In making indefensibly bad projections about economic growth, the Bank of Jamaica (BOJ) and Planning Institute of Jamaica (PIOJ) have used up more paper than any dysentery pandemic.
Proving that Jamaican bureaucrats tend to be but mealy-mouthed sycophants of the PIP (Party in Power), our highly paid BOJ and PIOJ technocrats have been stubbornly predicting growth for an economy producing no new jobs; fewer manufactured goods; and increased recurrent expenditure. Yet public servants, squealing whenever their wages are threatened, continue to chatter ad nauseam, expressing hope but producing nothing.
Faced with bureaucratic insistence our economy would grow, I wrote, from as far back as February 19 ('Where's this 'growth' to come from?'): "So far, we've seen ... growth in crime, in environmental degradation ..., in inflation, in poverty, and unemployment ... . So, where's this 'growth' to come from? Talk?"
The G-word busybody bureaucrats keep throwing around isn't measured by reference to hot air. It's growth in GDP. For those living in bureaucratic bubbles, the 'p' in GDP means 'product', not 'projection'. To grow, we must produce.
Despite this simple truth, our expensive BOJ governor predicted 1-2% growth for each of the calendar year's first two quarters and for this fiscal year. Now, upon what actual production were those projections based? Surely, he expected us to PRODUCE something? This is what he said:
"The forecast for growth in the March 2012 quarter and the fiscal year is supported by the relatively strong expansion in credit to the private sector from the commercial banks ... ."
Pinch me, please. I must be dreaming. But, in February, he was still predicting generous growth and low inflation. Come May, he did it again. This time, the Gov predicted, for the second calendar year quarter: "Continued slow growth ... largely similar to the estimated expansion for the March 2012 quarter."
He must be high! What 'continued' growth? From where? He made the following confident assertion.
"Agriculture, forestry and fishing continues to be the major driver of growth and is expected to be supported by expansion in mining and quarrying, hotels and restaurants, and electricity and water supply."
He was more guarded in giving his third-quarter projections, projecting 2012-13 growth "in the range of 0.0% to 1.0%", thus laying the foundation for the bureaucratically brilliant assertion of economic growth, even should the result be zero. Egad!
Well, agriculture's first two quarters' growth is allegedly 6.5% and 8.5%. Goodness knows where the official numbers would be without agriculture to prop them up. Whatever happens elsewhere, we can always depend on agriculture. Right?
Roger Clarke at Denbigh (August 4; on Jamaica's US$1-billion food-import bill):
"We have to do something about it, because it's not sustainable. We don't have the money to bring in that (amount of food) ... we must produce some of it here.
"... We must decrease that importation (bill) by US$300 million; ... Those people who believe ... they must get everything (from abroad), ... they'll have to pay, because all those waivers (for which they apply) are going to be 'waived'."
What's the point of reducing food imports, but doing nothing about increasing food exports? Where's the policy forcing (oops, sorry, 'encouraging') citizens to eat what we grow together with the local incentives needed for us to "produce some of it here"? Simply withdrawing 'waivers' won't cut it. Jamaicans will happily pay more to boast about their Butterball Turkeys and Whitman's samplers.
WHAT OF SOIL HEALTH?
What's been done about improving agricultural yield by improving soil health? In September 2011, a comprehensive brief on the subject was delivered by a Soil Health Steering Committee commissioned by former Minister Robert Montague, but it's gathering dust somewhere. The day after delivery, the FAO launched a Global Soil Partnership, but as far as I'm aware, Jamaica has ignored it. I've no doubt that soil health has the single greatest effect on our economy, food security, environment, health and, accordingly, Jamaica's future.
Fully one quarter of the carbon dioxide contributing to climate change is emitted from the soil. Poor soil health causes poor water retention and lower agricultural yields. Why are we still talking around this problem? It's time to rent an available brain; engage the appropriate muscles; DO SOMETHING or leave!
The Gov's beloved mining declined 8.7% last quarter. Although tourism grew 5.2%, transport/communication contracted 3.5%.
The Gov based his growth predictions on "generally favourable weather patterns, both in Jamaica and the major grain-producing countries, and a moderate increase in the price of crude oil given the projection for continued growth in the global economy". But we've known for months that US Midwest drought will drive up corn prices and, therefore, imported animal feed prices. Our livestock farmers have warned wholesale prices will soon go up at least 20%, with more to come. So, agriculture 'grows', but so do inflation and Jamaica's trade deficit.
Regarding the Gov's persistent reliance on moderate increases in crude oil prices, I wrote, on March 25 ('Recycled illusions of recovery'): "Instead, a continuing sequence of weekly gas price increases has reached an unbearable stage, with no end in sight. And, with all the Middle East sabre-rattling now fashionable, crude oil prices are nowhere near peaking."
