Friday, June 30, 2017
It is a well-accepted fact that crime — the number one impediment to doing business in Jamaica — is costing us between four to six per cent of GDP annually.
What this means is that, because of our inability to arrest the crime monster, Jamaica, and Jamaicans, are between $56 billion and $84 billion poorer per year because of the failure of our governments to deal with crime.
Put another way, Jamaicans are being taxed more each year to the tune of some $10 billion, when the fiscal accounts could collect additional taxes of between $16 billion and $24 billion annually, if only the Government could tame the crime monster.
As far as I am concerned, the best strategy for us to attain economic growth is to curb our rapidly increasing crime problem. This would create more economic activity, greater investment, more jobs, more tax revenue, a lower debt -to -GDP ratio, and a better living environment, among other advantages.
Think about it. Just by solving our crime problem, we would increase the standard of living for all Jamaicans. So one must ask the question: Why haven't we put the necessary resources and effort behind resolving this issue over the years? Clearly it must be a failure of governance, as the primary reason for Government is to provide security and the opportunities for prosperity for its citizens.
I repeat that this is a failure of governance, because consecutive governments have failed to do what is necessary to create an environment for crime to be reduced.
In an April 2013 article called “If we are to solve our crime problem…” I wrote the following:
“In order for us to get a handle on crime, the first thing we must do is understand that we cannot sustainably solve the problem if we do not have a disciplined and orderly society. In other words, it is difficult to create order within an environment of disorder. So if the parents in a household carry on with unethical behaviour in front of their children, then more than likely the children will act out what they see rather than what they are told.
“…it is always going to be difficult to solve crime if we do not deal with the indiscipline on the roads, the violations of the Noise Abatement Act and the zoning laws, and the littering of the roads. These are simple things to deal with, but unless we address them, it will be like expecting someone to emerge from a mud lake without any mud on them.
“…justice must be swift and low-cost. If we are serious about taming the crime monster, we cannot have a situation where the police make an arrest, take someone to court, and the case takes five years to complete. We also cannot have a situation where jurors go to court and don't even get lunch money or transportation costs reimbursed…
“The police need to treat all crimes as equal violations of the law and act speedily in all cases. So when someone reports domestic violence or praedial larceny, it is important for the police to treat all those cases as urgent. Don't wait to take action until the thief and the perpetrator of domestic violence graduate to more serious crimes …
“The law also needs to be applied equally to everyone. And in this case I am not talking just about the person with connections, but also when we give someone leeway because you think they are numbered among the less fortunate. If you give the small man a chance, soon you find a reason to give everyone a chance, and eventually corruption flourishes.
“It is also very important that before charges are brought against someone or any accusations are made public, proper investigations take place. There have been many cases of people being charged or accused of wrongdoing, but these charges either prove false or lack sufficient evidence. This negatively affects the credibility of law enforcement.
“… Enforcers of the law, such as the police, cannot be seen to disobey it. It is very important that the credibility and authority of those persons… are intact.
“So if we are to solve the crime problem, we cannot just focus on the outcome (such as murder). We must address the root causes of the problem — the main one being a lawless society.”
The irony is that I could have simply republished this article and changed the date, and it would have been just as, or even more relevant, four years later.
The fact is that all these situations seem to have grown worse. Accordingly, the crime threat has also heightened, and is now affecting our number one foreign exchange earner — tourism.
All of this is happening at a time when everyone is bullish on Jamaica, but that “bull” has been reduced to a “calf” on account of the ravages of crime.
This inability for many years to enforce law and order has reduced the attractiveness of Jamaica as a place to live and work. As stated above, it is a direct failure of governance.
Although I have a lot of respect for Tourism Minister Ed Bartlett, his latest suggestion to remove crime from the front page as a solution is ill- advised. It is like the “divine intervention” suggestion.
Crime will not be solved by refusing to highlight it, or by invoking the Lord's help at a prayer breakfast. It is going to be solved by the same methods that we used to deal with our economic problems: facing the reality of the problem and setting up a public-private partnership (EPOC or ESET) to deal with it. The sad reality is that if left to Government alone, the solution will not happen. It needs the involvement of all stakeholders.
