Government must lead development

Claude Clarke, Contributor

Standing out like a gangrenous thumb in the positive economic outlook that the Government tried to serve up during its annual conference last weekend was the stark fact that the economy has bled badly and continues to bleed from the woefully inept management of several government-owned-and-controlled commercial enterprises.

The prime minister bemoaned the loss of over US$400 million in Clarendon Alumina Production over the last three years and promised to get rid of it, as was done with other haemorrhaging government-owned businesses recently.

Government-owned commercial enterprises such as Air Jamaica, the Sugar Company of Jamaica, and ENROC have hung on the people's neck like an albatross, retarding the country's development, and denying us the vital social services to which we are entitled. The total cost to the country of all these loss-making commercial ventures runs into the hundreds of billions of dollars. How much could the Government have done to advance the country's development with these funds had they been available for that purpose?

It is good that Government has now, albeit forced by adverse circumstances, taken the decisions that should have been taken many years ago to lift some of this heavy financial burden from the backs of the Jamaican taxpayers. But it would be unfortunate if the Government did not learn the more important lesson from these costly experiences: that the role of government should be confined to the things the society needs, which cannot be otherwise provided; and that it should never become involved in activities simply because it has the power to do so.

In determining the functions it should undertake, government would do well to adopt the three "burden of proof" questions which were used by the New Zealand government to determine the activities for which it should be responsible. The questions are: Should it be done? Who should do it? Who should pay for it?

This litmus test was adopted by the New Zealand government in the 1980s when it was on the brink of bankruptcy and the economy was chronically uncompetitive and unable to transition to industrialisation. The approach succeeded spectacularly. New Zealand has since been transformed from a relatively poor, agriculture-dominated economy dependent on concessionary United Kingdom-market access to a more industrialised globally competitive economy. Its government began running budget surpluses, and the country is now rated the most peaceful in the world.

Similar test

Had a similar test been applied by the Jamaican government, we would never have squandered hundreds of billions of dollars on wasteful commercial adventures, which have only served to create fiefdoms for privileged party favourites to preside over.

This propensity to own and manage commercial businesses has diverted the attention of Government from its real purposes of:

• Ensuring public safety;
  
• Facilitating the rule of law with a reliable and fair system of justice;
  
• Assuring and encouraging educational opportunity for all citizens;
  
• Ensuring the availability of health services for all our people;
  
• Providing proper help for individuals, who genuinely cannot meet their own basic human needs;
  
• Providing good stewardship over public property and the environment, and maintaining an environment conducive to economic opportunity and development.

Experiences such as those of New Zealand have reinforced my belief that before we entrust power to our political parties, we must ensure that they disclose their true intentions for seeking power. It is up to us to ensure that they lay out their plans, starting with a clear and concise statement of the philosophy that guides them, their core values and guiding principles, and the beliefs which provide their raison d'etre for national leadership. This would provide a basis on which the public could test the sincerity and credibility of the many promises politicians so eagerly make when they seek our vote.

Their philosophy, if it is to mean anything, must embody a vision for the country - a vision capable of inspiring our people to embrace a future better and brighter than is immediately within their view.

However, this vision will be of no value if it is not converted to a clear mission supported by an agenda of policies and actions capable of bringing it to reality. Such an agenda must be based on a detailed analysis of needs and benefits, costs, and budgetary implication, if it is to have validity and credibility. This is the level of seriousness that must be brought to the promises made by our political parties if they are to show true respect for the people whose trust they are soliciting.

In laying out their agenda, our political parties must reveal how they envisage their role as government and how they will achieve the development they all claim they will bring. They must lay out their strategy for creating the broad overarching conditions within which development will take place.

For me, the most important of these broad conditions is the transformation of the attitude of our people to one that is more conducive to an environ-ment of production. There must be a commitment to lifting our national social capital to a level that will engender trust and acceptance of our common interdependence; a new social paradigm that will result in a greater adherence to discipline, order, and respect in the society. I am firmly of the view that it is the erosion of these social qualities that has contributed most to the retardation of Jamaica's development in recent decades. The social divisions, suspicions and adversarial relations between individuals, between management and labour, uptown and downtown, Jamaica Labour Party and People's National Party, and the tendency towards a sort of social apartheid, have led to the squandering of our human potential and productive capacity.

Social order

Social order and respect for law and the rights and interests of others yield high economic rewards wherever they exist and explain much of the success of the world's most prosperous countries, many of which have very few natural economic assets. A major part of what comprises national competitiveness is peace and social harmony, which reveals why 15 of the 20 most peaceful countries in the world are among the 20 richest. Pew Research has established that the wasteful and corrosive problems of crime and corruption are relatively absent in such countries, and public trust is high.

Our political parties must tell us how they will go about creating such an environment of order and peace. I firmly believe this can only be achieved if the rule of law is rigorously applied from the top down, beginning with our political leaders. In this way, the rest of us could be assured that our justice system and other systems of accountability will faithfully expose and punish infringements of law and ethical standards by anyone who holds public office.

At the same time, those who come to us soliciting power must tell us how they will organise the justice system and law enforcement so that the ordinary citizen will be able to rely on the State for justice and security. Recognising that it is only with the assent and support of the people that law secures its validity, this is a most fundamental prerequisite for achieving peace and order in the society.

It is this environment of order combined with the creation of meaningful economic opportunity within the country that will at long last end the economic dependence of whole communities on the proceeds of crime, and liberate thousands of our people from what they may see as benevolence, but what is in fact the tyranny of dons.

Vital institution

Contrary to popular talk, Government is the most vital institution in the development of an economy. It is Government and the public service it embodies that determines how smooth and efficient will be the flow of commerce and the factors that go into the productive process. But Government as it operates in Jamaica today is an expensive impediment to production, and, therefore, deep changes in the way it operates must be made to transform it to become a facilitator and partner in production.

The development surge experienced by many emerging economies around the world did not happen only because of the acumen of their businessmen, but by the confident and inspired leadership of their governments. From Lee Kuan Yew in Singapore to Erskine Sandiford in Barbados, inspired leaders have taken bold decisions which have guided their countries towards development.

The goal of development requires successful private enterprise, but private companies cannot be successful in the global environment without a government that is focused on development and is prepared to make the major cost factors, which are entirely outside the control of individual businesses, internationally competitive. The outrageous cost of energy, the result of decades of government neglect; the usurious price of capital created by Government's dominating presence in the domestic debt market; and the bloated size and cost of government are burdens the producers of the country's wealth should never have to bear.

Our political parties must give us specific plans for bringing each of these cost factors, for which the government is responsible, to international competitiveness before we can believe any promise of development will be fulfilled.

All the talk of growth will be just that if our political parties do not radically change their approach to governance: if they do not commit to restrict their activities to government's core responsibilities, create a society of trust, peace, and opportunity, and manage the economic costs for which it is responsible so the people will be able to produce and compete with the world.

Development plans that do not address these issues are not worth the paper they are written on, and the high growth performance the country so desperately needs will continue to elude us.

Claude Clarke is a former trade minister and manufacturer. Feedback may be sent to columns@gleanerjm.com.