JLP, PNP in IMF trap
Published:Sunday | December 4, 2011 | 12:00 AM
Ian Boyne, Contributor
In central Jamaica tonight, the prime minister should deal with the central issue on Jamaicans' minds, according to the polls: jobs, jobs, jobs. The election announcement is already anticlimactic, with the prime minister having teased us for so long and leaving it to everybody but himself to "call it".
The scandal over the Jamaica Development Infrastructure Programme (JDIP) should be exercising his mind more than jobs, however, as that issue has the potential of robbing him of his opportunity to call much more than the election. The election will be over in a few weeks, so we, as a nation, had better start concentrating on a post-election agenda.
Scandals will come and go. There have been many in both political parties in the past, and I hope you are not so hopelessly naïve to believe there won't be more in the future, whoever wins. It is astounding the faith we have in people and their incorruptibility, once they belong to our tribe. We never learn. Of course, we cannot adopt a fatalistic attitude about corruption and must press our politicians to establish governance systems and procedures which can minimise corruption.
But there is an even bigger issue than JDIP or Trafigura at this time, which after we have huffed and puffed, we simply have to return to face. The elephant in the room is the economy.
The Gleaner has been doing a stellar job in attempting to focus our attention on issues and ideas, rather than the histrionics and propaganda which ritualistically consume the political parties, especially at election time. Of course, we need to tie the parties down to some specifics and some concrete commitments, and I hope our journalists do that in the upcoming national debates.
But I say we need to go beyond probing what the parties will do about this or that matter and what specific positions they will take on certain issues. We need to discuss, urgently, economic philosophy. Andrew Holness, Bruce Golding before him, and the JLP have made it abundantly clear that they are fiscal conservatives, free marketers par excellence and state minimalists. At the recent JLP conferences, Golding again shouted emphatically, "Government can't create jobs; Government is not the solution. Government is the problem!"
UNPROGRESSIVE AGENDA?
The PNP, meanwhile, has come out with a document it mislabels the Progressive Agenda which, in my view, is gross intellectual promiscuity. Weeks after proposing the Jamaica Emergency Employment Programme (JEEP) and after several promises to explain how it would work, the PNP is still mum. I am one of the few who have not ridiculed JEEP, but the fact that the PNP has taken so long to articulate it shows its own lack of conviction about a non-neoliberal, progressive path to economic development.
So what is interesting is that while there is a global ferment over the state vs the market; the one-per cent vs the 99 per cent; the jobs crisis and the issue of economic inequality, in Jamaica there are only market fundamentalists in our political parties. If there are some who believe otherwise, perhaps for expediency (they need private-sector funding to win the election), they dare not open their mouths. There are certain economic dogmas which remain unquestioned - and which are repeated incessantly by our main financial analysts, commentators and, sadly, our University of the West Indies lecturers/professors.
So you have two main contestants in the upcoming general election but one basic economic philosophy. The difference being who is less corrupt, more trustworthy, more efficient and has the better team to implement the International Monetary Fund (IMF) model. And while there are many commentators in the print and electronic media, there is only one basic economic philosophy which is being espoused, with only variations on the theme. Neoliberalism has an intellectual hegemony in Jamaica.
How do countries really grow? Is it enough to rely on purely market mechanisms to achieve growth with equity? If we fix our debt and fiscal problems, and get back on track with the IMF as The Gleaner is urging us in front-page editorials (and the PNP is echoing), will we create the jobs? If we put in good economic managers, adopt rigorous fiscal discipline, eliminate corruption and garrison politics, will investors flock here with jobs and our own domestic investors invest? If Government gets out of the way, removes bureaucracy and reduces its size significantly, will private-sector investment take off?
I would like us to have a discussion on these broad issues. The dominant view in Jamaica that economies grow by private-sector activities and market mechanisms is absolute myth. The economic scholar Ha-Joon Chang has amply demonstrated in his book Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism that the world's first industrial country, Britain, used protectionist measures to grow its industries.
Capitalism rescued
Franklin Delano Roosevelt's New Deal rescued capitalism in America and brought the US out of the Great Depression of the 1930s. Said he in his second inaugural address: "Government is the instrument of our united purpose to solve for the individual the ever-rising problems of civilisation. Repeated attempts at their solution without the aid of Government had left us baffled and bewildered."
