Friday, January 19, 2018
In the book “The Wisdom of Crowds”, James Surowiecki argues that behaviour is shaped in many respects by the environment in which people are allowed to operate, and that people tend to go against rational behaviour in order to conform to the nature of their environment.
He further argues that most people will always want to do what is right, even if it is not in their immediate individual interest, as they realise that doing the right thing instead of pursuing one's selfish interests will result in a better society for everyone. If, however, there are no enforced rules to prevent selfish people from seeking out their own interest, then there will be a general breakdown of the community, and everyone will start to do what is in their own interest. In the end, of course, everyone will be worse off.
This is true not only of organisations, but also of societies.
This explains quite clearly the situation we face in Jamaica. One can argue that the prevailing lawlessness and high murder rates are caused primarily by the environment we have allowed to develop, where everyone pursues their individual self-interest over societal interest. The inevitable result is that everyone loses or everyone gains less than they would if the interests of the society were pursued by all.
What causes this, according to Surowiecki , is the fact that rules are not enforced.
Let us examine Jamaica's case. Over the years people have been allowed to drive any way they want (including on any side of the road), people have been allowed to set up businesses in any residential area they choose, people have been allowed to squat wherever they choose (60 per cent of the population now squats), and play music at any time and at any volume they choose. Allowing all these things to happen has led us to a society where lawlessness rules and crime prospers.
Why have we had such difficulty in dealing with the crime monster all these years? The answer is that all the actions we have taken have never sought to address the nature of our environment which is gradually going downhill. What we have always sought to do is introduce special police squads, strong legislation, or other such knee-jerk initiatives. But we have never sought to enforce the laws and bring people to book for breaking the laws.
So there are taxi drivers out there right now with hundreds of outstanding traffic tickets. Or we have read recently about the light sentences handed down for gun offences. Or we are only too familiar with the long time it takes for a case to be tried. Or we take 10 years to pass Road Traffic Act amendments that can assist the police with enforcement. Or we fail to properly equip the police, or agencies like the NSWMA, and then we wonder why they can't function at full capacity.
We need to understand that enforcement of laws is not just the action of the police or the courts, but everything that goes into making them effective.
So in effect, to take the argument from Surowiecki, by our inability to enforce the rules, we have now created a situation where more and more people see law- breaking (pursuing individual interests) as the only way to get any benefit from the society. In short, we have failed to create a society where law-abiding action benefits everyone. We have created a society where individual pursuits result in greater rewards for some rather than where group pursuits result in a greater reward for all.
The result is sub-optimal performance, which finds its way into low productivity, poor economic and social development, reduced standard of living (we have seen increased poverty recently), and ultimately low GDP performance.
In order to fix this problem, we must recognise that immediate steps must be taken to counter lawlessness, such as a military response. However, a long-term sustainable fix requires a serious focus on changing the environment, which is currently a fertile ground for crime and disorder because it encourages deviant individual pursuits.
My own view is that if we were to start enforcing the laws, primarily at the level of the roads and things like illegal vending and night noise, then we would start to see a behavioural change. And using the argument by the book, we would start to see more and more people seeing the benefit of action for the benefit of society as a whole, as individual interests against the society will result in swift punishment and act as a deterrent.
For example, if motorists know that by accumulating more than five unpaid tickets they will lose their driving privileges and go to jail if they fail to comply, then road indiscipline will go down. But if someone knows that even if they have 100 tickets outstanding they will more than likely not be held to account, then they can take the risk of driving badly and getting to their destination before the law-abiding citizens.
We must therefore understand that in order to solve crime in any sustainable manner, serious law enforcement is necessary. I have seen some people argue that the proposed fines are too high, as if they are planning to be fined. But my view is that the way to avoid the fines is to abide by the law, not break the law.
As someone said a few years ago, the Jamaican society has developed to a point where “the man who plays by the rules will always get shafted”.
Tuesday, December 12, 2017
Not all weight loss is good. In other words, if you lose weight by cutting into muscle, then it can actually have a negative effect on your health. Nutritionists will therefore tell you that it is very important to eat properly and avoid a “no food” diet, because lack of food will affect your energy level and ultimately your health.
