Friday, June 17, 2016
A book I am reading called “Superforecasting” looks at the way in which people go about making forecasts, and draws some conclusions why some people – a select few – are consistently more accurate than others. These people are referred to as superforecasters.
One of the reasons mentioned is that most people think like hedgehogs, while the superforecasters think like foxes. Hedgehog-type thinkers make forecasts or predictions that are influenced significantly by their own biases and experiences. In other words, they lack the ability to think “beyond the tip of their nose”. Foxes, on the other hand, are those who are able to objectively take all surrounding information into consideration, and look beyond their own biases and experiences.
No doubt, foxes in most cases will be much more accurate than hedgehogs. So if we consider someone who can make good investment predictions or economic projections, it is usually someone who thinks like a fox. That is, a person who considers all the information objectively and does not pay attention to the short-term market reactions.
One person who thinks like a fox, and he always speaks to it, is Michael Lee-Chin. He always expounds the same principles of investing, always looks beyond short-term market moves, and believes in the information he has analysed, for long-term gain.
This principle is also very important in organisations. When we think about people who are seen as transformational leaders, more often than not they are “foxes”. In other words, one of the significant characteristics a transformational leader has is his/her ability to look into the future, and consider all the information available, and implement strategies based on that objective analysis.
Some transformational leaders we know include Lee Kuan Yew, Steve Jobs, Henry Ford, and more recently, in my view, Barack Obama. Closer to home we can think of people like Michael Lee-Chin, Butch Stewart, and Chris Blackwell. And if I were to think of politicians who implemented transformational ideas, I would say Michael Manley, Edward Seaga, and PJ Patterson.
These leaders were able to think about and implement ideas that were not the “talk of the town” at the time. In other words, they looked at the information and the environment around them, and made decisions even when others couldn’t see the reason for it.
One of the challenges Jamaica has, in my view, is that we have too much hedgehog-type thinking. This has frequently caused us to take two steps forward and three steps backward, and has robbed us of innovation and progress.
The fact is that too many of us are not able to see beyond our own personal biases. Because of that (and thanks to social media), you can see where some people have two different views on the same issue, depending on which political party is in power.
When a statement or forecast is made by someone who is not in alignment with other people’s political or personal preferences, some people attack the person and say that the idea is backward, stupid, or political. But if someone who holds their political conviction makes that same statement, they will support it. This is because of their hedgehog style of thinking. In other words, they are unable to think beyond “the tip of their nose”.
After reading this reasoning in the book Superforecasting, I began to realise what makes normally rational people think irrationally, or with unsupported bias, when they enter groups (such as political parties). This also explains why a normally rational person, when he or she takes up political office, would shelve a tried and proven plan in favour of another, sometimes doing the same thing, but with another name. Examples can be found in both parties.
I think this is why we are unable to get consensus many times on governance priorities, because irrespective of how well a plan has performed, because it was implemented by the other party, it must go. Or because someone has always been aligned to the opposing party, then they are not useful. The result is that potentially every five years we can throw out good ideas and start the same process all over again, and then we wonder why after 54 years of independence, it seems like we are still in the starting blocks.
There is no doubt that the only way we will move forward is if more of us as citizens, and at the leadership levels, start to think like foxes. We do see some ministers who are more inclined to be foxes, but there are still too many of us who think like hedgehogs. And we know only too well in Jamaica, from our crime situation, that all it requires is a critical minority that can wreak havoc on any well intentioned plan or idea.
If we are to move this country forward though, there must be an unwritten code that we are going to ensure that we shed our hedgehog-type thinking and start focusing more on objective thinking about national development.
We must learn (especially many of the younger political activists) that it is important to look beyond the messenger and properly analyse the message. Or we must learn to be able to properly assess information, and look beyond our personal biases. If we fail to do so, then we will always be in the starting blocks as a country.
For this to happen, only transformational leadership will set that tone.
Sunday, June 12, 2016
AS I listened to the PIOJ’s recent review of the Jamaican economy, I thought to myself that we have become a nation that is too used to mediocrity. The PIOJ estimated that the Jamaican economy grew by 0.9 per cent for the fiscal year just ended, and in the current fiscal year it is expected to grow between one and two per cent.
In the context of how the economy has performed, one could easily say that this is welcome news, as since around 2009 we have seen what the economists love to refer to as “negative growth”. In layman’s term, the economy has shrunk.
