EDITORIAL - The economic Quixotes

Richard Byles, one of corporate Jamaica's finest minds and co-chair of a committee that monitors the government implementation of its agreement with the International Monetary Fund, is neither an apologist for the Simpson Miller administration nor a basher of the private sector.

If anything, he believes that the private sector is the real driver of economic growth and that for too long, it has been impeded by a meddling, ham-fisted government.

He is also a refreshingly straight talker. Which is why we commend his remarks last week to anyone who seriously thinks about, and is serious about, finding solutions to Jamaica's economic crisis.

"From my point of view as a member of the private sector," Mr Byles said, "I see the Government doing what we said they must do. I think it is up to us now in the private sector, myself included, to do what we think is good business, which is to invest and look for opportunities."

carping commentators

But sensible arguments like Richard Byles' are at risk of being undermined by carping commentators who believe their, or the Government's, hands are better than those of the market. They seem to require the paternalism of the State.

This group - a subsector of those who, illogically, demand stimulus spending by a broke government - gripes that the Government's tax measures, and its programme of fiscal containment, are contractionary. They acknowledge only en passant that these are aimed, in part, at paying down the national debt.

Yet, they appear to offer no concession to the fact that in the past, when revenue projections were unmet, Jamaican governments merely borrowed some more, crowding the private sector out of the debt market, thus weakening prospects for investment, job creation, and economic growth.

The result: a debt of 150 per cent of GDP - and the cause of today's austerity.

incentive pitch

Curiously, too, the critics complain that unregulated companies - those other than a handful of mostly financial services firms and big utilities - will be allowed claw back a chunk of their payroll tax from their corporate income tax. They argue that the concessions are not likely to find their way into new investment and would, therefore, prefer that such credit be accessed after specific job-creation projects. They propose that incentives be applied to regulated companies .

On the latter point, we make no comment, but there is a particularly disturbing aspect to the former: It perpetuates the distrust of the private sector that has long been at the heart of Government's attitude towards business. Moreover, the dismissal of this scheme as, at best, a half-worthy incentive, seems almost a rejection of those who argue that small and medium-size firms are the ones, in the right circumstances, most likely to create employment and stimulate growth.

There is a blasé, almost contemptuous, ignoring of the zero tariff on manufacturing inputs, as well as other measures that will lower factor costs and effectively reduce corporate income tax rates and the potential impact of these on manufacturing.

There are, we believe, legitimate causes to criticise the Government's economic policies. But cavil gets us nowhere.

In any event, Mr Byles is right. What Government must do is create a competitive environment for firms, not attempt to be the hand of the market. The private sector must act on what it demanded and got.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.