This is certainly no different in relation to business, or even at a country level. The fact is that if your strategy is focused on simply reducing expenditure, then you will ultimately find that you have no capacity to expand or compete effectively. As a result you will begin to chart your own demise, irrespective of how great your intentions are. In other words, the most rewarding way to survive is to grow, not to stay the same or to shrink.
In an article I wrote on Friday February 2, 2007 (in the Jamaica Observer) titled 'The problem of capacity', I pointed out: “This lack of a proper plan to national development causes us to focus short-term on things like balancing the budget, while what we sacrifice in order to do that is the capital expenditure and investment required to develop that infrastructural support needed for economic growth.”
So in effect, what we have been doing as a country, since the 2007/08 recession, is “reducing muscle” and ignoring the consequences.
This approach, in my view, has led to the infrastructural challenges that are causing the traffic congestion we see today (costing us around $200 billion annually in lost productive hours), and more recently, the flooding that we saw in Montego Bay, as well as the crime problems that plague us daily.
I say this because our primary economic management tool since 2007 has been centred on reducing expenditure. And I remember around that time, a few of us were constantly warning that fiscal consolidation alone is not a long-term strategy, as the only way to achieve sustainable development is to start growing by at least three per cent per annum for a few years.
PATTING OURSELVES ON THE BACK
But instead, we kept patting ourselves on the back because of the results of the fiscal consolidation.
Today, however, we have discovered that reducing expenditure is easy (all you have to do is owe people or not execute), but growth is much harder and requires different strategies and skill sets.
In the same way that the government moved away from borrowing as much as they used to, many financial institutions and individuals learned that different skills are required to earn profits than those needed to rely on high interest rates. But whereas the financial institutions adapted, fiscal policies never changed to meet that reality.
So where have we ended up? Today we have very poor infrastructure, which creates significant opportunity losses, and we have inefficient use of capital, which continues to limit growth in the economy.
We have failed to invest in the equipment needed by the police force. We have not dealt with the serious problem of informal settlements, with the result that criminal activity is perpetually on the rise, costing the country some four to six per cent of GDP, or more than $80 billion annually.
We have failed to address the regulatory environment that restricts the efficient use of capital (such as the Minimum Capital Test, Reserve Ratios or what pension funds can invest in), costing the country tens of billions of dollars in capital investment and economic growth, the result being lower growth and a lower per capita income for the labour force, both pre- and post-retirement.
We have failed to address the procurement rules for government, again costing the country tens of billions in economic activity and lost productivity (taking over 10 years to look at the procurement rules/amendments).
We have failed to predict traffic needs in the face of the growing population and increasing economic activity. We have not invested wisely in our road networks or a proper public transportation system, resulting in traffic congestion, which has cost around $200 billion annually in productivity losses. We have also failed to invest in technology to monitor our road networks, resulting in increased man-hours for the police force, instead of using technology, resulting in higher costs on the fiscal accounts.
We have also failed to invest in upgrading our justice system, resulting in lost productivity and increased criminal activity.
THREE PER CENT
Oh, yes, we have been very successful at meeting our fiscal consolidation targets, and we all agree that that was necessary because of the dilemma we found ourselves in when the recession started. But because of our failure to think beyond the exigencies of the fiscal challenge at the time, we have found ourselves celebrating one per cent growth, when what we need is three per cent, and we see the results in the form of traffic congestion, crime, and flooding.
The transition to growth is necessary, but it continues to elude us. Some of us now realise that achieving high levels of sustainable growth is a difficult task that requires different strategies. It requires a different skill set, which must either be developed in the people responsible, or be brought in with new people.
Either way, it requires a mindset change, and an understanding that the policies we continue to follow in many respects cannot give us the growth we need. For example, in the US, when they want growth they reduce taxes at all levels. In our case we reduce at one level and increase even more at another, without understanding that the effect is a net take from the economy.
Until we start to appreciate this distinction, then the type of sustainable growth levels we need will continue to elude us.
Friday, November 10, 2017
Last Sunday, Justice Minister Delroy Chuck made a presentation to newly commissioned Justices of the Peace, and it was one of the most passionate and practical speeches I have ever listened to.
He referred in particular to the rampant indiscipline, especially on the roads, and promised to ensure that the full force of the law is brought down on delinquent motorists. He also promised to consult with lawyers to see if there is any way that drivers with 10 or more outstanding tickets can have their licences suspended.