On the other hand, while we are happy for the growth, our willingness to accept that meagre growth rate is symptomatic of the way in which we have grown to accept mediocrity as a standard. In other words, we should be very concerned that as a country with a lot more potential to expand at much faster rates, we have failed miserably to achieve that full potential.
This is the same way we accept poor customer service, indiscipline, poor governance by our politicians, bureaucracy, and the list goes on. It seems as if we have been shell-shocked by our mediocre performances, and so we set our standard very low and any politician that comes and tells us how nice we look, we are ready to go with them. This, I think, is one of the major impediments to our economic and social development.
If you grow up in a community where it is expected that garbage will be disposed of anywhere (gullies, sidewalk etc) or loud music is as natural as birds chirping, then it becomes a natural part of the environment. And you can’t imagine your life without it. In other words, what is the big deal about these things? Until finally one day, as we are seeing now, it is no longer just confined to a single community, but rather is very much the accepted culture for the whole island of Jamaica.
So we are numb to murders when they happen, or the number of road fatalities. We also see indiscipline as a way of life in the form of road use or squatting, among others. Because this culture and degradation is now ingrained in us, we then begin to celebrate it through our music.
So songs speak about the abuse of women or violence and we cheer when we hear them. Or, one of the new trends is violence in dancing, where men jump from roof tops on women, many times causing physical harm. But it is so accepted as a part of our culture that the patrons at the dances cheer when they see it.
The irony, also, is that we try to sell Jamaica on this “No Problem” culture, as Jamaicans seem proud to display their indiscipline when overseas. Many times when travelling and Jamaicans are on the aircraft, they have to put on some display, including speaking loudly. Recently I saw a sports team representing Jamaica (funded by the Jamaican Government and in Jamaica-branded shirts) playing music and speaking loudly on the aircraft. I had to speak to one of them to get the other to shut up.
But when I think about it, you can’t really blame Jamaicans too much for how they behave because this is how they have been socialised. Because of the failings of government policy and action, over the decades, we have developed an environment of indiscipline and acceptance of mediocrity, hence the reason for falling labour productivity since the 1970s.
Governments have further solidified this mediocrity by creating labour laws that go way beyond protecting workers rights to harming them, as the stringency of the laws have now led to a situation where a great majority of the workforce do not have any health or pension benefits, because it is best to hire people on short-term contracts.
These same Jamaicans, though, when they go to live in other countries, do conform to the social behaviour in the majority of cases. And then we ask the question why do Jamaicans conform when they migrate, but are indisciplined here. The answer, of course, is that the environment we have in Jamaica encourages indiscipline and mediocrity.
It seems logical to me then that if we truly want to realise our full potential as a country, we must as a priority look at the environment we promote.
For example, the best-selling book Rich Dad, Poor Dad speaks to the belief that the environment for learning created by two different fathers can determine the outcome of the child. So, as long as we teach our citizens to be indisciplined, unproductive and give them handouts, then we will continue to create a country where underperformance and indiscipline is rampant.
It is for this fundamental reason why we will always find it difficult to achieve any sustainable growth about three per cent. It is also for this fundamental reason why we have so many Jamaicans earning very low wages. It is also a fundamental reason why child abuse is so high, why squatting continues to grow, and why crime is a challenge.
For me it seems logical, and I can’t understand why we have not seen it expedient, to fix these underlying issues rather than encouraging celebration of our mediocrity as “No Problem”. It is perplexing that we celebrate the very high standards of people like Usain Bolt, Shelly-Ann Fraser-Pryce and Bob Marley, but we seem too ready to accept a mediocre society.
Until we can do so, then we will continue to speak about one to two per cent growth and be willing to accept mediocrity as our highest standard.
Friday, May 20, 2016
The Government has placed growth at the front of its priorities. Since political independence, in 1962, we have only seen growth of any significance in the period 1962 to 1972, and then about three years in the 1980s. So the focus on growth is definitely what is needed if we are to truly see Jamaica develop relative to the rest of the world.
In order for growth to occur in any sustainable manner, however, there are some fundamental things that must first happen. The most important thing to consider is that “sustainable growth” can only occur in an environment that enables its occurrence. This is no different from the need to create an environment that encourages productivity in a single organisation, or even in a business sector.
So, as an example, if someone is learning how to swim they must have a body of water (such as a pool), proper swimwear and, very importantly, a teacher who is capable of teaching someone how to swim — and more importantly can themselves swim.
