Thu | May 25, 2017

If we could only grow up

Published:Monday | August 18, 2014 | 8:00 AM
Aubyn Hill

By Aubyn Hill

As a nation, we know how not to grow an economy. When something is practised for 40 or so years, the practitioner becomes adept at the activity. No growth - the average is such a minuscule positive number that to call the zero to one per cent 'growth' would be misleading. No growth is a more accurate - even kinder - rendition for the 40 years of Jamaica's malpractice at economic growth.

We know how to borrow money, not grow an economy. In the 1990s, we threw out the International Monetary Fund (IMF) so it couldn't put Jamaica under the kind of manners it has put Finance Minister Peter Phillips, and the country, since we signed its extended fund facility in May 2013.

With no IMF-dictated primary surplus, current-account deficit and other targets to meet, the government of the day let rip the borrowing machine. The easy-to-get and addictive money from loans was used to finance consumer items, to buy votes, to make some politicians and their families and friends rich, but hardly to invest in our people and country in order to earn our way out of poverty. We loved the poor too much.

Why would our feckless politicians put our voting citizens through the discipline and sacrifice that economic growth requires? After all, the voters may get upset and vote out the disciplinarians in favour of a slacker group of politicians. Better to promise that 'betta mus com' without saying how it is going to come. The pervasive ignorance of the very corrosive nature of the imprudent debt used to buy non-investment and consumer goods made the borrowing easy.

GROWTH NEVER IN POLICY MIX

In the more than two and a half years that this administration has been in power, the only real performance it can show is the signing of the IMF agreement and the passing of four quarterly tests. Not bad, but not enough. The fiscal fix programme was not home-grown; rather it was parachuted in from the IMF when we were effectively bankrupt.

After the IMF programme was signed, it was announced with little or no mention of a well-thought-out growth facilitation set of initiatives by the Government. Lip service was paid, and still is being paid, about efficient government, but like economic growth, no GOJ efficiency plan has been devised by our leaders.

The World Bank has just offered US$45 million to help make our government operations more efficient. Maybe with outside guidance - as with the IMF programme - we may begin to see some positive changes.

On the matter of economic growth, it is becoming more and more apparent that the Government does not quite understand what it is or how to achieve it. The focus is on collecting taxes - a very necessary agenda item. The business of growing an economy is a novel exercise for our politicians, who never gave it much thought for all of their political careers; that career is the only one most of our leaders have had.

Getting private businesses to grow their confidence in the ability of the Government to manage the policy apparatus of the State to foster economic growth is also a novelty for our Government. Ministers display a certain naivete when they expect business confidence to return because we have passed four IMF quarterly tests and the head of the IMF visited Kingston and praised our 25-per-cent-of-the-way effort.

The Government really believes that private-sector investors are going to rush back with their investment dollars to help grow the economy after such a prolonged period of government profligacy and palpable mismanagement.

But all need not be seen as lost. Our Government has not seized (but could) the scalpels of economic growth it has in its full control such as devising a water-catchment policy, which would partially ease our residential water issues and employ workers to install equipment and catchment devices.

The same kind of scalpel could be used on a variety of renewable-energy sources such as bagasse and other biofuels, wind and solar. But those kinds of regulatory, legislative and overall policy changes would mean that we have to make strategic decisions on water, energy, and other matters, all through the prism of economic growth. Alas, that is not what we do. If economic growth could just be renamed profligate borrowing, we would excel at it.

Aubyn Hill is CEO of Corporate Strategies Limited and chairman of the Economic Advisory Council of the Opposition Leader. Email feedback to columns@gleanerjm.com and writerhill@gmail.com, or tweet @Hillaubyn.