The last Global Entrepreneurship Monitoring report, showed that Jamaicans are one of the most entrepreneurial in the region. It, however, goes on to state that even though this is the case, most business startups happen out of necessity. In other words, most Jamaican businesses start because people are trying to fill a gap, for example because of loss of employment.
So, as a friend of mine said, most Jamaicans are “doing a business” and are not “in business”. What this basically means is that many of us are really just trying to earn money through “hustling”.
This is not only restricted to business startups, but it seems as if Jamaica has a culture of “hustling”. So the youngsters who start off selling or wiping the car glass, is doing it for a hustle. Or the politician, or public sector worker, who engages in corrupt practices thinks it is ok because they are just doing a “hustle”. Or the university student who applies for a job and when you ask them what their career goal is they say they don’t know yet but just want the job as something to do and make a money.
What is even more frightening, is the Jamaican culture, and our governance, supports the “hustler mentality”. When for example, I posted on social media that we need to get the men and boys removed from the stoplights, who are harassing drivers, the response from some persons is that they are just trying to make a living and what else will the government do for them. Those in authority also refuse to do anything about the situation, and we even have formal government programmes that promise job creation through mass employment. These are nothing more than programmes that give people a fish rather than teach them to fish. That is nothing more than an election promise of a “hustle”.
So it seems that in every sphere of Jamaican life, everything is a just a hustle. The persons who sets up a business, which he/she has no previous experience in, to benefit from his political party being in power; the student with no career path but just want “any” job that they can make some money; the boy who grows up on the street hustling every day to make a dollar; and the authorities who support the hustling by refusing to address the children on the street, or turns a blind eye to informal settlements.
Because of this hustler mentality we have created today a huge problem of a large informal economy, numerous informal settlements, and a set of persons who are unable to create any value for themselves, because they have for example grown up learning how to sell on the streets or wipe car glasses.
Effectively, the lack of action by the authorities, and the support of this “hustler” mentality has ended up creating greater poverty. This is because governance has been about giving someone a fish rather than teaching them how to fish. So we have a significant part of our people today who rely on hand outs from either government or others to survive, because we have failed to teach them how to create their own value. And the persons/businesses who are serious about creating value for all are scared away by bureaucracy or taxes that always seem to extract more out of the productive and give it to those who are less productive.
In other words, we have created more and more poverty amongst the Jamaican people.
The spin-off of that, of course, is crime, lack of law and order, and declining productivity and compensation. And as productivity and compensation decreases, political expediency means that we need to promise more handouts, which lead to greater poverty, as the only way the government can get more to give is through loans (which the IMF agreement has restricted) and/or taxing the productive more, which results in the productive becoming unproductive, thereby leading to even more stringent tax measures in the current IMF environment.
The problem we face now is that because of the IMF measurements, government must ensure fiscal discipline. But doing so means also that less money is available for handouts to those who have been taught to “beg” for a fish rather than learn how to fish. The dilemma is that increasing taxes will reduce investments, so the only practical option now is for the compensation levels to match productivity levels. The result being that “real incomes” will decline, as generally we have been seeing declining labour productivity since the 1970s.
And not much can be done to address that situation also, as any attempts for government or the private sector to address the productivity issues are met with stern resistance from our labour laws, which don’t care much for productivity. We can’t do much to improve productivity by improved processes and execution also, because the inefficient government bureaucracy, which includes the procurement rules, ensure that any implementation of private sector investments or greater public sector efficiency is held to ransom.
Examples include the building approval process or I know of investments (hundreds of US$ millions) waiting to happen but because of public sector bureaucracy we delay thousands of jobs, and GDP growth. Even when we talk about people losing their lives on the roads there is no urgency as the new Road Traffic Act may more than likely not be passed until 2017. And when you speak about trying to prevent road carnage by bringing discipline and accountability to the private taxis and buses, you hear that you are trying to stop their “hustling”.
One of the major challenges we face today is that Jamaicans are so dependent on “hustling” to make a money, that any attempt to bring order to the society is going to be faced with strong opposition and can result in hardship for many Jamaicans. This has not been by accident, however, as the government policies over the years have ensured that we find ourselves in this position today.
