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Commentary>Jamaica 2020: A vision of indebtednessWilberne Persaud - Financial Gleaner Columnist |
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No we're not speaking of Jamaica's perfect vision for the future. We are doing something everyone knowledgeable of history knows is foolhardy yet indulges in: predicting the future and speaking authoritatively about conditions more than a decade away.
I am led to this by the headline over Jamaica's raising of US$350 million priced to yield 8.375 per cent redeemable 2017-2019.
Do these guys have a crystal ball? How do they know we shall be in a position to repay?
They don't. But they don't need to. Governments do not go bankrupt disappearing like corporations.
They are like a gyroscope moving after energy dissipates, they continue in perpetuity unless they manage to morph into failed states.
Inter-Generational Debt Burden
Jamaica, despite the crime wave, despite speculation to the contrary, is not set upon that road. If it veers in that direction, there resides sufficient good sense in the culture to stop it.
So the money will be repaid even if merely by negotiating a new loan at the appropriate moment.
Only problem with this is that inter-generational debt burden seems a bit unfair to the yet unborn. But why worry? They, too, can always postpone paying the debt by new borrowing.
But what of the next five years? In the United States (US), recession must be referred to its first letter - becoming the 'R' word.
Negative Real Growth
While this approach to complex phenomena may be understandable, it is not an approach that pays fruitful dividends; which is why the word is frequently used and discussed privately.
The 24-hour news-cycle-dominated airwaves, unlike cyberspace, is just not the place to have such discussions.
But we shouldn't bury our heads in the sand. Economists see recession as negative real growth. The classical economists would have deemed it 'decay'.
The widely accepted definition of recession in the US is the occurrence of negative real growth for two or more successive quarters. So we don't know if we are in recession until it has come and perhaps even gone.
The US National Bureau of Economic Research has a Business Cycle Dating Committee. One of its jobs is to call the recession, defined as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production and wholesale-retail sales".
Bracing For Change
John Public knows when recession is in play. He loses his job or his friends do; his pay or accumulated savings goes less far at the grocery; generally around him he sees production activity slowing down.
Economists see investment activity decline, attitudes move from bullish to bearish.
Jamaica and the Caribbean must brace for the impact of these conditions. As airlines find ways to fill their revenue gaps by charging for bags, cutback on routes and otherwise make flying prohibitively expensive, our tourism industry faces downturn.
Try Old Ideas
The diaspora so much in the news today will likely reduce its flow of remittances to relatives and friends. Recession equals negative Carib-bean impact.
Might it be that an old idea could flourish as reality? Forbes Burnham thought of Guyana as the breadbasket of the Caribbean - we need not assess his ulterior motives - and no agriculturist worth his salt would dismiss the idea as a technical impossibility.
The idea fails because of other factors. Guyana loses population faster than Jamaica in the modern period.
Caribbean folk with the pioneering spirit do not stake out homesteads in the bush. They rent apartments, 'kotch' with relative or friend in New York, the Big Apple, a place with infrastructure, legal, physical, business, cultural, ready-made space for human survival.
Occupy Virgin Lands
Fuel and food prices suggest this is an opportune time to claim and tame, and cultivate that vast unoccupied interior of Guyana. But there are no bright lights to be seen for miles, from nowhere!
This has been the situation from 19th century colonial days. If planters owning slaves and latterly had indentured servants were unable or unwilling to do it, what chance does it stand today?
Who is going to risk capital to open up virgin land for cultivation? Where is the labour to come from? What incentives shall be required to attract private capital?
Should CARICOM governments become involved? If they wish to do so, will our Uncle to the north approve? Is the idea even worth consideration?
Meanwhile, I must agree it is absurd to have an Australian or New Zealander in our Parliament after one year when a Jamaican with US citizenship must stand back.
US Citizenship A Problem
But this reality harks back to the British Empire, upon which the sun never set and its attitude to those upstart North American colonists. The problem of dual citizenship does not appear to me to be a problem for Jamaica. We can solve it almost painlessly.
The problem rests with the country the Jamaican chooses to hold dual citizenship from. Jamaican law allows Jamaicans to hold citizenship of another country. Let's be clear, the one country in question when this issue is raised is the United States of America. And the US does not allow allegiance to a foreign power. So, the problem really may not be ours to solve.