Now a staunch neoliberal like talk-show host Ronnie Mason, who I listen to every morning, would say dismissively, "That's old, outdated stuff. That's the old way of doing things. Get with the times and cut out all that rubbish."
Well, let me skip a whole slew of data I have to demonstrate how Japan, South Korea, Taiwan and even Singapore achieved their astounding rates of industrialisation and became known as the Asian Tigers.
Let me skip the data relating to the Scandinavian countries like Sweden, Denmark and Norway famous for their social welfare systems and cradle-to-grave assistance to their people (and strong mixed-economy model). Let me also skip the European experience where the level of public sector contribution to GDP is very high.
Let me also skip the Latin American experience which shows empirically that that region did far better when it pursued an activist state model of development rather than the neoliberal model.
The neoliberals here would agree that Brazil is an economic giant. It is projected that by 2030 Brazil will be the third-largest economy in the world after China and the United States - in that order. Brazil is already one of the much-touted BRIC countries (which include Russia, India and China). Brazil has a very activist state and has strong state industrial champions. Brazil has used state-funded development banking to fuel its economic development, using, for example, levies on insurance and investment companies and directing pension-fund capital to mobilise resources for industrial financing.
More balanced model
At the close of 2008, Brazil had, through BANDES, its development bank, approximately US$120 billion in funds. When commercial funds dried up after the global crash in 2008, it was these funds which helped Brazil to weather that economic hurricane. In the just-released Economist special annual publication, The World In 2012, there is a fascinating article by Brazil's President Dilma Rouseff provocatively titled, 'The Brazilian Model'. I commend it to you, Ronnie (Mason) but also to the other Ronnie (Thwaites), for referral to his party.
Says the Brazilian president: "The rich world is now searching for a more balanced economic model ... . First, we should build a more balanced relationship between the state and the market. Governments should allow markets to do what they do best ... . But governments must also work to avoid the instability and income inequality that result from unregulated markets ... . Market self-regulation is no substitute for government regulation."
She goes on to say: "The market alone does not improve income distribution. Government action is needed." If anyone says that in Jamaica today, he would be chased out of the room with his "backward, old-fashioned, socialist thinking". Yet the issue of inequality and equity dominate economic and social analysis in the most sophisticated places today and is very avant-garde - except in Jamaica.
Next time I will go to China and India - whose economic prowess no one dare question. But have you noticed, come to think of it, that these giants have a strong state sector and that the icon of laissez-faire capitalism, the United States, is in deep crisis, primarily a job crisis? Can we learn nothing from this? But let me take you to the US itself.
You have to read the Harvard-trained former Michigan Governor Jennifer Granholm's book, A Governor's Story: The Fight for Jobs and America's Economic Future. Granholm did everything the IMF model prescribes. "I cut government more than any other governor in the history of Michigan and Michigan cut more (in percentage terms) than any other state in the nation. By 2007, we had 11,000 fewer state employees than in 2001 and workers had given back US$600 million in concessions through unpaid furlough days, wage givebacks and increased benefit contributions." Just what The Gleaner is calling for!
She cut taxes massively, drastically reduced the debt and fiscal deficits. She freed up capital for the private sector, but continued to lose jobs. Yet Michigan was repeatedly cited by Site Selection magazine as one of the top three states in America for new businesses. She applied all the neoliberal prescriptions, and yet it did not produce the expected results. She now learns that "in other countries, citizens expect their government to intervene to help spur growth, build and preserve industries and create jobs. Nations like Singapore, China and India rely on active governments to stimulate the economy."
Yes, Singapore. She quotes the dean of the Lee Kuan Yew School of Public Policy at National University of Singapore as saying, "America's anti-government mentality is causing it to lose ground ... . The United States must become more engaged in economic planning. In a ruthlessly global marketplace, only prudent and judicious government intervention can help an economy change course and adapt."
Is anybody in our political parties listening?
Ian Boyne is a veteran journalist. Email feedback to columns@gleanerjm.com and ianboyne1@yahoo.com.