4 years, 9 months, 17 days, 17 hours
5 October 2024
In the context of a conversation with a Minister from Barbados, what can a country in this situation do?
I framed my challenge last week in the context of a conversation with a Minister from Barbados, but I have since heard from colleagues that the same issues face their countries too. So what can a country in this situation do? Of course there is no single magic bullet, but my offer for some of the things that could be considered are as follows. I add by way of opening disclaimer that none of them are necessarily politically easy. If they were, they would have been done already.
Falling birth rate. If you are a country that has in the past incentivised a lower birth rate, like China, it is an easy fix to take off or reverse the incentive. But that doesn’t feel to me like a good answer, as ultimately a plateau in the global population is exactly what we need to take the pressure off both natural resources and human services. A population expansion race is the last thing the earth needs. Better to accept a new-normal of a stable or shrinking population and right-size the country’s services to match.
We all hanker after more stuff, but better distribution of employment opportunity, the wealth that exists and expectations on what citizens must give back, could create a society that measures its success on quality of life not its GDP growth and rate of consumption. Add-in that if better healthcare not only allows us to live longer but also have enhanced quality of health for longer, it follows we ought to expect individuals to remain net contributors to the society to an older age, which implies age-based entitlements need to be re-evaluated.
Net emigration. You either accept it or you proactively create policies to attract and retain individuals of working age to areas that are becoming depopulated – as Spain and Italy are doing. If rising climate risk is a major factor, as in Barbados, then you urgently need to invest in the resilience of exposed areas and essential assets. Or, as in New Zealand, you embrace “managed retreat” (see June 2023, A Managed Retreat).
Ultimately it is a cost-benefit decision whether it is worth trying to protect certain areas. In some cases that equation can be altered by the willingness of third-parties to invest in your increased resilience. Just two months ago it was announced that the Inter-American Development Bank and the European Investment Bank had joined forces to guarantee $300m of “debt-for-climate” loans to Barbados to support investment in climate-resilient infrastructure. But note it is a loan guarantee not a grant.
Rising citizen expectations. You do everything you can to meet them, recognising that it doesn’t always mean more money. Or you face into trade-offs that push more cost to consumers of services and/or reduce services that are no longer affordable (as has been happening for years in the UK local authority sector). In some cases communities will step-in, reversing a post-WW2 trend of centralisation of service provision to the state. But the accompanying risk is rising inequality between the communities that can afford and have the skills to support themselves, and those that do not.
Growing infrastructure gap. There is only one answer, which is currently a very-live political issue for the new governments both in the UK and in Mexico, where I am now. And that is private finance. That finance still has to be repaid, eventually. But it means some of the cost falls to a future generation, taking pressure of today’s generation which may not reasonably be able to meet a level of investment which is a function of the dislocation in the circumstances of the country. Or to state it more simply, in the medium term there is the potential for a rebalancing of the country’s needs and capacity to pay, and private finance can help bridge to that new paradigm. It’s a financial bet, so you need to invest wisely.