In addition, he indicated that at the end of the traffic ticket amnesty, anyone with unpaid tickets will have arrest warrants issued for them and they will be locked up.
I for one am in total agreement with the sentiments expressed by Minister Chuck, and I would even go further and say that anyone with two or more outstanding tickets should have their licences suspended.
In fact, it might not be a bad idea to systematically revoke all road licences and have holders reapply for them, at which time they would have to thoroughly convince the authorities why they should have them.
This might seem like a radical measure, but it is only by creating a disciplined and orderly society that we will be able to have a shot at real development.
I am sure that most people would have heard the saying, “Show me your company and I will tell you who you are.” Most of us understand that if you plant a seed in infertile soil, then the seed will either not grow or the plant that comes out will be too puny to survive.
The fact is that we will never be able to see any meaningful, sustainable growth and development until we create a fertile environment for people to become more productive. Productivity cannot thrive in an infertile environment. So just as seeds will not grow in infertile soil, people cannot achieve their potential if there is too much negativism and disorder around them.
Crime will not subside in an atmosphere of disorder and indiscipline. Businesses will not do well if citizens (consumers) do not reach their full potential.
This need for a fertile environment does not only apply to people, but also to capital. For years I have listened to people lament the poor productivity of capital and say that “the private sector” must contribute more to the economy, not understanding that the private sector comprises anyone who is not in the public sector, including those spouting criticism.
But local businesses will remain unable to realise maximum value and productivity if we continue to hold them back with inhibiting labour laws, or we continue to restrict the movement of capital.
In Jamaica's case, capital has to work much harder than in other countries. As an example, where our cash reserve ratios are higher than in other countries, then the capital left to work must have a higher rate of return. For that reason we may see fees and other charges not seen in other markets.
Another example of how environment affects outcome is the relationship between the increasing cases of abuse we have seen against children and the low educational performance over the years. This is why I remain disappointed that months after the case of the neglected seven-year-old was brought to the fore, no one from any of the responsible child protection agencies has been held responsible, which just shows the disregard and uncaring attitude we have for our children.
We should not be surprised about the environment that we have created. Our governance has long neglected our justice system, traffic ticketing system, child protection, and the list goes on.
Instead, our governance focus has been on fiscal policy that has the prime intention of grabbing more and more from the citizens while giving less and less. So today we have very bad roads, high crime, bureaucracy, and uncompetitive tax rates.
In plain terms, we have “deliberately” set about creating the environment we live in today, and sometimes I have to wonder about our intent and ability to change that environment.
The production of numerous studies and commentaries of “intent” lead to no positive outcomes. The “toxic” business environment we have created over successive decades simply goes from bad to worse.
This doesn't mean that we have not made some progress — as minimal as it may be. But what we have failed to understand is that we don't live alone in the world, and that improvement is not just assessed by absolute measures, but by relative measures. So while we are standing still, other countries are doing what is necessary to move ahead faster than we are. So we take 10 years to pass Road Traffic Act amendments, or 10 years to pass the new Procurement bill.
We are weighed down under many studies and reports, which tell us in a spectacular way what needs to be done. We listen to countless speeches made by politicians over the years proclaiming their good intentions. And the truth is that if we did even 20 per cent of what is contained in those many reports, we would be way ahead of where we are now, both economically and socially.
As I said at the start, Delroy Chuck is right: the only way to address the matter of indiscipline is to take a zero tolerance approach and bring the full force of the law down on perpetrators.
I also believe that the minister has every intention of doing all within his power to fulfil his promises. However, unless we take action and implement a functioning ticketing system, utilise technology to assist in the crime fight, and fix our ailing justice system, then all those pledges will evaporate. Because if the supporting infrastructure and environment is not in place to support his intentions, then his fate will be the same as that of our economic and social development.
Friday, November 03, 2017
One of the best ways to be educated is to travel to other countries and see different environments in operation, as it teaches you not only new things, but also shows possibilities. For example, there have been reports of ancient tribes that have been locked away in the Amazon for decades and still live the same way they did 100 years ago.