I am certainly no crime expert, but what I know is that (1) crime is costing us the opportunity to do the best we can for Jamaica, and solving it is the most effective route to “prosperity”; and (2) crime cannot be sustainably addressed in a society that lacks law and order at the very basic levels of everyday rules.
Friday, June 09, 2017
As I reflect on how Jamaica has developed, it reminds me of some parents who, in bringing up their beloved children, try to make life as comfortable as possible for them. The parents give them the best, cater to their every need, and provide them with anything they ask for.Further, the parents protect those children from any possible missteps they may make, to the point where they become very sheltered and unable to face challenging situations. The parents will even attack anyone who tries to discipline those children if they misbehave. We have often read about this sort of thing happening in various schools.
The usual result of all this attention is that the children are unprepared for life and end up underperforming or depending on their parents or other people forever.
This is similar to what has happened in the Jamaican economy. Either because of “Love” for the people, or more than likely political expediency, policy measures have been driven by the need to “give a fish” rather than “teach Jamaicans how to fish”.
Giving the fish is more accepted, as the recipients don't have to do any work, and therefore feel that the politicians really care about them and so will give them their vote.
Teaching someone to fish will of course demand effort on both the part of the political representative and the constituent, and may result in the constituent being upset and therefore not giving the vote to the politician.
The consequence of trying to “teach people to fish” in our environment usually is that anyone who tries to provide people with the ability to fend for themselves, rather than sit back and receive gifts, will not be elected. The politician is caught between a rock and a hard place, as he is divided between doing what is right and losing the election, or doing what is unsustainable and winning the election. Normally they will go for the short-term solution and win the election, but in the end things only get worse.
We have seen this in recent elections — for example, when Holness said there would be bitter medicine, during the 2012 campaign. People were even wonderings how he could be so stupid to speak the truth, which many times we don't want to hear. Or the fact that Phillips took the bold decision to implement austerity measures to save us from economic disaster, and no doubt caused some people to vote against the government at the time.
Capitalising on the “politically naïve” remark by Holness in 2012, the PNP went on the offensive and said that Holness didn't love the poor. Learning from this in 2016, the JLP promised that things would get better, as everyone would have $18,000 per month more after the $1.5-million tax threshold.
Again, when McKenzie was mayor, he went on a campaign to rid the streets of illegal vending. The backlash was swift, with persons on social media saying that he needed to stop harassing people who were trying to make a living.
Recently when I wrote about the Hip Strip (a significant part of our main FX earner) becoming a dump, and lacking any order, the responses from social media indicated that I was fighting against people trying to make a living. No concern for the fact that when the Hip Strip gets worse it reduces the real estate value and is less attractive for the tourists, so the businesses will suffer, and maybe close down, just like many residents see their property values depreciate because of roadside garages and businesses being established in residential areas. But not to worry, if the businesses ever try to close down, or downsize and lay off anyone, the IDT will get them and make it more difficult.
But as many Jamaicans (in Jamaica and even in the diaspora, where they have to abide by the rules) would say, no problem with that, just don't fight against a trying man. Let them try that in the US or Canada though, and they would be keeping company with Bernie Madoff.
Because of this attitude, and the need for politicians to survive, we end up with policies all the time that focus on welfare rather than productivity.
Is it any wonder that Jamaica's labour productivity has been consistently falling since 1972? Is it any wonder that our GDP per capita is around US$7,000, while small Antigua's is US$18,000? Is it any wonder that we have 180,000 households reported to be stealing electricity, while the compliant pay for it? Is it any wonder that 40 per cent of our population is made up of squatters?
As long as we have this demand and supply relationship, then we will only be moved to do what is necessary when our back is against the wall, as was done in 2012 with the IMF programme. And then again, it only worked because of the public-private partnership through EPOC, or ESET. Relying on the public sector institutions alone has never worked. Not because there are not very talented people in the public sector, but systems like the procurement process severely restrict what can be done, while more and more money is thrown at replicating studies done too many times to mention.
