Wed | Aug 23, 2017

Orville Taylor | Budget: better connect the dots

Published:Wednesday | March 22, 2017 | 3:00 AM
File Audley Shaw, minister of finance and public service, delivering the opening presentation of the Budget Debate on March 9.

I am mindful when using the word 'prosperity' now. Because of its appropriation by the ruling Jamaica Labour Party (JLP), it is almost a dirty word in some circles.

Boldly, the 'Man a Yard' has boasted about boosting employment and gross domestic product (GDP) growth, raising the living standards of the Jamaican people, progressively reducing a poverty level that remains too high, and strengthening the social safety net for the poor. Yet, in all that, there is a fundamental disconnect where there seems to be the view that it is a growth-first approach and the generation of employment and all the other elements of uplift for the working class/poor are products of the 'prosperity'.

On the contrary, my argument is that we have had more than 70 years of growth-first, trickle-down economics and have failed to understand that investment in people is not an outcome of economic strategy or economic growth. Rather, it is the one empirical thing that we can categorically say will lead to all of the things that the policymakers claim that they will deliver.

For decades, the cart before the horse was that we should fix this obscure thing called the economy. Well, let me once more confront my colleagues in economics and management studies and tell them a secret. There is no such thing as an economy. It is merely people in places desiring and obtaining things. So it starts with people, not numbers.

Basic lesson number 1: This thing called demand is nothing more than taste, and what people naturally desire or are taught via socialisation to desire. People - not numbers - consume and spend. And, most important, it is living, breathing human beings who produce the goods and services that are exchanged for money and thus generate this thing called increase in GDP, or growth.

It must be also learned that there is almost no evidence that the models relating to economic growth have given us sustained growth, even with the best economic theorists guiding public policy. And we have some of the best economists here.

What makes people tick? What makes workers produce at the desired level and efficiently? The answer is so simple that it escapes all of the experts and consultants who are paid mega bucks to advise us about what we have always known. It is simple: 'Decent work' is the essential ingredient of any development strategy for us.

As far back as the late 1990s, my contention was that there was a 'race to the bottom' in pursuing lower labour costs, via suppressed labour conditions and standards.

Academics, including yours truly, have for years presented research at myriad conferences to show that productivity and GDP increased with more decent work. More interesting was that not only did these improve, but social violence also would decline. And, of course, the obverse is true. Where decent work became less available, crime would rise. All of these were predicted on research from as early as 2000.

 

ON WHAT ARE THEY SPENDING?

 

Therefore, in assessing the proposed Budget, it must be shown how decent work will drive the strategy. It is noted that the income tax threshold has made more Jamaicans feel an increase in disposable income. My immediate question is, on what do they spend the money? Given that Jamaicans have foreign appetites, doesn't this ultimately lead to pressure on foreign exchange and balance of trade and, ultimately, inflation?

Doubtless, I am tired of Government raiding the financial institution called the National Who is in Trust (NHT). Whatever is the basis for the millions being spent on housing-related activities, the more basic point is that an NHT, with such a surplus, is failing in its mandate to provide affordable housing. And it is precisely because workers can't afford housing why the Trust has such large reserves.

And somehow, I cannot imagine how increasing the tax on health insurance will raise productivity in a country where free health care is a running joke. True, there is going to be the well-overdue pension reform and the contributory scheme for government workers. And the increased PATH benefits must be commendable. But shouldn't the objective be to reduce the number of persons who need to be on the programme?

When governments stop thinking of decent work, protection of the vulnerable and youth empowerment as outcomes instead of causes of economic growth, the budget on crime and health will be in better shape.

 - Dr Orville Taylor is senior lecturer in sociology at the UWI, a radio talk-show host, and author of 'Broken Promises, Hearts and Pockets'. Email feedback to columns@gleanerjm.com and tayloronblackline@hotmail.com.