Finding the right vehicle ... and the right driver

Raymond Pryce, Guest Columnist

The minister of finance was recently seen on a Jamaica Labour Party (JLP) platform exclaiming that the campaign for the next general election has begun. "No more Mr Nice Guy," he shouted. And if he is correct, we are perhaps now at the start of a yearlong, no-holds-barred election campaign.

In that context, there can hardly be any surprise at the minister with responsibility for information's use of the post-Cabinet press briefing to advance his own and his party's political agenda. One wonders if Mr Vaz is rehashing his campaign to be JLP general secretary via the post-Cabinet briefing platform. In the week since her presentation at the 73rd annual conference, People's National Party (PNP) President Portia Simpson Miller has expressed "delight" that the proposals she presented for a National Intervention Programme have moved the JLP into action.

Within 72 hours of that presentation, the industry minister had transformed into a modern-day relic of the Cold War era, complete with jabs against "socialist programmes", a comment which was published on the same day Jamaica signed the socialist government-sponsored Madrid Accord and received additional millions of dollars of support from the Chinese communist government. All of this sparked by the JEEP.

What should growing economies yield?

When they are working, market economies yield certain specific, measurable and desirable outcomes. This is true, as China has proven, even when that economy is not underpinned by a democracy or overt capitalism.

1. Expansion of social services

Health, education and public safety are the classic social services that all modern societies require. The level of access, availability and quality is used to rank or place the society higher or lower on the relativity scale. It is a scale that increasingly is driven by the individual's opinion of his or her own place in a shrinking world. A process that is being fuelled by the proliferation of ICTs which now allow individuals within a certain profile to interact with, measure against and compare themselves with others on the other side of an LED or HD screen, despite the distance in space.

These three social services are also promoting, in the sense that the more of each that one has, the higher on the social ladder one is located. This is true within countries and between countries. The demand of the individual for the optimum balance (where and when and how needed) is determined on the individual level, giving modern weight and meaning to the maxim which proclaims that 'the consumer is king'.

Successful governments are those which, through their policies, expand access, availability and quality on all of these services.

Regrettably, in Jamaica within the last four years, despite the celebrated removal of user fees for health and education and recent reductions in major crimes, access to quality health care, quality education and a sense of safety and security among the population is on the decline.

This is particularly so among young professionals, who are generally understood to be post-secondary-trained individuals who have matriculated successfully into the world of work, who, all things being equal, would be on an upward trajectory. In some instances, such individuals are trained to the global standard, and on paper, at least, are marketable beyond the shores of their homeland. Dr Tufton recently complained in a response to Jamaica's plummet in the Global Competitiveness Report that people's perceptions lag behind his government's reality. Well, Dr Tufton, he who feels it knows it. Such is the nature of confidence in market-driven, open and democratic societies. Get used to it!

2. Expansion of the Middle Classes

As societies become safer, healthier and better trained, the ability to attract and retain investments in productive activity increases. This is measured classically as foreign direct investment, high brand penetration, robust exports, and remittances. These outcomes are propelled by a sense of investedness and or interestedness by others in that society.

One tangible manifestation of this is in the increase in the availability of better-paying jobs pursued under increasingly superior working conditions. Professionals begin to get job satisfaction. They acquire the modern necessities. These include, but are not limited to, comfortable housing solutions, comfortable transportation, appropriate recreation and health-seeking behaviour, and secondary entertainment (movies, theatres, restaurants, trips to new locations and exotic vacations, acquisition of luxury items). In other words, they fuel aggregate demand.

Initially, the State has a role in providing some of these key secondary services. It does this through the provision of mass transport, the development and maintenance of green spaces, provision of facilitating infrastructure and/or the implementation of appropriate policies to cover fair taxation and an incentive regime that causes the private sector to take over the provision of all such goods and services.

As that happens, aggregate demand grows, savings grow, investment grows, production grows, GDP grows, job satisfaction grows, salaries grow and the middle class expands.

Unfortunately, in Jamaica, within the last four years, these parameters have all been moving in the wrong direction. Even when the impact of the global recession is accounted for, things are unmistakably worse off than they should be, worse off than expected, and worse off than the Government is accounting for. In the absence of accepting this to be so - appropriate corrective measures cannot be made. At any rate, this administration had determined that the global recession would have been beneficial for Jamaica.

3. Increase in loans, savings and performing loans

Economies that are heading in the right direction record increases in savings (personal and national), increase in loans (personal and corporate) and increase in the performing-loans portfolio (personal, corporate and commercial).

These are parameters which are the tangible manifestation of the intangible value of business, and investor and consumer confidence. In such environments, consumers feel better about the future and, therefore, are willing and able to cover core purchases with surplus for saving, investment (homes, cars, education), and disposable income (movies, vacations, sporting events, binge spending).

Despite the belated tattle about what is contained in the 2007 manifesto published by the JLP, the manifestations over the last 49 months present a different reality. Four years on, the manifestations include an increasing number of houses for auction occasioned by foreclosure, record increases in the non-performing loan portfolio, cancellations of projects, and businesses not purchasing new inventory. Thus, the Government suffers from the manifesto vs manifestation dilemma.

How has Golding performed?

Sadly, it is now all but decided that Prime Minister Bruce Golding has failed to correctly assess the international horizon. There has been a misdiagnosis of the systemic, seasonal and environmental challenges. This has led to a failure to develop and outline a coherent, overarching plan of action with appropriate linkages and stimuli to minimise and offset the decline that has now set in. In the September 8 sitting of Parliament, the prime minister said: "One of the problems that this Government has had to contend with is that we have had to be prioritising among priorities."

Well, this is a feature of all governments. Could a reasonable person conclude, therefore, that the prime minister had misunderstood the roles and realities faced by heads of government? At any rate, the February 11 IMF report confirms that there has been a failure to prioritise and properly sequence capital projects.

This failure to prioritise, or even a failure to launch, is in evidence across many sectors. There has been dithering in the energy sector, when there should have been adeptness. There have been inconsistencies regarding taxation measures where there should have been certitude. Note the recent waffle regarding taxation on the still-to-be-defined group of energy drinks and the terse and swift response of the Jamaica Manufacturers' Association.

All such missteps and lost opportunities have compounded the economic stagnation and have prevented Jamaican businesses and consumers from leading the economy out of recession.

What lies ahead?

The longer it takes to create a locomotive for the economic recovery is the worse it will be for Jamaica and Jamaicans. People tend to adopt a wait-and-see attitude, speculation will soon set in, and as the IMF disbursements continue to be delayed, the Government may have to go back to borrowing from the local and/or capital markets. Should the Government seek to borrow locally, interest rates may go up in what will by then be a lender's market.

If the Government seeks to borrow on the capital markets, it would not be artificially able to sustain an interest-rate regime in Jamaica that was different than what the available capital is being borrowed at. Pressures on the foreign-exchange market will be heightened, especially as remittances and tourist arrivals will be suppressed if a new recession begins in the US, or even if the rate of recovery continues to be flat or near zero. So, unlike the 'duppy story' of socialism that Minister Tufton raised, the real fear ought to be the impact that Mr Golding's style of capitalism will have on all of us.

Raymond Pryce is a broadcaster and is chairman of the PNP Patriots. Email feedback to columns@gleanerjm.com and raymond_pryce@yahoo.co.uk.