This is going to be one of the most difficult things to change in Jamaica, but unless we start to reverse it then we will sink further. The economy will grow of course, but the problem is that participation in that growth will be minimal, and the majority of persons can end up being left out.
Monday, August 15, 2016
Jamaica lacking a strategic long term vision
Recently someone said to me that the reason why our politics has not been able to solve our challenges and have sunk us further into economic and social problems is because either politicians don’t understand what to do or just don’t care. After reflection, I thought to myself, that I do know many politicians who care about Jamaica and are also quite competent. And so the problem could not be explained away as simply as that.
After giving it some thought, and a recent experience, I thought to myself that the real reason why our governments have not been able to bring us to the “prosperity” being talked about now, is that the objective of politics is many times different from the objective of long term economic and social development.
In other words, because of our political system, and the needs of the supporters, the expediency of politics (and ultimately governments) have been at variance with the much needed economic and social development. So if you think of economic and social development as going to Montego Bay, the problem is that the objective of politics has been either going to St. Thomas, or at best going to Ocho Rios and stopping there. In the latter case going in the correct direction, but stopping short of the long term objective.
So in my view, politicians are very competent at achieving the objectives they set. The problem is that the objectives are different from what we as Jamaicans want for economic and social development. Maybe I shouldn’t include all Jamaicans, because many, as a result of ignorance, party colour blindness, or personal goals, also don’t mind the political objectives being different from the needed economic and social ones.
Because of this, the policy directions are geared towards the political objectives in many respects. And because we have had too many bureaucrats who are willing to accommodate political, over economic and social objectives, we end up with the political objectives being implemented in preference to long term developmental objectives. This also results in the systems and processes of government bureaucracy being set up to really do nothing but push a lot of paper.
It is for this reason why persons from the private sector will find it difficult to work in the public sector because in the private sector we are used to things happening, and the achievement of organizational growth. The problem with government bureaucracy is that it doesn’t need prosperity or effectiveness of itself to survive, as all government has to do to make up for the revenue loss from being unproductive is raise taxes on the productive persons (private citizens). The problem is that sooner or later you end up with significantly fewer productive persons to tax, and then you end up in a situation as we are in Jamaica, where debt to GDP ratio goes to 150% before we realize we have a problem.
Even our well talked about Vision 2030 is nothing but a pipe dream, because our political objectives are at variant with its objectives. The result is that the Vision 2030 objectives (which were well thought out) flies under the radar, and may be soon forgotten when 2030 finally arrives.
So while we talk about a long term developmental objective, the truth is that the preference of political objectives will always ensure that these are not met. The only way for that to happen is for the political objectives to align with our “Vision 2030” developmental objectives.
The irony is that this is easily possible, and can result in very real economic and social development in Jamaica. However, the probability of Jamaica achieving its full potential in the near future though is maybe less than 50%, primarily because the existing institutional infrastructures do not allow it. It is still early days for this administration, however, and if the desire is real prosperity then we may very well see the structural issues being addressed. Up to this point though the probability of that happening anytime soon seems to be less than 50%.
The reason I say so is because for that to happen, then political objectives would need to be sacrificed for long term development plans. The political objectives I speak of does not include remaining in office, as any government that achieves real economic and social development in Jamaica will, in my view guarantee office for years to come. The objectives I speak of include (1) short term benefits for the party and constituents; (2) power benefits; and (3) the need to make out the opposition as doing the worst things in the past 5 years when the problem is the accumulation of the past 54 years.
So we continue to put the right framework in place to address these serious structural issues like the OCG, INDECOM, Public Defender, Auditor General, and the new Corporate Governance Framework. But we also underfund or ignore their recommendations, and expect that they will work. For example, we say we are serious about solving crime, but we continue to underfund the security forces and refuse to address a very inefficient and underfunded justice system. Never mind that crime robs us of 4 to 6 percent of GDP, as the longer term benefit of solving crime never seems to get preference over the shorter term political objectives mentioned above.
One of the major problems also are the supporters, who as I said in a recent social media post, even if a political party put Hitler to represent them against Obama, they would still be voted in because many Jamaicans vote based on colour and not objective reasoning. Obviously this is the theory of the effect of crowds, as individually they will be very rational but put them in a group and the reasoning changes.
