Don Robotham, Contributor 
In this August 2005 photograph, Bank of Jamaica Governor Derick Latibeaudiere (right) and Finance Minister Dr. Omar Davies (left) greet Jamaica Bankers Association president, William 'Bill' Clarke at the Hilton Kingston hotel.- FILE
THE CONTINUED decline in the murder rate is a triumph for Minister Peter Phillips. Between January and March this year, murders declined by more than 100 over the same period last year, from 419 to 313. In South St. Andrew, the murder rate declined by a whopping 50 per cent.
We still have a long way to go, especially in the East Kingston area. But it is clear that Minister Phillips' policies are on the right track.
On the other hand, the news from the economic front is mixed. Last Friday, in response to the reappointment of Dr. Davies the stock market miraculously rallied in one of its sharpest turnarounds ever.
Alas, it did not last. By Monday the news of an impending general election had sunk in and the stock market resumed its downward slide.
Equally disturbing is the fact that the value of Jamaican bonds declined on the international market. In other words, the market is not waiting on Standard and Poor's. It is making its downgrading decisions right now.
SOBERING SIGNALS
Those who are hot to trot to elections would do well to pay heed to these sobering signals from the market. The reason why both the domestic as well as the international market have resumed their downward slide is simple.
People are not stupid. They have heard all the back-room boasting from government insiders about holding an early general election and dumping both Dr. Davies and Dr. Phillips and their policies immediately thereafter.
We hear all the chatter about the Cabinet being a 'holding action.' Everyone has heard of the plan to fix the exchange rate and to reinflate the economy, once a 'mandate' has been secured. Mandate to do what? To wreck the economy like Michael Manley did in the 1970s?
Jamaica is going to get itself into one soup and we are going to pay a high price if we do not settle down and stop the nonsense swiftly and firmly. The market is going to teach us a stinging lesson which will make the crunch in the 1970s look like a joke.
The reappointment of Dr. Omar Davies and Dr. Phillips is clearly not enough to calm the markets. More is needed.
What is required is a clear statement, backed up by strong action, repudiating the youthful exuberance about fixing the exchange rate. We need am unequivocal statement that the deficit reduction programme and the floating exchange rate regime are here to stay in the long term, election or no election.
PRAYERS WON'T CUT IT
The statement made so far about balancing the budget subject to 'balancing lives' has made matters worse. Markets hate ambiguity. From an economic point of view it was a bad idea.
Likewise, what our international partners need on the security front is not words but deeds.
The reappointment of Dr. Phillips helps but is insufficient. The acid test will be the rapidity or otherwise with which the Proceeds from Crime Act and the other legislation are passed and put into action and whether in practice, obstacles are placed in the way of subduing well-known PNP dons. Prayers won't cut it.
As both the Governor of the Central Bank, Derrick Lattibeaudiere, and Ralston Hyman pointed out on that excellent programme on Power 106 Real Business any attempt to fix the exchange rate will have disastrous consequences.
The exchange rate is not some plaything which any superannuated politician who comes along can manipulate by fiat. The exchange rate reflects the real level of productivity of our economy relative to the levels of our main trading partners.
For us, this basically means the United States. In fact, the truth is the Jamaican dollar is currently overvalued. The Bank of Jamaica has attempted to deal with this issue by means of what is called a 'managed float.' What this does is to ease the rate down to secure a soft landing.
The governor pointed out that our 'dirty float' exchange rate regime is admired widely around the world in central bank circles. It is referenced in key sources in the scholarly economic literature. One would have thought that common sense would have told us not to play around with such a crucial issue. But apparently not.
A great virtue of our floating exchange rate, as Ralston Hyman pointed out, is that it allows our economy to respond quickly and without crisis to the inevitable fluctuations in our economic position vis-à-vis our main trading partners.
If we attempt to fix a political exchange rate then the market will not only ignore it but it will also punish us for our wantonness. The market will simply establish its own real exchange rate on the black market. We can forget economic growth and any attempt to raise productivity then.
SMALL-NATION MEGALOMANIA
One of the realities which we often forget in Jamaica is that we are a tiny country with an open economy in a world dominated by economic and political giants.
We make fools of ourselves imagining that world leaders and the world press are watching every move on the Jamaican political scene with rapt attention. Pure fantasy. Take a look at the low level of the foreign delegations which attended the recent swearing-in of our new Prime Minister if you really wish to grasp what our real standing is in the real world.
Ask our poor diplomats overseas who have to face humiliation every single day. No Bachelet, no Hilary Clinton, no Condoleezza Rice, not even a Sirleaf-Johnson. Get real, Jamaica!
Far more powerful countries than ourselves, for example Sweden, South Africa or New Zealand, do not shape global economic and political forces, much less us. Our task is to understand the global terrain and to exploit it in the interest of Jamaicans to the maximum, especially to help poorer Jamaicans.
But we hate to even think about such a reality much less to have it said openly. We keep telling each other that 'we little but we tallawah' in a futile attempt to shut out harsh truths. It would help if we dropped this ridiculous small-nation megalomania once and for all.
We also suffer very badly from political and constitutional illusions. We think once we have political power we can simply direct the economy to do what we want. The only issue to debate is whether we should direct the economy top-down or bottom-up.
But I have news for us. The economy has a will of its own. If you bite it, it will bite you back. Its bite is hotter than either that of the top-downers or the bottom-uppers!
CONSTITUTIONAL REFORM
A good example of this delusion, which borders on a national psychosis, is the championing of constitutional reform by our loyal Opposition and others.
They and their supporters on talk shows and in the human rights lobby apparently believe that the separation of powers and the establishment of a U.S.-style presidential system is our cure-all. It will improve our economic prospects and make hair grow in your handmiddle. How this could possibly be the case they have never be able to explain. It is such an imbecilic idea.
In fact, even politically, a presidential system would have the opposite effect from what these village lawyers say they want. It would reduce freedoms not increase them.
This is because charismatically-inclined politicians would wallow in a presidential system and manipulate it to enhance their personal power above both their own party, not to mention the legislature and the judiciary.
President-for-Life 'Papa Doc' Duvalier, who claimed to have been anointed by both the Christian and the Vodun Gods, did this very effectively for several decades less than 100 miles from our shores.
As Eric Gairys and even Michael Manley also showed, in the English-speaking Caribbean there has been no shortage of politicians willing to exploit popular religiosity to enhance their personal political power.
In such a context, the establishment of a presidential system is a sure formula for a religious-based dictatorship.
If you think this could not happen in Jamaica, you don't know the country you are dealing with.
