Safeguarding our growth agenda

The Government has placed growth at the front of its priorities. Since political independence, in 1962, we have only seen growth of any significance in the period 1962 to 1972, and then about three years in the 1980s. So the focus on growth is definitely what is needed if we are to truly see Jamaica develop relative to the rest of the world.

In order for growth to occur in any sustainable manner, however, there are some fundamental things that must first happen. The most important thing to consider is that “sustainable growth” can only occur in an environment that enables its occurrence. This is no different from the need to create an environment that encourages productivity in a single organisation, or even in a business sector.

So, as an example, if someone is learning how to swim they must have a body of water (such as a pool), proper swimwear and, very importantly, a teacher who is capable of teaching someone how to swim — and more importantly can themselves swim.

So growth can only happen in an environment that encourages capital investment, greater productivity, and where people feel incentivised to work. This is the challenge that we have and continue to have. I don’t think that most of our politicians see the long-term link between the need to improve productivity and work ethic, for example, and sustainable growth. For this reason our State has, over many years, encouraged welfare politics and income redistribution rather than productivity improvement and rewards based on productivity.

The result of this welfare politics is squatter settlements and falling labour productivity, because in order to “get ahead in life”, all you have to do is align yourself closely with a political party and ensure they get in power. This type of thinking has led us to develop labour laws that ensure that unproductive labour is rewarded, which results in the long term with many people being contracted without any permanent employment benefits. This in turn creates lower fiscal revenues for the Government and erodes workers benefits into the future.

When I started writing in newspapers in 2003, I thought to myself that surely Jamaica has the potential to be a high growth rate country and see significant development. This, I thought, was where we were destined to be because of our geographic location, language advantage, tourism competitiveness, music and sports competitiveness, etc.

One of my objectives was to see if I could assist to improve the conversation around development and by doing so help Jamaica to achieve economic success, within a 10- to 15-year time span.

One of my main motivations in 2003 was to see Jamaica become a place where my son would grow up and want to live in. At the time he was nine, and I thought that if as a country we did what was necessary, we could have seen Jamaica truly become the place of choice to live, raise families, and do business, as pronounced in Vision 2030. As a result, I also sat on one of the Vision 2030 sector committees.

This obviously didn’t work out as 16 years later we are still grappling with low growth, low productivity, and social issues. Although in the last two to three years we have made some progress in putting a framework in place to address our economic issues, our social and legislative challenges still remain an issue.

This came home to me even more when last weekend I attended my son’s graduation, where he did a bachelor’s degree in actuarial science, and he said to me that even though he would love to come back to Jamaica to live, he would not because it was too disorderly and had too much crime.

He also went on to say that, in his view, Jamaica would be the best place to live if we could control the crime and bring order to the society. I couldn’t argue with him when he said that, and I thought to myself that Jamaica has once again lost another mind that could help us to develop. And this scenario has played out many times over.

This conversation took place in Des Moines, Iowa, which is the same place the two US missionaries that were murdered in St Mary are from. Sitting down to dinner with two residents there, they brought up the matter and said that they were both very popular in Des Moines, and because of it Jamaica had developed a very bad reputation there and many missionaries who were thinking of coming decided not to.

Jamaica has always had the potential to develop into a First-World country, where our people would prosper and we would not be seen as persons of interest for security personnel in other countries. In other words, we could have easily avoided the label of being “extraordinarily violent”.

The problem we have is that we continue to cause our own demise by our failure to do what is necessary from a governance framework to provide an enabling environment for proper economic and social development, and safeguard the growth agenda we speak about so often but fail to realise.

What we must recognise, though, is that creating this environment is not going to come from the continuation of our welfare politics, or biasing our conversations depending on which political party forms Government. For example, I see on social media all the time where some people argue two different ways before and after the election, on the same point.

Safeguarding our growth agenda means that as a people we must change the conversation and we need to start looking at capital as positive for development, rather than with the suspicion we have always treated it and tax it before it starts working.

We have to create an environment of trust, which means that the security forces and government bureaucracy must respect the citizen and not make it hard for them to live and do business.

We have to bring order to the society, which means harsh penalties for those who dispose of waste illegally or who violate the Noise Abatement Act or who break the Road Code.

Until we bring this sort of order to our country, then someone else will lament the fact that their son or daughter chooses not to return to work and live.

A long-term solution to crime needed

According to the World Economic Forum’s 2015-16 Global Competitiveness Report, crime and theft are the second most problematic factors to doing business in Jamaica, accounting for 16 per cent of the challenges. This is only outdone by inefficient government bureaucracy at 16.4 per cent.

Recently we have seen an upsurge in horrific crimes, including multiple killings. These include the following murders: a three-year-old killed by her father, a policewoman shot at a bus stop, and two US missionaries killed by persons unknown. These incidents have renewed calls for severe punishment for the perpetrators. The case of the US missionaries has understandably caused international press coverage, which can result in a negative economic impact if not managed properly.

There have also been renewed calls for hanging by the Security Minister and others. All this comes at a time when we are fighting for the freer movement of Jamaicans within Caricom. The government has also placed responsibility for reducing the crime rate on the shoulders of Police Commissioner Carl Williams.

In my view, the fundamental issues that have created the crime monster will not be addressed by either the resumption of hanging or by saddling the Commissioner with the superhuman task of reducing the crime rate. Hanging can only be a deterrent if we are able to catch the criminals. Even then it is not a solution if a trial takes years to complete, and then through the lengthy appeal process hanging might be in breach of the Pratt and Morgan rules.

It is also impractical to place the responsibility for reducing crime at the feet of the police, as in most cases all they can do is react to the crime after it is committed. I say this because an assessment of the crime statistics reveals that many killings are domestic, with gang murders in second place. We have discussed many times that the real challenges with crime in general and murder in particular have less to do with policing and more to do with the environment.

In 2015, for example, I am told that the police solved 600 murders committed by more than 700 people, which is a significant number of murders to solve. This has been achieved despite being hampered by inadequate resources and operating in a challenging working environment, both in the office and on the streets.

How can the police prevent domestic crimes, if they are defined as mainly crimes of passion, and not premeditated – which means they occur in the heat of the moment? All the police can do is react.

How do the police eliminate gang murders when the society and communities are actually creating more and more people who are likely to fall into crime every day? As an example, one of the challenges with crime in St James is the number of squatter settlements that have mushroomed. So because the communities are not properly organised, they are very difficult to police, and the conditions the people live in do not encourage civil behaviour.

Although short-term fixes must be found to relieve the increasing crime situation, the fact is that a sustained reduction in crime needs a much more detailed assessment. In my view, the first thing we must do is understand what are the causes of crime, and many of these causal factors occur years before the crime actually occurs. For example, people who commit murder today may have been victims of child abuse who saw one or both parents murdered years earlier, or who grew up without any parental control over what movies or music they were exposed to.

The fact is that our crime situation today has resulted from policy missteps over the years. In short, we have continued to create an environment which encourages criminal activity. This is no different from children growing up in a household where there are no rules, and they can do and get away with anything they want. So if children have grown up in an unstructured environment, don’t expect that when they get to 18 they will adhere to the rules of society or their workplace.

Similarly, Jamaica continues to facilitate an environment of indiscipline on the roads (taxis and buses drive how they want); night noise from dances throughout the night (in contravention of the Noise Abatement Act); blaring music that promotes violence and abuse of women; illegal squatting and violation of the zoning laws; illegal vending; violation of environmental standards; and abuse of children and the elderly.

This undisciplined environment is supported by a very slow justice system and a grossly under-resourced police force that is fighting corruption within its own ranks. Add to that a less-than-adequate education system and a high incidence of children not attending school.

So in fact, crime is supported by the ways we have chosen to organise ourselves. We have had many spontaneous reactions to crime over the years – special police task forces such as ACID and Kingfish; curfews; Suppression of Crime Act; Gun Court; and in 2010 – the Tivoli incursion. All this has not resulted in reduced levels of crime, but rather an increasing distrust between the authorities and the Jamaican people, as evidenced by the LAPOP report over the years.

If we are serious about making Jamaica a safe place, then we must realise that crime can only be solved by creating a society of order and respect for the average citizen. We must stop fertilising the crime tree.