So after my many years commenting on Jamaica’s economy, and seeing events like the current rise of Donald Trump, I am convinced that the reason why the world (and Jamaica) is in economic and social decline for most persons is because of our failure to ensure that political objectives align with development objectives. We only have to look to Singapore to see the positive effect the alignment of those objectives can have on a country.
After giving it some thought, and a recent experience, I thought to myself that the real reason why our governments have not been able to bring us to the “prosperity” being talked about now, is that the objective of politics is many times different from the objective of long term economic and social development.
In other words, because of our political system, and the needs of the supporters, the expediency of politics (and ultimately governments) have been at variance with the much needed economic and social development. So if you think of economic and social development as going to Montego Bay, the problem is that the objective of politics has been either going to St. Thomas, or at best going to Ocho Rios and stopping there. In the latter case going in the correct direction, but stopping short of the long term objective.
So in my view, politicians are very competent at achieving the objectives they set. The problem is that the objectives are different from what we as Jamaicans want for economic and social development. Maybe I shouldn’t include all Jamaicans, because many, as a result of ignorance, party colour blindness, or personal goals, also don’t mind the political objectives being different from the needed economic and social ones.
Because of this, the policy directions are geared towards the political objectives in many respects. And because we have had too many bureaucrats who are willing to accommodate political, over economic and social objectives, we end up with the political objectives being implemented in preference to long term developmental objectives. This also results in the systems and processes of government bureaucracy being set up to really do nothing but push a lot of paper.
It is for this reason why persons from the private sector will find it difficult to work in the public sector because in the private sector we are used to things happening, and the achievement of organizational growth. The problem with government bureaucracy is that it doesn’t need prosperity or effectiveness of itself to survive, as all government has to do to make up for the revenue loss from being unproductive is raise taxes on the productive persons (private citizens). The problem is that sooner or later you end up with significantly fewer productive persons to tax, and then you end up in a situation as we are in Jamaica, where debt to GDP ratio goes to 150% before we realize we have a problem.
Even our well talked about Vision 2030 is nothing but a pipe dream, because our political objectives are at variant with its objectives. The result is that the Vision 2030 objectives (which were well thought out) flies under the radar, and may be soon forgotten when 2030 finally arrives.
So while we talk about a long term developmental objective, the truth is that the preference of political objectives will always ensure that these are not met. The only way for that to happen is for the political objectives to align with our “Vision 2030” developmental objectives.
The irony is that this is easily possible, and can result in very real economic and social development in Jamaica. However, the probability of Jamaica achieving its full potential in the near future though is maybe less than 50%, primarily because the existing institutional infrastructures do not allow it. It is still early days for this administration, however, and if the desire is real prosperity then we may very well see the structural issues being addressed. Up to this point though the probability of that happening anytime soon seems to be less than 50%.
The reason I say so is because for that to happen, then political objectives would need to be sacrificed for long term development plans. The political objectives I speak of does not include remaining in office, as any government that achieves real economic and social development in Jamaica will, in my view guarantee office for years to come. The objectives I speak of include (1) short term benefits for the party and constituents; (2) power benefits; and (3) the need to make out the opposition as doing the worst things in the past 5 years when the problem is the accumulation of the past 54 years.
So we continue to put the right framework in place to address these serious structural issues like the OCG, INDECOM, Public Defender, Auditor General, and the new Corporate Governance Framework. But we also underfund or ignore their recommendations, and expect that they will work. For example, we say we are serious about solving crime, but we continue to underfund the security forces and refuse to address a very inefficient and underfunded justice system. Never mind that crime robs us of 4 to 6 percent of GDP, as the longer term benefit of solving crime never seems to get preference over the shorter term political objectives mentioned above.
One of the major problems also are the supporters, who as I said in a recent social media post, even if a political party put Hitler to represent them against Obama, they would still be voted in because many Jamaicans vote based on colour and not objective reasoning. Obviously this is the theory of the effect of crowds, as individually they will be very rational but put them in a group and the reasoning changes.
So after my many years commenting on Jamaica’s economy, and seeing events like the current rise of Donald Trump, I am convinced that the reason why the world (and Jamaica) is in economic and social decline for most persons is because of our failure to ensure that political objectives align with development objectives. We only have to look to Singapore to see the positive effect the alignment of those objectives can have on a country.
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