So growth can only happen in an environment that encourages capital investment, greater productivity, and where people feel incentivised to work. This is the challenge that we have and continue to have. I don’t think that most of our politicians see the long-term link between the need to improve productivity and work ethic, for example, and sustainable growth. For this reason our State has, over many years, encouraged welfare politics and income redistribution rather than productivity improvement and rewards based on productivity.
The result of this welfare politics is squatter settlements and falling labour productivity, because in order to “get ahead in life”, all you have to do is align yourself closely with a political party and ensure they get in power. This type of thinking has led us to develop labour laws that ensure that unproductive labour is rewarded, which results in the long term with many people being contracted without any permanent employment benefits. This in turn creates lower fiscal revenues for the Government and erodes workers benefits into the future.
When I started writing in newspapers in 2003, I thought to myself that surely Jamaica has the potential to be a high growth rate country and see significant development. This, I thought, was where we were destined to be because of our geographic location, language advantage, tourism competitiveness, music and sports competitiveness, etc.
One of my objectives was to see if I could assist to improve the conversation around development and by doing so help Jamaica to achieve economic success, within a 10- to 15-year time span.
One of my main motivations in 2003 was to see Jamaica become a place where my son would grow up and want to live in. At the time he was nine, and I thought that if as a country we did what was necessary, we could have seen Jamaica truly become the place of choice to live, raise families, and do business, as pronounced in Vision 2030. As a result, I also sat on one of the Vision 2030 sector committees.
This obviously didn’t work out as 16 years later we are still grappling with low growth, low productivity, and social issues. Although in the last two to three years we have made some progress in putting a framework in place to address our economic issues, our social and legislative challenges still remain an issue.
This came home to me even more when last weekend I attended my son’s graduation, where he did a bachelor’s degree in actuarial science, and he said to me that even though he would love to come back to Jamaica to live, he would not because it was too disorderly and had too much crime.
He also went on to say that, in his view, Jamaica would be the best place to live if we could control the crime and bring order to the society. I couldn’t argue with him when he said that, and I thought to myself that Jamaica has once again lost another mind that could help us to develop. And this scenario has played out many times over.
This conversation took place in Des Moines, Iowa, which is the same place the two US missionaries that were murdered in St Mary are from. Sitting down to dinner with two residents there, they brought up the matter and said that they were both very popular in Des Moines, and because of it Jamaica had developed a very bad reputation there and many missionaries who were thinking of coming decided not to.
Jamaica has always had the potential to develop into a First-World country, where our people would prosper and we would not be seen as persons of interest for security personnel in other countries. In other words, we could have easily avoided the label of being “extraordinarily violent”.
The problem we have is that we continue to cause our own demise by our failure to do what is necessary from a governance framework to provide an enabling environment for proper economic and social development, and safeguard the growth agenda we speak about so often but fail to realise.
What we must recognise, though, is that creating this environment is not going to come from the continuation of our welfare politics, or biasing our conversations depending on which political party forms Government. For example, I see on social media all the time where some people argue two different ways before and after the election, on the same point.
Safeguarding our growth agenda means that as a people we must change the conversation and we need to start looking at capital as positive for development, rather than with the suspicion we have always treated it and tax it before it starts working.
We have to create an environment of trust, which means that the security forces and government bureaucracy must respect the citizen and not make it hard for them to live and do business.
We have to bring order to the society, which means harsh penalties for those who dispose of waste illegally or who violate the Noise Abatement Act or who break the Road Code.
Until we bring this sort of order to our country, then someone else will lament the fact that their son or daughter chooses not to return to work and live.
Friday, May 06, 2016
According to the World Economic Forum’s 2015-16 Global Competitiveness Report, crime and theft are the second most problematic factors to doing business in Jamaica, accounting for 16 per cent of the challenges. This is only outdone by inefficient government bureaucracy at 16.4 per cent.
Recently we have seen an upsurge in horrific crimes, including multiple killings. These include the following murders: a three-year-old killed by her father, a policewoman shot at a bus stop, and two US missionaries killed by persons unknown. These incidents have renewed calls for severe punishment for the perpetrators. The case of the US missionaries has understandably caused international press coverage, which can result in a negative economic impact if not managed properly.
There have also been renewed calls for hanging by the Security Minister and others. All this comes at a time when we are fighting for the freer movement of Jamaicans within Caricom. The government has also placed responsibility for reducing the crime rate on the shoulders of Police Commissioner Carl Williams.
