EDITOR, The Tribune.
With a few notable exceptions, the oil industry subsidizes failures. In the most corrupt countries, like Nigeria, it has not cured but rather exacerbated corruption and wastage. In backward tribal kingdoms (like Saudi Arabia) it has deepened and hardened a primitive conservatism that stifles dissent and militates against any substantial movement of the population up the human development scale.
Why? Because of a phenomenon known to economists as “moral hazard”. This, basically, is where an ostensible blessing prevents a society from correcting underlying defects by sparing the leaders of that society the direct consequences of those defects.
So a governor of oil-rich Delta Province in Nigeria can afford to simply dispense contracts and largesse, rather than actually construct refineries or improve infrastructure (keeping the country dependent and poor), while a Saudi Prince can give cash grants to his subjects rather than fund structural change to an educational and social environment little changed in the last 500 years. The so-called “resource curse” is very real and there is nothing supernatural about it.
The exceptions that I speak of (Norway being the best example) are countries with strong civic cultures, advanced civil societies and deeply equitable wealth distribution systems. Norway was already one of the most equal societies on earth before it discovered oil, which explains why oil wealth has flowed so naturally into enhancing the country’s social capital and with such broad results.
The Bahamas that local oil enthusiasts would like that industry to descend upon is a place where more than 70 percent of revenues are derived from taxes on the poor, while even the wealthiest individuals and corporations pay zero taxes on income.
It is a country where the national airline reacts to falling revenues (because the people are broke and unemployed) by raising airfares on the poorest residents of the outer islands, while lowering them for the few foreigners well-off enough to travel amidst an economic meltdown.
It is a country that consistently ranks in the top ten most expensive countries on earth, yet in that grouping sits at the very bottom in terms of minimum wages (just over half of the next lowest, Japan) and is the only one that subsidizes a tax-free existence for the rich via taxes levied on the poor.
Anybody who thinks that oil revenues will do anything other than subsidise and cover for these deep structural defects by permitting our political class to avoid addressing them is unacquainted with Bahamian history.
February 15, 2021.