What we will have to do is to try and break this cycle, as was done with the economic downward spiral in 2012. This means that government policy should be focused on doing what is necessary for driving long-term growth and sustainability, which will mean that short-term welfare will have to be reduced to only what is essential, and not the practice of creating policy that makes everyone poorer.
For example, why have we not been able to see the need to enforce general law and order, such as road discipline and noise pollution? After all, these create the breeding ground for graduation to more serious crimes. Why have we not been able to deal with the labour laws that create lower productivity? Why have we not been able to deal with illegal vending? Why do we push aside common sense long-term development policy for short-term resource distribution?
Because of this welfare politics, governments since the 1970s have created policies that limit productivity and create poverty throughout the economy. We have not sought to make the future of our people better, as evidenced by where we are, but have sought to cater to short-term satisfaction.
We have made some progress, however, and because of this Jamaica is in a better place than it was four years ago. But we must not get complacent. We must continue to strengthen the institutions that will create long-term development and make Jamaicans better off than they are today.
Friday, June 02, 2017
In my view, the last two weeks represent one of the worst periods for economic news in recent times for Jamaica. We saw the report coming out from the PIOJ about the effects of the $1.5-million tax package, which showed the regressive nature of the tax package and the effect on those at the lowest income levels; the non-trial of the Cash Plus/Carlos Hill case after nine years - which once again shows the ineffectiveness and inefficiency of the justice system; the slowdown and slight reversal of the business and consumer confidence survey findings; and the flat first quarter GDP numbers for 2017.
All these made for a very bad period of news for Jamaica, which was only outdone by the self-inflicted nuclear-like effect caused by Donald Trump's tweets.
The truth is that I can't say that any of this is surprising though, and that really is the sad part.
If we look at them individually, we can assess them as follows:
o¨ Cash Plus “non-trial” is really just a continuation of the poor justice system we have, as over the years we have seen many instances of stalled trials, and the truth is that most of the successes we have had are really from “imported justice”, and I guess since we import everything else, why not?
o¨ Effect of the $1.5-million tax package is exactly what we at the PSOJ had indicated would happen, at the time when Mahfood was President, and in fact is exactly the thing that the 2012 Private Sector Tax Working Group report had seen happening and had recommended ways to address.
o¨ Business and consumer confidence downturn is somewhat expected, as coming off the expected euphoria of the tax package, then naturally expectations would decline. However, an even greater long-term concern is two trends I noticed as I charted the indices since 2014. First, the trend since 2014 is that the Current Business Conditions index is always higher than the Expected Business Conditions index, and the one time when they were almost the same was in 2015 when the Current index fell to meet the Expected index. This implies that businesses always have a less favourable view of the future than the current situation. Secondly, for the first time since 2014, the consumer expectation index is lower than the current condition index. Both these indices also have not considered the recent tax package. My understanding is that it features heavily in the research being conducted in the second quarter confidence findings.
o¨ The flat GDP outturn for Q1 2017, while somewhat unexpected, is not a huge surprise, as the drought conditions at the start of the year were expected to impact. The fact also is that whenever agriculture is negatively impacted, the risk to growth is always on the downside.
The challenge we face is that the second quarter may actually be worse than the first - or so it feels.
I say that for a few reasons. The tax package would have been implemented during that period, and we know the outcry surrounding the property tax. The rate of depreciation of the Jamaican dollar had increased, and although not anything to be alarmed about, the psychological impact of $130 could play here. Also I am not sure what effect the continued negative image of US politics is having (such as we see with reduced remittance flows reported in the confidence survey), and finally the costs associated with the recent flood rains, which should continue the negative effect on agriculture in addition to GDP losses.
What we must not do though - as we have done in the past — is dwell too much on our misfortune, but use this as an opportunity to refocus and redouble our efforts.
What we also must not do is excuse the performance with explanations, and not accept the fact that it is our reality.
