Mon | Aug 21, 2017

Editorial | Lee-Chin and the priority of crime

Published:Tuesday | August 23, 2016 | 8:00 AM

We needn't have to be lectured. For Jamaicans have long known that the Government's abysmal management of the country's fiscal affairs apart, the high level of crime, especially homicides, is among the biggest impediments to economic growth.

Indeed, after that dramatic decline in murders in the wake of the security-force operation in Tivoli Gardens against Christopher Coke's militia, the Private Sector Organisation of Jamaica (PSOJ) sought to lock in the gains by reminding the Government of the cost and consequences of crime and dangling before it the potential rewards if homicides were brought somewhere near to global averages. For, notwithstanding the one-third drop in murders, compared to six years ago, Jamaica's homicide rate - again on an incline at around 45 per 100,000 - is among the world's worst.

In their 2010 document, the PSOJ highlighted a World Bank estimate of about US$400 million, annually, in direct and indirect costs, to treat the victims of violence. That's around J$51.6 billion at current exchange rates. Further, on average, Jamaican firms then spent about two per cent of their revenue on security, but that could reach nearly 18 per cent for a small business.

But perhaps most significant was the World Bank's conclusion, 15 years ago, highlighted by the PSOJ in its paper, that with a murder rate of 8/100,000, Jamaica could extract an additional 5.8 per cent in annual output, which would translate to a doubling of per-capita income a little bit over a decade.

Should we, however, be in need of a reminder about the drag that crime has on the island's economy, offers evidence the International Monetary Fund (IMF) in its latest annual Article IV consultation of the economy, which also encapsulated the 11th and 12th quarterly reviews under Jamaica's economic support agreement with the Fund. In a diagnostic of the leading obstacles to growth, using a matrix based on perception of the private sector and data from the World Bank's World Development Indicator, crime emerged as the major constraint, with a negative impact around three times the world's average. Crime was considered a greater constraint than the cost and availability of credit, the cost of tax compliance, and the cost of electricity.

 

ECONOMY'S WINNERS

 

The data and broader analyses suggest, we believe, that much like the fixed and ongoing attention of the past four and a half years on fiscal macroeconomic reform, a similar focus has now to be placed on crime. Which brings us to the work of Prime Minister Andrew Holness' Economic Growth Council (EGC), chaired by the entrepreneur Michael Lee-Chin.

Most Jamaicans, we believe, are not clear on exactly what Mr Lee-Chin's group is to do, except that whatever it proposes to the administration should result in delivering Mr Lee-Chin's promise of at least five per cent growth in four years' time. What Mr Lee-Chin's group mustn't attempt to be is a substitute for the market and a hand that attempts to anoint who are to be the economy's winners.

What they must do is to help the Government build consensus around their identified programme, similar to what was achieved with macroeconomic reform, having made the case that crime is the priority for the allocation of resources, financial and otherwise. Mr Lee-Chin has to be persuasive in that argument.