Whenever I come back from overseas and land at Norman Manley International Airport, it is always a great feeling to touch down in the land of my birth, as I am sure many Jamaicans living overseas feel. However, after leaving the picturesque view of the Palisadoes strip, you find yourself quickly descending into the decay of our capital city.
The first thing that hits you is the run-down infrastructure; then moving along Windward Road and Mountain View Avenue, you notice not only further decay, but also the indiscipline on the roads, where the police and government have ceded control to the taxis and buses.
As you drive further into the city, going either through downtown or New Kingston, you will meet the garbage pile-ups, numerous peddlers at the traffic lights, and taxis and buses weaving in and out of traffic, using their vehicles like “weapons of mass destruction”.
JAMAICA - NO ACCOUNTABILITY
As a resident Jamaican, I am all too familiar with the contrast between the orderly environment overseas and the morass of disorder that always greets me on my return to Jamaica. I suspect that a new visitor to the island must be wondering if there is any government in Jamaica. They may have heard the slogan 'Jamaica - No Problem', but I don't think they would have imagined that it meant 'Jamaica - No Accountability'.
So every morning, as I make the arduous journey to work through the traffic, I can't help but wonder, like the new visitor, if there is any governance in Jamaica. Or should I say, if there is any care about proper governance.
Taxis, which are easily identifiable now, drive illegally on the right-hand side of the road, and flash off any oncoming traffic with disgust because they dare to drive (legally) on the left-hand side of the road coming towards them. And don't even try to suggest that taxis should stay in the turning lane, for example when they are turning onto Hope Road from East King's House Road. After all, they have the right to do anything they want, and no government or police can stop them.
' Jamaica - No Problem' means that anyone can establish a small business on the sidewalk by just deciding that they will set up a stall, and to hell with pedestrians who try to make rightful use of the sidewalk. And woe betide any female driver who dares to reject the “services” of boys who flock to wipe their windscreens. And you'd better not offer them less than $100 for the “service” they have imposed on you.
If you are misled into believing that as a Jamaican you have any right to peace and quiet, you will be sorely disappointed, because the party promoters have a lot of clout and will play their music as loud as they want at any time of day or night. You are crazy to think that because you go to the United States and see where noise levels are controlled, you can come to Jamaica and think you deserve the same privilege.
In fact, if you have children who are too young to watch PG programmes or listen to X-rated lyrics, tough luck. They will just have to stay in their beds and listen to the lewd lyrics from the music being played two blocks away. Why do you think that you have the right to determine whether your child listens to expletives or abusive lyrics being played through loudspeakers at parties? That is the right of the promoter, and no government or policeman can stop that.
And if people want to squat on government land and put up concrete structures, that is their right also, as long as they are delivering votes. It is no business of the government to tell anyone where they can build or if they want to operate a garage in a residential community.
If someone chooses to take unauthorised leave from work, the employer has no right to tell them they cannot, and if the employer dares to dismiss them for it, then they will just go to the IDT and put the employer in his place because he failed to follow a year-long process. No employer has any right to demand high levels of productivity from any worker, or they will be forced to pay monies which they were unable to earn because of low productivity.
And if you are ill-advised enough to sue someone for committing a crime, or because of abuse by any arm of the State, then you must suffer the high legal costs of having the matter adjourned repeatedly, and become familiar with the comatose justice system, because you will be in court for at least five years.
After five years, if the judge thinks you have suffered long enough and awards you any costs, especially against the State, you had better bequeath the amount to your grandchildren, because you will not see any payment in the rest of your time on Earth.
Does anyone think I am exaggerating? I am no crime expert, but how do we expect to solve crime and get economic and social development in the kind of system I have outlined above? Sadly, this is Jamaica's reality - not a fictional place.
Year after year, the Global Competitiveness Report tells us that crime and bureaucracy are the two main impediments to economic growth, which is essential for social development, but instead of addressing the root cause of disorder and indiscipline, we tinker around the edges while undermining our true potential as a nation.
Friday, October 13, 2017
Over the past couple of weeks traffic congestion has been unbearable on the roads, and has revealed a lack of proper governance.
