Friday, May 15, 2015

Long-term view to solutions necessary

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Recently, I said to someone that one of the challenges we have as a country is that we are too focused on immediate gratification, and not on the long-term effects of our actions. As a consequence we react to what people, or the media say, and throw out our long-term, well-thought-out plan in order to conform with the popular opinion of the moment, or to prevent the public saying anything negative about us.

This is not only a fault with our politics, but in many instances occurs in private companies also. Managers will often listen to the office talk and act based on that, rather than properly investigating and applying an objective process to finding a solution.

So, as I said to the person, it is not the best thing to manage your affairs based on what is being said, but rather manage based on whatever well-thought-out plan and long term objective you have, and ensure that you apply the right principles. You might not be "popular" in the immediate term, but that is only important if you are in a beauty contest. One of the primary responsibilities of being a leader or professional, is to always do what is right even in the face of being unpopular.

Economic climate

At the current time there is much debate about what are the right economic and fiscal policies to pursue, as there is no doubt that the economic climate is difficult for many in the labour force and some businesses. It seems paradoxical that many in the business community, buoyed by the business and consumer confidence numbers, are saying that the programme is going well and they see improvements, expecting a better economy. While there are others, and rightly so, who question the path we are on because it has become very difficult for them. Included amongst them are many well-qualified professionals.

I don't doubt that, as I have seen and heard about such situations. And I empathise with them, as there has been a significant change in the economic environment.

What we must not do, however, is bring about any radical change that will affect the long-term viability of our plan. I have seen many times in the past where at the first sign of criticism we falter and throw out all the accomplishments we have achieved. This is what leads to the view by many that new governments abandon all the good programmes and policies that are in place because of politics.

But, as I said, this is not unique to the country's governance, but also private sector companies which may have the wrong leadership; because I have found that when it comes to success, leadership is first, second, and third.

Great business leaders

And I know what it is like to come under severe criticism by people who either can't see the long-term vision, or those with different agendas. I have also had the experience of working with some great leaders, who have always looked at the bigger picture and don't worry too much about the immediate criticism.

Two such people, whom I worked very closely with on the Air Jamaica divestment, were Dennis Lalor and Don Wehby. I remember during that process that there was severe criticism from many, including comments also that we were securing financial reward for ourselves from the transaction. The irony of it is that none of the directors even received the normal stipend, and in many instances the bills were taken care of by Lalor.

In the face of the criticisms, however, these gentlemen would say to me that we have a job to do and we have to think about the long-term objective. Is it any wonder that both GraceKennedy and ICWI are very successful companies that have been around for a very long time.

I remember also when I was on the board on the Betting, Gaming and Lotteries Commission, and being much younger then I received a very important lesson from the chairman at the time, Gordon Robinson, who said to us that irrespective of what people say out there we will do the right thing -- even if it means that we will eat bun and cheese for the rest of our lives.

The fact is that credibility does not come from being popular. It comes from doing the right thing all the time.

This doesn't mean that as you go along the journey you don't make adjustments. In fact, having the flexibility to make adjustments is very important. Richard Byles always says that the economic programme is like driving to MoBay. You may change your speed or may get a flat along the way and have to fix it, but you should never forget that you are still driving to MoBay.

So we are at a critical juncture of the economic programme, and the change in the economic competitiveness, and reduction in government programmes is taking a toll. And I think we need to make adjustments where necessary but we should not make any decision that will cause us to be thrown off the long-term objectives. Any action that causes that will only lead to even greater hardship, as has happened in this country over the past 40 years.

What it will require is strong and visionary leadership. Leadership that must be able to communicate effectively -- not only what we are doing -- but the long-term objective and path to get there. Leadership that can sell this vision to the country so that they also are fully engaged.

One of the things I have always warned against, which we must not be tempted to do, is to install taxes as a short-term gap for the fiscal accounts while hurting the long-term objectives. I have seen us do that too many times, which ends up causing even greater fiscal challenges.

As citizens we also have a responsibility to engage constructively with the government. Criticism and disagreement is good but it must be done in a constructive and respectful manner, while in the long run doing what's necessary to achieve our objectives.