In my view, the fundamental issues that have created the crime monster will not be addressed by either the resumption of hanging or by saddling the Commissioner with the superhuman task of reducing the crime rate. Hanging can only be a deterrent if we are able to catch the criminals. Even then it is not a solution if a trial takes years to complete, and then through the lengthy appeal process hanging might be in breach of the Pratt and Morgan rules.
It is also impractical to place the responsibility for reducing crime at the feet of the police, as in most cases all they can do is react to the crime after it is committed. I say this because an assessment of the crime statistics reveals that many killings are domestic, with gang murders in second place. We have discussed many times that the real challenges with crime in general and murder in particular have less to do with policing and more to do with the environment.
In 2015, for example, I am told that the police solved 600 murders committed by more than 700 people, which is a significant number of murders to solve. This has been achieved despite being hampered by inadequate resources and operating in a challenging working environment, both in the office and on the streets.
How can the police prevent domestic crimes, if they are defined as mainly crimes of passion, and not premeditated – which means they occur in the heat of the moment? All the police can do is react.
How do the police eliminate gang murders when the society and communities are actually creating more and more people who are likely to fall into crime every day? As an example, one of the challenges with crime in St James is the number of squatter settlements that have mushroomed. So because the communities are not properly organised, they are very difficult to police, and the conditions the people live in do not encourage civil behaviour.
Although short-term fixes must be found to relieve the increasing crime situation, the fact is that a sustained reduction in crime needs a much more detailed assessment. In my view, the first thing we must do is understand what are the causes of crime, and many of these causal factors occur years before the crime actually occurs. For example, people who commit murder today may have been victims of child abuse who saw one or both parents murdered years earlier, or who grew up without any parental control over what movies or music they were exposed to.
The fact is that our crime situation today has resulted from policy missteps over the years. In short, we have continued to create an environment which encourages criminal activity. This is no different from children growing up in a household where there are no rules, and they can do and get away with anything they want. So if children have grown up in an unstructured environment, don’t expect that when they get to 18 they will adhere to the rules of society or their workplace.
Similarly, Jamaica continues to facilitate an environment of indiscipline on the roads (taxis and buses drive how they want); night noise from dances throughout the night (in contravention of the Noise Abatement Act); blaring music that promotes violence and abuse of women; illegal squatting and violation of the zoning laws; illegal vending; violation of environmental standards; and abuse of children and the elderly.
This undisciplined environment is supported by a very slow justice system and a grossly under-resourced police force that is fighting corruption within its own ranks. Add to that a less-than-adequate education system and a high incidence of children not attending school.
So in fact, crime is supported by the ways we have chosen to organise ourselves. We have had many spontaneous reactions to crime over the years – special police task forces such as ACID and Kingfish; curfews; Suppression of Crime Act; Gun Court; and in 2010 – the Tivoli incursion. All this has not resulted in reduced levels of crime, but rather an increasing distrust between the authorities and the Jamaican people, as evidenced by the LAPOP report over the years.
If we are serious about making Jamaica a safe place, then we must realise that crime can only be solved by creating a society of order and respect for the average citizen. We must stop fertilising the crime tree.
Until we choose to do so, we will continue to react to an ever-increasing problem (at best we might have a short-term reprieve). The security forces will find it more and more difficult to cope, and we as Jamaicans will continue to suffer.
We must create opportunities for all Jamaicans and ensure that our children are protected and not subject to conditions that breed criminal behaviour. We must use technology such as CCTV and properly resource the police force. We must ensure that legislation such as the new Road Traffic Act is enacted in short order, just as we do with tax legislation.
Only then can we say that Jamaica will be the choice of place to live, raise families, work, and do business.
Wednesday, May 04, 2016
The recent impasse between Jamaica and Trinidad, arising out of the latest round of Jamaicans being not only denied entry to Trinidad but being detained in less than acceptable circumstances, has once again raised the question of the purpose of Caricom, and more specifically the CSME.
This is only the last of many incidents that have grabbed the attention of the region on this matter. The tension began in 1961, when Jamaica held a referendum which saw us withdrawing from the West Indies Federation. At that time the then Trinidad Prime Minster Dr Eric Williams appropriately said that “one from 10 leaves zero”, referring to the fact that without Jamaica the Federation would be virtually non-existent.