What we must do this time is keep our eyes fixed on the ambitious target of five per cent growth by 2020, and determine what must be done to achieve this.
What I can further say is that achieving five per cent growth in three years means that we cannot do the same things we have always been doing and expect different results. It also means identifying all, and more precisely, the main impediments to achieve this target, and we must be in a hurry to fix them.
In other words, we cannot work within the same bureaucratic processes and expect to achieve the target of five per cent growth in 2020. In fact, it is this same bureaucratic process that is ranked as the number two problem to business in Jamaica, and so we cannot expect to work within that same system and achieve anything different.
Saying that, we also must realise that just following the IMF initiatives will also not give us the five per cent target. If the IMF model is based on a maximum three per cent growth, then logically it means that we must first ensure we maintain the baseline growth of the 1.5 per cent, ensure the IMF deliverables that will give us three per cent, and also we will have to implement additional initiatives to get us to five per cent.
For me this means saying to the PIOJ, put six per cent growth in 2020 in your model and tell me what I must do to achieve it, and then we have to focus on the major impact and low-hanging items to get to that five per cent. It is only by visioning this target (through the PIOJ model), establishing initiatives and timelines to get there, assigning accountabilities, and going against the system that has stymied our growth, that we will get to the target we desire.
It also means not only seriously taking steps to tackle the obvious GDP robbers of crime (approximately four per cent of GDP) and bureaucracy (maybe another two per cent of GDP), but also doing so in a hurry, which for me means not continuing to allow the procurement system, for example, to continue to keep us underperforming. But at the same time we must hold people accountable for breaches. Very importantly, it also means quickly bringing efficiency and confidence to our justice system.
The fact is that the only logical and realistic path to getting to sustainable economic growth is to chart a strategic plan, after creating a vision of that growth, and realising that to get there we must of necessity do things differently.
Friday, May 26, 2017
Just over a week ago, sections of the island suffered massive infrastructure and other damage as a result of torrential rains which lasted for several days. It is estimated that the direct damage caused by the floods could be in the region of $700 million, and if one were to assume GDP conservatively at $1.3 trillion, then we could easily add lost productivity that would approximate a further $1.7 billion.
This means that the cost of the rains could be upwards of $2.5 billion, and some suggest it could be as high as $4 billion.
Of course, this does not take into account the negative social impact which will result from people having to recover from tremendous personal losses.
The devastating effect of the rains, however, is no real surprise, as for many years now we have been neglecting our capital infrastructure. This neglect has been somewhat expedient, as our attempts to recover from our deep economic woes left us with little option but to reduce capital expenditure, among other things, in order to balance our fiscal accounts.
During this period, some of us warned that by neglecting our infrastructure, we were running two grave risks:
(1) incurring serious damage - as we have just witnessed, and
(2) scaring off potential investors.
But although the neglect of shoring up our infrastructure is the primary cause of the recent flood damage, the irony is that the real reason does not lie in spending copious financial resources. The real reason is the culture of indiscipline that we have developed in this country — a culture which has resulted from a serious lack of leadership by those in authority, and the fact that we fail to implement accrual accounting in our fiscal accounts.
This culture of indiscipline is reflected in many areas, but the following stand out: the proliferation of informal settlements (where an amazing 40 per cent of Jamaicans are squatting); lack of proper zoning plans and approvals for developments; and practices like incorrect disposal of solid waste, which ends up blocking our drains and gullies. As a consequence, flood rains invade homes and businesses as the water has nowhere else to go.
All of these practices are attributable to successive administrations over the past 40-plus years, and no one can take full credit for it, but all who have been in government (especially at the local government level) must accept responsibility.
Both Prime Minister Holness and Dr Phillips have recognised this, and have said so publicly, with Dr Phillips stating quite bluntly that all those who have been in government must accept responsibility.
Holness has also said that illegal construction on river banks must stop, and I think he should go further and say that illegal settlements must also stop.
The Government must now give a timeline for remedying this situation of poor local government control over planning and zoning, what measures will be put in place to prevent illegal settlements, and how our population of squatters will be properly housed.