Friday, May 08, 2015

Public sector wage dilemma

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One of the issues that has to be resolved, as we move forward with our economic programme, is the matter of public sector wages. Over the past three years, the workers have accepted a wage freeze.

Over this period the exchange rate has moved from approximately J$88:US$1 to over J$115:US$1. Also, inflation would have totaled approximately 30 per cent, which means that public sector wages would have been significantly reduced in real terms. What this means is that public sector workers would have seen a decline in living standards. This is not exclusive to the public sector, as private sector workers have not only faced wage freezes, but also job losses.

This sacrifice by the public sector workers has contributed positively to the the fiscal accounts. Over that period we have successfully completed eight quarterly IMF tests and, more importantly, the fiscal deficit balance has been significantly reduced to near balance. This has resulted in lower inflation rates, lower interest rates, increased business confidence, reducing debt to GDP ratio, and significant slowdown in the depreciation of the exchange rate.

Indicators point up

These numbers are significant, because for the first time that I can recall all indicators are moving in the right direction all at the same time. Previously we would have a combination of either (1) stable exchange rate, high inflation, high interest rates, and deteriorating debt to GDP ratio; (2) devaluation, high inflation, lower interest rates, and deteriorating debt to GDP ratio; or (3) all indicators worsening.

Another positive effect of reducing real wages has been the improvement in the balance of payments, as a result of reduced imports, caused by reduced demand.

One can therefore sympathise with the public sector workers, as significant sacrifice has been made resulting in lower living standards. The other challenge that public sector workers would face is that because of a lack of emphasis on performance compensation, persons who add greater value and go the extra mile still get the same compensation as someone in a similar pay grade who is much less productive. In the private sector this productivity is considered in compensation, for example incentive payments.

The March 2015 fiscal quarter shows that although the more important primary surplus percent target has been met, the amount was some $4 billion less than target. The implication being compressed expenditure, especially on infrastructure, in order to meet targets. This also means that in order to meet our targets at this time, the greater reliance is on expenditure management rather than revenues.

This news comes at a time when the public sector is negotiating for a wage increase and is demanding up to 15 per cent each year for the next two fiscal years. At the same time, the Government is correctly advising that this would threaten the fiscal targets and could result in us jeopardising future IMF tests.

The dilemna

The dilemma is: Do the workers have an argument for double digit increases, or is the Government correct in saying that more than 5.0 per cent would jeopardise the future targets? In the past, for example, when faced with pressure from the public sector unions, the Government would provide the increases demanded and then we'd start the whole process all over again, which is why 53 years after independence we are still in an economic quagmire.

My own view when the budget was presented is that an increase of between four and eight per cent was to be expected. This is simply because any amounts above that would jeopardise the fiscal and economic programme. Too high an increase would (i) eliminate any capital expenditure on infrastructure; and/or (ii) cause a lower primary surplus and higher deficit.

It is for this reason that the best option may be for public sector workers to compromise with the Government's position this fiscal year. This is because any increase that causes us to regress in the fiscal accounts will result in only very short-term benefits, but within a year that would be followed by higher inflation, increased debt, and greater devaluation. In very short order purchasing power would quickly be eroded. In fact, I think any misalignment now may cause even greater hardships than before.

This doesn't mean that public sector workers should continue to sacrifice indefinitely, and what I would do, if I were the union, is get a commitment from the Government that accepting the proposed increase in this fiscal year means that certain things will be put in place to ensure growth, and hence improved tax revenues.

One of the things that has resulted in this impasse, as well as the difficulty faced by public sector workers, is the failure of administrations over the years to adequately address public sector transformation. The focus of course is not on job cuts, but rather transforming the public sector into a much more productive unit, which will facilitate private sector productivity. This will of course result in greater revenues for the fiscal accounts. Bear in mind that a part of this also is to ensure that there is greater emphasis on tax compliance by persons outside of the net.

It is clear to me that any sustainable solution to public sector wages, for the benefit of both the workers and the fiscal accounts, can only happen if there is greater public sector productivity and workers are compensated based on their value added, rather than just seniority.

So I will end with what I also said when the first set of wage freezes started (I think in 2007). Wage freezes are not a sustainable solution to the fiscal accounts and will only delay the inevitable and during that time cause unnecessary suffering. If we want to see better circumstances for public sector workers and the fiscal accounts then public sector transformation must happen.