Since then we have been unable to see the free movement of goods and people within the region, and examples of these include:
(1) the challenges involved with exporting Jamaican products to Trinidad and Belize, especially patties;
(2) previous instances of Jamaicans being refused entry into Trinidad (I remember last year the Institute of Chartered Accountants of Jamaica sought reassurance from Trinidad that our delegates attending the Caribbean Conference would not have any difficulty with immigration because of a prior incident); and
(3) the landmark ruling coming out of the Shanique Myrie case.
In the case of the movement of goods in particular, my own view is that Caricom and the Council of Trade and Economic Development have proven to be very ineffective in addressing this issue. Countries have made commitments at the highest level that the non-tariff restrictions would be addressed, but years later the problems remain – in particular, the case of the restriction by Belize.
This recent impasse between Jamaica and Trinidad is the latest in a long line of events demonstrating the ineffectiveness of Caricom, and more specifically the failure of our governments to rectify this situation. It reflects a serious lack of leadership in the region. I am left to wonder why we are unable to resolve a matter as important as this, yet we find time to proffer solutions to problems affecting West Indies cricket; but such is the irony of our regional politics.
Once again, though, we need to question the relevance of Caricom. The recurrence of these situations creates divisiveness and drains our energy, because the failure of governments to find a sustainable solution always carries us back to the same unfortunate position.
Nonetheless, I am heartened by the stance taken by Prime Minister Andrew Holness and Foreign Minister Kamina Johnson Smith, and former Minister Anthony Hylton, as they have all stated a commitment to take firm action on this. Hylton at the time had in fact overseen rulings against Trinidadian petroleum products for rules of origin breaches under the Treaty of Chaguaramas.
Outside of these three, however, I think the other responsible people have proven to be ineffective and seem to always be seeking quiet diplomacy, while Jamaica and other countries of the region suffer. In fact, one could say that it is the failure of strong leadership on this matter that has seen the persistent failures of Caricom and our inability to move towards a true CSME.
On this recent impasse, however, I appeal to Jamaicans not to get emotional and respond like the former Trinidad National Security Minister, and also the “Donald Trump” surrogate Trinidadian talk show host. As a people we must remain above those types of responses, and understand that there are many Trinidadians who are decent people.
So we should continue to conduct business with Trinidad wherever possible, because it makes us better off financially. That is the only reason for market trade, so let us avoid emotional reactions.
I, for example, will not stop buying Trinidadian goods just because of this issue, but I have always looked for Jamaican goods over any other import, as long as they are equal in value (quality to price). This is because as a Jamaican my preference should always be for Jamaican goods, but certainly not at all costs to me personally. I therefore encourage Jamaicans to always purchase Jamaican goods over imports where they are available and of similar value.
However, while we consider the comparison of products and services, we must also be mindful of the policy restrictions that create unfair competition.
Trinidad (through its finance minister) has admitted to providing a subsidy on fuel. Based on our own research (at the PSOJ) this subsidy is more than just on petrol, and extends to manufacturers.
I won’t go into detail here, but suffice it to say that this is in contravention of several parts of the treaty. So while we have enforced a policy (CET under the Treaty) to promote the CSME, we must also recognise where policies are failing us because of contraventions, and must act decisively to address that.
This is where the Jamaican government has failed us, because much of this has been suspected for a while, and brought to their attention, and they have failed to protect the Jamaican people. In fact the PSOJ estimates that over the 10 years to 2014, we have paid out approximately US$700 million we wouldn’t have had to pay if there was no CET on fuel because of the premium charged by Trinidad on account of the CET.
This would be enough to fund the sugar industry every year, and hence create jobs in Jamaica as opposed to supporting the subsidy in Trinidad.
So my appeal to Jamaicans is this: Don’t let one or two wayward voices in Trinidad cause us to view everyone in Trinidad with disfavour. And don’t let the ineffectiveness of the current Trinidad Government to address this issue, or the past ineffectiveness of the Jamaican government, play a role in how we feel. What we must do is demand action by the governments to either solve this Caricom façade, and make it a true CSME, or stop fooling ourselves about it. What we must do is act and stop “posing”.
Caricom has a role to play in our regional development. But it is our failure to treat Caricom properly that has resulted in the many breaches – and not only the failure of Caricom, but the poor economic performance of the region.
Friday, April 15, 2016
Last year I had set a goal to ride 7,500 miles on the bicycle, which I achieved. Discussing it with another cyclist, I was asked if that was my ultimate objective and if I would be increasing it this year (2016), to which my response was no because the real purpose of the goal was not to just ride 7500 miles for the year, but rather that was an initiative to achieve the greater goal, which was good health and to perform better on the bicycle.
