A Tale of Two Islands - A Profile in Building Trust

Picking back up the blogging mantle after several weeks enjoy the lazy hazy days of summer.

During my vacation break, I heard a story on the National Public Radio program "This American Life" that really brought home to me the power of trust.

The program contrasted the approaches of two different countries - Jamaica and Barbados - in dealing with similar financial crises. Barbados emerged from their crisis a much stronger nation - median income is currently twice that of Jamaica's, and its literacy rate of 95% is four times better than Jamaica's. By every economic and socioeconomic measure, Barbados is significantly outperforming Jamaica. Why? Primarily, because during a time of crisis, Barbados chose to use trust as the fundamental lynchpin of their economic recovery strategy and in so doing - reinvented their approach to running the country.

Here's what happened. In the early 90's, oil prices skyrocketed and threw the world into a global recession. This created a real foreign currency crisis for Barbados. Essentially they did not have enough foreign currency to pay for imported goods and wound up having to borrow significant money from the IMF. Barbados' leaders "chose trust" and established a partnership between business, workers and the government to build an economic recovery plan based on shared sacrifice.

Business and the unions, previously adversaries, learned to trust each other, and their close collaboration essentially saved the country. Together they did extraordinary things - labor took an 8% across the board pay cut. Business collaborated with labor and government to make sure that layoffs did not affect both breadwinners of the same family. The results of this partnership were astounding - within 5 years, Barbados paid off their loan to the IMF, wages reached pre-crisis levels. And most importantly, the collaboration established between government, business and labor - still endures and forever changed Barbados' governance model.

Jamaica, and it pains me to say this since I am of Jamaican ancestry, had a very different response when faced with the same crisis in the early 70s.  The Jamaican Prime Minister did not build trust between rich and poor, business and labor. He made autocratic decisions and famously said in a speech that if Jamaicans didn't like what he was doing "there were five flights a day leaving for Miami".  As a result, thousands of middle class Jamaicans (including many of my relatives) left the country. This crippled the economy and Jamaica has never fully recovered. In fact,  now 50 cents of every $ the government collects is spent on paying down interest on IMF debts.

Tony Wolcott, Executive Director of the Barbados Employers Confederation, sums up the bottom line: "Trust is the key factor in the whole cohesion of the social partnership we've got here."

Such is the power of not only a partnership mindset, but of building trust. 

More on how to build trust in future blog posts.