Friday, August 01, 2003

Problems with inner cities

Recently during a workday, I was driving along Spanish Town Road, from Three Miles to Downtown. As I was traveling, I noticed several empty buildings that once boasted some of Jamaica’s most successful/productive entertainment centres and businesses. In addition to the wasted real estate, I noticed many young men and women loitering on street corners, evidently searching for something to occupy their time. A conversation I had with one person revealed that most, if not all, would love to have the opportunity of employment.

It suddenly hit me that this is one of the reasons for our current economic condition. The real problem of the inner city emanates from the extensive idle resources they contain. These resources are potential business establishments and productive labour that are going to waste. What’s more, the situation worsens with each passing day. How can any nation or company survive in a competitive environment, if it does not fully utilise all of its available assets? Yet, we have been trying to compete with other countries that fully utilise their productive resources.

The problems facing us as a nation are primarily:

1. Idle real estate that lies in many inner city areas because of crime, as well as neglect by the relevant authorities over the decades. These properties, potentially, are thriving businesses that could be employing thousands of persons; and
2. Increasing idleness of our human resources, particularly, in the inner city.

Both these factors are wasted resources, which, as long as they are idle place a greater requirement on the productive sector, as the wants and needs to be satisfied remain relatively inelastic.

In my opinion, the productive employment of these resources is certainly one way of more evenly distributing the tax burden. For example, take two companies with assets valued at $100. If company A invests the whole $100 at 20% per annum it will earn $20 over a year. If company B invests only $70 and leaves $30 unused, it will have to realise a return of approximately 28.5% to earn that $20. Similarly, in our situation, we are competing against countries using a higher percentage of their productive base, both in terms of real assets and labour. In order for us to compete effectively, we, therefore, must realise a higher rate of return on our assets.

A review of statistics on the population and the economy reveals some interesting points. Our total population has increased while our labour force in absolute numbers and as a percent of total population has decreased, moving from 44.52% in 1997 to 42.86% in 2002.

The implication of this is that we have less persons working to support an increasing population. Over this same period, there has been an increase in the average US$ weekly earnings from US$145.50 to US$173.08 - a 19% increase. Similarly, the total earnings over the total population has increased from US$64.78 to US$74.18, a 14.5% increase, over the same period. The implication is that the work force was, on average, earning more in real terms in 2002 than in 1997. Other implications include a growing young population, increased dependence on the breadwinner and, more importantly, a greater concentration of wealth in the hands of the working class. Whatever the fundamentals are, it translates to a decrease in the productive population.

I deliberately neglected to imply an increase in productivity, as while earnings per capita has been increasing, there has been a decrease in real GDP growth. How is this possible since greater earnings should imply more productivity? I would propose that the increased earnings have more to do with increased debt levels rather than productivity. Over the same period of declining GDP, we have seen significant increases in the debt, moving from J$196 Billion in 1997 to J$497 Billion in 2002.

The implication is that increased earnings are stimulated through the injection of borrowed money. It is only recently that we have seen any growth in GDP and, even so, it has been marginal and equivalent to earlier declines. This means that debt is being used to create earnings without any productive assets to support it. Thus, the debt is being channeled significantly towards consumption, rather than capital investments. On the other hand, it could be argued that the debt was necessary to spurn consumption and positively affect growth, which will inevitably feed on itself.

This situation again follows the argument above regarding the underutilisation of property and human resources. Here, we are again underutilising financial assets. In all areas, we seem not to be using our resources in the most productive manner. This problem may be as prevalent in the private as in the public sector and it may do well to do some research in this regard. The Government seems to have recognised this, and is attempting to address it through its public sector modernisation programme, but is already at a disadvantage as decades of cultural and infrastructural acceptance of waste is difficult to overcome.

Apart from the non-use of assets, we also have been placing emphasis on industries that have long become unproductive and uncompetitive, thereby not using our assets in the most effective and productive way.