Also, just recently, I posted that the philosophy that was adopted by the previous NSWMA board was good customer service and good corporate governance. This in itself is not the ultimate objective of the NSWMA, but what it does is guide the development of the initiatives needed to achieve the ultimate goal.
These two examples show that in order to achieve any ultimate objective, we must have carefully designed initiatives and a guiding philosophy.
So even though the initiatives and philosophy have been identified and are both critical to attaining the objective, the fact is that if you were just told the initiatives and philosophy guiding the initiatives, they would both be meaningless unless we are aware of what the ultimate objective is.
However, if we were to know what the ultimate objective is, then we could easily identify a philosophical framework and the supporting initiatives without being told.
So if I told you the ultimate objective of the NSWMA (as defined by section 4 of the NSWMA Act) is responsibility for the proper management and disposal of waste, then you could say to me that in order to achieve that I would need to have a guiding philosophy of customer service and governance. At that point I could then say, well, if I want to achieve that then I must look at the major risks to achieving that and then create my initiatives by order of priority.
This is the approach that the previous NSWMA board took, as the first thing the board did was to go to the NSWMA Act and ask what is our ultimate responsibility. That was able to guide our philosophy and coming out of that analysis we were able to identify Riverton and garbage collection as main risk areas and tackle those early.
For the past 43 years, Jamaica has been trying to achieve growth and development. We have heard many people talk about the need to grow the economy, and identify specific sectors — need for macroeconomic stability; need to reduce the debt to GDP ratio and reduce the fiscal deficit; and how critical it is to pass the IMF tests inter alia.
It wasn’t, however, until Vision 2030 was developed and launched in December 2013, that we sort of created a guiding philosophy for our development. It was then that we finally decided that what we wanted for our development was to become “the place of choice to live, work, raise families, and do business”.
Until then Jamaica had no guiding philosophy for our development. Sure we knew that we wanted economic growth. We knew that we wanted to develop the country’s infrastructure. We knew that we wanted to reduce crime and indiscipline. We knew that we wanted to eradicate poverty. But to what end? And the fact is that if you don’t know where you are going, then you can take any road and you will get there.
But even though this philosophy (which I think is an excellent one) was developed, the truth is that it really has not been taken seriously by successive administrations, and seems to have remained an academic task with no desire for implementation. So there are a few persons monitoring Vision 2030, but the needed initiatives have not been tied in to the action by the country’s “board of directors”, which is the Cabinet.
So imagine if the NSWMA management identified a philosophy for the organisation, but it was not accepted by the board. Could it be achieved?
Last Tuesday, I accepted an invitation to interview some young people from a low-income community, in an attempt to identify what their skill sets and needs are. I thought it was important, even though I had a really hectic day, because I believe our young people need serious nurturing and guidance. I was happy to see that several professionals were there, and it was more encouraging because it took place at 7:00 pm.
But while speaking to some of these young people, just out of school, I was very disheartened. These youngsters were very ambitious and creative, but had a poor family background, had been abused, had produced children early, or had to drop out of school because they had no financial support.
One young lady of 18 was trying to make life better for herself, and wanted to go back to school, but had to drop out at 13 when her mother died and her grandmother could not afford to send her and two younger siblings to school. So she had to start hustling to help them. Immediately I thought to myself, what type of future does she have? Fortunately, she had no children and I pleaded with her not to do so until she was financially independent.
There were many stories similar to this, and it was obvious that they were very willing to improve themselves and at a time when they should have been enjoying their childhood but could not do so. I will definitely participate again.
This led me to think that even though we are talking about passing IMF tests, and nice terms like macroeconomic stability, the fact is that there is a significant part of our population that is just concerned about what they will eat tomorrow. Hence the disengagement we saw in the election turnout.
The fact is that our governance and philosophy is totally disconnected from what the ultimate objective of development should be – to improve the general standard of living for Jamaicans and ensure that all Jamaicans have an equal opportunity at success.
That is what governance should be about. Instead we focus on initiatives, and because we have not been able to define anything but initiatives we have not been able to see any meaningful development.
In other words, our leaders need to go back to basics and understand that the real purpose of growth and development should be about enhancing the lives and opportunities for the people. This is why the US has been so successful as a country, because their ultimate objective is improving the lives of US citizens, guided by the philosophy of government by the people and for the people.
