Inequality and arrested economic development

Published: Friday | April 19, 2013 Comments 0

By Wilberne Persaud, Financial Gleaner Columnist

Malcolm Gladwell's 'Outliers: The Story of Success' provides a convenient starting point to discuss interactions among status by ascription - read colour in Jamaica - inequality, corruption, anaemic rates of return on capital and arrested economic development.

I can imagine immediate mental exclamations: What a strange mix of variables! Is this for real?

Suspend judgement for a moment and follow the discourse.

Gladwell, seeking to explain the true basis of success of his forebears in Jamaica, confronts the role of colour. He relies on Orlando Patterson: "These people - the coloureds - had a lot of status. By eighteen twenty-six, they had full civil liberties. In fact, they achieve full civil liberties at the same time as the Jews do in Jamaica. They could vote. Do anything a white person could do - and this is within the context of what was still a slave society.

"Ideally, they would try to be artisans. Remember, Jamaica has sugar plantations, which are very different from cotton plantations you find in the American South. Cotton is a predominantly agricultural pursuit. [Sugar in contrast] ... is an agro-industrial complex. You have to have the factory right there, because sugar starts losing sucrose within hours of being picked. You had no choice but to have the sugar mill right there, and sugar mills require a wide range of occupations. The coopers. The boiler men. The carpenters - and a lot of those jobs were filled by coloured people."

The idea of privilege

Gladwell expands on the idea of 'privilege' with the interesting table below listing two groups of Jamaican professionals in the 1950s - lawyers and members of parliament differentiated partly by "skin tone".

His description of the categories is in itself instructive.

"'White and light' refers to people who are either entirely white or, more likely, who have some black heritage that is no longer readily apparent. 'Olive' is one step below that, and 'light brown' one step below olive, although the difference between those two shades might not be readily apparent to anyone but a Jamaican. The fact to keep in mind is that in the 1950s 'blacks' made up about 80 per cent of the Jamaican population, outnumbering coloureds five to one.

Ethnicity Lawyers MPs
Chinese 3.1%-
East Indians - -
Jews 7.1% -
Syrians - -

White & Light 38.8%10%

Olive 10.2%13%
Light brown 17.3%19%
Dark Brown 10.2%39%
Black 5.1%10%
Unknown 8.2% -

"Look at the extraordinary advantage that little bit of whiteness gave the coloured minority. Having an ancestor who worked in the house and not in the fields, who got full civil rights in 1826, who was valued instead of enslaved, who got a shot at meaningful work instead of being consigned to the sugar cane fields, made all the difference in occupational success two and three generations later."

Ascription still stands

Filling out the legacy of relative privilege his forebears enjoyed, Gladwell does not omit its beginnings in a "morally complicated act: William Ford looked upon my great-great-great-grandmother with desire at a slave market in Alligator Pond and purchased her."

With such good detail of the story 'status by ascription', jump more than a hundred years to independence in 1962. Much has changed, but ascription maintains great sway. The sentiment existing in old sayings such as: 'If you white you alright, if you brown stick-arung, but if you black stand back' capture this reality. Politics now makes inroads upon all this. The profession of MP, rather politician, now becomes the preserve of the brown and black middle class. In a nationalist phase, this group can best mobilise the vote as significant change is attempted.

Local decisions about national development create opportunities for upward mobility among the majority classes - black people. At the same time, political activities must be funded.

Here the complex interaction takes place. The upwardly mobile black businessman yearns for respect, to feel valued by the society. Since status is ascribed by colour gradation and not true capacity or worth, however defined, the recourse is conspicuous consumption. A big house, car, great clothes all announce to the society: we've arrived at good life's gate. While some see this as flawed, for the majority of the society it is merely acting out a normal human desire - not everyone is capable of the ascetic life lived in the fullness of self-confidence.

How does corruption enter this process? Contracts among this emerging group of entrepreneurs are arranged with fluid boundaries. There is room for kickbacks, cost overruns, payment of protection monies and the like.

Note however, this pattern of behaviour and operations is not confined to the upcoming group alone. It becomes ubiquitous as a process Carl Stone described as 'democracy and clientelism' unfolds, particularly as garrison constituencies emerge and mushroom.

Efforts to combat entrenched inequality in Jamaican society are not confined to government policy interventions, they are also initiated by actors operating in the economic space. The latter are convinced their actions are justified.

To the extent that government contracts, many of which over the past several decades result from external loans, are subject to forms of corruption and big cost overruns, to that extent the economy loses as the return on 'capital expended/invested' must be low. What in the books is described as capital expenditure actually funded among other things, protection rackets, conspicuous consumption and payments to inner city community residents who swell the ranks of the unemployed.

Every Jamaican listening to local news or reading the newspaper surely faces information overload of cost overruns on government projects, hotel properties with overruns in the US$50-million range over quantity surveyor budgets.

At the same time, school rooms have no crayons, on occasion even principals and teachers. This process embodies a nexus of interests all dependent on plundering capital meant to create wealth generating physical structures and institutions.

It is this nexus that truly represents what the World Bank and IDB would refer to as Jamaica's 'structural impediments to growth'.

If the objective is to mould or reconstruct Jamaica as a place in which to live, work, do business and raise a family, these are the obstacles that must be demolished.

Not having to worry about the macroeconomy for four years is indeed helpful, but an enabler is not a solution.

Wilberne Persaud, an economist, currently works on impacts of technology change on business and society, including capital solutions for innovative Caribbean SMEs. E-mail: wilbe65@yahoo.com

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