to creating businesses — in other words, if Greeks worked with each other and with the government — there might be a positive outcome to the IMF’s austerity measures. Of course, that’s not easy. As of now, Greece has no economic pressure valves, no easy way for people to just go out and make money. People won’t want to let go of their government jobs, understandably.
What Barbados did is really unique. People working together and taking cutbacks for one another really stands out against the usual progression of human history. Everyone could stand to learn a little bit from Barbados.