Until we choose to do so, we will continue to react to an ever-increasing problem (at best we might have a short-term reprieve). The security forces will find it more and more difficult to cope, and we as Jamaicans will continue to suffer.

We must create opportunities for all Jamaicans and ensure that our children are protected and not subject to conditions that breed criminal behaviour. We must use technology such as CCTV and properly resource the police force. We must ensure that legislation such as the new Road Traffic Act is enacted in short order, just as we do with tax legislation.

Only then can we say that Jamaica will be the choice of place to live, raise families, work, and do business.

That Caricom issue: Jamaica -Trinidad relationship

The recent impasse between Jamaica and Trinidad, arising out of the latest round of Jamaicans being not only denied entry to Trinidad but being detained in less than acceptable circumstances, has once again raised the question of the purpose of Caricom, and more specifically the CSME.

This is only the last of many incidents that have grabbed the attention of the region on this matter. The tension began in 1961, when Jamaica held a referendum which saw us withdrawing from the West Indies Federation. At that time the then Trinidad Prime Minster Dr Eric Williams appropriately said that “one from 10 leaves zero”, referring to the fact that without Jamaica the Federation would be virtually non-existent.

Since then we have been unable to see the free movement of goods and people within the region, and examples of these include:

(1) the challenges involved with exporting Jamaican products to Trinidad and Belize, especially patties;

(2) previous instances of Jamaicans being refused entry into Trinidad (I remember last year the Institute of Chartered Accountants of Jamaica sought reassurance from Trinidad that our delegates attending the Caribbean Conference would not have any difficulty with immigration because of a prior incident); and

(3) the landmark ruling coming out of the Shanique Myrie case.

In the case of the movement of goods in particular, my own view is that Caricom and the Council of Trade and Economic Development have proven to be very ineffective in addressing this issue. Countries have made commitments at the highest level that the non-tariff restrictions would be addressed, but years later the problems remain – in particular, the case of the restriction by Belize.

This recent impasse between Jamaica and Trinidad is the latest in a long line of events demonstrating the ineffectiveness of Caricom, and more specifically the failure of our governments to rectify this situation. It reflects a serious lack of leadership in the region. I am left to wonder why we are unable to resolve a matter as important as this, yet we find time to proffer solutions to problems affecting West Indies cricket; but such is the irony of our regional politics.

Once again, though, we need to question the relevance of Caricom. The recurrence of these situations creates divisiveness and drains our energy, because the failure of governments to find a sustainable solution always carries us back to the same unfortunate position.

Nonetheless, I am heartened by the stance taken by Prime Minister Andrew Holness and Foreign Minister Kamina Johnson Smith, and former Minister Anthony Hylton, as they have all stated a commitment to take firm action on this. Hylton at the time had in fact overseen rulings against Trinidadian petroleum products for rules of origin breaches under the Treaty of Chaguaramas.

Outside of these three, however, I think the other responsible people have proven to be ineffective and seem to always be seeking quiet diplomacy, while Jamaica and other countries of the region suffer. In fact, one could say that it is the failure of strong leadership on this matter that has seen the persistent failures of Caricom and our inability to move towards a true CSME.

On this recent impasse, however, I appeal to Jamaicans not to get emotional and respond like the former Trinidad National Security Minister, and also the “Donald Trump” surrogate Trinidadian talk show host. As a people we must remain above those types of responses, and understand that there are many Trinidadians who are decent people.

So we should continue to conduct business with Trinidad wherever possible, because it makes us better off financially. That is the only reason for market trade, so let us avoid emotional reactions.

I, for example, will not stop buying Trinidadian goods just because of this issue, but I have always looked for Jamaican goods over any other import, as long as they are equal in value (quality to price). This is because as a Jamaican my preference should always be for Jamaican goods, but certainly not at all costs to me personally. I therefore encourage Jamaicans to always purchase Jamaican goods over imports where they are available and of similar value.

UNFAIR COMPETITON

However, while we consider the comparison of products and services, we must also be mindful of the policy restrictions that create unfair competition.

Trinidad (through its finance minister) has admitted to providing a subsidy on fuel. Based on our own research (at the PSOJ) this subsidy is more than just on petrol, and extends to manufacturers.

I won’t go into detail here, but suffice it to say that this is in contravention of several parts of the treaty. So while we have enforced a policy (CET under the Treaty) to promote the CSME, we must also recognise where policies are failing us because of contraventions, and must act decisively to address that.

This is where the Jamaican government has failed us, because much of this has been suspected for a while, and brought to their attention, and they have failed to protect the Jamaican people. In fact the PSOJ estimates that over the 10 years to 2014, we have paid out approximately US$700 million we wouldn’t have had to pay if there was no CET on fuel because of the premium charged by Trinidad on account of the CET.

This would be enough to fund the sugar industry every year, and hence create jobs in Jamaica as opposed to supporting the subsidy in Trinidad.

So my appeal to Jamaicans is this: Don’t let one or two wayward voices in Trinidad cause us to view everyone in Trinidad with disfavour. And don’t let the ineffectiveness of the current Trinidad Government to address this issue, or the past ineffectiveness of the Jamaican government, play a role in how we feel. What we must do is demand action by the governments to either solve this Caricom façade, and make it a true CSME, or stop fooling ourselves about it. What we must do is act and stop “posing”.

Caricom has a role to play in our regional development. But it is our failure to treat Caricom properly that has resulted in the many breaches – and not only the failure of Caricom, but the poor economic performance of the region.

What should be the real purpose of growth and development?

Last year I had set a goal to ride 7,500 miles on the bicycle, which I achieved. Discussing it with another cyclist, I was asked if that was my ultimate objective and if I would be increasing it this year (2016), to which my response was no because the real purpose of the goal was not to just ride 7500 miles for the year, but rather that was an initiative to achieve the greater goal, which was good health and to perform better on the bicycle.

Also, just recently, I posted that the philosophy that was adopted by the previous NSWMA board was good customer service and good corporate governance. This in itself is not the ultimate objective of the NSWMA, but what it does is guide the development of the initiatives needed to achieve the ultimate goal.

These two examples show that in order to achieve any ultimate objective, we must have carefully designed initiatives and a guiding philosophy.

So even though the initiatives and philosophy have been identified and are both critical to attaining the objective, the fact is that if you were just told the initiatives and philosophy guiding the initiatives, they would both be meaningless unless we are aware of what the ultimate objective is.

However, if we were to know what the ultimate objective is, then we could easily identify a philosophical framework and the supporting initiatives without being told.

So if I told you the ultimate objective of the NSWMA (as defined by section 4 of the NSWMA Act) is responsibility for the proper management and disposal of waste, then you could say to me that in order to achieve that I would need to have a guiding philosophy of customer service and governance. At that point I could then say, well, if I want to achieve that then I must look at the major risks to achieving that and then create my initiatives by order of priority.

This is the approach that the previous NSWMA board took, as the first thing the board did was to go to the NSWMA Act and ask what is our ultimate responsibility. That was able to guide our philosophy and coming out of that analysis we were able to identify Riverton and garbage collection as main risk areas and tackle those early.

For the past 43 years, Jamaica has been trying to achieve growth and development. We have heard many people talk about the need to grow the economy, and identify specific sectors — need for macroeconomic stability; need to reduce the debt to GDP ratio and reduce the fiscal deficit; and how critical it is to pass the IMF tests inter alia.

Vision 2030

It wasn’t, however, until Vision 2030 was developed and launched in December 2013, that we sort of created a guiding philosophy for our development. It was then that we finally decided that what we wanted for our development was to become “the place of choice to live, work, raise families, and do business”.

Until then Jamaica had no guiding philosophy for our development. Sure we knew that we wanted economic growth. We knew that we wanted to develop the country’s infrastructure. We knew that we wanted to reduce crime and indiscipline. We knew that we wanted to eradicate poverty. But to what end? And the fact is that if you don’t know where you are going, then you can take any road and you will get there.

But even though this philosophy (which I think is an excellent one) was developed, the truth is that it really has not been taken seriously by successive administrations, and seems to have remained an academic task with no desire for implementation. So there are a few persons monitoring Vision 2030, but the needed initiatives have not been tied in to the action by the country’s “board of directors”, which is the Cabinet.

