Price control ‘may not help poor’

  • Craig Simmons (Photo by Akil Simmons)

A move to control food prices may not help disadvantaged island residents, an economist warned yesterday.

Craig Simmons, senior economics lecturer at Bermuda College, said: “It is difficult to see how price controls can help those in poverty.”

Mr Simmons explained that food prices were rising around the globe because the world’s poorest were earning more, which increased demand while supplies of food were not growing in line.

He added that if importers were forced to bring in lower cost foodstuffs or sell at lower prices they would move into areas of business with a better return.

Mr Simmons was speaking after the People’s Campaign released a 12-page policy document last week, including a call for price controls and stronger market regulation.

The document was released only weeks after the House of Assembly passed legislation to change the Price Control Commission to the Cost of Living Commission and gave it more power to look at how it could reduce the expense of living in Bermuda as well as the ability to impose higher fines for failure to comply with commission notices.

The change was signalled in the pre-election Progressive Labour Party manifesto and championed by David Burt, the Premier and Minister of Finance.

But Mr Simmons said: “The best way to affect food prices is through innovation and disruption of traditional methods of farming and importing food.

“We cannot force entrepreneurs to import food specifically for the poor or to sell at what some consider fair prices — they will simply not do it and do something profitable.”

He added the entrepreneurs solved problems, but only if they had the access to start-up and working capital and less regulation to be “innovative and disruptive”.

Mr Simmons said: “Bermuda’s economy doesn’t do a good enough job of providing small businesses with the capital they need to fulfil their problem-solving mission.”

Mr Simmons added that People’s Campaign manifesto was “for the most part” reasonable and deserved “due consideration from policymakers and the general public”.

He added: “The suggestions can form a basis for public reasoning and debate on the issues raised. For that reason, the People’s Campaign manifesto deserves credit.”

Other recommendations in the document included the implementation of a living wage, money-management classes in schools, as well as tighter market regulation.

Mr Simmons said: “Bermudian society is having difficulty with the role of markets as the decision maker of how resources should be organised.

“It would appear that Bermudian society has lost sight of the common good and as a result, high-net-worth individuals’ influence is trumping democratic values and power.

“Economic thinking has failed to keep abreast of the profound changes felt by Bermuda residents because of globalisation, privatisation and competition.”

Mr Simmons said that the goal of economics was to identify “the institutions and policies that would promote the collective aspirations of society”.

He added: “To that end, economics has failed to provide residents with ways of thinking about the changes that are happening in our neighbourhoods.”

Mr Simmons said that a living wage benchmark was possible, but that “the difficulty lies in the details”.

He explained: “For example, we know that a disproportionate number of single-parent households are at the bottom of the socio-economic ladder.”

Mr Simmons pointed out that low-income households might have to work full-time for up to 50 weeks a year to reach the benchmark.

He added: “In these situations, there is likely an undesirable trade-off between making more money and time spent parenting. And then there are those who have work-limiting illnesses or disabilities.

“For these households, we will need to address those barriers.”

Mr Simmons said that financial literacy was important, but that he was “not convinced that schools, as they presently exist, are the places to lead this effort”.

He explained: “Schools are already overburdened with the task of teaching the three Rs and even that is not going well.”

Mr Simmons added: “We suffer from the delusion that what is taught in school is applied in life.

“Teaching is one thing. Learning, by which I mean lasting change in behaviour, is another.”

Chris Furbert and the Reverend Nicholas Tweed, leaders of the People’s Campaign, discussed the cost of living, including food prices, during an interview with The Royal Gazette last week.

Rev Tweed said: “It is in the interests of the people to not be exploited by a monopoly on food prices.”