Sun | Jan 29, 2023

Put economy over politics

Published:Sunday | April 1, 2012 | 12:00 AM

Shalman Scott, Contributor

NOW THAT the two major elections - the parliamentary and local government - have come and gone, it is time for the country to refocus on other matters, chief of which is the state of our fiscal situation, specifically, and the economy, generally. Since 1973, when the Organisation of Petroleum Exporting Countries dramatically increased the price of oil on the world market with its crippling impact on small and vulnerable economies such as ours, we have been struggling to regain some semblance of sustained fiscal stability for the last 39 years.

During this period, each succeeding decade the clarion call from the political directorate ranged from exhortations to tighten our belts to biting the bullet, for if there is no pain there will be no gain, they argued. This we believed, as we absorbed the downsizing, rightsizing and re-engineering exercises under the trusteeship of the multilateral institutions - the International Monetary Fund, World Bank and Inter-American Development Bank - to the painful adjustments under the programme of liberalisation and globalisation. The advanced economies of the world in tandem with the multilaterals marketed globalisation through the use of the 'Convergence Theory' to convince, if not coerce, weak economies such as Jamaica that with the integration of international production countries that are poor and struggling economically and socially would become strong and wealthy, based on the principle that a rising tide lifts all boats.

Experience of poorer nations

When it became clear that the experience of the poorer nations of the world turned out to be opposite to what the new paradigm of globalisation promised, the convergence theory was downgraded to a conditional convergence theory in which a new concept, 'the absorptive capacity' of countries, was put forward to explain why the promised economic redemption under globalisation, to the contrary, has increased social inequality, poverty and unemployment globally. It was argued that the extant structural and economic vulnerabilities within the economy of countries like ours make it almost impossible for us to absorb the positive benefits - at the optimal rate and quantum - occasioned by the advent of globalisation. By this time, we already had signed on to the trade liberalisation policies under the general agreement of tariff and trade GATT transitioned into the World Trade Organisation - by the removal of external protective barriers to trade leaving our exporters, including our farmers, exposed to international competition on a playing field that was neither fair nor level. The internationalisation of capital was now in vogue, where transnational corporations and transnational corporate confederations were now free to move capital, goods, service and technology across borders, but the movement of labour remained unambiguously restricted.

For most of the past 39 years, particularly in Jamaica, successive administrations have been busy reconfiguring and realigning the national economy and in the process - to a large measure - have withdrawn the state from the public space it previously occupied through a long process of privatisation and divestment. The social impact of these adjustments have been crippling for the most part, resulting in the distortion in business activities and dislocation of workers with a noticeable increase in commerce within the informal economy, inclusive of street vending. Not to mention an increase in illegal and illegitimate transactions. The plan was for the private sector to be the engine of growth within the economy, and that prosperity and progress was to be achieved through this minimalist approach to governance. This has not worked well, and at the time of writing, a second supplementary estimate in less than two months of the new government in office is about to be presented to the parliament. Not a good sign, indeed, but we are encouraged by the frankness and forthrightness of the new minister of finance in his honest communication with the nation.

Not all gloom, doom

While, on balance, the story of the last 39 years is not all about gloom and doom, as some progress has been made in the areas of health, education, physical infrastructural development, communication and sports, among other areas, the sticking point is that these have come about by other nations and international financial institutions providing the money. Our limited progress was not paid for by us as we remained trapped in a habit of the overconsumption of imported goods and services, and the underproduction of goods and services for domestic consumption and for export. Consequently, the gap created by this perpetual posture had to be filled by borrowing until we have now reached the zenith of a dept trap. And as our economic situation continues to deteriorate, the most palatable option which was temporarily open to us was to borrow more money to pay what we had previously owed. That option is all but closed.

Default is not a word we wish to use, so the Jamaica Debt Exchange (JDX) and what it promised began to see some modicum of success and then ended in failure as, along with three tax packages in 2009, this plan removed $82b from the hands of private households-occasioning serious compression of demand in the economy. In the meantime, the JDX has left many pensioners and retirees with less money from their hard-earned savings with which to pay for an ordinary existence.

Against this background of economic challenges, excessive partisan point scoring must take a back seat to the urgency of the need to effectively and cooperatively deal with our economic challenges. The elections are over, the people have spoken, it is full time for us to turn to each other for our economic salvation. Our worsening economic difficulties is a growing problem that presents a wonderful opportunity for unity, as no one has to convince us that things have gone very wrong in the state of Jamaica. But, I believe, if the country settles down we are capable of winning this battle in the end.

Shalman Scott is a political analyst. Send feedback to