Friday, April 24, 2015

What does economic and social change look like?


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.


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


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.


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.