Friday, April 01, 2016
As we pursue our eternal search for economic development, one focus has been on the need for us to purchase local goods and services in preference to imports. The reasoning behind this seems logical, as it should mean that the balance of payments should improve, and this should mean a stable exchange rate and employment for more Jamaicans.
As a result, there have been many calls for us to ‘Buy Jamaican’. Former senator Norman Grant has been at the helm of this initiative, which, in my view, has reaped much success. Even with this successful campaign, however, we have continued to see currency depreciation, high inflation and interest rates, and increased unemployment over the period. So the question is, why wouldn’t things improve if we had such a successful ‘Buy Jamaican’ campaign?
There are a few reasons for this, and it underlines the fact that simply saying we should ‘Buy Jamaican’ will not improve our economic fortunes.
So while the campaign was very good and necessary, the truth is that we never really supported it with policies that would sustain a move towards consuming more Jamaican-made products and services. In addition to lack of policy stimulus, many local producers have not improved the service and product quality to properly compete with imported products.
The first thing to note is that it is a futile exercise to be pushing a ‘Buy Jamaican’ campaign when we are unable to significantly increase the production of Jamaican goods and services. So what we have failed to do as a country is ensure that appropriate policies address this failing. To do so all we had to do was ask the question – what is it that prevents capital from making long-term investments in locally produced goods and services? In other words, does capital feel comfortable investing for the very long term in sustainable production, and – importantly – locating their facilities in Jamaica?
The answer to this is that government policy has never effectively addressed the issue of being more attractive to capital than our competitors. Sure we have done it by creating special incentives for industries such as tourism, bauxite, free zones, etc. But the fact is that government’s attitude to capital generally has been very wanting.
As an example, tax policy in Jamaica has always pinpointed increasing fiscal revenue as its primary purpose. Never mind that it ends up killing incentives for capital and businesses generally. In contrast, countries like Panama have a direct policy of focusing on attracting capital, and as a result they have consistently grown at 6.0 per cent to 8.0 per cent per annum.
Government policy in Jamaica has always created a hostile environment to capital, and then created special carve-outs for foreign direct investments. Small wonder then that local investors are reluctant to risk their savings and pensions in business ideas.
The fact is that if government policy was focused on addressing the four most problematic factors in the 2016 Doing Business Report: inefficient government bureaucracy, crime and theft, tax rates, and corruption — then not only would we solve 54 per cent of our business challenges, but we would also see increased capital inflows and employment. Instead we have struggled for years to implement a computerised tracking system for development approvals, and then we wonder why growth remains anaemic.
Secondly, many of the Jamaican products and services produced are not able to compete in terms of quality and price.
Price in many instances is again affected by government policy, which seeks to extract as much revenue as possible without much concern for the survival of businesses and their ability to compete. But there are also quality issues with some of the goods and services produced. As an example, last year I took my daughter to the Easter Funfest at Hope Gardens, and it was a great event for children. I got there very early and she was almost alone on the rides so it was good.
This year I went early with her, only to be greeted by blaring music, with speaker boxes lining the route to the rides. The music was so loud that my daughter started crying and wanted to leave, and it was equally unbearable for me and some of the staff. Later I got a video of them having a stage show there with children dancing on the stage to a large audience of cheering adults.
A significant deterioration over last year.
This is a similar story for many Jamaican products and services. They start out well and end up being uncompetitive. This is okay in a competitive market, but the problem is that this mediocrity is supported somewhat by government policy, which in many respects creates significant barriers to entry. The result is that the invisible hand of a competitive market does not get to work properly. For example, something as simple as not enforcing zoning laws allows some businesses protection by allowing them an unfair advantage from a cost point of view. The result is mediocrity.
Other inhibitors are lack of information and inability to move goods effectively. Just look at the deplorable state of most farm roads.
The point is that we should not ‘Buy Jamaican’ just because it is a Jamaican product or service. But rather we should ‘Buy Jamaican’ because it is just as good or better than the imported products.
It is only when we can produce competitively that we will see improved growth and employment. This is because buying an inferior product actually does have economic costs: (i) higher cost of living, (ii) lower productivity and hence lower wages, and (iii) decreased potential for foreign exchange earnings.
At best then, producing inferior products and services will produce a more closed economy which becomes more uncompetitive and produces lower income levels, as happens in Cuba.
If we are to grow the economy at acceptable levels, then we must increase the number of Jamaican products and services. This, however, must be done competitively if we are to benefit.