Ian Boyne, Contributor
The sweltering, agonisingly punishing heat in the country will soon be accompanied by an even more intense inflationary heat, as the price increases from the recent Budget begin to bite unsparingly. It will feel hotter than Brian Wynter's 10-12 per cent inflation projection.
Already, government spokesperson Sandrea Falconer is bawling about price gouging from retailers, threatening to "name and shame" offenders. But people are going to be hit with a whole range of increases that they can't report to any Consumer Affairs Commission. When your plumber, electrician, mechanic, hairdresser, computer technician, doctor, lawyer raise fees, can you run to Ms Falconer? You will just have to 'hug it up', for everybody will be increasing his prices.
It is going to be dread. And many organisations which are accustomed to helping the poor are going to be having a hard time for the now much-despised waivers, of which they used to be beneficiaries, are increasingly being frowned on. The poor and lower middle class are going to get hit from all angles. And keep in mind, too, that it is not only Austerity Apostle Peter's Budget which will be savaging your living standards.
WORSENING ECONOMIC SITUATION
There are some very dark storm clouds over the global economy. Things are worsening in Europe. This week's Newsweek has a cover story on 'Europe's Lehman Brothers Moment: The Gathering Eurostorm', recalling that catalytic event which marked the official start of the Great Recession of 2008. Greece, Spain, Italy, Portugal and Ireland are in serious trouble.
Unemployment is as high as 24 per cent in Spain, 22 per cent in Greece and 14 per cent in Portugal. And the US has just returned the third consecutive month of slow employment growth.
"Something is very wrong with the world economy," the Economist announces in its June 9 editorial. "That something is a combination of faltering growth and a rising risk of financial catastrophies. Economies are weakening across the globe." Even the new stars in the economic galaxy are dimming. Brazil's GDP is growing slower than Japan's, and India's growth has slackened, while China's slowdown is intensifying. "A global recovery that falters too soon after the previous recession points towards a widespread Japan-style stagnation," says the Economist in its editorial.
In Jamaica, we are not paying enough attention to global realities and have a very parochial approach to our problems. Ralston Hyman is almost alone in trying to educate our people about what is happening in the world and how that affects us. Whatever you want to say about him, it can't reasonably be denied that he has brought a knowledge base and a scholarly appreciation to financial journalism that is unparalleled in Jamaica. The country desperately needs economic literacy. We need to understand how interest-rate changes in the United States affect our debt obligations and fiscal accounts and how developments in Europe affect our balance of payments and prospects for export growth.
With all the chirpy talk about growth prospects from the Government, has anyone given us a realistic assessment of how developments in Europe, America and the emerging markets are likely to affect our growth projections? We still have this insular approach to economic matters and the political parties seem content in trading blame for "wrecking the economy". Like the reckless talk we had from the Government in the recent Budget Debate about the JLP's wrecking the economy, leaving this present administration with the task of "repairing it". Well, good luck to them.
What we need urgently is both a national unity and a national economic-literacy campaign. This campaign has to be led by civil society, with a strong input from the most powerful players in the private sector. Oliver Clarke, Butch Stewart, Billy McConnell, the Hendricksons, Joseph M. Matalon, Gassan Azan and others, along with key stakeholders in civil society, including the Media Association, need to sit the leaders of the two political parties in a room to hammer out an agreement on certain common positions. And they need to get private-sector players not to exploit the crisis.
The social partnership talks have to resume and take on a force like never before. Do this for Jamaica 50. It's a matter of survival. I don't know whether we grasp the magnitude of the challenges which face us and the kind of hopelessness and despair people are going to be experiencing in a couple of months as this fiscal consolidation sinks in. Only a strong sense of national unity and purpose, a common vision and a sense that there is no alternative can galvanise us.
National unity has become a cliché. We have to take it beyond that. We have to live and breathe it. This is our last chance. If we don't get it right this time, I fear we will lose it forever. I hate to sound apocalyptic. But the times demand it. Fortunately, I think we have a firmer basis for this political consensus on some critical issues now than we ever had in the past. There is no sharp ideological divide between the political parties.
