Robert Buddan

Since the election of last September, the new administration has spent much time tinkering with Parliament, contesting court cases, firing the Public Service Commission, campaigning for local government election, appointing new board members and commissioner and managing the public relations crisis arising from its turnaround in some election promises made. Little has been done about the economy.

There has been no comprehensive presentation on the economy - the relative role of the state and the market, the future of the public sector MOU and the role of the trade unions, the concept of partnership, the economic targets to be achieved, the goals of the National Industrial Policy, the approach to the CARICOM Single Market and Economy, preparing for global competitiveness, achieving corporate social responsibility, the shape of energy policy, investment strategy, interest rate strategy, trade policy, and so on.

What we have had is knee-jerk reaction to crises as they spring up, such as the cost-of-living and energy crises. We have heard separate announcements from different ministers at different times about protecting the prices of basic items, increasing the minimum wage, returning to the 'partnership for progress', regulating informal investment schemes, and, lately, sourcing LNG for cheaper energy.

We don't know what development strategy the Budget will adopt and we have not been given the big picture of where the economy is to go and how it is to get there in the coming years.

Economic policy

Butch Stewart urges caution (left) and Richard Byles wants drastic cut in civil service (right). - File photos.

I have criticised tinkering with Parliament as a poor substitute for a comprehensive review of the Constitution and the political system and similarly criticise the knee-jerk reaction to the economic crisis as unsatisfactory because of the absence of a more coherent view of economic strategy and medium-term plans.

The JLP had been out of power long enough to have come better prepared. The parties have been talking about constitutional reform for 15 years. The price of oil has been moving constantly upwards for eight years and enough people who should know had been predicting US$100 a barrel prices for some time. Hurricanes and near-hurricanes have become an annual threat to the economy for some time. We should not be caught reacting as if we did not know.

Probably, it was the need for economic leadership that prompted some backers of the Government to convene their own council to give direction as to what should be done.

Another newspaper listed these business people as 'Butch' Stewart, Richard Byles, Godfrey Dyer, William Mahfood, Dennis Lalor, Christopher Zacca and Gassan Azan.

But it was evident that there was no consensus among them and so no direction could be given. None of them seemed to speak from a plan - their organisation's or one from the World Bank, the International Monetary Fund, the Inter-American Development Bank or some other - that was based on real research and analysis.

Somehow, we are to run a modern economy on the personal opinions of a few business people. They should be told that government is no longer run on the basis of ideology, family, class, wealth or personal opinion. It is run on the basis of policy research and experience.

Unsure of thinking process

However, we did get an idea of what kind of thinking they were into. The newspaper report led us to conclude that the businessmen were talking about the politics of economic policy and what Government should do, not what the business sector should or must do.

This is typical of the private sector. It is yet to realise that governments gave it the role of engine of growth years ago.

The group did not tell us what investment opportunities were available, what role the banks should play, how they can stimulate investment, what to do about lending rates, how to improve the education and training of employees, how to brand Jamaican products, what is needed to conserve energy and other costs, how to take advantage of CARICOM markets and markets elsewhere, what good trade agreements can do for Jamaica, how to cushion our economy against the American recession, how to make business more efficient and globally competitive, and how to bring the diaspora market more fully into our economy. The focus seemed entirely to be on what Government must do. The only difference was about what was politically feasible to do, when and how.

Richard Byles reportedly wants a drastic cut in the civil service and wage and salary increases below the inflation rate. This clearly goes against the government-public sector MOU, but he says that this has to be done even though it was a tough medicine to swallow politically.

The Government has lately said that it wanted to follow the path of the social contract, which should mean more partnerships rather than less. This is diametrically opposed to Byles' recipe.

Political caution

The group argued that the Government should take advantage of what it claimed was the goodwill and confidence that the new administration enjoyed from international credit agencies and the business community and either make big cuts in the jobs and wages in the public sector or call an early election and increase its seat margin to give it the command to take drastic action.

'Butch' Stewart, however, was the voice of political caution saying, according to the newspaper that, "Government would have to straddle what is politically shrewd and what is economically viable".

I thought this was what businessmen always accused politicians of doing and damaging the economy in the process.

Mr Stewart's response to his colleagues was that cutting the number (and costs) of ministries and the public service would be one of those measures that was not politically feasible for the time being.

The truth is that businessmen cannot speak for public sector workers. Government, their staff associations and trade unions have to.

Nor can businessmen speak for the JLP. The party and its organisers have to know how much goodwill is out there and when it is good for the party to call an election. Besides, are these businessmen willing to pay up millions of dollars so soon again for a campaign?

As for goodwill and confidence, we are not so sure about this. The latest business confidence survey, published earlier this month, showed that business confidence fell in the last quarter of 2007, or the first quarter of the new government's year.

Only 45 per cent of firms in the survey anticipated improved profits, compared to 64 per cent in the previous survey.

Professor Curtin, who conducted the survey, said that this erased all the gains in confidence made in 2007.

Most firms cited crime and violence, which increased by 17 per cent last year, as a hindrance but they also said they were still waiting for policy details about what the budget intended to achieve. High prices and high interest rates were other concerns. Only 28 per cent anticipated an increase in the pace of economic growth compared to 45 per cent in the quarter before.

The Gleaner's headline for January 9 was apt, 'Business confidence tumbles - Firms await policy signals from government'.

This confirms that the Government has failed to provide even a broad view of how it intends to manage the economy.

But it also reflects on firms and their dependence on government and politics when it comes to investing, creating jobs and making profits.

Robert Buddan lectures in the Department of Government, UWI, Mona. Email: Robert.Buddan@uwimona.edu.jm.