So imagine if the NSWMA management identified a philosophy for the organisation, but it was not accepted by the board. Could it be achieved?

Last Tuesday, I accepted an invitation to interview some young people from a low-income community, in an attempt to identify what their skill sets and needs are. I thought it was important, even though I had a really hectic day, because I believe our young people need serious nurturing and guidance. I was happy to see that several professionals were there, and it was more encouraging because it took place at 7:00 pm.

Disheartening

But while speaking to some of these young people, just out of school, I was very disheartened. These youngsters were very ambitious and creative, but had a poor family background, had been abused, had produced children early, or had to drop out of school because they had no financial support.

One young lady of 18 was trying to make life better for herself, and wanted to go back to school, but had to drop out at 13 when her mother died and her grandmother could not afford to send her and two younger siblings to school. So she had to start hustling to help them. Immediately I thought to myself, what type of future does she have? Fortunately, she had no children and I pleaded with her not to do so until she was financially independent.

There were many stories similar to this, and it was obvious that they were very willing to improve themselves and at a time when they should have been enjoying their childhood but could not do so. I will definitely participate again.

This led me to think that even though we are talking about passing IMF tests, and nice terms like macroeconomic stability, the fact is that there is a significant part of our population that is just concerned about what they will eat tomorrow. Hence the disengagement we saw in the election turnout.

The fact is that our governance and philosophy is totally disconnected from what the ultimate objective of development should be – to improve the general standard of living for Jamaicans and ensure that all Jamaicans have an equal opportunity at success.

That is what governance should be about. Instead we focus on initiatives, and because we have not been able to define anything but initiatives we have not been able to see any meaningful development.

In other words, our leaders need to go back to basics and understand that the real purpose of growth and development should be about enhancing the lives and opportunities for the people. This is why the US has been so successful as a country, because their ultimate objective is improving the lives of US citizens, guided by the philosophy of government by the people and for the people.

Why should we buy Jamaican?

As we pursue our eternal search for economic development, one focus has been on the need for us to purchase local goods and services in preference to imports. The reasoning behind this seems logical, as it should mean that the balance of payments should improve, and this should mean a stable exchange rate and employment for more Jamaicans.

As a result, there have been many calls for us to ‘Buy Jamaican’. Former senator Norman Grant has been at the helm of this initiative, which, in my view, has reaped much success. Even with this successful campaign, however, we have continued to see currency depreciation, high inflation and interest rates, and increased unemployment over the period. So the question is, why wouldn’t things improve if we had such a successful ‘Buy Jamaican’ campaign?

There are a few reasons for this, and it underlines the fact that simply saying we should ‘Buy Jamaican’ will not improve our economic fortunes.

So while the campaign was very good and necessary, the truth is that we never really supported it with policies that would sustain a move towards consuming more Jamaican-made products and services. In addition to lack of policy stimulus, many local producers have not improved the service and product quality to properly compete with imported products.

The first thing to note is that it is a futile exercise to be pushing a ‘Buy Jamaican’ campaign when we are unable to significantly increase the production of Jamaican goods and services. So what we have failed to do as a country is ensure that appropriate policies address this failing. To do so all we had to do was ask the question – what is it that prevents capital from making long-term investments in locally produced goods and services? In other words, does capital feel comfortable investing for the very long term in sustainable production, and – importantly – locating their facilities in Jamaica?

The answer to this is that government policy has never effectively addressed the issue of being more attractive to capital than our competitors. Sure we have done it by creating special incentives for industries such as tourism, bauxite, free zones, etc. But the fact is that government’s attitude to capital generally has been very wanting.

As an example, tax policy in Jamaica has always pinpointed increasing fiscal revenue as its primary purpose. Never mind that it ends up killing incentives for capital and businesses generally. In contrast, countries like Panama have a direct policy of focusing on attracting capital, and as a result they have consistently grown at 6.0 per cent to 8.0 per cent per annum.

Government policy in Jamaica has always created a hostile environment to capital, and then created special carve-outs for foreign direct investments. Small wonder then that local investors are reluctant to risk their savings and pensions in business ideas.

The fact is that if government policy was focused on addressing the four most problematic factors in the 2016 Doing Business Report: inefficient government bureaucracy, crime and theft, tax rates, and corruption — then not only would we solve 54 per cent of our business challenges, but we would also see increased capital inflows and employment. Instead we have struggled for years to implement a computerised tracking system for development approvals, and then we wonder why growth remains anaemic.

Secondly, many of the Jamaican products and services produced are not able to compete in terms of quality and price.

Price in many instances is again affected by government policy, which seeks to extract as much revenue as possible without much concern for the survival of businesses and their ability to compete. But there are also quality issues with some of the goods and services produced. As an example, last year I took my daughter to the Easter Funfest at Hope Gardens, and it was a great event for children. I got there very early and she was almost alone on the rides so it was good.

This year I went early with her, only to be greeted by blaring music, with speaker boxes lining the route to the rides. The music was so loud that my daughter started crying and wanted to leave, and it was equally unbearable for me and some of the staff. Later I got a video of them having a stage show there with children dancing on the stage to a large audience of cheering adults.

A significant deterioration over last year.

This is a similar story for many Jamaican products and services. They start out well and end up being uncompetitive. This is okay in a competitive market, but the problem is that this mediocrity is supported somewhat by government policy, which in many respects creates significant barriers to entry. The result is that the invisible hand of a competitive market does not get to work properly. For example, something as simple as not enforcing zoning laws allows some businesses protection by allowing them an unfair advantage from a cost point of view. The result is mediocrity.

Other inhibitors are lack of information and inability to move goods effectively. Just look at the deplorable state of most farm roads.

The point is that we should not ‘Buy Jamaican’ just because it is a Jamaican product or service. But rather we should ‘Buy Jamaican’ because it is just as good or better than the imported products.

It is only when we can produce competitively that we will see improved growth and employment. This is because buying an inferior product actually does have economic costs: (i) higher cost of living, (ii) lower productivity and hence lower wages, and (iii) decreased potential for foreign exchange earnings.

At best then, producing inferior products and services will produce a more closed economy which becomes more uncompetitive and produces lower income levels, as happens in Cuba.

If we are to grow the economy at acceptable levels, then we must increase the number of Jamaican products and services. This, however, must be done competitively if we are to benefit.

Jamaica’s road to prosperity — Part 2

In order to secure power (spillover from the colonial system), both political parties when they formed government set about creating institutional loyalties, using the state bodies and security forces to cement their hold on power and share spoils amongst supporters. This resulted in an inefficient bureaucracy (based on political loyalty, rather than ability, for board appointments, as an example) and dysfunctional state mechanisms that excluded those supporting the opposition, instead of including all citizens.

I could go on and develop this, but suffice it to say that Jamaica’s political arrangements have resulted in a state of affairs where most of the citizens have either been excluded from participating in any “prosperity” because (1) people were given special economic privileges based on party affiliation and not market opportunity; (2) the masses suffered from declining values and poor educational and health access because of inefficiency and poor governance; and (3) our political system created garrisons that focused on furthering political division.

Therefore if we are to move towards “prosperity” for all, we must find a way of firstly continuing the current fiscal and legislative reform programme, in order to create the foundation for development.

In other words, no development can happen with a debt-burdened society and poor legislative infrastructure. Secondly, we must create an environment that encourages capital to invest and by doing so provide employment and entrepreneurial activities. Thirdly, we must then create a policy and political environment which includes everyone (irrespective of political preferences) and which builds on the natural talent of all and not just some.

If we can achieve these three goals, then we can create prosperity for all, as we will then be able to create value at the individual level.

The problem with where we currently are in the ERP is that it has never seriously considered the third objective up to this time, and hence people were not feeling the improvements on the ground.

Of course, there are the usual policy actions that need to be taken, and these include a modern legislative framework, and other policies to enable a competitive and business-friendly environment. I have been emphasising that all we need to do is create policies that speak to the top four problematic factors in the World Bank’s Doing Business Report, which are Inefficient Government Bureaucracy, Tax Rates (uncompetitive tax environment), Crime and Theft (lack of law and order), and Corruption. These four account for 54 per cent of the challenges perceived to doing business in Jamaica. So if we were to just focus on these four areas alone, then we would have gone a far way in enhancing the business climate.

