Ian Boyne, Contributor
THE PARTY is over. It's time to pull down the Christmas tree, unplug the lights, clear out the liquor bottles and sober up for 2003. The fantasy is over and it's time to face some harsh, brutal realities: Like the reality of Jamaica's crippling debt burden and the even greater burden of recognising that there is no quick fix.
It is about time that this country comes to a consensus on certain economic realities. The first is that there is no painless route to sustainable economic development and growth. Because party politics plays such a major role in national affairs, and because we are so politically fractious, it is difficult to discuss economic issues without grandstanding, myth-making and misinforming.
It is in the People's National Party's (PNP) interest to show that there is no alternative to its set of economic policies and in the Jamaica Labour Party's (JLP) to demonstrate that the Government is on the wrong track and that the JLP has the answers. Unfortunately, some of the so-called economic experts recycled on the talk shows are slaves to party lines and the public does not have many sources of impartial, dispassionate information.
I have found Bruce Golding to be a highly informed, clear-headed, rigorously analytical commentator on economic matters. I don't know whether that will change now that he is back in one of the two main political tribes, but it has struck me that this man is way ahead of many of his colleagues, on both sides of the fence, on economic matters. Golding has a grasp of the ramifications of globalisation and the challenges to the developing world that few public commentators have. It would be a tragic loss to the public square if his return to the JLP should rob the country of this precious intellectual resource. We are already suffering from a surfeit of partisans on the talk-show circuit and in the media.
People continue to say that "what Jamaica needs is production", more investments, more factories, more exports. All of which is true. But how many developing countries are attracting sizeable investments and what are the investment pulls? Is it just a matter of having a more effective JAMPRO or having a Ministry of Development which reduces the bureaucratic hurdles? Is globalisation really working for the developing world? If we adopt all the tenets of the Washington Consensus, will economic growth be assured? These are crucial questions.
Very few people inform their discussions on economic matters by the empirical data. The people commenting on economic matters are not generally well-read or are au fait with the scholarly literature or the economic experience of various countries. In a well-researched paper recently delivered at an economics conference in India, Thandika Mkandawire of the United Nations Research Institute for Social Development (UNRISD) in Geneva ("Maladjusted African Economies and Globalisation"), pointed out how a number of African countries took the medicine prescribed by the IMF and the World Bank and yet they have failed to show the desired results and not only because they have been ruled by corrupt politicians.
"A comparison between Africa's economic performance during the period over which globalisation is often said to have taken hold the last two decades of the last century and earlier periods shows clearly that thus far globalisation has not produced rates of growth higher than those of he 1960s and 1970s. Per capita income was negative over the two decades." Mkandawire anticipates and rejects the view of those whom he calls the "Afro-pessimists" who hold that the stagnation was peculiar to Africa. He shows that "during the period of globalisation economic growth rates have fallen across the board for all groups of countries. In a review of the long, inconclusive literature on the IMF, Adam Przeworski and James Vreeland (2000) find that IMF programmes lower annual economic growth by 1.5 per cent for each year that a country participates in its programmes."
Concludes the scholar: "After two decades of reforms, the most striking trend, one that has given credence to the notion of 'the marginalization of Africa', is the decline in the African share of global non-oil exports which is now less than one-half of what it was in the early 1980s. During the last three decades the decline in Africa's share of world exports represents a staggering annual income loss of US$68 billion or 21 per cent of regional GDP".
PROSPECTS FOR GROWTH
Acquaintance with serious scholarly studies makes one cautious about being overly optimistic about the prospects for growth in developing countries like Jamaica. They certainly give one immunity from the propaganda of those soothsayers who give the impression that our problems are easily soluble once their prescriptions are adopted.
As I have said many times there are serious structural problems with the Jamaican economy which retard our economic growth. Our high import-dependence is a major problem as well as the weak inter-sectoral linkages, low levels of scientific and technological innovations; a weak and largely uncreative and pessimistic entrepreneurial class and low levels of social capital. Current international realities don't favour our rapid development as some of the key strategies which enabled East Asia to rapidly industrialise are now forbidden under WTO rules.
