Thursday, October 18, 2007

No one has to be poor

I have always thought that one of the things Jamaica lacked is a vision of where we want to be, summed up in a single statement. I am aware that we have been working on a 2030 plan, but no vision for Jamaica has really been communicated to the people of this country. Prime Ministers have come and declared their undying commitment to bring justice to the people of Jamaica, and have even expressed love for poor people, which if we really love poor people then we should strive to ensure that no one is poor rather than place a shield around them and protect them from prosperity.

It is within this context that the statement made by Bruce Golding, that Jamaica should be a country where “maybe not everyone can be rich, but no one has to be poor”, is the closest I think that has come to a vision statement. I am going to officially declare the last part of this statement, “no one has to be poor”, the official vision for Jamaica, as if my declaration will carry any weight.

In all seriousness though I think we need to examine this statement, as this more than anything else said by Mr. Golding, embodies his commitment to Jamaica and the possibilities. Because if we are to ensure that “no one has to be poor” then we must examine how we are to achieve that. Saying that human rights will be respected, inner city houses will be built, free education or hospital fees will be provided, or any other type of promise serve to be nothing more than temporary reprieves in the ultimate objective of prosperity.

And so the question we must ask is how to achieve the vision statement for Jamaica, “no one has to be poor”. Well in order to get to that vision we must understand what makes people poor and fix those fundamental problems. In other words we must put the structure in place to ensure that the vision is well supported by a set of systems and policies that will outlive any individual. Our country has always operated like many organizations in Jamaica, where the flavour of the month depends on the present mood and attitude of the person running the organization. So that we tend to vote in charismatic leaders and people who promise that they will do something for us, if we vote for them. Based on Mr. Golding’s statements it seems as if that day may be at an end, and the only way that it can be is if the structural changes are put into force by legislation, as one day Mr. Golding will no longer be there and we may end up back in the same arena.

So if we are to examine what makes people poor then we can identify a few factors, which include:

- A lack of access to quality education – I am always amazed that over the years of us talking about providing jobs for people we are always scraping the bottom of the barrel. Garment factory, low level IT jobs, low level jobs in hotels etc. If we want to see people’s earnings go up then we have to train them for high level jobs, as if we do not have a highly trained labour force then we can only provide low paying jobs. So while we may be able to attract investments to Jamaica, it will not be the Jamaicans who get the higher paying jobs.

- Lack of law and order – we constantly speak about the high murder rate in Jamaica but the high murder rate is just a symptom of the real problem of a lack of general law and order. How do we intend to solve murder if we cannot even control the bad driving on the roads? The lack of law and order creates a stranglehold on certain areas, some of which we call garrisons. By allowing this general breakdown of law and order in society we force poverty on the people that live in these areas.

I believe that if we deal with these two social problems they will go a far way in alleviating poverty. There are some other areas that need to be addressed also, more on the financial side.

The first of course is that fiscal discipline must be maintained. The present government has inherited a debt of almost J$1 Trillion, and more importantly a set of fiscal accounts that seem to be always in deficit. Additionally, the fiscal targets have been consistently missed. No doubt fiscal discipline has to be the order of the day, as there is no way that we can continue this indefinitely, as what will happen is that when we are no longer able to borrow money then inflation will return. There are only two ways to address a fiscal deficit, inflation and debt, and the latter is what we have been accumulating since the early 1990s when the debt stood at J$34 Billion.

Management of the fiscal accounts not only means though that expenditure is contained. We have been pursuing a strategy of expenditure containment for the longest while with no success. This is because if you are constantly containing expenditure when the pie is shrinking (there may be growth but the growth in debt outweighs it) then you are going to find that there is no more room for containment. Expenditure management is important though to ensure that monies are spent where the greatest value comes to the country as a whole. As an example the recent roads indicate that higher standards need to be put in road work, so that instead of paying $100 to fix roads every 3 years, we pay $150 and fix them every 10 years.

The strategy surrounding the fiscal accounts therefore must be revenue growth (by growing the economy not necessarily through new taxes). Economic growth has to be achieved through creating a more efficient bureaucracy, and here I would like to add that we should seek to hold our public officials accountable, but it is important to pay them more. Both go hand in hand. We have to create an environment that encourages local business growth, which includes lower interest rates (a balanced budget), tax reform geared at encouraging business development rather than just fiscal revenue growth, a more efficient transportation system, and better use of energy. If we can achieve these then we can reduce our reliance on debt, and remittances, and our people will be more equipped to earn more.

We will then be closer to the vision that “no one has to be poor”.

Accrual accounting justified
Another matter that had me thinking was the statement attributed to Omar Davies that some J$17 Billion and US$15 Million were left in bank accounts. This was said in answer to the J$15 Billion “unbudgeted expenditure” Audley Shaw spoke of. Now I think anyone should understand that money in the bank at any point in time does not mean that it is free and clear to meet additional expenses. The fact is that these balances could also be waiting on unpresented withdrawals, and in fact after all withdrawals are presented the amounts could in fact be negative. So there is really no relevance between the cash balances and any unbudgeted commitments. This has always been the problem with cash accounting, and fully supports the need for the move to accrual accounting, which was started under the previous government.


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