Wednesday, May 14, 2008

Change is hard but necessary

“Everyone wants to go to heaven but no one wants to die”. These are well known words and were even belted out by Peter Tosh in one of his hit songs. How does one go to heaven if death is not involved, as death is a necessary ingredient of making it to heaven? And this is the dilemma we face as a country.

From when Omar Davies was Finance Minister he used to point out that the only way we can achieve significantly lower Debt/GDP ratio, and make more money available for social spending, is to first balance the budget. This was recently repeated by Don Wehby at a recent Mayberry Investor Forum. Any sensible argument from analysts will also confirm that this is in fact so. The question then is if we all know that the only way to reduce the strain on the fiscal accounts, and make more money available for social programmes, is to balance the budget then why have we not been able to achieve it for so many years.

Wanting fiscal results
In fact of the 45 years between 1962 and 2007, we have managed to balance the budget approximately 6 times. And this is at the heart of our high Debt/GDP ratio and lack of money available for spending on Jamaica, as we have to continuously borrow money to fund the budget. The fact is that we have just been living above our means for too long. If one continues to spend more than is earned then eventually your assets will be seized, and you will end up with nothing.

This appetite for spending more than we earn is driven by first of all the Jamaican culture, but more importantly is supported by political rather than economic expedience. As the saying goes “Good politics does not make for good economics” because in many instances politicians have to promise short term fiscal irresponsibility and sacrifice long term gains. This tendency is even more pronounced in countries such as Jamaica where we suffer from such a relatively high illiteracy rate where 70% of our high school student population leaves without one subject. An unbelievable statistic in a country that is based on 70% services, which requires human input to create competitive services.

Based on the literacy levels we would be better suited to a manufacturing economy. But of course as usual we fail to properly plan our development based on the resources available and go with where the political wind blows. The political directorate of course does not behave like visionary leaders but rather a businessman who seeks to maximize gains by promising high short term gains knowing fully well that the long term stability is compromised. But the fact that politicians are able to do this successfully over the years is more an indictment of our own ignorance as a people rather than the actions of politicians. I mean politicians do the same wrongs to us every year and who continues to vote for them. So who is more stupid, the fool or the one who continues to follow the fool?

If we really want change in this country then we must understand that it requires a fundamental difference in the way we do things. So that when the Prime minister makes decisions, that are unpopular, but is made with the prospect of making conditions better in Jamaica, we should analyze it on its merit for improving the country rather than who we think may be offended. And in some cases no one feels offended but the politics is always more important than the economics for many archaic minded politicians. When decisions are made to properly restructure loss making companies, or dispense with them, we have to understand that the short term sacrifices that may be necessary is good for the long term gains. Instead of thinking long term, however, we tend to oppose the good decisions because over the short term they are not politically correct, as Jamaicans at every level of society, are more concerned about curry goat politics rather than good economics.

Selfish motives
The selfishness of Jamaicans leads us to want change for everyone else except ourselves. So everyone, except me, must make the sacrifice for a better Jamaica, which I will of course partake of. That is the thinking that has helped to destroy this country. So when a politician is faced with a choice of political fallout or making a decision in the best interest of the country, history has shown us that most of our politicians have made the choice ensuring that there is no political fallout. As far as they are concerned the ignorant poor people of this country are not educated enough to understand that their long term future is at risk so they won’t notice that we are sending them like lamb to the slaughter. It is for this reason that I believe that there are many who should never think about offering themselves for office in this country again. But that is if they have a conscience.

In Barbados the economy was falling apart, and a Prime Minister came to office called Erskine Sandiford in 1987. He made the ultimate political sacrifice to ensure that the economy was put back on the right track by making the decisions that was certain political suicide but in the best interest of the country. It is to the detriment of the Barbados people that they voted him out, and I believe that they are still benefiting from his policies but recently has shown some signs of vulnerability.

In our case, however, we have had Prime Ministers that have always made decisions in the interest of the political party and to hell with Jamaica, as the party and party members are always more important than the ordinary Jamaicans. So while slavery ended in 1834 feudalism continues unabated with the advent of the political party.

If we really desire change, and want to see this country develop, then we must change our behaviour. If we want to balance the budget then we must accept that tax reform is necessary, and should not mislead the people that the additional $2.9 Billion in taxes is any real burden, when $2.9 Billion of new taxes is coming from cigarette smoking. Are we trying to encourage cigarette smoking by criticizing that tax? If we really want change we have to understand that when a decision is made to change personnel in a political administration we must look at the benefit to be gained, or the loss from such a move, rather then focus on how large the cabinet is. Are we saying that we are okay with the high levels of crime and fuel bill? If we really desire change we cannot continue to say that public transportation is only for the less fortunate amongst us rather than see how we can make it acceptable to all, as it is ludicrous to continue current consumption levels of oil when the only gas we produce is from the mouths of some of our politicians and bodily functions. If we really desire change then we must accept that it is unacceptable to continue government support of our loss making public sector bodies that add little economic support, while we debate whether we can afford $2 Billion for health care and another $2 Billion for education.

My own view is that Bruce Golding is of the ilk of Erskine Sandiford, as he is proactive in the decisions he has made in support of making for a better Jamaica. No doubt the perception that he has ruffled the feathers of some of his supporters may have some merit. But isn’t the development of the country more important. We have to be very careful that we don’t throw the baby out with the bath water, as I really believe that this is the last stand before we plummet into a Haiti like situation.

As I said at the start if we want to go to heaven there is a precondition to that. Let’s make sure that we end up not going to heaven but still die.

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