Pyrrhic victory and bitter medicine

Robert Wynter, Contributor

History tells us that in 280 and 279 BC, the Greek king Pyrrhus beat the Romans, but suffered so many casualties proportionally that, in the end, he lost the war. In reference to the battles he won, Pyrrhus admitted that another such "victory" would be a disaster. That infamous battle gave rise to the term 'pyrrhic victory', translated as being one gained at too great a cost.

The recent announcement that Jamaica has 'passed' its first IMF test was timed with almost military precision to coincide with announcements that the economy registered a decline during the April-June 2013 quarter, making it the fifth consecutive quarter of decline.

It was also announced that the major primary-surplus target was achieved by throttling spending to counter lower-than-expected tax collections, contributing to greater sluggishness in the economy. This pyrrhic victory was, therefore, received with tempered enthusiasm, even within the hallowed halls of the People's National Party'sheadquarters.

What has given me more concern than the parlous state of the economy is the seeming lack of credible solutions to get sustainable growth and development.

SICK PATIENTS NEED DOCTORS

Medical doctors are trained to cure ailing patients and to help maintain healthy ones. One first identifies the symptoms, understands the underlying problems that cause the symptoms (diagnosis), and applies corrective measures to the underlying problems (prognoses). Doctors look at symptoms such as changes in temperature, pressure, weight, and colour of eyes. Having diagnosed the cause, the doctor prescribes medication to 'ease' the symptoms and to 'correct the cause'. Only quacks try to simply treat the symptoms.

Jamaica can be likened unto a patient. The country has been sick for a very long time. The symptoms are clear - high debt, low growth, poverty, high crime, low education outcomes, etc. We have hired a government to diagnose the root causes of the symptoms; and to provide the necessary medication to ease the symptoms and to address the causes.

As far as the economy is concerned, we look to the economic management team of finance minister, financial secretary, Bank of Jamaica (BOJ) governor and Planning Institute of Jamaica (PIOJ) director general for diagnoses and prognoses.

BOJ Governor Brian Wynter suggests that our poor economic performance is caused by drought, weak domestic demand, and slow recovery in the global economy. PIOJ Director General Colin Bullock also suggested drought and the weak global economic environment.

Both officials were extremely superficial in their diagnoses. If not, they would have at least explained the reason for our economy being stagnant when there was no drought and when the global economy was doing very well.

Finance Minister Peter Phillips was far more strategic in his diagnosis when he said that "despite the gains made by Jamaica over the past 75 years, the country is yet to establish an economic foundation that will enhance growth and development and allow citizens to achieve their dreams if they work hard". Dr Phillips is spot on. Having grown an average of less than one per cent over the past 30 years, we cannot simply blame drought and the weak global economy.

Having been very statesmanlike in identifying the real root cause, the goodly finance minister could not resist being partisan while addressing Comrades when he continued his speech by blaming the current situation on the previous administration.

Predictions and projections

If we are to believe Messrs Wynter and Bullock, prognoses have already been put in place. So both are "predicting" a turnaround in the economy. Mr Wynter suggests that "the projection for real GDP growth is predicated on improved investor confidence, continued expansion in the global economy and more robust growth in credit to the private sector given the release of resources as a result of reduction in demand from the public sector".

Mr Bullock stated that overall prospects for the upcoming period would be more favourable, mainly because of "positive performances in most industries as well as the continued implementation of growth-inducing capital projects".

Minister Phillips, unlike his two lieutenants, has not indicated there will be a turnaround soon. He told the gathering that "despite the challenges, the Government is determined to reduce the debt and to set the platform for growth. Reducing the debt means that we cannot borrow anymore money, and that means that you have to find a way to live within the available resources ... ." The Government is operating with a tight budget, because we are not going to borrow and sacrifice our children's future anymore."

While we are very clear that the IMF programme is designed to reduce the debt, we are not very clear on how we will grow the economy. Although Minister Phillips indicated that "what we are doing is to create the conditions that the private sector can expand their businesses, set up new businesses, and employ people", consecutive administrations and finance ministers from both political parties have been saying that for a very long time, without success. What the minister has failed to enunciate is what, or how, he will do things differently to establish the foundation.

RESURRECTING COST SHARING

At the height of the 2011 general election campaign, then Prime Minister Andrew Holness told Jamaicans to prepare for bitter medicine. Having predicted the bitter medicine, I find it strange that the goodly opposition leader is complaining now that the said medicine has manifested itself in many forms.

We have seen the public-sector wage freeze followed by devaluation, effectively making it a cut rather than a freeze. The latest manifestation has been the announcement from the Ministry of Education that auxiliary fees are now compulsory, prompting Mr Holness to accuse the Government of regressing to cost sharing. Bitter medicine does not discriminate!

Compliance with the previously voluntary auxiliary fees ranged from below five per cent in some schools to more than 95 per cent in others, with an estimated national average below 50 per cent. With an approximate 200,000 students between grades seven and 11 and an average auxiliary fee of $10,000, the ministry's paradigm shift (which incidentally was not part of its strategic plan approved by the Cabinet only weeks ago) seeks to have the schools collect a substantial portion of the $1 billion not now being collected.

What is not clear, and the ministry needs to clarify this very soon, is how schools will enforce this new compulsory requirement if they have no power to turn away students whose parents cannot, or will not, pay the auxiliary fees?

I do not believe that quarterly press conferences by the BOJ and the PIOJ are necessary, as the heads of these institutions invariably give us information with superficial analyses and prognoses, and they cannot be held accountable for national economic performance.

Instead, the finance minister or the prime minister ought to provide quarterly reports to Parliament on the state of the nation, with adequate diagnoses on unfavourable variances and the required prognoses to get us back on track.

I have been heartened, to some extent, by the prime minister and the opposition leader each conferring on to her/him the 'transformational leader' label. Nothing either has done has convinced me that they are worthy of such a label.

However, I must give them the benefit of the doubt that each has recognised that the Government needs to transform and that such transformation will redound to the benefit of the country. Based on the prognoses offered above, only Dr Phillips appears to be transformational in nature. His next step is to find the will to operationalise the prognosis.

Robert Wynter is managing director of Strategic Alignment Limited, which facilitates organisational transformation and and leadership development. Email feedback to columns@gleanerjm.com and rob.wyn@hotmail.com.