In fact, it was very interesting in this last Budget Debate to notice how the PNP was commandeering the JLP's fiscal discipline, fiscal prudence, tight-management mantra, while both Audley and, particularly, Andrew Holness made the case for social protection. Very interesting. So now it's not even a matter of one arguing for fiscal consolidation and tight debt management, while the other is talking about protecting the poor. Both are talking about both debt and fiscal management and protecting the poor.
Some behind-the-scenes diplomacy should take place, principally led by our most powerful business moguls, to have the parties tone down the rhetoric and resist the temptation to propagandise, in the national interest. This should not be hard, for I have every confidence in Andrew Holness as a responsible, patriotic, sober, level-headed and forward-thinking opposition leader. Andrew has a keen sense of the crisis the country faces and the tough decisions which have to be taken. His finely crafted and effectively delivered Budget presentation gave every indication of that.
The partisans will be telling him, "Nuh bother help Portia. She fight fi de power; now mek everything tun up pon har." They will urge him to exploit every bit of the crisis until the people are begging back for him. But I don't believe Andrew Holness is motivated by the acquisition of power, no more than I believe Portia is. I believe both are sincere and absolutely committed to the upliftment of the Jamaican people. Sure, the political contests will continue. But there are some overarching goals which should unite them.
After all, as Andrew himself has acknowledged, it's the same International Monetary Fund-sanctioned Jamaica Labour Party programmes the PNP Government is following. In fact, even the three stellar mega projects they are depending on to produce growth are carryovers from the JLP administration. Apart from some slight modifications, this Budget could well have been pre-sented by the JLP. The party says it would not tax any basic foods - and it is regrettable the PNP did - but the JLP might have been forced to do the same for sheer necessity. I believe every pained word of Portia Simpson Miller when she said she and her Cabinet colleagues sweated and felt anguish when they considered taxing basic goods.
I have never believed this nonsense about 'wicked government' causing pain. I did not believe it when Portia so propagandistically charged the Golding government, and I don't believe it now.
The Opposition has already backed a public-sector wage freeze and is publicly in favour of public servants contributing to their own pensions. They have not made any irresponsible calls for demonstrations against increases on basic foods and electricity. We don't give enough credit to our politicians. The level of consensus we have achieved on the economy is noteworthy. (Mark you, I continue to maintain their economic prescriptions are necessary, but not sufficient.)
I believe the Media Association should lead a national campaign to increase Jamaicans' economic literacy and to educate the country about our economic situation and options. I believe our media practitioners must do some more reading and join Ralston Hyman in educating the nation about what is happening in global markets and how that affects us. I believe our technocrats, too, must be on the cutting edge of know-ledge and must be scouring the best sources of information on economic development and trends and must bring a high level of sophistication in negotiating with the IMF.
Technocrats at the Ministry of Finance must be monitoring the IMF website every day, assessing every speech given by Managing Director Christine Lagarde. She gave a most interesting and quotable one last Tuesday. Addressing a forum organised by the progressive Centre for Global Development, headed by that intellectually sharp development economist Nancy Birdsall, Lagarde said, "Jobs must be at the forefront of any strategy for inclusive growth. Decent and steady employment is the sure foundation for human dig-nity ... ." This is significant coming from the head of a Washington Consensus multilateral which has traditionally put inflation targeting ahead of employment targeting.
She continued: "Developing countries, too, need to allocate public spending on social safety nets. In these countries, social safety nets might be all that stands between survival and catastrophe." Our technocrats need to be quoting back these words to some of the lower-level staff they are negotiating with. We must be able to match these multilateral fellows intellectually and craft an IMF programme the least inhospitable to our people and growth.
Noteworthy is the fact that the IMF chief said, "Now the IMF needs more resources for concessional lending to help vulnerable countries navigate an increasingly volatile world. This is one of my top priorities." So much for those economic illiterates who think that any talk of concessional financing for developing countries is just mendicancy and Third World cap in hand.
Lagarde knows countries need this. But this can't be confined to low-income countries but must include heavily indebted countries like ours, hence the rationality of A.J. Nicholson's call for us to be considered for special concessions.
For our children - as well as our own survival - let us have a national campaign around some common goals.
Ian Boyne, a veteran journalist, is the
2010-11 winner of the Morris Cargill Award for Opinion Journalism. Email
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