Apart from the severe threats to the infrastructure, it is inhuman to have a society where so many people must resort to squatting. What this speaks to is a failure of governance. But I guess this is what people vote for, and so there is some personal responsibility; just as the Trump supporters must now face the consequence of lost health care and other benefits.
Although there must be consequences for people who continue to live in illegal settlements, or to make a living from illegal vending, we also have to drive policy that creates alternatives. So if we are going to tell people not to vend or squat illegally, then we must also ensure that there are properly maintained markets (again a local government failure) and available housing solutions.
So we can't, for example, proclaim with great fanfare the construction of new hotel rooms without announcing accommodation for workers, as is the case in Montego Bay.
Funds from the NHT should be used to provide housing solutions and help to grow the economy, instead of being used to support the fiscal accounts.
We also must pass appropriate legislation and regulations for the revised anti-litter law, which will see a significant increase in fines for people who illegally dispose of their solid waste. If citizens insist on this practice, then they must pay heavily for it.
The second point made about accrual accounting may not seem like much to most readers, but as an accountant, I believe that failure to do this leads us to have a false sense that our financial house and assets are in order.
Accrual accounting addresses this by making provisions such as depreciation, so that when it comes time to replace the asset, you would have provided for the full cost after its useful life. So if you buy a new car today for $5 million, and it has a useful life of five years, you would provide in your accounts for it by putting aside $1 million per year for five years, thus ensuring that at the end of the five years you have the $5 million to replace the asset. This, of course, is a simple example, as one has to consider inflation, etc.
Contrary to this though, our fiscal accounts are prepared on a cash basis, so at the end of the fiscal year, the fiscal accounts do not consider assets to be replaced or monies owed to suppliers of government.
So one way that we famously balance the budget is by (1) not spending on our infrastructure (spending less capex than budgeted), and (2) not paying vendors when they supply goods or services.
As an illustration, I went to a gas station where there was a sign reminding the staff not to accept Advance cards from the Government.
The result of not using accrual accounting gives us a false sense of security about our finances and capital infrastructure.
So in my view, the recent rains resulted in what I call “fake” flooding, because the flooding is really just a symptom of what over the years has been poor governance, or one could say “fake” leadership, which we now have an opportunity to address based on the utterances of both Holness and Phillips.
Friday, May 12, 2017
The Prime Minister recently spoke to the need for sustainable growth that is equally shared by all, and specifically where the average Jamaican can share in that growth. We can, for example, mention many countries where there has been significant growth over sustained periods, and yet still they suffer from social and developmental challenges.As an example of this, Professor Hilary Beckles spoke to the situation in Trinidad, where for years they have seen high levels of growth and economic activity as a result of oil, but when the oil prices plummeted, the lack of social development was evident. Today Trinidad has a very high murder rate, as well as infrastructure which does not reflect the type of economic growth they have had.
This is no different from what happened in Jamaica after the cushion of the bauxite money left us. What it showed in both cases was that the authorities did not focus on economic and social development. Everyone knows that the best time to prepare for a hurricane is before it comes, not after it strikes. That is what the failure of governance in both these cases has demonstrated.
This type of preparation can only happen if a very deliberate and systematic approach is taken. This is also the type of approach that is needed for growth targets to be met. My impression is that we don't really apply a scientific approach to reaching growth targets, but rather we just “do some things” and hope that the target will be achieved.
Because of this we haven't really taken a serious approach to understanding and attempting to remove the structural deficiencies that prevent growth from happening. In fact, growth imperatives take second place to any political expediency, and as a result if we “buck up” on growth we are quite happy, but I can't honestly say that any deliberate and urgent approach is taken toward economic and social development, as it is much more than just growth.
For example, in December 2014 I wrote an article titled “Great need to transform Jamaica's labour force”. The article ended by saying that real sustainable growth “is only possible if we transform our labour force into a highly productive one, which means taking the necessary steps to do so.”
