Is it the economy, stupid?

I had an energetic conversation with a Jamaican academic last night, during a dinner party. I let out that I was an economist and we talked about what ‘we’ do. I tried to explain that, at its core, economic policy making starts by trying to figure out what’s amiss in the financial relations of the country, and also what government officials are trying to hide about what they have been doing. The IMF has a model of economic activity that must add up (banking sector, government accounts, the balance of payments, and the real (output, employment and prices) sector. By trying to get to an understanding of where the economy is, we look at accounts for these four sectors. They should each tell the same story. If they don’t, then we try figure out why.

Well, I was getting into a description of how that is done, when I was given a barrage of comments about ‘capitalism’. Deep breath time. I went on to discuss what happened in Russia, when I worked there at the fall of the Soviet Union: “Which Russia?” I said I thought this was moving into metaphysics. We went on. “But…but…but…not holistic…leave others to pick up the pieces.” I tried to draw an analogy regarding expecting an expert in tree forestry to resolve the problems of earache in pre-adolescent children. We can’t expect one discipline to resolve all of society’s problems, no matter how interconnected they are. I did not segment the world this way. I found it so and manoeuvred in it the best I could. “That’s just…” Breathe in. Let me just tell the Finance Minister that the whole world’s economic system is a mess and as soon as it’s sorted out, he should call me and we can see how to move forward. In the meantime, I’m going to chill. I may just go and play golf for a few years.

Economix_143-editWhat are Jamaica’s problems? (Let’s limit it to that, because, we could obviously go macro and ask “What are the world’s problems?”). Even that is a large topic. Well, where do we start? Of course, everything is connected:

‘Toe bone connected to the foot boneFoot bone connected to the heel boneHeel bone connected to the ankle bone…’ Where do you start, and who’s keeping track of all the moving parts? I pull my string, but can I be sure where it’s going to tug? Economists have a view on those connections, and that’s through a set of financial relationships that have nothing to do really with the type of economic system or all of the socio-psychological aspects of humans, which we know are many and complex, and many of which we barely understand. We economists try to stick with our knitting:

Money makes the world go around
The world go around
The world go around
Money makes the world go around
It makes the world go ’round.

A mark, a yen, a buck, or a pound
A buck or a pound
A buck or a pound…

Which of the nation’s problems are truly due to economics? Some would say, it’s all about the Benjamins, baby. Solve that, and Bob’s your uncle. People don’t have jobs, then they become social deviants, and that creates other problems, and on. People have too little income (relative to what? you may ask), then the quality of their lives diminishes, and then they may get caught in one of several vicious downward socio-economic spirals. Import more than you export and the clouds will never turn grey. Keep inflation in check and all of the orchids in the Blue Mountains will bloom in unison. It’s downright simple. I don’t know why I didn’t figure it out before. Thirty wasted years!

Is Chikingunya related to economics? Yes, in the sense that a better health service could come from more funding, and that would reduce the risks people face and improve the treatment they could receive. OK. But, what about people’s general lack of hygiene and their willingness to create filthy living conditions? They’re that way because they are poor! Balderdash! That lady in the Pajero, and the great manicure, who just threw out of her window the rest of her latte and cup from some chintzy coffee house is NOT poor. She is just nasty! A booming economy is not going to make her stop doing that; she may do it more.

I leave the general question open. If it is all about economics, is the economist supposed to fix all of that and the rest of society sit back and say “Go get it, Rover!”

That seems unreasonable to me, and personal responsibility, amongst other things, was just given the rest of its life off.

Is the Reggae Boyz dismal performance in the World Cup qualifiers last year due to economics? Did Waterhouse put up a feeble effort last week against DC United because of economics? I’m not offering the answer, because my yes or no to each will and can be easily countered. If I am giving the economic policy advice to the Minister of Finance do I need to be cognisant of these relationships, which are micro-level, if they are indeed relationships?

I’m merely posing the questions, because the economist and the policy makers who are looking at the economic health of the country need to understand if the general view is that they are like The Messiah. I could act as if I have the answers to all of the problems but that’s as silly as putty.

Silly, silly putty
Silly, silly putty
Rub it on and all of your pain will vanish…

I just don’t see the situation this way. But, I have to take note that some intelligent people do. I can be a quick study, but I know little about Chik-V, but who may come calling for me to conjure up a cure for them?

Author: Dennis G Jones (aka 'The Grasshopper')

Retired International Monetary Fund economist. My blog is for organizing my ideas and thoughts about a range of topics. I was born in Jamaica, but spent 30 years being educated, living, and working in the UK. I lived in the USA for two decades, and worked and travelled abroad, extensively, throughout my careers and for pleasure. My views have a wide international perspective. Father of 3 girls. Also, married to an economist. :)

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