Wed | Oct 17, 2018

Orville Taylor | F for Finance

Published:Sunday | August 12, 2018 | 12:00 AM

When we appoint bright people to prominent positions, we expect them to deliver, and deliver big. Quoting the prime minister during the unexplained delay in appointing Chief Justice Bryan Sykes, we want "actions that brings results".

In a cloud of petroleum-fuelled smoke, doctoral degree holder, Andrew Wheatley, has departed his ministerial portfolio, although it is still not known if it is a suspension, resignation, recusal from duties or dismissal. With his departure goes one part of the bright boys' club in this prosperity saga. The captain had to abandon his vessel while he was in deep ship. As a holder of one of those Pile it Higher and Deeper (PhD) degrees, I am always sad when academics fail in practicums. Of course, the questions surrounding the man of science are not about his ability or knowledge, but rather about his stewardship and perhaps his moral fabric and judgement.

A few months ago, the learned doctor was foisted on the citizens who had faithfully followed their Member of Parliament Derrick Smith for three decades. Many, including the elder Smith, expected that the baton would have been seamlessly passed to the junior. However, that was not to be. Given the divisive potential of introducing the neophyte into a community where Smith's son 'grew up', the benefit to the country and, of course, the Government, must clearly outweigh the bitter green taste left over from the sudden insertion. Moreover, the new MP, Dr Nigel Clarke, leapfrogged all other members of the Kermit-coloured clan and became the second most important member of government.

 

BRIGHTEST MAN IN CABINET

 

Of course, on paper, he has no peer, with the exception of Rhodes Scholar Delroy Chuck, and even so, his earned PhD is nothing to laugh at. Therefore, this brightest man in the Cabinet, in the wake of the fugue of Wheatley, has to now score serious runs and show the country that his brightness is not only theoretical. Moreover, he has displaced the immensely popular Audley 'Man a Yard' Shaw.

It might be early days yet, but I am not encouraged by what I see. For me, any notion of prosperity, in the real sense of the word, has to be based on a stable local currency, which does not slide as often as the credibility of a politician. In this column and on campus, I have had many battles with my economist colleagues over the devaluation theories, and my constant cry has been that in practice, there is little to show beyond their models that they work.

For reasons best known to economists, the reduction of the value of the local currency should, in theory, lead to a decrease in the price of our exports and, thus, more demand would be generated for what we produce locally. On the other hand, I suppose that the obverse is that with the fall in the Jamaican dollar, the price of imports would thus become more expensive. Therefore, theoretically, the more pricey commodities that we import would thus become less demanded. Well, I have read somewhere in some book or two where it actually occurs. However, in my 30-plus years of being in the academy and studying the various economic and social policies pursued since Independence, I can find no empirical evidence to disabuse me of the idea that devaluation is a four-letter word.

It is simple. We have an insatiable demand for imports and, indeed, our oil bill is more than the amount of money that we earn from exports. Almost everything that we produce in this country, including water, is indexed to our petroleum imports.

 

SLIDING DOLLAR

 

Weekly, callers to my radio talk show complain about this large-butted woman, called PAM, on their 'water rate', and I have to go through great pain to explain that only water flows downhill. Oil and its price always float to the top. On the other hand, the decrease in the value of our exports does not lead to more of it being demanded by the foreign markets. All that happens is that we now earn less from the same quantities, while paying more for what we import. In the week after celebrating the 56th anniversary of our Independence, the sobering realisation is that there is nothing independent about our economy. Therefore, not even our currency obeys independent laws of economics.

If this is really the case that whatever we do with our local dollar, we are still going to be oil-import-dependent and export-vulnerable, can anyone take credit or blame for any of our economic indicators?

For me, it is a telling and scary statistic that the rate of exchange was US1= J$126.77 in February, the month before Clarke was sworn in as minister of finance. By June 2018, it was $130.76, and at the end of July, it was $132.25. Last Friday, it was $136.43. For the thousands of workers who suffered under the dictates of structural adjustment from the IMF and World Bank, no pleasant smiles or glib addresses will make a real difference.

Five months might be too early to say whether or not Clarke is doing a good job as finance minister. However, as regards the exchange rate, he gets an F.

- Dr Orville Taylor is head of the Department of 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.