Friday, May 16, 2014

The economic impact of fear

FEAR can be a very important learning tool if one understands and embraces it. A child for example learns through fear, and understanding how to minimise the risk associated with the fear. If, however, the child does not take risks because of fear then the child will not develop properly, and could end up being mediocre in life because of the fear of taking risks. This I think is one of the reasons children (or young animals) are curious because nature understand this need to take risk in order to learn, but it also gives us pain as a way to ensure that while we remain curious we are also fearful of the consequences of being careless. In fact it is usually the fear of parents that lead children to not want to take risks as parents tend to thwart their natural curiosity to experiment.

While riding earlier this week, I thought about this concept, as we were all sprinting at upwards of 30 mph. While recognising the fear of falling, or crashing into someone, at 30 mph on a bicycle, we also understand that not taking the risk means that you get left behind. So if you want to ensure that you are at the front of the pack, then you have to understand that you have taken all steps to minimise the risk of falling but not let the fear of falling stop you.

This to me seems to be one of the major philosophical challenges we have faced as a country that has set us back significantly. This is manifested in a fear of failure that has led many Jamaicans, and the Government, into inaction. Or at best case to do the same things a different way, while expecting the same result.

This is one of the reasons the Insolvency Act, which is soon to become law, is such an important piece of legislation, as it seeks to change our perspective on people who have tried and failed. Steve Jobs, for example, did not succeed the first time he was at Apple, was actually dismissed as a failure. If he lived in a country like Jamaica, however, more than likely he would not have been given a second chance because either the ridicule from society, or the regulations, would have prevented him from trying again.

It is this stigma that society places on failure that leads many persons to prefer the comfort of a job rather than the initially difficult, but long-term rewarding, life of an entrepreneur. That situation is changing now I think, as I see a lot more university students wanting to become entrepreneurs, than when I was going to school when the thing to do was to become a lawyer, doctor, etc. In other words your parents wanted you to just go to school and then apply for a job you would keep for the rest of your life. The result of course is that you never enjoy the rewards of being a successful entrepreneur, which usually was left to the persons who never did so well academically, who ended up employing the persons who excelled academically.

This same situation is also present in the government bureaucracy, where the fear of failure is so entrenched that we ended up creating systems that ensured that no one is seen as a failure by ensuring that everyone failed. In other words, because we are fearful that persons will be corrupt, the first thing we do is assume that everyone is corrupt and then put in a system to ensure gridlock (procurement and approval systems) and the result is nothing gets done. The positive side we see is that if nothing gets done then nobody can be blamed, and so everyone is satisfied that they have done nothing wrong because they do nothing.

I have seen for example numerous situations where following the procurement rules caused the cost incurred to be greater than the risk from having less onerous procurement rules. In one instance I saw a situation where the cost of the system to monitor an expenditure cost more than the expenditure. I also remember a case that was in Parliament where the Accountant General department has not paid a bill for two years because the procurement rule was not followed properly to secure the equipment, and the finance charges they had to pay two years later came to more than the initial bill. So they ended up having to pay more than twice the cost, in US$. Why? Simply because of the fear of failing, even when we have failed already.

And this fear is exacerbated, and many times distorted, by the media who just wants to hear that someone got something wrong and then they are all over them, and the readers and listeners lap it up as the latest scandal to be discussed. Never mind that for the first time in a very long time Jamaica has achieved a fiscal surplus. That is not newsworthy enough to carry.

What I am arguing though must not be confused with carelessness and lack of accountability. Of course if one breaches rules or is negligent then there must be accountability, which the lack of it is another problem. Holding someone accountable for something, or accepting accountability, is a big problem we face, but maybe that is again driven by the fear of failure. What we must do is find the right balance between risk and accountability if we are to maximise success.

This I think is one of the positive differences with the economic programme we are currently undertaking. The fact is that it is a departure from the normal way we have done things, as it seeks to change the behaviour of the economic players, by changing the way we do things. This I think is fundamentally driven by the legislative reforms being undertaken. While the programme realises the risks associated with tax and legislative reform to the fiscal revenues, it also balances that risk with the benefits to be achieved from the increased competitiveness that will result.