It is our failure to do this that has once again resulted in the public sector workers seeing declining real wages without any permanent solution to the fiscal accounts.

Friday, April 24, 2015

What does economic and social change look like?

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PERHAPS the question I get asked most frequently is about the economy and the prospects for it. One of the things I hate the most is when people engage you on the economy and ask about the prospects, but then don't give you a chance to answer and then go on to curse everyone who is living and dead, about the difficulties in the economy. They then go into the history of our economic mismanagement and then naturally their argument progresses to placing blame on one political party or another. All of this before I have answered the question, which always leads me to wonder why they don't call a talk show to vent rather than ask the question.

Many times, however, people will have doubts about where the economy is going, and whether we are seeing any benefits from the economic programme, as admittedly things are not easy. I will be the first to admit that the past few years, since 2009, have been very challenging for some businesses and individuals.

So when I say to them that I am optimistic about the changes being made and where I see the economy going, they are surprised. Some even go as far as to say that when analysts like us speak that way, we are being spin doctors for the government. However, when we say things are not going well, under both administrations, they cheer you on. It seems they just want to hear bad news all the time. I can only imagine how such an attitude affects one's perspective.

Hope

The truth, however, is that we need to develop the ability to recognise when there is hope and when there is not. That ability helps make a successful entrepreneur, one who might be having a difficult time in their business but can still see the forest and not just the trees.

Not everyone has this ability, but what everyone can do is try to develop an open mind to see other people's reasoning. It is this tolerance of opposing views that enables us to develop our own thoughts.

The question to be answered is: are we making progress under the current economic programme? My view is yes we are, and, as I have said many times before, this time we stand a better chance than under prior IMF programmes.

Why do I think so? Because for the first time we are making necessary legislative changes to accompany the fiscal changes. And, as various analysts have said many times in the past, the only way any fiscal or economic reform can work is if it is accompanied by structural changes. The legislative agenda has provided the opportunity to change the structural environment to create a more competitive economy. So I don't think that anyone would disagree that this programme includes the much needed structural reforms.

There is also no doubt that the economic environment is getting more competitive and more challenging for many businesses and individuals. The reason for this is that as a country we were used to operating in an economy with less competitiveness, with many people and businesses benefiting from contacts and government welfare. When those avenues lessened it inevitably became a more challenging environment.

The role of bodies like the PSOJ is to help with that transition to a more competitive economy, where the playing field is level for all and the bureaucracy and societal conditions do not stand in the way of innovation or economic activity.

Recognising positive change

What we must ensure, however, is that while we acknowledge the difficulties, and the things that still need to be improved, we must also be able to recognise when positive changes are happening and the direction we are moving in. In other words, how do we recognise when an economy is positively transforming even while challenges are there. For example, in the two years after 2008, the US economy was still going through significant challenges, and the instinctive reaction globally was to move to austerity measures as Europe did. But the US administration, however, stuck to its guns, even in the face of opposition, and the end result is that the US economy is now the locomotive of the recovery.

It is also going to be very important for us not to prevent our own development, in the face of the immediate challenges, by deviating from the path we are on. Many times in the past we have embarked on fiscal and economic reform programmes, and at the first sign of difficulties we start running fiscal deficits and restart the process of decline all over again. This is how we have ended up where we are today.

I recognise the difficulties we face but all the indicators are showing me that we are on the right path. These include (i) much lower inflation and interest rates, with the difference between US$ and J$ interest rates much reduced; (ii) reducing balance of payments deficit; (iii) a more stable exchange rate; (iv) near zero fiscal balances; and (v) increasing business and consumer confidence.

But even with this, we must still recognise the challenges we have and must address. These include bureaucracy, crime, and governance. What we must do is address these challenges constructively, deliberately, and together. In other words, let us criticise each other, as this is good for progress, but let us do so rationally and constructively.

So what we must be able to do is understand that any transformation, including economic and social, to a better model, will always cause dislocation. What we must do though is forge ahead with any plan we have properly thought out, and be able to see the long-term outcome while at the same time dealing with the challenges that occur on the way to that desired outcome.