Whatever the approach, we must put to productive use the many idle and unproductive resources existing in the inner city. This necessitates a shift in the social and economic paradigm of the country. If we are not able to fully leverage our assets and make them productive, then we are already at a disadvantage in a global environment.
It is within this context that the work of the Kingston Restoration Company is critical to the future of our country and the Government and private sector must be applauded for the effort being placed on this venture. The Government has also shown its intention to focus on the renewal of the inner cities, which can only be beneficial for the country and should be supported by all. If we can address this, focus effectively, then many of our economic and social problems will be resolved.


Anonymous said...

whoah this blog is excellent i like studying your posts.
Stay up the good work! You already know, a lot of people are looking around for this information, you can aid them greatly.

Visit my weblog - best diet

Anonymous said...

Link exchange is nothing else however it is just placing
the other person's weblog link on your page at appropriate place and other person will also do similar in favor of you.

Also visit my blog post healthy diet

Anonymous said...

When I initially commented I clicked the "Notify me when new comments are added"
checkbox and now each time a comment is added I get four e-mails
with the same comment. Is there any way you can
remove people from that service? Thank you!

Also visit my homepage: ketone diet

oakleyses said...

coach purses, louis vuitton handbags, kate spade outlet online, nike air max, michael kors outlet, michael kors outlet store, oakley sunglasses, burberry outlet online, coach outlet store online, michael kors outlet online, louis vuitton, louboutin shoes, louis vuitton outlet, louis vuitton outlet online, louis vuitton outlet, polo ralph lauren outlet, gucci handbags, oakley vault, longchamp handbags, polo ralph lauren, coach outlet, michael kors outlet online, tiffany and co jewelry, jordan shoes, burberry outlet online, ray ban outlet, nike air max, coach outlet, cheap oakley sunglasses, kate spade handbags, red bottom shoes, ray ban sunglasses, chanel handbags, christian louboutin shoes, nike free, tory burch outlet, christian louboutin outlet, nike shoes, prada handbags, tiffany jewelry, longchamp outlet, michael kors outlet online, prada outlet, longchamp outlet online, michael kors outlet online

oakleyses said...

north face pas cher, louis vuitton pas cher, nike roshe run, hollister, barbour, ralph lauren pas cher, converse pas cher, nike air max, vans pas cher, nike air force, abercrombie and fitch, nike trainers, louis vuitton uk, true religion outlet, mulberry, sac louis vuitton, ray ban pas cher, nike huarache, nike free pas cher, michael kors canada, hollister, timberland, longchamp pas cher, hermes pas cher, sac vanessa bruno, air max, nike blazer pas cher, longchamp, ray ban uk, lacoste pas cher, michael kors uk, chaussure louboutin, air max pas cher, nike free, sac michael kors, louis vuitton, burberry pas cher, ralph lauren, nike roshe, air jordan, true religion outlet, new balance pas cher, lululemon, oakley pas cher, guess pas cher, nike air max, scarpe hogan, tn pas cher, north face, true religion

oakleyses said...

babyliss pro, p90x workout, valentino shoes, canada goose pas cher, rolex watches, canada goose outlet, abercrombie and fitch, mcm handbags, lululemon outlet, canada goose outlet, new balance outlet, soccer shoes, bottega veneta, wedding dresses, insanity workout, hollister, canada goose, jimmy choo shoes, ugg outlet, ugg boots, north face outlet, uggs outlet, ghd, asics shoes, marc jacobs outlet, giuseppe zanotti, ferragamo shoes, longchamp, reebok outlet, birkin bag, north face jackets, canada goose uk, celine handbags, vans outlet, nfl jerseys, uggs on sale, ugg, moncler, mont blanc pens, roshe run, canada goose outlet, moncler outlet, mac cosmetics, chi flat iron, herve leger, beats headphones, moncler, ugg soldes, soccer jerseys, instyler ionic styler

raybanoutlet001 said...

oakley sunglasses
nike trainers
oakley sunglasses
nike roshe
ray ban sunglasses
cheap nfl jerseys
true religion outlet store
ugg boots
true religion outlet
los angeles lakers jerseys