Fixing these alone, however, will only solve the layer of creating an enabling business environment and generating country-level growth. But to get to the desired levels of “prosperity” for all, what is needed is to create an environment of inclusion for all. Of course, this means breaking down the institutional barriers to inclusion. Very importantly, the existing political and economic structures will have to give up some power over their respective territories.

This, of course, will require strong, sincere, and forward-looking leadership.

To the credit of the politicians, and also business people, they have been giving up some of that power and this is why Jamaica is making some progress under the ERP.

This is very important to understand, because no reform programme can work sustainably if institutional arrangements continue to strangle any progress made, which is why we have had to go through so many IMF agreements and reform programmes without any success. The fact is that as soon as we start to see some progress and the squeeze starts to threaten the political process, then the institutions usually reverse any improvements and maintain the stranglehold, through debt, as an example.

Since I wrote the book in 2009, however, I think much of that institutional stranglehold has been released and there has been more citizenry inclusion in the political process. So things like the Charter of Rights, INDECOM, Fiscal Rule legislation, Political Ombudsman, Public Defender, etc. have all been incremental steps towards greater citizenry inclusion.

I am also reminded that the current Electoral Commission started out as the Electoral Advisory Board and is a shining example today of citizenry inclusion.

This progress has come as a result of our much regarded press freedom, which has encouraged more radio and television stations and with it a voice given to Jamaicans. It has also resulted in a very active civil society and private sector, all of which have forced the Parliament to bring about incremental changes that have resulted in greater participation.

The problem we have, though, is that while we have progressed significantly in terms of social inclusion, we have made little progress in terms of economic inclusion. This is evidenced by the fact that a significant number of Jamaicans still remain below the poverty line and more importantly, we have not seen any relative improvements in our middle-class structure when compared to other countries. Everyone knows that in order for countries to do well, and for shared prosperity, there must be a growing middle class. Because what it means is that there are greater opportunities for all.

The challenge for the new government in moving towards prosperity, therefore, will be how we achieve economic inclusion. One thing is certain: it can only be done by breaking down institutional barriers. So, for example, we must create educational and health opportunities but in a fiscally responsible way, as we cannot achieve individual prosperity without country growth, and that can only be done with a stable fiscal, legislative, and macroeconomic environment).

We must also find a way of breaking down the invisible, but divisive barriers of garrisons. We must find a way to create a safe environment for all, where the security forces are seen as protectors of the people.

We must find a way to make government service delivery efficient and focused on providing quality service.

We must find a way of creating a low tax environment where people see maximum returns from their efforts.

If these can be done, then we will truly be on the path to “prosperity” for all.

Jamaica's road to prosperity - part 1

The JLP’s slogan, “Poverty to Prosperity”, was very catchy and seemed to have been embraced by enough people for them to win the elections. Now that the election is over, we certainly as a country must turn our attention to moving towards prosperity.

The first thing we must clearly understand is what true prosperity is, as many people, even in their personal lives, do not truly understand the concept of prosperity and how to achieve it. And even at a national level you could say that we have never understood what prosperity is, as we have never been able to achieve it since independence in 1962.

Many people get confused and think that prosperity is borrowing money to buy the latest luxury car, when you don’t own a house or can’t afford to do things you want to do because you are hamstrung by a loan. Or even worse, cannot afford to miss one month’s salary or else all financial hell breaks loose.

Similarly Jamaica gives the impression of prosperity to many who visit and see the cars etc, and can’t believe that this is a country that is burdened by debt that has reached as high as 150 per cent of GDP in recent years and 212 per cent in 1984.

So maybe the first thing that we need to do is understand what prosperity means. Because prosperity is not driving the latest model car, while not being able to feed yourself properly. And it is not borrowing money to pay people more, or provide welfare, as Jamaica has done in the past.

Also the socialist experiments, which came to an end with Russia and China effectively accepting market economies, showed us that redistribution of income from one set of people to the next does not mean long-term prosperity if there is no increase in productivity. Our own social experiment in the 1970s demonstrated to us that a country cannot be prosperous without capital, when for example there was migration of capital from Jamaica.

The fact is that prosperity for a country only comes about when there is sustained economic and social development. And this can only happen when real GDP grows consistently at above average levels, and when there is social inclusion. And at the individual level, prosperity can only come when you are yourself more productive and can increase your earnings based on that productivity.

So a country’s prosperity comes when greater value is created either through increasing the capital investments in a country, or by improving the return on the current investments. In other words, producing more value through goods or services.

At the same time a country can be prosperous, but a large majority of the citizens are not. In other words, prosperity for a country does not automatically translate into prosperity for the population. If we look at countries such as those in the Middle East, for example, where the countries earn a lot of money from oil, there is still only a small set of persons who really experience prosperity. So the challenge that Jamaica’s government will have, to realise prosperity, is not only to grow the economy, but also to find a way to push that prosperity down to all Jamaicans.

And as indicated above, the only way for this to happen sustainably is to find a way for these people to improve their productivity and value creation. It certainly cannot be done by moving money from one place to another, by borrowing, by increasing taxes, or by ignoring capital spending in favour of recurrent expenditure. All these things we have consistently tried in the past, but they have not worked.

The recent economic reform programme (ERP) has also generated much debate, with some saying that it has not improved the lives of most citizens, and in fact has caused more pain. Although this is a very true statement, the ERP should not be blamed for this, as it has been constantly said, and is true, that the ERP is necessary but far from sufficient to bring about prosperity. What it does, however, is lay the foundation for prosperity. So, for example, you cannot eat dirt, but dirt is necessary for a tree to grow and bear fruit. If you get rid of the dirt then there will be no fruit, and similarly if you do not do the necessary fiscal and legislative adjustments there can be no sustained growth and prosperity.

The challenge is this: How do you first of all create sustained economic and social development, and then translate that country-level development into as much widespread individual development as possible? Because irrespective of what you do, there are going to be some people who will not benefit. The role of governance, however, should not be to see that everyone benefits, even if they don’t deserve to, but rather to create an environment where everyone has the opportunity to be the best they can be. This is true whether you run an organisation or a country.

This comes down of course to the problem of politics. In 2009, I wrote the book Charting Jamaica’s Economic and Social Development: a much needed paradigm shift. The book looked at our economic development since 1962, as I sought to answer why Jamaica has not done better economically and socially, and what needed to be done to get us to the elusive “prosperity” goal.

I concluded (which was not the intention) that the problem with our economics and society is our politics. Our political system, and the way we practise it, pulls the life out of our economy and society and does nothing more than create a welfare economy where the ruling party controls the resources to the exclusion of half of the country at any one time (remember the statement “[Jamaica’s] politics is about who gets what…). So at best we have half of our resources pulling in one direction and half in the other direction.

I recently began reading another book, which supports the conclusion I arrived at in my own book. The book is called Why Nations Fail and is a book I recommend to all politicians, and those interested in understanding the difference between rich and poor nations. In fact I was in Guyana recently and mentioned the book to their Minister of Energy (who was on a panel discussion) and he indicated that he was currently reading the same book.

What the book says is basically that our political systems, and how we practise our politics, is ultimately what determines why one country is rich and another is poor, which supports my own conclusion about Jamaica’s development since 1962.

The fact is that politics determines inclusion or exclusion (as said in Why Nations Fail), and pursuing a path of inclusion or exclusion determines whether or not we achieve long-term prosperity. Since 1962 (and before, but my concern is with our own governance) we have pursued a politics of exclusion by virtue of our political arrangements.

This politics of exclusion got even more aggressive in the 1970s, having its roots in the 1960s, when Jamaica and Jamaicans started to be divided along political lines, culminating in the democratic socialist ideals of the PNP in the 1970s, versus the market doctrine of the JLP.

We are Jamaica's problem

I am sitting down to write this article on election day (February 25), after watching the lead-up to the election and the commentary from not only politicians but also us the citizens of Jamaica.