Friday, April 17, 2015

How we think impacts our development

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ONE of the things I encourage my staff to do is feel free to be critical of me as CEO of the Private Sector Organisation of Jamaica (PSOJ), which leads to having an environment where we can all be critical of each other.

We therefore have an open atmosphere where we can all speak to each other about; ideas for growth: what areas we think someone can improve in and, importantly, to recognise achievements. This creates an atmosphere where everyone feels comfortable about contributing to the progress of the organisation.

I see the same philosophy with many private sector leaders I have worked with -- such as Dennis Lalor and Don Wehby -- who always ask for feedback before making any comments whenever we discuss any issue. I find that the present PSOJ officers, led by William Mahfood, are also always interested in feedback. This philosophy is what makes for their own success in many respects, as the ability to listen, especially to suggestions for improvement, is probably one of the most important traits you will see in any successful leader.

In fact, I have found that many persons who have failed have an inability to constructively accept criticism. In other words, they usually end up "shooting down" the messenger and not listening to the message. This, of course, results in them only attracting "yes men" -- when nothing could be more damaging to that person's development.

While that criticism may come across as harsh, it may be necessary given the circumstances. I we want to develop, we have to learn to listen to the criticism, rather than just the form in which it is delivered. That is not to say that criticism must not be respectful and constructive, but even that is sometimes essential for overall development.

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One instance I can think of when harsh criticism is necessary is when a group of us are cycling. There may be a group of 20 to 30 people all moving at upwards of 25 mph and just 6 to 12 inches behind each other's wheel. In those circumstances, we can understand when we do something wrong and the person behind us tells us two "choice words". While we might tell them one back, we realise that any error can cause serious physical damage. In such a situation no one is offended by what they are told.

Party colours

This inability to accept constructive criticism is one of the things that has held back the development of our country. The emails I receive about governance issues are always the same, no matter which political party is in power. What is amazing is that the same person can have two very different thought processes on the same issue depending solely on which party is in power. This is one of the primary roadblocks to our own development as a people and country.

It is strange that the politicians themselves are much more receptive to the constructive criticism than the people who follow them. And it is not that the politicians tell them to think that way. In fact, it is much easier and acceptable for me to sit down with the politicians and give them my own views -- which they accept -- than to have a discussion with some other people who are supposedly intelligent thinkers.

This says a lot about our level of development as a people.

I must admit, however, that there has been much improvement since the 1970s and 1980s, for example, when we used to kill each other over our individual political views. The irony is that many of those who would want to go back to that way of thinking do not understand how much people suffered during those times, as they were either not born yet or were not old enough. I was young during the 1970s, but I can remember those days very well, and so people like me will appreciate the need for the constructive dialogue that many have sacrificed for.

Vision 2030

If we are to develop as a country and to achieve the elements espoused in Vision 2030, then we can't focus only on infrastructural and economic development, but we must also change how we think and communicate with each other.

The economic reform programme is an example. My own view is that the economic agenda, as outlined by Minister Phillips, is certainly the direction that we want to move in. Fiscal and legislative reform is essential and is a necessary ingredient to form the basis of any economic and social development. It might not be sufficient, but I don't think that there can be any argument about the need for these reforms.

There is also a need for public sector transformation, skills training, and focusing on certain strategic investment decisions, such as the Agro Parks, KCT, highway development etc.

But even though all agree that there is a need for public sector transformation and efficiency, there is disagreement when initiatives under the reform are being undertaken, without any rational explanation for the disagreement or any alternative being offered. So the question is, what is the difference to someone agreeing that greater efficiency and better management is needed in the public sector and recognising that same need for management around ChickV and the Riverton Fire -- which both cost the country hundreds of millions of dollars?

The short answer is that the only difference is our inability to accept criticism constructively, which is really what places us at a disadvantage.

On the other hand, there are some of us who will also criticise any policy put in by a government that we do not support -- even though we would support it if put in place by a government that we support. And this disease seems to be contagious as it is also affecting the US now.

If we want to move forward and develop as a country, we must be able to accept good and bad criticisms, and look at the message not the messenger.

Friday, March 20, 2015

Why won't the private sector invest?

