Ralph Gonsalves is an economic fool and so is Camillo - Part 2 (7/29/2016)

In part one of the article titled “Ralph Gonsalves is an economic fool and so is Camillo”, I was in the process of justifying my claim as it is outlined in the title. I have pointed out that there is a major difference between: an enterprise and an investment in a country as it relates to small economy or small island economy. I explained that an enterprise is a business that depends on the circulating capital of the economy wherein they are operating for its sustenance and its profitability. 

I also said, based on Camillo’s speech in NYC earlier in this year, that Ralph and Camillo Gonsalves’ indicator of a thriving economy is the escalation in the prices of commodities and service. I pointed out that the Gonsalves’ indicator of a thriving economy are actually some of the very indicators that economist use to define a depressed economy. I also reminded readers that this is the premise upon which Camillo Gonsalves tried to entice Vincentians within the Diaspora, to return to St Vincent and the Grenadines to invest. 

I further stated there was not enough circulating capital in the St. Vincent and the Grenadines economy, to sustain the enterprises that are currently operating within the country and that any new enterprise that is set up, only has a two percent chance of becoming profitable and their profitability will be at the failure of other companies. I also forecast the closure of some presumable strong businesses and the laying off of workers from companies that have a history of being large employers.

Continuation

It is Camillo’s plan to flood SVG with enterprise that will be import based enterprises, which will take an even greater toll on our already depleted foreign exchange and dwindling circulating capital. This nonsensical plan of Camillo and Ralph Gonsalves will not help the economic situation in St Vincent and the Grenadines but will only serve to worsen the situation. And will leave those who sacrifice their nest egg in the enterprise worse off than they started. Therefore defeating the objective of getting involved in any business venture, which is to come out better off than you were before you started. 

Instead of making an effort to flood the country with new enterprises that will not contribute to the strengthening of the economy, but become a burden on the same and only further stress the limited circulating capital within St Vincent and the Grenadines, and with the knowledge that such businesses are destined to fail, why not look for people to come to St Vincent and the Grenadines to invest in St Vincent and the Grenadines. Now an investment as it relates to small island economy are those business ventures that depend on an external market or markets for their profitability, while only utilizing very small volume of land as it relates to St Vincent and the Grenadines size. 

Or better yet, and as I have clearly stated in previous letters, why not encourage those Vincentians and other Caribbean nationals within the Diaspora, with the aid of appropriate government subsidies, to pool their resources and open enterprises in the country of their residence or citizenship that will purchase and offer for sale in that foreign market, goods, products and even services that were produced and or manufactured in St Vincent and the Grenadines. 

Such will not put a strain on the circulating capital of SVG; but will boost the circulating capital in the country and cause the local economy to grow. This plan will create employment for otherwise unemployed citizens in St Vincent and the Grenadines, ensure that the resources in St Vincent and the Grenadines are utilized to the maximum and those people who have invested their resources, with diligence and hard work, can and will gain a good return on their investment. 

Please take note: there is a big difference between a company that invests in a small island economy and a company that is an enterprise that operates within the small island economy. These companies that invest in the economy do not depend in any way on the circulating capital of the county for their profitability. They tap into external markets and it is from these external markets their profits are derived. 

But by the virtue of their presence, and operations within the small island or country, they contribute to the growth of the circulating capital, by continually infusing new capital into the economy, by purchasing and utilizing commodities and other things that are produced locally, by employing its labour force, which will include skill and unskilled labour, managers and middle managers, even directors if the structure of the company so allows. 

They also contribute to the swelling the circulating capital by paying their taxes and giving back to the community a portion of its profit in the form of charitable donations, sponsorships, etc. be it financial or otherwise. 

We are in a new era and it is time that we put away the old way of doing the business of the state, for the science of doing business has changed. As a result of this change, we will recognize that as recently as 20 years ago, we did not have to worry about the circulating capital of the country. 

That was so because we had an influx of fresh capital that was consistently put into circulation thanks to investment such as Eastern Caribbean Agency, which was owned and operated by the Defreitas Brothers: at the time a young Vincentian entrepreneur, who purchased a wide range of agricultural produce from the local farmers and shipped and sold them in Canada, I am not sure of the yearly dollar figures this company brought into SVG, but it contributed significantly to boosting the economy. 

There was also GEEST PLC, which was a UK based company that purchased over a hundred million dollars, worth of bananas from St Vincent and the Grenadines each year and shipped them to England. We also had a relatively fair tourist industry. 

But today, it is critical that we understand the finer points of our economics and come up with creative and innovative ways of tackling the crisis that we have found ourselves in. As I say, we cannot do business as we did back then. We have to study our economy and gain an understanding of some key area as it relates to economics. We need to know and keep a handle on things like:

1. How long does a dollar that enters our economy stay before it leaves our economy?

2. What is the depletion rate of the circulating capital within the economy?

3. What are the channels that aid in the replenishment of the circulating capital within the economy?

4. At what rate is the circulating capital of the economy is being replenished?

After we have answered these questions we need to come up with ways to:

1. Ensure that the dollars stay longer within the economy and circulate several times before leaving.

2. Create new ways of introducing capital into the economy and thus cause a constant replenishment of the circulating capital.

3. Strengthen the existing channels whereby capital comes into the economy.

4. Ensure that we reduce national spending and cut back on imports to ensure that we have a reserve for a rainy day.

5. We have got to start investing in gold. This is so for the simple fact the international market uses the trading of gold as the standard for currency and gold is use as a means of measuring the value of a country’s currency. 

6. I am being prepared to take St Vincent and the Grenadines to new economic, social and spiritual highs. 

This is a new era and we must stop doing business in the same old fashioned way. Remember we no longer have a protected market, but we are thrown into the trade ocean with the sharks, whales, and other advanced, vicious and ruthless predators, which will devour us alive if we are caught off guard. 

In the same way the big US owned but South American based companies of Dole, etc. had squeezed us out of the GEEST Plc banana business, because they out-produced us, they produced their fruit at a cheaper rate per pound and they also indulged in a little biological warfare, causing our fruits to become infected with blights, etc. that automatically disqualified our fruit from being shipped. 

It is a vicious world that we are asked to survive in and because of our size we have got to be smarter and wiser than our competitors

.