In a flyer entitled “NWU Calls for COSSABO on Privatization,” the union notes that the PP government has signaled its intensions to sell a number of State Enterprises. This is not the first time that privatization has entered the discourse in Trinidad and Tobago.
This essay seeks to trace the trajectory of privatization in Trinidad and Tobago so that this generation of union, non-union workers, the unemployed, the under-employed and citizens at large will be better informed as to (1) what is Privatization? (2) How and why did privatization become part of the discourse in Trinidad and Tobago?
Simply put, privatization involves the sale of State Enterprises (government owned and controlled entities, for example First Citizens Bank) to local, regional and foreign individuals or companies.
Additionally, it involves the contracting out of services provided by state employees (Public Servants) to the private sector (the contracting out of transporting prisoners). However, privatization involves not only the sale of a government entity but the transfer of wealth.
How is this wealth transferred? In the first place, the government used taxpayers’ money to create the bank. Therefore, it is owned by the taxpayers and the Corporation Sole is the trustee for all taxpayers and citizens. The profits made, then, forms part of government expenditure in so far as providing goods and services to the public.
However, when government sells part of the company or the whole company, private individuals and companies purchase the shares or the entire bank. This means that in the long term the government expenditure will decrease while private individuals and companies will reap the profits and become wealthier.
During the Privatization debates in England in the 1980s, Lord Stockton opined that privatization “is like selling the family silver to pay the butcher's bill.” In this case, the “butchers” are the wealthy, the powerful and the politically connected who fund the political party. The political party reciprocates by rewarding the “butchers” with government contracts and the possession of State Enterprises.
In other words, the capitalist obtains assets for free or at very huge discount prices. In many cases, the government loans them the money to purchase these assets. Additionally, privatization involves discrimination because those citizens who do not have the means to purchase shares or pay for the privatized service will be excluded. Will the Corporation Sole use the profits of the sale to provide services to the marginalized and improve their communities?
From the 1960s up to 1986, the PNM government had created over approximately 100 state owned and controlled entities that engaged in primary, secondary and tertiary production, making it one of the largest state sectors in the English-speaking Caribbean.
This policy was not novel to Trinidad and Tobago but was part of the economic settlement that emerged in the post-World War II era whereby governments played a major role in the management of the economy (government regulation) and in the re-distribution of resources to the less fortunate.
This was why the PNM government purchased the private telephone company (which became TELCO (presently TSTT) and the private bus companies (now PTSC). The resulting struggles waged by workers in these two companies pushed the government in that direction. Additionally, in the 1970s, Third World governments waged struggles in the UN and other fora for a New Economic Order whereby these countries sought to wrest control of their natural resources from foreign multinational corporations and put an end to economic dependency.
The nationalization of the sugar industry and the partial nationalization of the petroleum sector best exemplify this thrust. Struggles waged by oil and sugar workers in the 70s prompted government’s thrust. However, some stakeholders frowned upon the idea that the state should be involved in owning and operating business enterprises.
One such group was Civicus. This group was formed in the 1960s and comprised prominent businessmen and business representatives such as George Bovell, Geoffrey Chandler, Tommy Gatcliffe, Neil Lau, David Lindsey and Selby Wooding who represented the interests of the “French-Creoles” and foreign capitalists. (See Civicus, The State of the Nation: Trinidad and Tobago in the later 1960s (Port of Spain, Trinidad: Caribbean Printers, 1969).
This publication was the genesis of the discourse on privatization in Trinidad and Tobago. Civius did not use the term privatization but called on the government to contract out its services to the private sector. This group was also an enemy of the trade union movement, especially the OWTU and attacked its position on the nationalization of BP.
As the 60s progressed and the 70s came to an end, private Think Tanks in the US funded by major corporations began a discourse on privatization, which became the mantra of Ronald Reagan and Margaret Thatcher, the leaders of the “Conservative Revolutions” in the U.S. and Great Britain.
However, it was Thatcher who set the tone for the privatization onslaught. After its successful application in Great Britain, the Thatcher government became the poster government for privatization world-wide. This victory of the so-called “free market forces” over Communism and Socialism signaled the end of the post-World War II economic settlement and the demise of the Welfare State. With the aid of the IMF and the World Bank, the new policy of government deregulation and privatization became the medicine for what the “Economic Hit men” call “ailing economies.”
In Trinidad and Tobago, privatization and government deregulation became the discourse from the late 70s to the present. This was led in the main by The Trinidad Guardian’s Special Correspondent. As the economy imploded in the 1980s due to the global recession, the local capitalist viewed the PNM as an impediment to their growth and viability.
Mindful that their conglomerates faced bankruptcy, prominent businessmen like Sidney Knox, CEO and Chairman of Neal and Massey, funded and played a prominent role first in the formation of the Organization for National Reconstruction (ONR) and then secondly, the National Alliance for Reconstruction (NAR). Both parties promoted and pushed for privatization of state enterprises. However, it was the latter that made it a public policy on winning the 1986 General Elections.
From 1986 to the present, the NAR, the PNM, the UNC and the present PP government have become proponents of privatization. In the case of the latter, Winston Dookeran, former NAR cabinet member, has become the leading spokesperson for government deregulation of the economy and does so in tandem with the ECA, the Manufacturers Association and the Chamber of Commerce.
According to an ILO Report, The position of the private sector as gleaned from the views expressed by three organizations: Employers' Consultative Association (ECA); Trinidad and Tobago Manufacturers' Association (TTMA) and Trinidad and Tobago Chamber of Commerce suggests they are generally favorable to the idea of reducing the role of the State in directly productive activity.
The TTMA supports open competitive policies. Moreover, it is the view that privatization efforts should be undertaken through the Stock Exchange of the country. This is spun as being conducive to widening of participation by the mass of the people and of workers generally.
The TTMA looks favorably on ESOP. This mode of privatization is conducive to the development of the Stock Exchange and is more facilitative of the expansion of private business in the country.
The ECA generally espouses a similar philosophy. Although it is the official mouthpiece of employers in the country, it has not contributed very much to the public debate on the rationalization, or privatization and divestiture. It is however, firmly agreed on the need for the withdrawal of the State from directly-productive activity.
The Chamber of Commerce, on the other hand, has maintained a much higher public profile, and through its weekly newspaper column, has elaborated on its position that the State should leave business activity to the business and commercial interests in the country. In the view of the Chamber that the relative failure of the State in ensuring profitability of enterprises under its control represents a wasteful use of the resources of the country (ILO Caribbean Studies and working papers, no 2: The employment impact of restructuring and privatization in Trinidad and Tobago).
Privatization is not just a public policy: it is part of an ideological discourse called the free-market discourse that gained currency in the 1980s. This discourse portends that there is no alternative to the market, that the private sector should become the driving force in the economy and that the government should become an umpire and adjust the rules in favor the elite and wealthy.
However, the present global economic melt down, the massive unemployment, rising income inequalities, rising crime, increasing global poverty and war and destruction all testify to the fact that the free-market has failed.