The point is that while we must all be fearful of failure, that fear must be measured by the need for success, and the realisation that giving in to that fear means gridlock, and ensures that nothing happens. Just ask all the successful entrepreneurs we would all like to become.

Friday, May 09, 2014

What will man leave for God?

Christianity teaches us that God made the earth, and all that is within it, in seven days, while the proponents of evolution promotes the idea that the world, and the animals (including man) evolved over billions of years. In either case it would seem that the world came about with man as a by product. The result in either case was a world where nature was seemingly in perfect harmony with itself, abundant food and water sources, and a natural habitat that corrected itself through the elements of nature.

Christianity also goes on to teach us that one day there will be the second coming of Christ, when God will come back to judge everyone and take back his creation.

On May 7th the New York Times reported on a recent climate study publication (National Climate Assessment), which showed that climate change is no longer something that will happen in the future but that it is here with us today. There has been a 2 degree Fahrenheit increase in average temperature over the past century, the glaciers have decreased by roughly 40 percent, and sea levels could rise by six feet in 2100 (consider this against the fact that sea levels have risen by 8 inches over the past century). The report states that the changing weather patterns we have been seeing in the US is attributable to the increasing global warming effect.

So for all of us who believe in the second coming of Christ, the question that we should be asking is what will man leave for God? In other words when God returns to earth to judge what we have done since creation, will God be satisfied that the condition he gave the earth to us in is the same, or similar to, the condition we will be handing it back in.

The fact is, as the report says, that since the industrialization period the concentration of carbon dioxide has increased by approximately 40 percent, and over the past 50 years the primary cause of global warming has been driven by human activities. Further, temperatures are expected to rise another 2 to 4 degrees F in most areas of the US over the next few decades, and around 6 degrees F by the end of the century.

One can only imagine what climatic conditions we will face if we continue on the same path, as the past decade has also been reported as one of the most active in earthquake activities. What is more is that this tells us how short sighted we are as humans, because the main motive behind the destruction of our climate (profit and improved living standard) is the same things that we are ensuring will be threatened for ourselves and our children, who we claim to love so much. So we are ensuring that when we are no longer here to protect our children that they will be at the mercy of vicious climatic conditions.

But this is just one of the ways in which the so called most intelligent animal (humans) have sought to bring about our own destruction. We kill each other through wars and murders in society, abuse our children, keep others in poverty for our own riches, create more destructive weapons every day, produce foods and other inventions that lead to our ill health and own devise, and the list goes on. And then we say that we are civilized. In fact, I think people acted in a more civilized manner to each other before many of the technological and luxury advances we have seen.

I was commenting to someone recently that it is no longer fun living in Jamaica, because we are so fearful of the crime and for what can happen to our children and loved ones. We have created an environment where people thrive on news from the media about the downfall of others, and celebrate the fact that our children are baring themselves naked and drinking alcohol at various events.

And still we say that we have advanced and call ourselves intelligent and civilized. We know for example that certain lifestyle habits are not good for us, but we still do it and say we are intelligent. Is it any wonder then that even though there have been many warnings about climate change effects from the use of fossil fuels and other carbon emissions that we ignore the warnings and continue to live as if actions have no consequences, negatively or positively. Or maybe because we are in an era where everything is fixed for cosmetic reasons we believe that when the climatic conditions get really bad we can solve it like we do with liposuction or a diet pill, when we want to lose weight for an event, not thinking about the long term health effects.

Climate change is a serious thing. This is not something that affects one part of the world and not the other, or one section of society only. It is the great equalizer and if we do not take care of how we treat the climate, or how we allow others to treat it, then we all suffer.

So the question is, what will man leave for God when he returns? Based on our behaviour the likely answer is that when God returns there will be nothing left as we will have destroyed everything. However, as human beings we do in fact have the intelligence (even though difficult to believe) to understand and act to ensure that when God returns we can give back the earth in the same or better condition. Which one will we choose?

A cyclist's perspective of Jamaica

ONE of the things I have learned from my teachers is that before you attempt to write (or say) something, in other words pass judgment, it is very important to observe and think about what you will say.

