Bitter medicine: hard times for us all

Orville Taylor, Contributor

There's many a slip 'twixt the cup and the lip, and the Government now knows that there is a big difference between looking from the outside and critiquing, and being on the inside and doing.

Under the previous Jamaica Labour Party (JLP) regime, the idea of returning to the International Monetary Fund (IMF) resurfaced. For some of us who observed, studied and researched through the period 1975-1992, it was like a combination of Brooklax and Epsom salts.

For almost two decades, the Jamaican working class took the bitter medicine and, as with the laxative, it was just belly 'cuttings' and 'aparation' but nothing good came out in the end. Then, with the same set of mouths, the then JLP Government warned that the 2008 global financial crisis wouldn't affect us, and we were told that the IMF was a different IMF.

While the current Government might be quick to say, IMF means It's Man a yaad Fault, we in academia did warn that agreements with the Fund typically involved a process that ultimately widened the gap between rich and poor because the working class had to disproportionately bear the burden.

The structural adjustment programmes of the IMF have produced little, if any, benefit for the working classes anywhere in the world. Looking back at the lost decade of the 1980s in which countries reeled and suffered under the programmes, the International Labour Organisation observed that the programmes created 'social debt'. Simply put, this meant that workers were made to bear the burden ostensibly for the short to medium term. Given that the IMF is a bunch of economists and bankers, it was felt that they should do things to allow for the local capitalists to earn and pull the country out of the economic crisis.

Presumably, when the economic targets were met, the social debt would be repaid to workers and the poor, as more welfare-oriented policies would be put in place and some trickling down of the economic spoils would take place. In other words, equity would eventually come the way of the working class who paid high prices for the economic outcomes. However, as with all the bankrupt trickle-down theories from the 1950s to the present, the postponed benefits for the poor never come to fruition.

The measures generally involved reduction of the public sector, decrease in social welfare spending, wage ceilings, more taxes for working classes, but little control on profit. I am not certain what the experts and politicians expected, but in my view it is the same I and the same MF.

NECESSARY MEDICINE

Nevertheless, an IMF agreement is as necessary as a set of immunisation shots are for entry in school, and whosoever's fault it is, it is the People's National Party's (PNP) time to govern. The Government is putting its own stamp on the agreement and is implementing a slew of new policies which, at best, are frightening. First, now swallowing some of its earlier words, the PNP Government has apparently recanted on its prior misgivings.

Faced with a debt-to-gross domestic product ratio of 130 per cent in 2010, the JLP Government came up with the idea of a Jamaica Debt Exchange (JDX). It was not a ludicrous or malevolent programme, because the majority of the national debt was owed to Jamaicans or persons who operate within the Jamaican economy. In 2012, the ratio was 140 per cent

The sad truth is that the Jamaican private sector, and in particular the financial subsector, has been predatory, counterdevelopment and unpatriotic. For all the criticism that it has proffered against successive administrations, only the manufacturing group within the Chamber of Commerce has any moral authority to speak. All others - with the possible exception of the information and communication technology industry, which offers offshore data services - are net users of foreign exchange, make the balance of trade worse, and put pressure on the local currency.

What many financial institutions have been doing, even after the crash of the sector in the 1990s, is essentially lending the State money via government paper and other instruments and thus profiting from the adversity facing the nation. For years, money brokers have grown fat off the high interest rates that the Government pays, instead of investing in businesses and other activities which will bring real growth. True, they have invested pension money in some of these government instruments. However, the majority of the benefits goes to a small number of 'entrepreneurs' who earn their pound of flesh from their services.

Given that in most countries, including the United States, economic growth is mostly attributed to the growth of small and medium enterprises, one would have thought that a patriotic private sector would have been pushing for lower interest rates and even lower ones for small business and agriculture. Only the People's Cooperative Banks and credit unions can say they are people and development-oriented.

Nonetheless, JDX was opposed and criticised by the then Opposition, and Omar Davies declared, "I say very, very calmly and with all good intentions to the minister, let us not even
contemplate taking any such step; I am referring to the possibility of a
JDX 2."

My suspicion for the recanting by the PNP is
that unlike those who can criticise from the periphery, it has displaced
the inspectors and loader men and is now in the Driva's seat. Yet, as
with the JLP initiative in 2010, I fully support JDX
2.

Never mind that Fitch and Standard & Poor's
are going to give us a lower rating because we have unanimously agreed
to 'default on our debt'. It is those same institutions which gave poor
advice and wrong information and thus led to the global economic crisis.
As I said last week, oftentimes the opinions by non-nationals are
unfair, biased and reflect an ignorance of things
Jamaican.

TRUST DEFICIT

Still, there
are elements of the recent announcements by the Government which are,
at best, unnerving. The private sector is antsy over the high tax rates
which it sees as being a surreptitious betrayal. Trade union members
have once again been left out of critical discussions. In fact, my own
view is that any team to the IMF should have included the hierarchy of
the unions. There is a major trust deficit with the Government, and the
unions and private sector feel betrayed.

Furthermore,
it doesn't help that the administration has not been very forthright and
forthcoming on these matters or other affairs of State. Indeed, the
Government has been often accused of being missing in action last year.
It also doesn't help that it is Peter Phillips, the same person who is
believed to have secretly made an agreement with a foreign state and had
gone against popular sentiment in his own party and challenged the
Comrade leader, is the main protagonist. He must be
careful.

These are trying times and a real social
partnership is needed. It cannot be the anti-worker policies of the
past. As said in other columns, we need to look at what Barbados did in
the early 1990s. Its private sector and trade unions trusted each other
to have open dialogue. And the Government was open,
too.

Dr Orville Taylor is senior lecturer in
sociology at the UWI and a radio talk-show host. Email feedback to
columns@gleanerjm.com and
tayloronblackline@hotmail.com.