Sat | Oct 1, 2016

The cheap politics of poverty

Published:Sunday | January 10, 2010 | 12:00 AM



The revision of the $21.8-billion Christmas tax package is nothing but a pandering to the politics of poverty which has been ruining Jamaica. Sanitary pads were the symbolic red rag of rage which kept the government in line with the cheap/poor politics of poverty of the past.

I am now certain that the Bruce Golding government has neither the will nor the capacity to be 'new and different'. The reconfigured tax package panders to a fundamental premise of the politics of poverty - soak the rich, fool the poor, whomever they both might be, beyond the crafty slogans and empty sentiments of political manipulators. The real tragedy is that the poor think the politics of poverty is in their favour.

Let us dissect the politics of poverty. It is seeking state power and conducting governance ostensibly in the interest of the 'poor', while doing very little actually to change the circumstances of poverty. The poor, certainly in Jamaica, have the majority of the votes and are, therefore, very politically useful, as is, where is. The politics of poverty sows the bitter seeds of resentment against the 'rich' and suspicions against wealth accumulation. It casts placating crumbs to the poor, which keep them happy and grateful for small mercies from political 'samfie' benefactors, when all the while much more is possible.

Wealth creation

The only real cure for poverty is wealth creation. But the politics of poverty is more concerned with wealth distribution, the special forte of the socialist state but something to which the nominally capitalist state is not immune. Economies grow, people and countries prosper when individuals can pursue their self-improvement self-interests, without undue impediments by the state in which they live and not hurting the interests of others. Simple. Adam Smith's 18th century Inquiry into the Nature and Causes of the Wealth of Nations is the pre-eminent treatise on the matter.

The capacity to generate wealth is based on property and the security of property. The post-slavery government of Jamaica, which despised the poor, deliberately kept land, the most basic property out of their reach, as I reminded readers in last week's column. The poor-loving governments of Jamaica since Universal Adult Suffrage which brought self-government in 1944, and since Independence in 1962, have done little to provide broad access to land property. Prosperous free enterprise countries have long understood the power of the house, as not only shelter but a reservoir of basic capital and a store of wealth for owners.

Nearly half a century after Independence, the housing minister announces that a third of Jamaicans are squatters. The Government of the '70s created a 'housing solution' agency, the National Housing Trust, which now reports that 80 per cent of its forced contributors do not qualify by income for any of its mortgages.

Crime and corruption hurt the poor most. This is not just Martin Henry running up his mouth. Data from the World Bank and other multilateral agencies for development financing say so. And thoughtful common sense shows so too. Crime has all but killed certain kinds of business opportunities in poor inner-city communities, leaving the business of crime to flourish.

The one-acre farmer is hurt more by uncontrolled praedial larceny than the large estate owner. The rich can buy non-state security and avoid danger better. The inner-city poor, largely abandoned by a government which loves them, must be contented with what security can be provided by the system of donmanship at high personal cost to their freedom, dignity and opportunities. Having to buy state services under the table is disproportionately costlier to the poor.

A government which loves the poor could work wonders for the poor by just improving the security and law-and-order environment for everyone and reigning in state corruption. By the way, protests which lock down the country and disrupt the economy always disproportionately hurt the poor. And the self-employed and 'job work' poor hurt most from the disruption of their marginal livelihoods.

Nothing prepares the poor better for seizing economic opportunities than education. Governments which love the poor have constructed an education system which perpetuates the marginalisation of the poor through illiteracy, poor literacy and the lack of skills. Primary education has, historically, been designed to provide the poor with only a labourer's education. Traditional grammar high schools were few and for the well to do. When secondary schools were 'built by labour' in the 1960s they were 'junior', holding mostly the children of the poor for a few more years beyond the primary school, with little to show for it. The system has never really recovered.

Illiteracy

Depending on whose data you are reading, up to a third of Jamaicans are out and out illiterate in the 21st century, others are semi-literate; and up to three-quarters of the people in the low-wage economy have no formal skills training. The rich have been able to pay for prep-school education for their children which position them to dominate the grammar school places in the past and the best high school places today. Edwin Allen, as minister of education, had to introduce the 70:30 ratio for grammar school places in favour of primary school Common Entrance candidates. Governments which love the poor have done little to make that ratio unnecessary.

If law enforcement and the maintenance of public order for all is the best gift that government can give to the poor in fulfilment of one of the most basic function of the state, maintaining a stable currency for all is a close second. Because of its creeping nature, the devastation wrought by inflation and devaluation, and most heavily upon the poor, is scarcely understood for what it is. Governments which love the poor have presided over a near 90-fold devaluation of the Jamaican dollar since currency conversion in 1969, and over big patches of double-digit inflation during the period largely created by fiscal recklessness including providing for the 'poor' what the state could not yet afford.

One consequence of the devaluation of the dollar is the astronomical debt burden which rests most heavily upon the backs of the poor, who are least able to pick up the slack from their own resources left by the inabi-lity of the indebted state to provide services. As it takes more Jamaican dollars to buy one United States dollar for our imports and our own productive capacity can't generate all the foreign exchange needed, we borrow more and more.

Another consequence of the debasement of the currency by the policies of governments which love the poor is high interest rates which is a tool the government uses to 'mop up liquidity', as they say in econospeak, which just means wooing people to invest rather than spend because the returns are so good, a move which takes pressure off demand for more foreign exchange to buy more imports for more local consumption, which further drives down the value of the Jamaican dollar, that is, its purchasing power for buying foreign currency.

Former Finance Minister Dr Omar 'Run Wid It' Davies who, with his government have made significant contributions to hurting the interest of the poor, who are most loved by his leader Portia Simpson Miller, is warning, from the security of Opposition and his impoverished South St Andrew garrison constituency, that the unbacked recent advances to the Government from the Bank of Jamaica of $23 billion is printing money.

Government releasing 'unbacked' money into the economy, Nobel Laureate in Economics Milton Friedman forcefully argues, is the sole cause of inflation. Inflation, too much money chasing too few goods,



"A good tax system should impose a low and universal general consumption tax on all goods and services while reducing flat rate taxes on wage income and interest and profits income preferably to zero."
- Ian Allen/freelance Photographer