LAST year I sat on a panel to discuss the state of the economy. Someone in the audience correctly stated that much work was being done by the government to improve the business and economic landscape, but asked why the private sector will not invest if the government has done its part.

I told him that he was also a part of the private sector and suggested if he saw the opportunity to invest, then he should not want anyone to invest before he does, and that he should make the investment. And even if he has to secure a loan, he should take the risk or he could use his savings to do so. His response was that he would not risk his meagre savings in an investment, and he didn't want to borrow any money either.

I asked him who he referred to as the private sector, as I thought that everyone who is not a part of the public sector is in the private sector.

This illustrates the view that many persons have: The private sector is someone else, not me. Nothing could be further from the truth.

Consequently if you do not see an opportunity that would cause you to risk your own money, why do you expect that there is a private sector out there that will?

But the question persists. Why doesn't the private sector step up to the plate, now that the government has done so much to facilitate businesses? However, I would pose the question this way: Is this the right time for me to make an investment, and if my answer is yes, I would ask why no one else has made the investment; not to urge anyone else to invest before me but to assure myself that my own assessment is right. I don't think that I can ask someone to risk their own money when I am not willing to invest mine.

I do agree, and have said repeatedly, that the current reform programme is moving in the right direction, with the various fiscal and legislative adjustments being made. This has resulted in Jamaica moving up 27 places in the Doing Business Report; being named the best place in the Caribbean to do business; and having business and consumer confidence at yearly highs. I get a real feeling also that businesses are looking at even more investments, which will begin to show and pay off for the economy.

We must understand though that (i) mobilisation of capital is not easy, so even when there are positive changes capital just doesn't appear out of thin air; (ii) even though confidence has improved it doesn't mean that we are now more competitive for investments than other countries, as they are not just sitting down and waiting on us; and (iii) regaining enough confidence for action is a process, as we have had more than 40 years of mistrust between the private and public sectors. If you have had even one year of mistrust in a relationship and you are making an effort to improve it, does it go back to where it was overnight?

There are, of course, many things that erode trust and confidence. These include:

* Even though this year we have had a more proactive budget process, we must remember that every year the country (including businesses) holds its collective breath about what new taxes are coming -- removing the predictability of business. Any one tax measure can change a business model in an instant.

* Many persons who invested in government paper saw their cash flows and values affected by the first debt exchange in 2010, and subsequent ones. These actions changed the return and cost of capital overnight, even though unavoidable.

* We must also remember that we have just gone through a raft of legislative changes, which still continue, and it takes time for businesses to assimilate all the changes, which is the prudent thing to do before investing.

* The bureaucracy is still a significant issue, especially for those SMEs which cannot afford a courier service. It still consumes a lot of time to pay taxes, despite the improvements by TAJ. And attempts at the improvements have not been smooth as there have been reports of challenges with the new forms and new system. The bright spot is that TAJ's response has been very good, and they continue to be an example of good customer service in the public sector. On the downside we are told that the cost of exporting to New York from the Dominican Republic is less than the cost of getting the container on a ship here.

* Crime is still a problem, even though there have been improvements. Much of the crime is domestic violence but the perception of an unsafe environment still exists.

* Last year drought conditions cost farmers significant losses, while the NWC continues to have the majority of its water unaccounted for and the dams are full of silt. Also last year ChickV resulted in an estimated 13 million man hours lost, and approximately 0.5 per cent of GDP. Between the drought and ChickV the GDP lost was around one to 1.5 per cent.

* Now we have the Riverton fire, which has caused untold health problems, and many businesses have lost hundreds of millions in revenue and citizens have lost income. Businesses also have to pay employees wages despite losing income to a crisis that could have been avoided.

The fact, though, is that there have been significant investments over the past year, but long-term investing is not like buying and selling, which is what we have become accustomed to. It takes time to show returns.

So when we next wonder why the private sector is not stepping up to the plate and investing as it should, remember that the private sector is everyone outside of government, and if we do not feel like risking our own money in investments, then why do we ask others to do so? The other way the question can be asked is, why do we not buy the domestic product even when it is much more expensive than the import, or why do so many of us choose to migrate instead of staying and helping to build Jamaica?

