Bookkeeping versus economics

Dear Editor,

AS I travelled around Guyana last week, respondents in a survey described what took place in the Ministry of Finance under the Coalition as bookkeeping rather than economic management. They said that they were not pleased with the performance of Winston Jordan when he was Finance Minister. They blamed him for the ‘paralysis’ state of the economy during the five-year tenure of the Coalition regime. Tens of thousands lost their jobs, and businesses shrank by more than 50% during the five-year period. In multiple annual surveys I conducted in Guyana between May 2015 and March 2020, markets and shops were virtually empty, with sellers and shopkeepers saying, “Things dead; business nah dey. Abee ah face pressure.” At times, during the busiest hours of the day, I observed there were more vendors in public markets than buyers. Sellers begged me to buy their produce. “Ow meh brother, buy something from meh nah!” Many stores were shuttered across the country; stress and depression were seen on the facial expression of people everywhere, including in APNU strongholds.
Winston Jordan was not part of the current survey being undertaken, but his name would frequently come up when people were asked to compare and contrast their confidence in or the state of the economy now versus under the previous regime.  The respondents volunteered information that Jordan was not adept at, or know how to ‘create’ money in the economy.
Businesses were glad Jordan is gone. I was taken aback when business people and the more educated, including those who voted for the Coalition, referred to Jordan as a ‘bookkeeper” rather than as an economist, meaning he was not focusing on growing the economic pie, but just ‘balancing’ numbers through collection of revenues and expenditures. Generally, but not always, a Finance Minister is an economist. Both Ashni Singh and Bharrat Jagdeo studied Economics, and were highly rated for their performance as Finance Minister. As someone who taught an economics course for a couple of decades, I would also give them high marks for their performance; they were very skilled and adept at their tasks.

I do not know what Jordan studied at university, and businesspersons are unduly harsh in their views of him. Managing an economy is no walk in the park, especially when politics directs activities as happened under the Coalition. I do not think it was Jordan’s intention to stagnate the economy, but he had to follow political directives, especially in opposition PPP strongholds, where many households felt they were squeezed out of a living to drive them out of the country to weaken the PPP. That strategy backfired, resulting in APNU’s own supporters becoming disgruntled, with many not voting, resulting in its defeat in elections.

I did doctoral studies in Economics, under which I took ‘Bookkeeping’, so I have some understanding of both. Although they are related, in that they involve crunching business numbers, they are two separate fields. Bookkeeping is also known as Accounting, and is generally learnt in pursing a degree in Business Administration and or Commerce, and is about balancing or reporting income (money collected) and expenses (how much spent). Economics is studying the financial and resource state of affairs of the country (including political economy), such as production and consumption of goods and services and transfer of resources, marketing, trading, etc; it is much more than balancing numbers or tracking the flow of money, as occurs under Accounting practices. A bookkeeper tracks the flow of money in the economy, while the economist examines the movement of resources and activities that lead to the creation of the money. Economics is about creating jobs and attending to the country’s needs, not just balancing books. In short, the bookkeeper gives an account of the state of financial affairs after the money has been created by the economist. The public, businesses in particular, was critical of Jordan’s performance as Finance Minister, in that he did not create wealth as a good economist should and would. It was idiotic to shut down four sugar factories without alternative means of employment. Even though the estates were money-losing enterprises, the circular flow of money and economic activities more than balanced off the losses. The estates helped the economy to grow, and kept families off the bread line. In political economy, not every financial activity is about balancing numbers. One must also balance livelihoods, and think of the politics of economic decision-making to retain support. Jagdeo is intelligent enough to know that the estates have to be re-opened because of political and financial reasons.

Bharrat Jagdeo, unlike a Jordan, was and still is described as ‘a whiz’ in money creation and managing the economy. Respondents feel he managed the economy well when he was Finance Minister under the administrations of Cheddi and Janet Jagan, and when he became President. It is generally agreed, including by his worst critics, that Jagdeo knows how to grow an economy, and people are confident he would do it again. From my evaluation, as someone who studied economics, Jagdeo appears as a brilliant economic analyst. Critics must not underrate or underestimate his skills in analyzing business proposals and political agreements. Growth and unemployment are major concerns in the country. The nation looks to Jagdeo to find ways to stabilise the government and economy, and create jobs quickly. Patience among supporters is running thin.

Yours truly,
Vishnu Bisram