In considering this, I am even firmer in the belief that Jamaica’s challenges have more to do with the way we have ordered our society and the way we interact with each other. After all, economics teaches us that the way economies are organised and developed has more to do with social interactions than anything else. Which is why economics is a social and not natural science.

While we spend much time speaking about the macroeconomy, the fact is that it is an outcome of the microeconomy, which is nothing more than the behaviour of individual households. And that behaviour is determined by the social interaction and behaviour of individuals within the household.

So my preferred taste for imported foods over local foods, if I am joined by enough Jamaicans, will determine what the demand for foreign currency is and ultimately the balance of payments. Similarly, if enough individuals believe that school is a waste of time and it is better to pursue an athletic or music career, or just “beg” money, then we would end up with low labour productivity.

In the context of elections, many people have made some very strong opinions about policies being proposed by both major political parties. but when when you ask them if they will vote they tell you they are not enumerated. At that point I always tune them out because I realise that they are irrelevant and can contribute nothing meaningful beyond words.

This is no different from the parent who tells their child that it is important to eat properly, but then they themselves eat the same things they tell their child not to eat. Or the person who wants to own the most expensive car, without first trying to own a home, and does so with bank loans they can’t afford.

So we can see that the accumulated behaviour of everyone determines the economic outcome for the country.

So when people tell me they feel hopeless about making changes in the country as they don’t have influence, I tell them that everyone has the platform to make their voices heard. And many times these are the same people who will say that they can’t bother to go out and vote, or worse they can’t even bother to get enumerated. I feel very strongly about this, as it is a fundamental right that we all have and even if we are the only vote against everyone else in the constituency we live, it is important for us to exercise the right that many of our forefathers gave their lives for. Ensuring that we do this also sends a very good signal to our children, not making it into a hopeless cause like the bad examples some show on health and social interaction.

As of today though, our failure to have exercised that right (because many say of frustration) on Election Day will have determined our own future whether you voted or not. Because any policy implemented by any government will affect you whether you voted or not. The fact that you did not vote means you don’t have the moral authority to criticise. Just like they say, “God helps those who helps themselves.”

If we accept that the success of economies are determined by the sum of individual behaviours, then it seems to me that countries can only successfully develop if societies are properly ordered and policies are geared towards influencing behavioural outcomes. And if that is the case, shouldn’t we as a people demand that political parties (and governments) implement policies that would lead to behavioural attitudes that will result in economic success. In other words impacting social development is critical for impacting economic development.

So as I always say, despite the economic failures of the Manley administration in the 1970s, his social policies were critical in ensuring greater opportunity for the average Jamaican and transforming the advantage from the ruling colonial class to average Jamaicans. The problem is that the policies were primarily focused on upstaging the power balance rather than integrating everyone into it.

This change in approach to policies that influence behaviour can only come, however, when we demand it as a people. And I don’t think that enough of us have paid any interest to long-term acceptable social behaviour to make the politicians pay enough attention to it. The truth is that without this the country will continue to perform way below our potential.

Societies and economies cannot, for example, develop without order. What most of us show interest in, however, is just getting rid of the high murder rate, without making the link between road indiscipline, night noise, and the way we treat our environment.

This election was no different, in that we really did not address the important issues. What we were talking about mostly is what one party would do for us as opposed to the other and vice versa. And the conflict in many respects was a retrograde step, as we have made too much progress to go down that road again.

One major problem is that many young people do not understand the social and violent turmoil coming out of the 70s leading up to the 1980 election and so are prone to repeat the mistakes again. This is why it is important for us to teach the history of Jamaica (no matter how short is is) in our schools instead of focusing on the history of other countries.

So the next time we think of criticising someone else (politicians, civil society groups, or private sector) for Jamaica’s problems, take a look in the mirror first and understand that the outcome of policies and how our governors behave have more to do with how we behave at an individual level. In other words, we can either be Jamaica’s problem or success.

One from ten leaves nought

In 1961, when Jamaica voted by referendum to withdraw from the West Indies Federation, Dr Eric Williams, then Premier of Trinidad and Tobago, said “one from ten leaves nought”.

This statement can be interpreted to mean that there are always key ingredients in an object or event that make it unworkable, or achieve suboptimal performance. So for example, if a car does not have fuel it will not drive, while on the other hand a car with a flat tyre may still be able to move but at a significantly slower pace.

So too if we look at our economy, there are some who from the start have lamented the hardships that have come as a result of the fiscal programme, and at the same time talk about development. The fact, however, is that development could not have happened until we were able to fix our fiscal and debt situation. As a result the necessary adjustments, which created the downturn, were an essential part of any development that was to take place.

I think that many have accepted that reality, with the exception of a few diehards who still believe that it is always going to be possible to have economic and social prosperity without sacrifice. And it is not surprising, as even at the individual level there are many who believe that sacrifice is not necessary for success, and so they will borrow to buy the most expensive cars when they are young, only to face the reality at retirement.

Now that we are at a point where the fiscal and legislative reforms have borne fruit (as we see from the confidence sentiments, low inflation and interest rates, improved capital market, relative exchange rate stability, etc), it is now necessary for us to realise what the next ingredient is to move to the next level of economic and social development.
To illustrate, growing an economy or a company is similar to riding a century (100 miles). The first 50 miles may be the easiest, but even if you can’t easily get to the first 50 miles, you can still be in condition to go the full century. As you progress, however, every additional mile is going to require more fluids, food, and physical and mental toughness.

So it is with our economic and social development. Getting to a point of fiscal and macroeconomic stability is an essential base, but to move from this base to the next 50 miles of real economic and social development is going to require more, and different strategies, than what we used to complete the first half of the journey.

This, of course, is one of the challenges we have had with implementing Vision 2030. The fact is that we have sought to make it happen without any real attempt to change the bureaucratic and social environment needed for us to realise that vision. The result is that we are pressing the gas pedal with the emergency brake still engaged. The car may move slightly with the emergency brake engaged, but the performance will be way below what is required to get anywhere soon.

New thinking needed

It is important for us to understand this as we move from fiscal and macroeconomic reform to sustained economic and social development. In short, for this to happen it will require a different and bold way of thinking, as the strategies that got us to this point cannot be the same ones to get us through the next 50 miles of the race.

For this reason I have always maintained that any strategy that focuses primarily on fiscal revenues will do so to the detriment of economic and social progress. This is because the nature of a focus on fiscal revenues is in contrast to incentivising productivity and investment. Therefore, it is important for us to find the optimal balance, where fiscal revenues are maximised and productivity and investments are optimal.

This is the mistake that we have always made with our fiscal accounts, and as a result have always put more and more taxes in place only to watch economic performance stagnate over the years.

Today, my view is that the economic reform programme of the past three years has created a very attractive base for us to now move to the next level of real economic and social development, like no other time that I can remember. Whereas in the ‘90s we were attractive for debt, today we are seen as the best place in the Caribbean to do business (Forbes andDoing Business Report) — a significant contrast.

The only way to move to the next level is to now get the ingredients necessary for it all to come together. It is going to require a new and bold way of thinking. Not the old linear way of saying that if we increase fees and taxes, then more will come to the government coffers. Or that every business person is trying to run a scam.

It is going to require even more public-private partnerships (which has been one of the reasons over the past three years for the progress we have made). It is going to require bold moves such as charting a way for more competitive tax rates by reducing rates, and even setting out a programme to gradually move from direct to indirect taxes. It is going to require an assault on indiscipline, such as road indiscipline, and clamping down on night noises. It is going to require investing significant sums in the security forces, not just for equipment but for training, and demanding even more accountability. It is going to require that we take decisions — such as was taken with the oil hedge — and realise that we won’t win every time, but that we take decisions based on risks to the stability of the country. It is going to require political maturity to rally around a common cause, and for us as individuals to be tolerant of each other’s views and to vote based on issues and to move away from welfare politics.

Unless we can make this paradigm shift in our thinking, then we will always be reminded that “one from ten leaves nought”.

2016 must be a year for growth

As was expected, 2015 was a turning point for the economy and the fiscal accounts.