The global economy has a far greater impact today on national economies than ever before. It is not the decisions which are taken at Cabinet meetings on Mondays which are most critical to the Jamaican economy. It is the decisions taken in Washington, Geneva, Tokyo and Brussels. Myopic commentators, therefore, who focus solely or largely on national policies are living in a time warp. We cannot ignore national policies, of course, because they are crucial in the sense that we have to chart appropriate responses to the challenges posed by globalisation.
We have to be careful about following fads, mindful of the crash of Argentina which followed the Washington Consensus to the "T", including the dollarisation policy. A growing fad of the neo-liberals is central bank independence. One of the fascinating papers delivered at the recent economics conference in India was the one by economist Jayati Ghosh titled "Independent or Irrelevant? Notes on the Political Economy of Central Banking in the Brave New World". In this paper he strips away the mythical notion that central bank independence represents some kind of Archimedean point devoid of political interest and representing economic common sense.
Ghosh says the proposal for central bank independence is not apolitical. "Rather, it implies a certain political choice on the part of policy makers who grant the central bank such autonomy of action in favour of price stability. The interests of rentiers and other groups who are more interested in keeping inflation low are therefore privileged over the interests of those-say workers without jobs-who would be in favour of increasing employment or those-such as small scale industrialists and agriculturalists - interested in a higher level of economic activity in general. Across the world, therefore, the shift in policy discussion that has made the option of central bank independence so popular reflects shifts in the balance of political and economic power".
Ghosh says the idea of an independent central bank is "manifestly absurd" since the basic wherewithal of the central bank, the management of the country's currency, cannot occur without the explicit backing of the state and its power".
We must, therefore, think rationally and critically and analytically examine the economic options before us as we very early in the year debate economic strategies. What is clear is that sacrifices will be demanded of everyone and this is where the biggest rub comes in and where our low social capital severely handicaps us.
The Government's and the Opposition's acceptance of substantial pay increases has not helped to develop trust between politicians and the people and the Government may yet learn that this move will cost them more than the hundreds of millions budgeted for the increase.
INVESTING IN SOCIAL CAPITAL
We have to find ways of building trust between all the classes and interest groups. We have to lower the cynicism, the rumour-mongering, and the whisperings -- for the resentments which are growing. As Professor Don Robotham said in that incomparable Grace, Kennedy Foundation lecture of 1998 on voluntarism, the "underlying root cause" of our difficulties lie in the "weak bonds within the Jamaican society". Says Robotham insightfully: "We have to address this most forbidding challenge: How can we recover and display a sense of regard for one another and an interest in the well-being of our fellow-citizens? In the name of what ideals and focusing on what goals can this be done?"
I cannot resist a further quote from Robotham: "We are witnessing a fundamental shift in the values of the Jamaican people and one critical aspect of that shift is an abandonment of altruistic attitudes and the replacement of these by a narrow individualism based on a shallow understanding of what a market economy necessitates. Every man and woman for himself and herself seems to be the slogan which is expressed in all departments of Jamaican life". This crude individualism and the intoxication with possessions is a major brake on Jamaican economic development.
How can you separate our ballooning trade deficit and appetite for imported consumer goods from our impaired sense of self which leads so many Jamaicans to overcompensate by acquiring things to achieve respect and personhood? East Asian politicians and finance ministers don't have to launch values and attitudes campaigns to get their people to limit their foreign purchases in times of crises.
Those citizens believe in themselves and their own products and willingly support their own producers and put national interests above their personal interests because they primarily think group rather than self.
Our public sector workers cannot be persuaded to hold strain, nor can you try that george with private sector workers. It's not our cultural strength. There is a major problem with corruption in Jamaica because there is a problem of greed and runaway individualism. People must make the connection between our low savings rate and our debt crisis. We have a low savings rate because everybody wants to live above his means, to "flash I" and to show off on his neighbour. While culturally the Chinese and the Jews are known for their frugality, we Jamaican blacks are known for extravagance. It's a national disease. Unless we deal with these cultural defects, tinkering with economic models will not help us.
The primary issue Jamaica must face is moral-cultural. The economic and political problems are symptoms of something larger. The global community is realising that values matter. In the special issue of Newsweek magazine titled, "Issues 2003" (December 2002-February 2003) the president of the World Economic Forum, Klaus Schwab, says, "Corporate integrity means that business should be governed not only by rules but by values. Business leaders will be trusted only if their actions reflect a true culture of corporate integrity, which springs from individual integrity".
An appropriate New Year's Message for everyone.