Friday, March 06, 2015

ICAJ 50: the accountant’s role in development

THE Institute of Chartered Accountants of Jamaica (ICAJ), of which I am the current president, is celebrating 50 years of existence, having been formed in 1965. After reflecting on the importance of the accountancy profession, and considering where we are as a country today, I thought it would be good to highlight the importance of the accounting profession to Jamaica.

This is especially in light of a problem I see many SMEs facing; that of improperly prepared accounting records. This not only restricts their growth potential but also causes challenges with accessing credit. Even when they are able to access credit the cost of funds is higher because financial institutions cannot do a proper credit assessment.

Many business people do not see the importance of accountants, and records, until it is too late. So the emphasis is on producing and selling products, or services, but no emphasis is placed on record keeping, filing tax returns, and other proper governance practices. SMEs need to understand the importance of this for their own growth and development.

This is where the accountant plays a very important role in development of businesses, at the micro level, and ultimately economic and social development.

The first thing to understand is what to look for in an accountant. Just like when you are buying an appliance there are certain brands that are tried and proven, it is also important to ensure before you buy accounting services that you are getting good quality.

Many people use accountants who are not suitably qualified to prepare their records,. I have seen this time and time again. Usually the customer complains about the accountant's service after the fact. And many times we discover that the accountants are not members of the ICAJ, and so we have no jurisdiction over them.

This is where the ICAJ, and the Public Accountancy Board (PAB), come into play, as these two bodies regulate the accounting profession and by extension issue membership and practising certificates to their members. One can therefore be reasonably assured that the quality one gets with someone holding this certification is of an acceptable standard.

The PAB is the regulatory body for the profession in Jamaica, and is so empowered to do so by law. The ICAJ goes further by certifying accountants as chartered accountants. In other words, even if you have passed all the accounting exams in the world, you cannot legally hold yourself out to be a chartered accountant unless you are a member of the ICAJ. Anyone who does that is liable to prosecution.

The chartered accountant title gives assurance to the public that the accountant is of a minimum standard, as he must pass certain exams; have a certain number of years of experience; be recommended by two members; pass an ethics exam; and not have any integrity issues.

Earning the right to be called a chartered accountant is a rigorous process, as even after all of that you are interviewed by a panel if there is anything that needs specific answers. Acceptance is not automatic.

The 2008 global financial crisis, for example, was partially caused by a lack of proper accounting reporting, as the valuation of securities was not properly reported. Assuring that they had been may not have prevented the crisis, but it would have alerted people about the problem before it became so big. In Jamaica, we would have stood a better chance than the US because of our use and application of IFRS, unlike the US standards in place at the time.

If we are going to move Jamaica's SMEs forward, then we must understand the important role that properly qualified accountants play. Look at the capital markets and companies on the stock exchange. Many people purchase shares on the exchange as long-term investments for their retirement years. The quality of the audited financial statements is very important, as if the reports are inaccurate, then it can lead to a lot of heartache in the future when and if the inaccurate reports affect the viability of the company. This is why I always urge people that the first section to look at in a set of audited financial statements is the audit report -- because if it includes a qualification it may not make sense to rely on the rest of the report.

The ICAJ and PAB recognise the need to protect the users of financial statements, and have put in place practice monitoring (quality assurance) and other programmes to reduce the risk of inaccurate reports being fed to the public. But as always it is up to the "buyer to beware".

In other words, check the credentials of the accountants you do business with -- and whose reports you rely on. One way you can do that is by checking the listing of members on the ICAJ website, or simply calling the ICAJ.

As the ICAJ celebrates 50 years of existence, it is appropriate to highlight the important role of accountants in national development. But as with any product or service, the user must be fully aware of what is being purchased.

Friday, February 27, 2015

Indiscipline and lawlessness promote social inequality

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LAST week I spoke about the lack of proper parenting skills being Jamaica's fundamental problem -- and the root cause of almost every challenge we face.

The reality, however, is that much of this parenting crisis comes from a lack of discipline and order in the society, in many instances promoted by people who should know better. In other words, many of our leaders, especially policymakers, are aware of the unethical and sometimes illegal social issues we face, but do little to address them. And so in many ways, ignoring these issues means that we are complicit in the consequences.

