Cedric Wilson, Contributor
On August 6, 1962, the hopes and dreams of Jamaica as a new nation were anchored in the conviction that the problems ahead were formidable but not insurmountable. Norman Manley captured the mood of the day when he asked rhetorically, "And what of the future?"
To the unseen challenges he had no fears, and his words continue to resound through the corridors of time: "We come to independence prepared," he said, "and ready to shoulder our responsibilities, and united I believe in one single hope that we can make our small country a safe and a happy home for all our people."
Jamaicans were prepared for independence because, even though slavery had been abolished more than 100 years before, the quality of life for the vast majority of the people had not changed significantly. There was mass unemployment and poverty; the walls of social stratification were still thick, and a small elite continued to wield power in their own narrow self-interest. It was in this respect, the average Jamaican believed that political independence would put power in the hands of the people, and with effective leadership economic transformation could be achieved.
Moreover, this was the age in which conventional economics accepted the doctrine that governments had a central role to play in the development process - to correct economic imbalances; to compensate for market inefficiencies, and to deal with social inequities. The outlook of Jamaicans at independence was therefore not an inane optimism, it was hope born out of a bitter struggle, justified by the ruling economic thought of the day, and reinforced by an irrepressible faith in the future. But after 46 years the aspirations and ambitions of the Jamaicans that celebrated the birth of a nation remain largely unfulfilled.
Since 1962 real per capita GDP, the primary measures of economic progress, has only increased by an average annual rate of 0.5 per cent. This indicates that the addition to wealth of the country as a whole is minuscule, relative the growth of the population. In fact, at the end of 2007 real per capita income was only 80 per cent of the level it attained in 1972. Had the economy grown at annual rate of one per cent over the last three and a half decades, at least the country would have been able to maintain the 1972 income level. The question there is: what went wrong?
Foreign investment
In the decade that followed independence the Government of the Jamaica Labour Party (JLP) pursued a policy of industrialisation largely driven by foreign investment. Central to the policy was a number of tax incentives that attracted huge investments in the bauxite and tourism sectors. During that period the economy grew at an impressive 6.1 per cent per annum on average. Yet, with all of that growth social conditions deteriorated. Between 1962 and 1972 unemployment increased from 13.0 per cent to 23.2 per cent and the gap between the rich and the poor widened.
In 1972, the proportion of national income going to the poorest 40 per cent of the population was seven per cent, compared with 8.2 per cent in 1958. On the other hand 10 per cent of the richest members of the society increased their share of the nation income to 50 per cent from 43.5 per cent. In addition, many people in the rural areas, in their search for a better quality of life, migrated to the urban centres, and the ghettos, particularly those in Kingston and St Andrew, expanded. Social conditions had worsened.
Sadly, the perception of the JLP had changed from defender of the masses to an enthusiastic accomplice in the transfer of wealth from the poor. As a result, Prime Minister Hugh Shearer was referred to in many parts of the country as 'Prime Minister Share-out'. The mistake the JLP made was related to their failure to recognise that rapid economic growth that does not translate into the improvement of the lives of the majority of the people is meaningless.
The landslide victory registered by the People's National Party (PNP) over the incumbent JLP was inevitable. Michael Manley, a man of extraordinary charisma, the Jamaican Houdini of cultural symbolism, rode into power chanting "Better must come". With the massive mandate of 1972, the Manley administration immediately transformed government from passive facilitator of growth to a dynamic agent of development.
Self-reliance
Public expenditure on social services increased, literacy rate improved, infant mortality rate continued the decline which had begun in the 1960s, and a considerable redistribution of income in favour of the people to the base of the society occurred. But, despite the development which happened over the period 1972 to 1980, the bottom of the economy fell out.
The Government's inward-looking strategies predicated on the notion of 'self-reliance' bore little or no economic fruit. In addition, the oil crises of 1974 and 1979, which saw enormous increases in the price of oil, sent the value of import through the roof. During PNP's watch of 1970s GDP grew at a rate of -2.7 per cent annually, the rate of unemployment increased, inflation soared to unprecedented levels, and the budget deficit expressed as a percentage of GDP was in double digits. Coupled with that, Manley's socialist rhetoric attracted unwanted attention from Washington and inspired fear among the wealthy.
Consequently, the country experienced substantial capital flight, worsening the already grave balance of payments situation. The experience of the 1970s provides incontestable proof that inward-looking strategies for a small, open, dependent economy does not work. More important, it serves to demonstrate development is unsustainable without growth.