This not only requires that you carefully observe but that you be slow in giving an opinion, and even more careful when you say or write something, which in many respects means that you understand two very important subjects -- mathematics (which teaches one to be logical) and English (which teaches one to relate accurately and understand). The problem with much of what we hear and say today of course betrays our understanding of both, and many times leads to national and personal challenges that could have been avoided if we had a proper understanding of these subjects.

It is therefore no surprise that many of us who see the importance of this understanding can point to teachers who have influenced us in many positive ways. At this point I would like to wish all my past teachers happy belated Teachers' Day. I can clearly remember those teachers who influenced the way I think and my preoccupation with the advancement of Jamaica, starting from high school and cemented at university by lecturers such as Trevor Munroe. Michael Witter, and Don Robotham, who, although they never taught the core subjects of my degree (accounting), very importantly influenced my thought process with their provocative look at the subjects of politics, economics, and sociology.

While returning home from my usual Sunday morning bicycle ride last week, it occurred to me that one of the challenges many of us face is one of perspective. In other words, many times we are moving too fast to really observe, understand, and appreciate what is happening in life around us. This, I think, is one of the challenges we face at a national and personal level, in many instances. That is, we many times don't appreciate what is happening around us because we are moving so fast and this results in us not being able to fully understand and comment appropriately. On a personal level what this many times results in is us coming to the end of our lives and then discovering that we really never focused on the things that really matter.

This is similar to my own perspective when driving as opposed to riding. When driving you are moving at around 30 mph and when cycling from the ride I am moving at around 10 mph. I therefore usually notice a lot more about the environment when riding home, which I don't notice when driving at a faster speed and sitting behind four doors with the windows up and radio on.

So while riding back home there are a few things you notice that would not normally be seen while driving. First thing you notice is that the roads are not in the most desirable state, but you do notice that some work is being done to address some of the road infrastructure issues. Related to this, however, is that our roads need directional signs in order to control the driving, especially for the buses and taximen who are the worst offenders. You also notice that the general infrastructure (sidewalks, drainage, and even some of the buildings) need some work to be done. If we are going to move forward as a society, and move towards vision 2030, then infrastructure development and some systems to guide use of the roads are essential.

One of the challenges we face is lack of fiscal space to do so, but it is also important to understand that future fiscal revenues also depend on a proper infrastructure being in place for investments, and for living generally.

What you also notice is that there are many young men on the road, obviously needing something to occupy their time. It is easy to identify those persons who are busy making their way to some employment, but you can also clearly identify those persons who are just hanging out on the corner, of which most are young men who should be employed in some productive activity instead of just sitting on a wall. If as a country we do not address this problem, then the future will have challenges.

You also notice (and this is normally when going to the ride) that we have no respect for the noise abatement act, as up until 5:30am you can hear the music all over.

Another thing that jumps out at you is that the gullies and sidewalks are dirty. People obviously dispose of their waste anywhere they feel like. This is a health and environmental hazard, which does not make the headlines but is a very serious problem. This may be because we have gotten used to this situation, and I notice that one way of certainly being able to identify when you are getting into Kingston is when you start to feel the quality of the air changing for the worse, indisciplined driving, and the garbage on the roads.

These challenges in our environment are problems for how we socialise our children, and you can see the various stages of development as you ride past the children. The very young you see with their mothers mostly (very rarely do you see a young child with a father) has the face of innocence and curiosity, and then the older ones (between maybe six and 10 years) you see without any adults riding or just starting the practice of hanging out on the corner like the older ones. And then there are the teenagers who are obviously making the transition to the practice of the young men mentioned before.

What is clear is that our society needs to be properly organised and that there must be a deliberate effort to do so. Cycling at 10 mph brings home a reality of what our society and infrastructure is like, which you don't see driving at 30 mph. It means to me, also, that much of what we talk about daily is really not addressing the heart of the problem, as even while we discuss many of the other pressing issues at a high level there are some critical on-the-ground things that need to be addressed.

If we do not address these issues, then we could end up with a society that is disconnected regardless of any macroeconomic progress we make.