Just last week, Gary "Butch" Hendrickson commented on something I had really not reflected on before. Butch indicated that the violation of the Noise Abatement Act was actually one of the primary causes of social inequality.

At first I didn't understand what he meant, but he went on to explain that when a child in a depressed community has to deal with music being played at loud decibels way into wee hours, that child loses a good night's sleep and is not properly prepared for school the next day. In addition, the child has to get up early and hustle on public transportation to go to school, often without the benefit of a proper breakfast.

Contrast this to a child from a middle- or upper-income family, who may live away from night noises, or whose family can insulate him from them so he can get a good night's rest and wake up refreshed and ready to learn. In addition, that child can sleep longer because he will be driven to school and will also receive proper nourishment before leaving home.

In both cases, each child is born with the same physical and mental capacity, but because of different circumstances there will more than likely be different results. The child from the inner city may rise up against the odds, but will have to do so under more challenging conditions.

It is also important to point out that apart from lack of sleep and proper nutrition, the child from the lower-income family also faces the challenge of a daily assault on our less-than- adequate and often abusive transportation system. Not only must this child wake up one or two hours earlier, but must also fight with the disorganised system, and be pushed around and sometimes shouted at by transport operators who want to maximise their earnings in the midst of the indiscipline on our roads. We can also talk about the physical danger they face with the poor driving practices of many transport operators.

This lack of order also extends to our crime problem, as the child from the inner city is confronted more directly with many of the crimes being committed and interfaces directly with the outcome of crimes -- even if not committed against him. Again, the child from the middle or upper class is insulated from many of these crimes.

Many children today face issues of abuse -- physical (including sexual) and mental. This occurs at all levels of society, creating social inequality by giving the abused child a greater reason to fail in life.

This is one of my pet peeves, as for the life of me I cannot understand why the child authorities and court system find it so difficult to come to grips with child abuse. This should be the priority of the justice system as our failure to adequately address child abuse just creates more criminal deviants in the future. Nor can I understand our failure to hold accountable those parents who take to the streets to sell or beg with their young children at their side. This is in plain sight, but nothing is done about it.

I have personally reported (around twice) a woman I see on Sundays at a gas station seated with two or three young children begging for money and food. One of the children (a young lady) seems to have grown up and is now begging as well. Still nothing is done about it

So after reflecting on what Butch said, it came home to me. In just that one comment he said a whole lot about why many families face generational poverty and failure, and why there is a divide between income classes as it relates to probability for success.

In other words, our failure to impose discipline and structure on our society has promoted the persistence of social inequality, which in turn is at the heart of our labour productivity and ultimate economic issues. No passing of any IMF test or even a proper growth agenda can solve this problem sustainably.

If we are to solve this, we must first consider it a national crisis and it must be dealt with as such by the authorities.

Just as we have a major focus on murders, we must give the same attention to indiscipline and lawlessness. For example, the stop lights in Kingston are now are like Coronation Market with window wipers, vendors, peddlers, pedestrians crossing at will, and people just seeming to be hanging out. This seems like a low-hanging fruit. If the stop lights are cleaned up, that would be such a big boost to the perception of order -- instead of ignoring it and creating an industry that we soon say we can't get rid of because it is creating a livelihood for persons.

We must also get serious about imposing the Noise Abatement Act, and understand the social inequality and injustice we promote when we allow people to disturb others with noise (not just music) any time of the day. We must also get serious about prosecuting child abuse cases, and also issue harsh penalties to adults (and parents especially) who know about child abuse and do nothing about it.

We must also support the JUTC in its effort to clean up the transport system and not allow preaching, eating, playing music, or any other disturbance to passengers. Personally, I would like to see a proper school bus system. And we must deal with undisciplined drivers and other users of the roads -- such as pedestrians who ignore traffic signs, cyclists who ride on the wrong side of the road, or people who illegally park on Knutsford Boulevard (sometimes while in the car) in plain view of police.

This is not about passing new legislation, as that is already in place. It is about the will to enforce it and to realise that our culture of giving a man a "bligh" does nothing more than create indiscipline and lawlessness, which affects negatively the same man we don't want to "fight against". It is only when we start to do this that we can provide equal opportunities to all for true social and economic development. Each of us has some responsibility.