It was at this juncture that the JLP under the leadership of Edward Seaga took control of the Government. The new regime inherited more debt than it had bargained for, a badly battered economy and the unsympathetic policy prescriptions of the World Bank and IMF. Tax reform was introduced resulting in an increase in revenues; public expenditure was slashed and the budget deficit was gradually reduced.
Vitality
Once again the economy showed signs of vitality, registering growth rates of 1.1 per cent and 2.3 per cent in 1982 and 1983, respectively. However, on the dark side there was the doubling of malnutrition levels among children between 1978 and 1985; and education expenditure was reduced by some 40 per cent between 1982 and 1986.
The Seaga administration was able to attract some amount of foreign direct investment, particularly in the free zone garment industry. However, this proved to be less than enduring, given the competitive nature of that industry, along with the early effects of globalisation.
The economy went though cycles between 1980 and 1989 but it grew by an average annual rate of 1.6 per cent. And while unemployment levels remained high, it fell from 27.5 per cent in 1982 to 18.0 per cent in 1989. The 1980s saw a reversal in negative growth but the social cost was high. In addition, the structural reforms introduced were not deep enough to reorient the economy on a path that would make growth a matter of course. The promise of independence was a dream.
It was in this context that a subdued Michael Manley returned to power in 1989. The world had changed remarkably in the 10 years his party was out of power.
Ideological battle
The great ideological battle that had dominated international spheres, since the installation of communism with the Russian Revolution of 1917, was over. Capitalism was, more or less, universally accepted as the superior economic force. The magic of the marketplace was enthroned and the Manley administration embraced it. The foreign exchange market was liberalised, financial sector reforms introduced and productive government assets privatised.
In the first five years of the PNP administration Jamaican saw the precipitous depreciation of the exchange rate, inflation rate in excess of 80 per cent, and little change in the level of unemployment. Yet, the economy grew marginally during that first five years. Nevertheless, the promise of the painful years of neoliberal economic policy pursued by Manley and carried on by his successor P.J. Patterson had fallen far fall short of expectations.
The main criticism of the 18-year PNP administration is the cavalier manner in which financial market reforms were implemented. In retrospect, it created the atmosphere for the financial meltdown of the late 1990s. It delivered a heavy blow to the Jamaican economy, from which the country has not yet recovered. There are those who argue that it was the greed and graft within the financial sector that led to its collapse. However, wherever there is money there will be vice.
Prevent disaster
It is the responsibility of the government to act, to put the necessary checks and balances in place in order to prevent disaster. The result was a programme by the government to rescue the sector. And this has contributed in no small measure to the dramatic increase in the countries debt. In 1996 Jamaica's external debt was US$2.6 billion and now it stands at US$5.2 billion. This is costly, since every dollar spent on debt servicing represents revenues that could be used to improve the education system, enhance health care or to expand the country's physical infrastructure.
The PNP administration did little to boost economic growth. Over the 18-year period the economy grew by an average annual rate of 0.4 per cent and real per capita income was only seven per cent better than it was in 1989. To its credit, unemployment trended down to 12 per cent by the time PNP were defeated at the poll.
Since 1962 Jamaica has a measure of development. But considerably less than what Jamaicans envisaged when the flag was pulled up to the top of the pole for the first time. And, indeed, the marginal gains in development have not been linear. On occasions, the country has climbed two steps upwards on the staircase of development, only to slip down another step.
Creativity
Arguably, migration has contributed to the development which has taken place in two respects. First, there is fewer people to divide the small national income cake among. Second, the Jamaicans in the diaspora have never failed to remit cash and kind to the family back home. But development is far from what it ought to be, given the resourcefulness, creativity, dynamism and energy of the Jamaican people.
In reflecting on independence, it is only appropriate that Jamaicans everywhere ask the same question Norman Manley raised 46 years ago: "And what of the future?"
Before the Bruce Golding administration assumed political office in September 2007, it project a vision of "growing the economy and putting the people to work". It would be unrealistic to expect a miracle in less than a year. Notwithstanding, the Jamaican people need to be shown a cohesive picture as to how that vision is to be realised.
The entire world is caught up in the hurricane of rising oil and food prices, and seismic effect of globalisation can be felt by small dependent economies everywhere, but this should not be used as pretext for inaction. Development is never easy; the conditions for economic take are scarcely favourable. Over the 46 years of independence the country has failed because, although the leadership had vision, it was without wisdom. And, paradoxically, when it appeared to be wise it was bereft of audacity.
Jamaicans everywhere must continue to believe in the "in one single hope that we can make our small country a safe and a happy home for all our people".
Cedric Wilson is an economist who specialises in market regulations. He may be contacted at conoswil@hotmail.com. Feedback may also be sent to columns@gleanerjm.com.