The recent traffic pile-ups have been caused, in my view, by:
(1) poor road work in the past, which has led to “craters” on the roads as soon as it rains;
(2) indiscipline on the roads, primarily from taxi and bus operators who think they can do whatever they like, and the authorities do nothing to address it; and
(3) the National Water Commission working on the roads all over the Corporate Area, causing traffic congestion, with no apparent thought to coordinating the activities so that they don't significantly affect traffic flow. And then when they are finished, not repaving the roads quickly.
In 2015, the Inter-American Development Bank started a dialogue on the cost of traffic congestion in Latin America, and concluded in the report that it was the number one factor inhibiting productivity in Latin America and the Caribbean.
This is not difficult to understand, as, if we assume that people on average spend even an additional one hour on the road every day because of traffic and multiply that by a working labour force of one million, we lose one million productive hours each work day. Assume 200 work days for the year conservatively, and we get 200 million productive hours lost per year to traffic congestion.
A simple computation (assuming GDP of $1.7 trillion, one million labour force, 200 days per year and one-hour workday) shows that traffic congestion, causing a one-hour loss per day, is costing us around $200 billion in lost GDP opportunity per year.
Wouldn't it be better to spend $10 billion to $20 billion per year on an efficient public transportation system, including a safe and efficient school bus system to prevent daily pick-ups, which adds to the $200-billion annual loss?
But traffic congestion is just one element of a weak foundation we have developed.
The recently released Global Competitiveness Report (GCR) 2017/18 shows that Jamaica still grapples with the issues of crime and theft, inefficient government bureaucracy, tax rates and corruption, as major inhibitors to doing business in Jamaica. I have omitted access to financing, which features in the top four this year, because the historical data show that these four issues have been consistently the main inhibitors.
Between 2014/15 and 2017/18, the GCR shows that these four factors above accounted for an average of 51.85 per cent of the challenges to doing business in Jamaica. In 2014/15 they were at 55.40 per cent; 2015/16, 54.20 per cent; 2016/17, 50.80 per cent, and 2017/18, 47.00 per cent.
The numbers show that they have been decreasing, but still remain around 50 per cent of the challenges to doing business in the country. No doubt there have been some improvements in the bureaucracy, which has caused the change, as evidenced by the fact that inefficient bureaucracy now ranks fifth, and in the years 2014/15 to 2016/17, was always in the top two challenges. Inefficient government bureaucracy still remains, however, at a significant 9.20 per cent perception as posing a challenge to doing business.
Among the inefficient bureaucracy is the matter of our regulatory environment, which includes the restrictions we place on the use of capital. Over the years of high government borrowing, legislation was put in place that effectively forced pension funds, and other financial institutions, to place most of their funds in government paper and a large amount also sitting down idly doing nothing.
This has caused us to lock away billions of dollars in capital, which could be working for local entrepreneurs, and which would cause lower interest rates, lower transaction costs, and greater wealth for LOCAL entrepreneurs.
Instead, fiscal policy has sought to lock away the capital (earning very minimal amounts), and has been pushing FOREIGN Direct Investments in preference to LOCAL investments. The fact also is that more local investments mean that more of the profits will stay in Jamaica. The fact also is that if capital was allowed to work, instead of being locked away, then more local people would have access to cheaper capital and our GDP per capita would increase.
So if we were to look at the conservative cost of traffic congestion ($200 billion), the approximate four to six per cent GDP loss from crime and bureaucracy ($85 billion), the capital losses because of uncompetitive tax rates and corruption (no estimate computed but assume conservatively two per cent of GDP - $30 billion), and the opportunity cost of capital locked away because of the regulatory environment, it would seem to me that we could easily get close to another $500 billion in GDP output, or another 29 per cent of GDP. This may not be in one year, but even over five years we are talking about six per cent growth per year additional.
This does not include the productivity losses as a result of our labour regulations, or losses from our procurement issues.
This shows that Jamaica's challenge for growth and development comes down to a poor foundation for development and growth. It also shows that the reason we are struggling with low growth, and our people are not productive and have low income levels, is primarily because we keep shooting our-selves in the foot. The fact is that Jamaica's challenges are more internally than externally generated.
So, given our limited resources, wouldn't it be better to just focus on these four or five areas to stimulate development and growth in Jamaica?
Friday, September 08, 2017
Putin is recently on record as saying that whoever has a competitive advantage in Artificial Intelligence (AI) will control the future of the world. Elon Musk agrees with him.