In 2015 the Jamaican economy started to see the benefits of the economic reform programme (ERP) and ended the year in a very strong position, with third-quarter growth of 1.5 per cent, the fastest-growing stock market in the world, multi-year lows in both interest and inflation rates, and improved business and consumer confidence.

All of this resulted from the perseverance of policies to maintain fiscal discipline and create the legislative framework that would bring greater competitiveness to the market. As a result Jamaica saw our debt to GDP ratio fall to 126 per cent (from 150 per cent in 2012), improving fiscal balances, and the first balance of payments surplus in 10 years, which by itself is a game changer and a significant achievement.

This performance was strengthened by the fortune of lower oil prices, the PetroCaribe debt buyback, and — up until recently — near zero US interest rates.

Without these occurrences, we would still have seen improvement in the economy — but at a much slower pace.

Also, from a regional perspective, Jamaica is poised to regain its place as the “Powerhouse of the Caribbean”, with the Trinidad and Barbados economies now in free fall, as low oil prices and policies against offshore financial havens take a toll on both economies.

Trinidad in particular is in for a rough ride, as oil prices are projected to remain low until maybe 2020, and by that time it could be further impacted by new sources of energy.

Micro level challenges

With all these macro achievements, however, Jamaica’s economy is still in a very vulnerable state, as there are still challenges at the micro level to address.

These risks include (i) an inadequately trained labour force (which resulted from periods where approximately 70 per cent of secondary school leavers left without passing one subject); (ii) crime and indiscipline, which is a major inhibitor to maximising our productivity; (iii) a still struggling SME sector, which, although conditions have improved, still struggles with capacity issues and bureaucracy in doing business; and (iv) an uncompetitive tax structure.

The fact is that unless we address these four major issues — which account for the majority of the most problematic factors in the Global Competitiveness Report — we will not successfully maximise our growth potential. This means that the benefits of growth for the economy, fiscal accounts and general standard of living will take longer to be realised.

This is important because even though we have been seeing the benefits at the macro level and specifically the fiscal and trade accounts, the fact is that the widespread micro effect has not been felt as yet. This is expected in any economic recovery. However, a failure to have widespread benefits in a timely manner will mean that economic activity and spending could be inhibited and lead to a loss of confidence.

In effect, therefore, we have done a very good job as it relates to the ERP, and the effect on the fiscal accounts and other macroeconomic indicators. Much commendation is due to those who have been charged with implementing and overseeing the ERP. However, similar to when a company is being restructured, expenditure management can only have short-term benefits. For the recovery to be sustained, you have to work on the revenue side.

As it relates to the country this means that we must now turn our focus to higher levels of GDP growth in 2016, as 1.5 or 2.0 per cent is insufficient to see the much needed impact on the middle and lower income classes.

In order for this to happen, it is going to be very important to focus on deliberate policy actions to address the issues of inefficient public sector bureaucracy, crime and indiscipline, more efficient justice system, more competitive tax rates and tax compliance, and — very important for me — labour market reform and workforce productivity.

Labour market reform and workforce productivity will be a critical success factor in 2016 if economic growth is to be above the low levels we are used to. It also is going to be a very important factor to increase the value added and compensation to labour. In other words, unless we are able to improve the productivity of the labour force, the standard of living generally will not significantly improve.

Therefore deliberate policy action geared towards education and productivity is going to be essential.

This for me will be the most critical factor for fundamental benefits of growth. That is to ensure that the average man on the street benefits from growth, as to do so they must be able to participate at the highest value added.

Some of the actions that can be taken include (i) vocational training programmes at HEART; (ii) focusing loans from the Students’ Loans Bureau on professions that will be in demand; and (iii) labour market reform.

If we are able to successfully address this and the other issues mentioned, then I have no doubt that we can achieve growth in excess of 3.0 to 4.0 per cent and Jamaica will once again be the envy of the Caribbean.

Honesty is very much alive

An incident occurred which gave me hope in our young people. Recently a friend of mine lost his phone at an event and gave up hope that it would be recovered only to receive a text from a young lady to say that she had found the phone and wanted to return it. She arranged to meet him and return it and refused to take any compensation and said she only wanted to return the phone because it was the right thing to do.

This single action certainly has bolstered my faith in the youth, and I want to say,’Well done, Lindesia’. She is a Political Science student at UWI.

Foundations for prosperity

The World Bank recently released a paper called “Jamaica Economic Update Fall 2015”, in which it gave an update on the Jamaican economy and spoke to the necessity to achieve higher levels of growth. As stated in the report, “While the government has made important progress on the structural reform agenda, Jamaica will need to accelerate its growth in order to achieve lasting debt sustainability”.

This is a very important point to note by the World Bank, as it is saying what some of us have been saying for a long time that while the fiscal adjustment is necessary, it is far from sufficient.

This is because the fiscal reform programme has been more on the expenditure management side and there is a limitation to what can be done in expenditure management, as there is a point that you can get to where everything stops.

If we are not at that point yet, we are certainly nearing that point. We should also note when the World Bank says that accelerated growth is necessary for debt sustainability. In other words, if we do not get the growth we need then we could start to compromise our debt to GDP ratio progress.

This has always been very clear, but the fact that it is mentioned in a World Bank report shows that after two years of expenditure management, it is very important to shift our focus to accelerated growth rates.

The World Bank goes further to suggest that capital investment may be a good way of doing so, which is what the US, for example, uses to emerge from economic recessions. This stimulus will usually come through the public purse in the form of roads, bridges, etc. One could think of Highway 2000 as having provided much of the stimulus for the economy because without it the economic conditions would have been much worse.

The recent decrease in the primary surplus balance will certainly allow some room for increased government spending, but even that amount will not be sufficient to create the stimulus for accelerated growth by itself, although it will help. In addition, the fact is that the government does not have the money required for the capital investments needed and so we should examine other sources to achieve that growth.

The best way to do that, without causing a strain on the fiscal accounts, require focusing on a few options.

The first is utilising Public-Private Partnerships (PPP). We have seen PPPs in the form of JPS and Sangster International Airport for example. In addition to PPPs in the pure sense, we also need to be looking at privatising some government assets, not just to take the burden off the government but also to make the assets more efficient and increase employment. Examples include Jamaica Telephone Company sold to Cable and Wireless; NCB privatisation; Air Jamaica taken over by Caribbean Airlines; and Sugar companies divested to the Chinese, among others.

These had the advantages of (i) reducing the burden on the fiscal accounts as well as (ii) increasing competition and employment as many have got larger.

In this vein I would also propose the privatisation of bodies like the National Water Commission, and looking at PPPs to manage entities like the Registrar General’s Department (RGD).

This approach will have the effect of (i) increasing capital investments; (ii) increasing employment and earnings; and (iii) reducing the fiscal burden, while increasing revenues from assets.

Poverty rate troubling

One troubling statement in the World Bank report is about the poverty level. It states: “Between 1997 and 2007 Jamaica’s poverty rate fell from 19.7 to 9.9 per cent, but by 2012 the poverty rate had rebounded to 19.9 per cent”.

This is a very worrying figure, as higher poverty rates means that purchasing power is reduced, resulting in lower economic activity. If economic activity is reduced, then it primarily affects SMEs, which are the ones that create the most new jobs. It also means that innovation which comes from the influence of SMEs will be limited. This will result in lower employment and uncompetitiveness eventually.

One of the main foundations for prosperity, therefore, must be to reduce the poverty rate to the lowest possible levels. For this to happen we need perhaps to increase employment. In order to increase employment in the past, the governments increased the number of people employed in the public sector. The only problem is that that is not a sustainable model as we are seeing now.

Therefore, increased employment can only come through increased private sector activity. Increased private sector activity can only come through people making investments with private capital. And capital will only invest where the risk-return is the best it can get, or else it goes to a safer haven.

What this means is creating an environment to facilitate capital moving into investments in Jamaica. In this global village it is easy to move capital from one market to another. This means that policies must be created to attract capital to the country, as is done in Panama where investors’ terms under which they invest are protected by law, which allows for predictability and lower risk.

The real foundation for prosperity lies in policies geared at full employment (defined at five per cent or less unemployment). But for full employment to occur it requires capital investments, as the World Bank says.