To date, however, not much has been done in terms of implementation. As a result of this, last week an article appeared in the newspaper, lamenting the fact that employers are finding it difficult to find sufficiently qualified workers. We also know that the BPO sector is limited to some extent because of the inability to find suitably qualified labour.
If I could see the need for transforming the labour market for growth from 2014, then I cannot for the life of me understand why our policy makers have not been able to do what is necessary to ensure that we would have met our growth requirements in 2017.
Or is it that although we projected growth, we really didn't believe that it would happen?
If unemployment is such a significant problem, why have we taken so long to take the necessary steps to train people for the jobs the economy will need, and by doing so create higher value employment and improve their earning power?
This shows that we don't really have an unemployment problem. What we have is a problem of the failure of leadership, as regards policy and execution, to create opportunities for people. Unemployment is merely a problem of that leadership failure.
The other challenge with our labour force is that our labour laws create lower levels of productivity. So the biggest problem that private sector companies complain to me about is the Industrial Disputes Tribunal (IDT).
This for me is a significant contributor to preventing increased productivity, because company owners have said that even if they have evidence of theft by employees, the company will still lose the case when they go in front of the IDT. The problem with this is that employers will shy away from long-term contract employment, and use technology to replace labour where possible. In the end the labour force suffers.
In addition to the structural problem of our labour force and its attendant legislation, we also underestimate the limiting factor of the indiscipline and general level of lawlessness.
I cannot for the life of me understand why we have not approached this with greater urgency, as major crimes can only thrive in an environment like this.
I also do not think they read the IDB report a few years ago, which stated that traffic congestion is the number one limiting factor of productivity in Latin America and the Caribbean region.
If we were serious about it, why for example have we taken so long to pass the new Road Traffic Act?
The approach to achieve high levels of sustainable growth seems very straightforward to me. It is a matter of going to the Planning Institute of Jamaica, and asking them what it will take to sustainably achieve economic growth of five per cent and above, in addition to addressing the social development issues. The PIOJ has a model that can provide some answers as to what would need to be done.
Once those strategies are identified, then what we should do is put initiatives in place to focus on the high-impact areas that will give us the greatest growth impetus. This may mean new legislation or some displacement of people and structures, but if we plan properly we can help people to transition to higher-value employment, and put in place much more efficient structures and institutions.
If this had been done in 2014, or before, we would not now be talking about the 12 per cent unemployment and high crime levels, while at the same time having employers report that they are having a difficulty finding suitably skilled and qualified workers.
Friday, May 05, 2017
Last week, members of the private sector met with Dr Alvaro Uribe, former president of Colombia, who was invited to Jamaica by the Economic Growth Council (EGC). At the meeting he said two things which resonated with everyone present, and which indicate the significant headwinds that have challenged our development.
Firstly he said that, if a Government does not create wealth, then the only thing they can distribute is poverty. This we are only too familiar with, as for the past 40-odd years, Jamaica has not created any wealth, even though our politicians have continuously sought to redistribute income from the most productive to the least productive. These failed “welfare” policies have resulted in fiscal deficits, low growth, trade deficits, devaluing currency, high crime, etc. This is the proof that our fiscal policies over the years just have not worked.
Secondly, he said he once had a conversation with Hugo Chavez, who told him that Venezuela does not need the private sector as they have oil. Well, we see where they are today, and to a much lesser extent this attitude against capital has also been a challenge for Jamaica.
Because of the desire to look like Robin Hood, many of our political decisions and policies have centred on “taxing the big man to give the small man a break”. What we have not realised, until recently, is that policies built on that principle will only cause everyone to become a small man. In other words, such policies will lead to impoverishment for all of us. This is what has happened to Venezuela, and the main reason for that is that we have not yet found any more efficient ways of creating value than the market forces.
In addition to those comments, we heard the minister of security say recently that an amazing 40 per cent of Jamaicans are squatting, and a recent editorial dealt with the high percentage of students who cannot cope with secondary or tertiary-level education because of poor grounding at the primary and early childhood levels.