Whether or not this will be so (and it does sound logical), what is clear is that the environment for labour is changing. In fact, a recent article suggested that because robots are being used more and more to replace labour, especially blue collar workers, governments should consider making a minimum payment to all their citizens. In other words, a minimum “welfare payment”, which would substitute for the displaced employment caused by robots and AI in the future.
What this onward march of technology means is that, in the very near future, most blue-collar and some white-collar jobs will be replaced by robots and AI. For me it doesn't necessarily mean that there will be no jobs, but that for people to gain employment they would have to be employed in areas that require higher-level thinking.
So recently I purchased, and have been using, a vacuuming robot at home, which can be scheduled to clean the house when no one is there. So even while on vacation the house can be cleaned.
There are also Wi-Fi camera systems that not only allow you to monitor your home from another country, but also allow you to speak through the camera to someone who is in your yard, or in your house, which I also have installed.
But this doesn't mean that you don't need household help or security companies to monitor your house. What it means is that their role changes to more critical and higher-level thinking. So the household worker now needs to understand how to utilise and monitor these house robots, and the security guard must now be familiar with the technology.
Another article pointed to the dominant economies projected for 2050. The similar track for the top 10 was that they all depended on infrastructure development, and very important growing and productive labour. So even in 2050, labour is still being seen as a competitive edge for development.
What must be noted, though, is that labour can only be competitive, and can only raise its value when it is constantly increasing in productivity. But labour can only increase in value, and be competitive, when it is allowed to compete with labour productivity in other countries.
This for me is the biggest impediment that Jamaica faces to our development and competitiveness, which I have been saying for some time.
The fact is that Jamaica's lack of international competitiveness and development is being stymied by our low labour productivity, and has been declining since the 1970s. The only way to increase real labour compensation is by increasing productivity.
However, up to the 2013 IMF Agreement, public sector wages were increasing (in real terms) at a pace faster than productivity. Indirectly also, overall labour compensation has been doled out through government welfare programmes, labour laws, and tax breaks. The result is that products and services do not increase in competitiveness, and as a result labour compensation loses value, resulting in declining standards of living.
If the Jamaican economy is to develop and become internationally competitive, it also means that our labour has to become competitive. Just like in a private sector company, the competitive edge is always labour productivity, such as customer service levels.
But for this to happen, Jamaica must face some facts and address them. The first one is that our policy must recognise that robots will eventually take over and be much more productive in jobs that we cling to for political reasons. These include street sweeping and sugar cane cutting.
This does not mean that we will displace these workers, but rather that we will employ strategies to ensure their training for higher-value thinking jobs, and hence more compensation because of increased productivity.
It also means that we must face the reality that our current labour laws actually end up creating a worse future for labour than the present we are trying to protect.
So I consider the IDT and labour laws major stumbling blocks to productivity, because they allow labour and capital to remain unproductive. This has resulted in more informal labour and less hope of pensions and health benefits accruing to workers.
So eventually the fiscal accounts will be caught with these gaps, which will mean greater taxes in the future.
This is not to say that unions are not relevant in protecting against any advantage being taken of workers, but they must be provided with an environment that promotes productivity and prosperity for their charges.
It is only by taking bold actions to address our present labour and industrial environment that we will begin to see an increase in labour productivity. And if labour productivity increases, then capital and labour compensation will increase. This will in turn increase standards of living.
But this cannot happen with just tinkering at the edge of the problem. Government must take the bold and decisive decision to do so, just as the decision was taken with the ZOSO.
Jamaica's growth and development can only happen when we accept the future of what will develop with labour markets and start to think about how we will make the Jamaican worker more productive, and not rely on “artificially created labour” and short-term impact measures.
Friday, September 01, 2017
The Jamaica Observer's editorial on Tuesday appropriately addressed the issue of the lack of “big” thinking, which has plagued Jamaica and resulted in a lack of development.
The Observer yesterday reported on the PIOJ press conference, which announced an estimated growth of 0.3 per cent for Q2 2017 (April to June), which followed a 1.4 per cent decline in Q1, as reported by STATIN.
The editorial, in my view, is fully supported by the PIOJ press conference. Dr Henry reported that in the short term, the reliance on growth would be on the expected construction on the Alpart plant, and that the risks to growth remain weather conditions and any oil price shocks, primarily.