Since the government does not have the necessary fiscal space, it therefore requires private capital investments through PPPs or private investments. This in turn requires policy action deliberately aimed at inviting capital to invest.

When this occurs (increased capital investment) then we will see increased employment, which will be the road to prosperity.

Requirements for sustainable growth

The Planning Institute of Jamaica has reported good news that the economy is estimated to have grown by 1.5 per cent for the July to September 2015 quarter. Of note is that the goods sector has grown 4.4 per cent, with manufacturing up 9.7 per cent and agriculture up 3.3 per cent. At the same time the services sector grew 0.6 per cent, with all services growing with the exception of producers of government services, which declined by 0.2 per cent.

This performance is not unexpected, as the fiscal and legislative adjustments have had a positive impact on the macroeconomic environment, as well as the business environment. Certainly over the past year we have been seeing improved investor and consumer confidence, along with increased investments by large companies.

While we celebrate this return to growth, it is important that we set about ensuring that growth is not only higher, but also sustainable. It will therefore require an understanding of what the challenges are to sustainable growth and what must be done to fix them.

It is important to understand this, as in the past we have seen bouts of growth of around three per cent, only to slip back under one per cent, because of structural issues in the economy. The fact is that the fiscal and legislative reforms being undertaken have gone a far way to break down many of the structural issues. If we are going to have real and sustainable development it will be through deliberate policy actions.

Risk of uneven growth

The risk we run of course is that we will have growth, but that it will not be distributed evenly. In other words, the economy can grow but a significant part of the population cannot see any benefit. This is the situation we see in Haiti, for example, as growth in an economy does not necessarily translate into better income levels generally.

So, even as the economy grows, the gains can be restricted to a certain part of the population. This is a situation that we do not want to see, but we are at risk of seeing. This is because the main risk we face to sustainable economic and social development is the current state of our labour market. This is reflected in the low labour productivity numbers.

This means that even though we may see a decline in unemployment, it will primarily be with low paying jobs and it will be difficult (though not impossible) for the 100,000 jobs projected by the minister of finance to be realised.

If, however, we embark on a programme of training (eg through HEART) and labour market reform, then we can certainly see more than 100,000 jobs being created even before five years. The reason why this intervention is important is that a significant part of the labour market is not adequately trained for the more productive and higher paying jobs, and in many respects our labour market is still dependent on menial jobs.

Labour market reform will of course be necessary to attract even more long-term investors and also to promote labour productivity.

Shifting to SME growth

Secondly, sustainable growth will require a vibrant SME sector, and this means improving the ease of doing business on the ground and not just the legislative framework.

This is why although the Doing Business Report 2016 shows us moving up seven places, the Global Competitiveness report 2015-16 shows a slight decline effectively. What this means is that for us to develop a vibrant SME sector, deliberate policies must be aimed at reducing red tape and also providing a friendly legislative framework and customer service approach to facilitate the business environment.

Much improvement has already been done (and this is why confidence has been improving) but, to be globally competitive, much more needs to be done.

One of the very important things I mention all the time is a predictable environment for doing business. So even though many legislative improvements have been made, business people still have to consider that next year the finance minister could go to Parliament and impose a new tax, which is an additional cost to doing business. Or a bureaucrat could destroy their business by targeting them for audits or causing unnecessary costs from bureaucratic processes without any accountability.

I finally want to mention that sustainable growth is also very much about creating a safe and disciplined environment in which people will want to raise their families. In other words, the most stable environment for a person's family (in particular, children) will be where that business person's money finally comes to rest.

It is important to understand this point, as over the years we have seen where many people have made money through their business in Jamaica and shipped it out to other countries (namely North America), where they send their families to reside for fear of the crime rate or the general lack of discipline in the country.

So my message would be that, while we should celebrate the 1.5 per cent growth rate, we should be mindful that:

(1) if the proper infrastructure was in place we would be talking about growth of maybe three per cent, as the drought alone cost us one per cent of GDP;

(2) it is important to create an environment where we will have sustainable growth and not just acceptable growth for one or two quarters. My own view is that we are on the path to doing this, but we are still at a very delicate stage and any incorrect policy action can reverse these benefits;

(3) we must create a workforce that is equipped with the skills necessary to be more productive, and hence earn more income.

In other words, for sustainable growth to happen, we must reduce our reliance on large-scale projects and FDIs mainly, to instead concentrate on a vibrant SME market and internal investors.

"The law is an ass"

This phrase originated in the Charles Dickens novel, Oliver Twist, when Mr Bumble, the unhappy spouse of a domineering wife, is told in court that "...the law supposes that your wife acts under your direction".

"If the law supposes that," said Mr. Bumble, squeezing his hat emphatically in both hands, "the law is an ass -- an idiot."

On Saturday morning at around 1:00 am I arrived in the Customs Hall at the airport. On reaching the Nothing to Declare line, a customs officer looked at my form and saw that I had declared souvenirs in the amount of US$80. He asked if I had any clothes and I said that I only had the clothes I went away with, at which point he said I should declare them. I didn't think it made sense to declare the clothes I left Jamaica with as they were not acquired abroad.

He insisted that I do so. At that point I refused as it was not practical. He insisted that I was ignorant of the rules.

I still refused to write it down and another officer who was there told me that if I refused to do so then he would send me to the room to check my luggage, even before my luggage went through the x-ray machine. I told him to come and do so, but he ignored me. He did not have the decency to acknowledge. Apparently he wanted me to just stand there and wait.

On Monday I called the Customs Office, and it was verified that the officer was the one who was not aware of the rules. In fairness to the Customs Office they addressed the matter swiftly. I should also point out that every other time I have interacted with customs officers they have always been very pleasant and have never taken that attitude, so it is a matter of two bad eggs giving the department a bad rap.

Even one incident, however, is too much, and what was of greater concern was that the customs officer was trying to intimidate me even though I was telling him the right thing. It is unacceptable for anyone in authority to deal with a citizen of Jamaica, who helps to pay their salary through taxes, in that manner.

This was not a matter of the law being "an ass". Rather it was a case of someone in a position of authority "making up" rules and trying to intimidate a citizen. I shudder to think of how they deal with people who don't have a voice. Accountability demands that those people be removed from front-line duty, and I hope the Customs Office will deal with it in this way.

What this reminds us though, is that the law must be practical and must not be an inhibition to (i) democracy, (ii) market efficiency, or (iii) personal privacy. The law also must not be discriminatory to any group. And the persons charged with enforcing the law should do so fairly and with sensitivity for the rights of the citizen.

This seems to be one of the challenges we have had with the application of laws in Jamaica, where those given authority have sought to use it to abuse the rights of our citizens. Apart from this customs incident, members of the police force have also been known to use their authority to abuse the rights of Jamaicans. We also have the situation where procurement rules may be resulting in more costs to Jamaicans, rather than reducing them -- as in my view the bureaucracy caused by these rules in fact may end up facilitating the same corruption they are trying to prevent.

Law vs its application

So the law, and its application, must also play the important role of facilitating market development and competitiveness,. But also very importantly, it must make everyone feel safe and that they have the same opportunities.

So it is not only about what laws are on the books. Their application is even more important.

A similar situation has to do with what is recognised by the Global Competitiveness Report (GCR) 2015-16, as the most problematic factor for doing business in Jamaica. Inefficient government bureaucracy is seen as causing 16.4 per cent of all the problematic factors in doing business. As a result of the challenges, the GCR actually showed an effective decline for Jamaica in 2014-15 over 2013-14. Jamaica ranked 86 for both reports, but the number of countries included this year was 140 versus 144 the year before.

Contrast this with the Doing Business Report (DBR) 2016, which shows that Jamaica moved up 7 places from 71 to 64 of 189.

The reason for the difference in the reports is that while the DBR focuses on the legislative and policy framework, the GCR looks at the implementation of the laws and policies, or how it is felt on the ground. The challenge we have, therefore, is not that the policy makers (politicians) have not been putting the framework in place -- but that the operatives, at the institutional level, are not implementing the framework in a way that impacts doing business properly.

So while it is clear that we have been driving the legislative and policy framework in a positive direction, the main challenge we have is how to ensure that the implementation is also done in a way that positively impacts the social and economic components.