Last week when I wrote about the lack of structure and degradation of the Hip Strip in MoBay, one person sent me an email to say that I am fighting against the small man who is trying to make a living. Obviously this person is caught up in a mentality of impoverishment, as he cannot understand that the way to “prosperity” is not to keep people at almost subsistence levels of living, but to expand the opportunities and teach everyone to take advantage of them.
The Prime Minister hit the nail on the head when he recently spoke to the fact that economic growth without social development is undesirable. And Hilary Beckles agreed by saying that this is what has happened in Trinidad, because while they were seeing high levels of growth, they failed to develop the social infrastructure, and so many were left behind with very low moral standards on top of it. Sounds like how we have developed in Jamaica, doesn't it?
As I reflected on these things, I compared it to conversations I have had with many successful business leaders, such as Hon Dennis Lalor, Hon Butch Stewart, Don Wehby, and Butch Hendrickson. These are people I enjoy speaking to and working with, as when you speak with them you get a different perspective on development, than for example the email I received about fighting against the small man on the Hip Strip.
And I would extend that even to some politicians, who suffer from the same “poverty of the mind” as the person who sent me the email.
This “poverty of the mind” is in fact what is holding back Jamaica. I have always maintained that poverty is more defined by how we think than the physical assets we own. When you listen to the stories of many of the very successful business people in Jamaica today, who were by societal standards economically poor, what you pick up is that even though initially they did not have material wealth, their minds were very fertile and prosperous, and that is what allowed them to become successful.
The irony also is that many people who say the rich should be taxed to help the poor man don't realise the difficulties they had to overcome to reach where they are. One trait I find among all the moguls mentioned above is that they never thought they were entitled to anything they didn't work for.
A serious problem that we face in Jamaica is a culture of entitlement that is ingrained in some of us. I saw a woman with nine children on the TV news one night, saying that she is suffering and the Government has done nothing to help her with her nine children.
Or we can even look at middle-class people who are in jobs and think that the employer owes them a favour, and so if they do what they are employed to do they must be compensated, or feel an entitlement to extend a long holiday weekend. And if the employer should dare to dismiss them, then they simply take the company to the IDT, where most times they will win.
Of course, this culture of entitlement receives strong support from political platforms, and is supported through legislation such as our labour laws which encourage unproductive behaviour and informal employment.
Over the years many have been mystified by the fact that despite Jamaica's obvious competitive advantages, such as in music, sports, bauxite, tourism, etc, we are still unable to develop as a country. Blessed with all these natural advantages, why are we still a poor country? Little Antigua boasts GDP per capita of US$18,000, while a much larger, resource-rich country like Jamaica is struggling at a mere US$5,000.
Or we wonder why indiscipline runs rampant in Jamaica, along with crumbling infrastructure and high crime. Why are we able to produce some of the best musical artistes in the world and the best athletes globally, yet with all of that we are still poor and struggling with economic and social challenges?
The problem is that we suffer from a poverty of the mind, which has been fed by the direction of some of our leaders over the years. The comment by the PM is to me a signal of this recognition, and must now be backed up by action.
If we are to move forward - one example being the development of the Hip Strip - it can only happen if we change our mindset, and stop thinking about poverty as our priority (such as what we can do for the poor) and start thinking about wealth creation (such as how we can make everyone better).
Friday, April 28, 2017
Last Easter Sunday seven of us decided that we would do the 111-mile cycle ride to Montego Bay.Of course I had to eat at Peppa's as soon as I got there, which I think is one of the best kept secrets in Montego Bay, and then stayed at my friend, Terrence Jarret's Altamont West, located right on the Hip Strip, which I haven't visited in a while.
After showering and resting for a while, I ventured out to meet a friend of mine who was visiting from overseas, to have a quick chat and then head back to the room for a good sleep.
I deliberately stayed on the Hip Strip because I could just walk from the hotel to meet up with my friend. Everything had gone well so far: We had a great ride to MoBay, ate good food, the room was good, and after the meeting I thought I'd just walk back to my hotel.
Everything was good until I started walking along the Hip Strip. This immediately struck me as urban decay in action.