At that time, Gulf prices were around US$125 per barrel but nowhere near 2009's US$149 high. They declined to a June 22 low of US$91.39 per barrel; since which time my expressed apprehension that we may be heading towards US$200 per barrel ('Gov bytes'; May 15) is on the cards. Consistent price increases from June 22 to August 20 finds it at US$122.46 and rising.
In these circumstances, most countries are moving towards alternative energy, but the Gov still depends on moderate rises in crude oil prices to secure Jamaica's economic growth. Have I fallen down a rabbit hole? Perhaps we must depend on oil until we've changed to a preferred alternative.
But, during that period, is anyone looking at Petrojam in our efforts to reduce energy costs? Do we really need Petrojam? Its refinery operations are so inefficient that Petrojam actually contributes to higher energy prices. Why does the Jamaican Government own and operate a horse racing track and an oil refinery? What's its expertise at either? I'll bet dollars to donuts that closing Petrojam and importing every drop of oil we need will significantly reduce Jamaica's energy costs.
We're in a state of economic emergency. Band-Aid policies won't do. Please stop the incessant chattering. Ban all panel discussions. Government's sole appropriate option is to implement the strongest policy prescriptions. NOW!
The PIOJ is no better. Its optimistic growth predictions were embarrassingly wrong. It now blames economic "dynamism" for the egregious errors. Seriously? Is that our first or second language? A "dynamic" economy loses more than 11,000 jobs in one fiscal year (while two governments express jobs as their priority)? In 'Where's this 'growth' to come from?', I warned the so-called construction boom was an illusion. Finally, the PIOJ admits we've shed a record number of jobs in construction, which declined 3.2% in the last quarter.
Now the Gov projects 'growth' for the fiscal year in the range zero to 1%, but the PIOJ's range is -0.5 to +0.5%. Who should we believe? Ity? Or Fancy Cat? Everybody's looking to an Almighty International Monetary Fund agreement as Jamaica's saviour. Without it, our bureaucrats weep, we won't grow. Well, there's more bad news. No Saviour wants us unless Jamaica significantly reduces its public-sector wage bill and routinely restricts recurrent expenditures.
Spending £1 million for politicians to visit the Olympics doesn't qualify. Earthbound Saviours are busy rescuing those troubled nations prepared to help themselves. Heavenly Saviours can't be bothered. After all, we were given free will. We might consider using it.
Public-sector workers must stop the eternal bellyaching and get with the programme. Government must stop begging public-sector voters for approval; make and implement the required tough decisions.
CRYING FOR MORE
Public-sector workers constantly cry that they should be paid like private-sector workers. Well, private-sector workers routinely contribute to their pensions and work overtime without additional compensation. They understand that, if their company fails, they'll be unemployed. Private-sector workers have never enjoyed bloated public-sector privileges like long leaves; sabbaticals; sick leave (regardless of health); departmental leave; and endless other creative ways public servants orchestrate to be paid without having to work.
Teachers must be told there'll be no pay rise until they produce better results. It starts from early childhood education. I'm tired of the nonsensical complaint that 'elite' schools get the best students. I attended an 'elite' school. When I started in 1966, it was the secondary schools' laughing stock. By great teaching; by concentrating on academics and using sports as EXTRA-curricular activity instead of the be-all and end-all of school life, 1966's 'sissy' school is now the most admired and desired.
Similarly, primary-level schools must focus on teaching each student by independently motivating each so that, when they reach GSAT or whatever replaces that lunacy, they'll ALL be of a standard to attend an 'elite' school. In the bad old days, if you fell short of the standard, you failed the Common Entrance Exam and repeated it next year. Today, every student advances regardless, because that's easiest on the teachers and administrators. It's time the system worked for students, instead of the other way around.
SPEAK THE TRUTH
Meanwhile, technocrats must stop pandering to politicians and speak only truth. Never mind the last BOJ governor who tried this was fired. Stop treating us like idiots. We go to markets and banks weekly. We know what the real macroeconomic indicators are. Inflation is on the rise everywhere. US inflation for 2009-2011: -0.3% (2009); 1.6% (2010); 3.1% (2011). January-July 2012's monthly average is 2.2%. UK's inflation: 2.1% (2009); 3.3% (2010); 4.5% (2011). For the same period, Jamaica's manipulated official inflation figures, despite using a CPI that excludes fuel costs, are 9.6% (2009); 12.6% (2010); and 7.5% (2011). Jamaica's January-July 2012 monthly average is 6.9%. Who do we think we're fooling?
On August 9, E10-87 gasolene sold for $103.10; E10-90 for $104.75 per litre. On June 28, these prices were $96.28 and $97.93 per litre. That's 7% inflation in gas prices in six weeks. Will Jamaica's economy grow this fiscal year? Or are we already in recession? You tell me.
Peace and love.
Gordon Robinson is an attorney-at-law. Email feedback to email@example.com.