This is the same thing we have been saying from as far back as I can remember, even while the world has, and is, changing around us.
In other words, for 40 years or more, Jamaica has been doing the same things, in a rapidly changing world, but expecting different results. Governments come and go, and they make grand announcements, but the same growth and market inefficiency issues remain.
So one could look at the last 10 years of the Global Competitiveness Report, and crime, bureaucracy, tax rates and corruption would feature among the top five impediments to doing business.
What is more, these four consistently account for upwards of 40 per cent of challenges to doing business.
It is this same attitude to governance that has caused the problem, not only with the Hip Strip, but with tourism decay in general. One may say that we have been increasing the number of tourists that visit the island every year, and that may be so. But within the context of a growing tourist market, cheaper and more accessible air travel, greater income levels and spend by tourists worldwide, and importantly, very good tourism offerings, particularly by our all-inclusives — have we really kept pace and achieved what and where we should be?
It is the attitude that ignores indiscipline (including illegal vending and harassment); the attitude that ignores infrastructure maintenance and development (because of our short- term fiscal thinking); and the attitude that ignores the foundations of crime (squatting and lack of order), that have kept us back and have us talking about negative 1.4 per cent growth, followed by 0.3 per cent growth.
Let us be clear: 0.3 per cent growth, based on the sacrifices we have made, the potential we have, and the growth we are seeing in the global economy, is shameful.
In fact, one could say it is within the margin of error, and when STATIN reports the final numbers, it could very well be negative.
With all of this, we still keep doing the same things and expecting different results. And maybe it is because successive governments think that even if the fiscal accounts do not perform well, all they have to do is raise taxes. Well, they have basically been doing so every year, and still we are reporting — 1.4 and 0.3 per cent growth rates.
Another example is the recent announcement by TPDCo to instal anti-harassment officers, which is being done for maybe the third time. But after a while you see the officers blending in with those doing the harassing, and as usual, “Jamaica - no problem”.
I am not saying that we have not had development in Jamaica, but I am saying that we are underperforming significantly compared to where we need to be. This is primarily because of the mindset that we have, and have had, towards governance.
In other words, what we need in our governance is “disruptive thinking”. And we had that when we put EPOC and ESET in place. Both teams have seen tremendous success, and made Jamaica the “poster child for IMF reform”.
This means that we are more than capable of moving the economy forward, and one has to therefore wonder why we can't achieve more.
Sadly, this is because of what the Observer editorial referred to as “lack of big thinking” or I would say “lack of disruptive thinking”.
If we are going to go for significant development and growth, and by extension improved living standards for all, then we must change the way we do things.
We cannot continue to be impeded by a set of procurement rules that cause more opportunities to be lost than costs saved; we cannot continue to ignore the indiscipline on the roads, such as the traffic lights that have become mini shopping malls and centres of harassment; we cannot continue to ignore the zoning laws and night noises; we cannot continue with labour laws that encourage an unproductive environment and the resultant loss of incomes; and we cannot continue to blame and restrict capital from working to develop the lives of Jamaicans, and as soon as someone starts to do well we tax them back down to a level of mediocrity.
And if we are going to achieve consistently high levels of growth, we have to recognise that the world is changing around us. So our growth strategy cannot continue to be to rely on “big” one-time projects, and not realise that we have to change our approach to agriculture because of climate change; we have to change our approach to growth inducement strategies; and we have to stop incentivising where we do not have a comparative advantage and build infrastructure to support those areas where we do.
Our fiscal policy must begin to recognise that the more productive capital is, the greater the returns for the economy. If we keep increasing the tax burden on capital and people, if we keep putting more and more stringent regulations in place, it follows that our fiscal accounts will fall, leading to further negative growth.
One ridiculous suggestion I heard recently was the recommendation by the National Road Safety Council that a tax be imposed on motor cycle imports to reduce the number of motor cycle accidents.
So, if we are to move beyond the growth we have seen in the first six months of 2017, we must understand that we need to have a mindset change from small thinking to big thinking, or from safe thinking to disruptive thinking.
Otherwise, in 40 years we will still be having the same press conference as the PIOJ did on Wednesday.