The pan chicken and other vendors had all taken up residence along the side of the street and even under the bus stops, allowing little room for any pedestrian traffic.
The sidewalks had obviously not been repaired in many years, and one could see the concrete breaking up. The roads had been cleaned but were badly stained from the vending activities that take place there night after night. And the traffic was horrendous, with taxis stopping wherever they pleased.
I thought to myself: “This is a prime example of why we find it so difficult to develop the country.” Tourism, as we know, is the number one foreign exchange earner (apart from remittances which are not based on productive activity, and Trump may soon reverse that).
Additionally, Montego Bay is the tourist capital of Jamaica, and the main area of attraction has always been touted as the Hip Strip. So in effect this strip could be referred to as the proverbial “goose that lays the golden egg”. But it seems as if we are trying to strangle that goose.
I cannot understand why we do not have a grand vision for the Hip Strip. If we do, why has it not been implemented? I can picture the Hip Strip as a well-kept road, where only pedestrian traffic is allowed, or specially designated shuttles, operated by the Tourist Board, paid for by advertisements displayed by tourism interests. The sidewalks and streets are well maintained.
No vending is allowed, and the type of business activity is well regulated. Against this backdrop thousands of tourists are traversing the Hip Strip 24 hours a day, and because of this experience the cost of a room is double what it is now, which means soaring real estate values.
In essence, the Hip Strip would become a global tourist attraction. However, once I wake up from that dream I come to the realisation that the Hip Strip is being allowed to go the route of downtown Montego Bay, which is dirty and absolutely chaotic.
Urban decay has been allowed to creep into residential communities because zoning laws have not been implemented; inadequate planning and the support of the “disturb my neighbour mentality” prevail as loud music is the norm across the country, with no regard for the citizens who want to enjoy the peace and quiet of their homes.
This is another assault on the market value of real estate across the country, as if we are not satisfied with the decay we have brought to the garrison communities in defiance of the euphoria and vision that Jamaicans had in 1962.
But let's not stop there, because we have allowed this same type of decay to beset downtown Kingston, which we are now trying to redevelop, while at the same time allowing the decay and indiscipline to creep into New Kingston.
New Kingston is now a place where many people say they dread going to because the sidewalk infrastructure is decaying; homeless people loiter on the streets all day - some establishing car wash businesses on the streets, in addition to the begging; the parking restrictions are ignored and whenever you go there, a line of illegally parked vehicles can be seen (even though there is a police post); and then there is the traffic which is blended in with the reckless driving.
For too long (for fiscal and other reasons) we have ignored the infrastructure and have been underspending, and it is important to reverse that trend. Think of it like a balloon.
A balloon can hold a certain amount of air in it, depending on the size. If you put more air than it can hold, then it will burst, and this is an undesirable outcome as you will lose both the air and the balloon. Similarly, economic growth is like the air in the balloon, and the capital infrastructure is the balloon.
In order to expand your economic and social development, infrastructure is important. So if we think about the tourism product, it is not going to be possible to increase the tourism value added if we do not improve the tourism product. And the tourism product cannot be improved unless we put the necessary infrastructure in place to support the improvement.
So the all-inclusives, such as Sandals, and similar hotels which have done a fantastic job with a fragile environment, cannot grow geometrically if we do not provide the environmental infrastructure to grow. Even on a micro level, can you imagine the growth in tourism we would see if we could improve the infrastructure and environment around the Hip Strip - even without developing beyond that, though that too is necessary.
Or can you imagine the growth in business and real estate values if we were to halt the decay in New Kingston and solve the traffic problems?
As far as I am concerned, this is a sound argument for the use of funds like the TEF and NHT. We shouldn't only be talking about using these funds for fiscal support.
We must think outside the box and start envisioning what is possible if we properly utilise these funds to provide this environmental support, and find the will to instill the discipline and order that we need.
What I am certain of is that investing in our infrastructure will increase our capacity for growth, and allow us to see the geometric expansion we need, rather than the incremental growth we have become accustomed to.