This is why public sector transformation is critical to moving the needle on our development. The fact is that unless we have a structure that will allow us to efficiently implement laws and policy, then "the law will be nothing but an ass".

So for me, public sector transformation is not primarily about saving money, but rather delivering efficiency. In this regard we must ensure that those in authority do not have the ability to abuse any citizen or make up rules as they go along, and there should be accountability when things go wrong.

Accountability's importance to development

The recent health sector saga has brought to the fore the real need for accountability in Jamaica. The fact is that this is not the first incident to highlight this deficiency, but another one that has been highlighted because of the sensitivity of the health sector and the election atmosphere.

What this incident has shown is that Jamaicans are demanding more and more accountability from our leaders, not only at the political level, but also those entrusted with the management of public assets. This is a good thing, as accountability is a very important ingredient for development, as without it there is usually an erosion of confidence and credibility in institutions and system.

It is no surprise, therefore, that there is little trust in our public institutions in Jamaica. It is because of the lack of accountability over the decades (as far as I can remember) that there is very little trust in politicians and public institutions like the police. As a result, there is constant suspicion of corruption and a heightened appetite for "scandal" news.

In other words, if there was a perception that people were held to account when things go wrong, then trust would be higher and not everything would be seen as corruption. My own experience, based on my public sector involvement, is that much of what people call corruption results from bureaucratic systems.

It is also because of the lack of systems for accountability that we have created very bureaucratic processes, such as procurement guidelines which take discretion and innovation out of the public sector, and which undermine the potential of many public sector workers. This is because our failure over the years to hold people to account has led us to introduce rules to make up for that accountability, but end up costing us more in the long run.

It is also because of this lack of accountability systems why we end up salivating each time a new so-called "scandal" breaks and calls for blood; because we finally get someone to account for the lack of accountability in all the past mishaps that we were not able to hold someone to account for. So we crucify the individuals in a very personal manner most times, with the objective of destroying them in the name of accountability.

The fact, however, is that when one exists in a culture of accountability, the focus is not on the person, but rather on the issue at hand. Accountability does not mean "crucifying" the person responsible, but rather holding the person (and the person holding themselves) to account for the execution of the function. So in a working accountable environment, it is seen as learning and a way to improve the person who might have made a mistake.

I remember reading an article when I was around 18, where a young manager in a very successful company in the US made a mistake that cost the company a substantial amount of money. When he went to the CEO and handed him his resignation, the CEO gave it back to him and said "Why would I fire you when I have paid so much for you learning a lesson, and then hire someone else who may make the same mistake?" In this example, the CEO realised that the young manager had taken accountability and was willing to learn from the mistake.

The problem we have in Jamaica is that no one wants to admit that they made a mistake so the natural reaction is to cover it up and not hold yourself or others accountable. So something as simple as saying to your stakeholders that I am sorry and made a mistake, is one of the problems we have. So, in the end, the problem stays like a sore that deteriorates without medical attention, and eventually threatens the whole.

Health sector saga

This is the problem with the health sector saga. The fact is that when Dr Dawes raised concerns, Minister Ferguson did the right thing and called for an audit. What went wrong, however, is that when the audit came back no one wanted to take accountability for it. So not being transparent and holding the operational people to account (which does not mean firing them as indicated above) resulted in the situation worsening and lives being lost. Lack of accountability creates a situation where credibility is not only lost in the system -- but also the people who manage it.

It is when that credibility is lost (because people have failed to hold themselves to account) that whether or not they can remain in the job comes into question. This would of course be the position the Prime Minister would have faced when she made the decision to remove the minister, and asked someone else to restore the credibility of the system. That was the right thing to do. The question that Minister Dalley must now ask is if the credibility of the system can be maintained if those who failed to hold themselves to account remain involved.

This does not only apply to health. We have also seen it in the police force, where the previous commissioner and INDECOM made accountability more prominent and we then started to see greater trust from the public.

What is certain is that a lack of accountability systems will stymie development, as companies or countries cannot move forward without trust in institutions and governance. And trust is not possible without accountability.

What is also obvious to me is that if people had held themselves to account earlier in this health situation, and said what went wrong and what was to be done to fix the system and restore credibility the loud calls for firings and resignations may not have happened. What is clear is that it is the lack of holding ourselves responsible that cause problems to escalate, and not the event itself.

So my plea to those charged with governance of our public sector is to be as transparent as possible. Share challenges with Jamaicans, as we were able to go through some significant economic transformation and we understand. And please take responsibility for when things go wrong and act. This is what Dr Phillips has done with the economic reform programme, through avenues like EPOC and his own utterances. Is it any coincidence then that the reform programme has been seen as successful?

Realising the objectives of governance?

Recently I did a presentation to the Institute of Chartered Accountants of Jamaica (ICAJ) about whether the success of the economic programme would make Jamaica the place of choice to live. I posed this question: "If you were guaranteed 100% return per annum on your capital invested in Syria, would you move your family there?"

The answer to that question was obviously no, which is what you would expect from any rational person who cares about their children in particular.

This shows us that choosing a place to live does not depend solely on financial returns, but rather on safety concerns and the general surroundings in which you live. As an example, even in a country where you have very little crime, things like racial, religious, or gender biases are very important. And in Jamaica's case, one thing we have that many other countries envy is our record of press freedom.

Around the same time, I was having another conversation in which I was told of someone who did business in Jamaica for many years, but decided to uproot himself and his family to go and live in North America because he felt safe when his children jumped on their bicycles and rode down to the park to play with their friends.

These two instances bring home the important point that the primary objective of governance should be about creating an environment in which people feel safe to live, work, and raise their families. In other words, in alignment with Vision 2030.

So even as we discuss the various achievements under the economic programme, I am reminded that we still have not, as a country, started to discuss the real issues relating to the purpose of governance, in any serious way.

Sure, we speak about the crime rate, health and access to education (or I should say free access), infrastructure, and employment opportunities. The problem isn't that we do not discuss the issues, but the context within which we do so. When we discuss these issues we do so from the point of view of how relevant it is to securing a vote. And this has been consistent from as far back as I can remember, not only from the politicians.

Context is of course important because it guides the way the conversation and action are developed.

I have given this a lot of thought recently, and the truth is that if we are to achieve Vision 2030, it seems to me that the whole purpose of governance must focus on creating an environment to make the average citizen see Jamaica as the place of choice to live, work, do business, and raise families.

If we were to do this, then I think everything else would fall into place -- because the focus would be on creating opportunities and an environment for individuals and families to see Jamaica as their first choice of home.

So we would not just be focused on the high murder rate, but rather we would be focused on the outcome of creating positive values within the schools, discipline on our roads, eliminating noise and waste pollution, and rehabilitation at our prisons. But our focus on crime though, is more a reaction to the outcry about murders. The result is that the solutions we propose are: tougher punishment for criminals, neglect of our prisons because we see inmates as criminals rather than citizens in need of rehabilitation, neglect of the Noise Abatement Act, and solutions to detect weapons in schools rather than change behaviour.

In other words, because our objectives of governance relate more to satisfying and minimising the cries from society, we become reactive to issues.

Similarly, another issue is the matter of the abuse of our children. The abuse we see now has been around for a long time, and every now and again it becomes a topical issue and there are a lot of reactive comments and action. But if we really had the issue on our radar to improve the lives of our children, then we would be focused on ensuring that the laws relating to underage drinking and gambling are enforced, we would ensure that there is a good school bus system in place so that children are not at risk on the roads, and we would ensure that the justice system catches sexual predators swiftly.

What these examples show us is that firstly, governance should be primarily about improving the lives of people rather than just economics, if we intend Jamaica to be the place of choice to live and raise families.

Secondly, it also tells me that maybe one of the reasons that we have been chasing our tails about development in Jamaica since independence at least -- is we have never really defined what governance should be about. To some it is holding state power and to others it may be 'what can I get from it?' But there is not enough of a critical mass that wants governance to focus on improving the lives and opportunities for the majority of Jamaicans. Is it any wonder then, that the US has been at the top of global development for a very long time, when its Constitution seeks first and foremost to protect and advance the rights of its citizens?