#COVID19Chronicles-266: December 30, 2020-Economic conditions in Latin America and the Caribbean

The International Monetary Fund (IMF) published its ‘Regional economic outlook’. yesterday, with an assessment of economic conditions in Latin America and the Caribbean: things have been hard, especially for tourism-dependent countries, like Jamaica:

The scale of the harsh impact is well summarised with this comment:

‘COVID-19 has hit Latin America and the Caribbean harder than other parts of the world, both in human and economic terms. The relatively large human toll is evident: with only 8.2 percent of the world population, the region had 28 percent of cases and 34 percent of deaths, by end-September.’

That’s because ‘comparatively more people work in activities that require close physical proximity, and less people have jobs in which teleworking is feasible…in addition to a high degree of informality and poverty, and combined with lower trade and financial turbulence’.

The IMF highlights why the Caribbean suffered more:

‘Dependent on tourism for anywhere between 20 to 90 percent of GDP and employment, Caribbean countries were the hardest hit. Despite being relatively successful at containing the virus spread, the sudden stop in tourist arrivals and local lockdowns was equivalent to a cardiac arrest to their economies.’

Coming out of the pandemic will be an economic challenge:

‘The recovery is expected to be protracted. Our forecast is for growth of 3.6 percent in 2021. Most countries will not go back to pre-pandemic GDP until 2023, and real income per capita until 2025, later than any other region.’

But the policy outlook is clear:

‘Policies should remain focused on containing the pandemic and cementing the recovery. Premature withdrawal of fiscal support should be avoided. However, further support should be accompanied by explicit, legislated and clearly communicated commitments to consolidate and rebuild fiscal defenses over the medium term.’

What are taxes for? Some thoughts on Dr. Phillips’ proposed bank tax and some possible unforseen consequences

Jamaica’s Finance Minister, Dr. Peter Phillips, has done something rare in Jamaica: he’s managed to get a lot of people to agree on something.

Dr. Peter Phillips thinking back to easier days, when he was a dreadlocked Jamaican, not a deadlocked one?
Dr. Peter Phillips thinking back to easier days, when he was a dreadlocked Jamaican, not a deadlocked one?

Unfortunately, for him, they tend to agree that the bank transaction tax he’s proposing is not a good thing. Many civil society groups have formally commented unfavourably on the proposal. We need to see how the conversations go in coming days, including as the Opposition make their budget responses. But, the Minister also gives us an opportunity to think about some basic elements of economic policy.

Some people have applauded the Minister’s choice of taxing bank transactions because it’s almost universal (at least for all those who are using the banking system), simple, and easy to collect.

Why do governments impose taxes? In a simple sense, taxes are mainly used to finance government expenses. But, taxes can be used to modify social behaviour. They can discourage ‘bad’ behaviour, eg polluting, consuming goods or services that governments think are bad for citizens, but which tend to be consumed notwithstanding that, e.g. a tax on cigarettes or on some or all alcoholic beverages. Taxes can also be used to protect local and infant industries, by taxing imports. Taxes also allow governments to try to achieve greater equality of wealth and income. To improve the balance of payments by increasing the duties charged on imported goods. To control spending in an economy.

Dr. Phillips has not explained what is his reasoning behind the new tax proposal, but we know that the budget had a hole of J$6.7 billion to fill and the other taxes imposed still left a gap of J$2.3 billion. Naturally, if a finance minister can find an almost dead cert for a tax then he’d have to be quite wanton to ignore it. But, taxes will have other effects once they are in operation, so some of the other effects that could be behind a tax measure can still come into play.

The bank tax will have some impact on social behaviour, not necessarily in terms of goods and services bought, but in how people go about their transactions. Economic agents will try to find ways the make the fewest withdrawals possible for any set of expected transactions. At its simplest, people may withdraw cash in a lump sum and then use that for transactions, trying to steer as much as possible outside the banking system. In other ways, those who can, will resist putting their incomes into banks so that they do not have to incur costs from withdrawing it again. In economics terms, people and businesses will tend to disintermediate from the financial sector. This will have another effect, longer term, in that the ability to use the banking system’s operations as part of the government’s monetary policies will start to diminish. That may, at least, complicate matters for the government and central bank later down the road.

Jamaica already has a low saving rate, and this wont help, at least in terms of money kept in banks. People are already sizing up their mattresses as a place to keep their money. Is this really the future that the Jamaican government foresees for a country that is supposedly primed to start growing after decades of stagnation?

Because both businesses and persons will be affected by the bank tax, we will need to see how each arranges its affairs. It’s quite feasible, that once domestic enterprises have figured out what the costs are and how it may affect their profitability, they may be inclined to move away from financial transactions with each other, but trade through barter. This may not be simple, but necessity is the mother of invention. Companies can easily find out the value of their goods in terms of other products, so rather than letting money remain the medium of exchange, companies may see if they can exchange products, 100 tins of ackee for 500 boxes of paper clips. There may be accounting issues to resolve, but to the extent that no legal constraints exist, barter may well be the order of the day for some, if not most enterprises. That may be good, in that brokering of barter deals may be new work in the economy.

Persons could do the same, but maybe without the same ease. Self-employed persons would be better placed, and more so vis-à-vis enterprises rather than other persons: one lawn cutting for 10 tins of orange juice, let’s say.

Dr. Damien King, a UWI professor of economics has spoken about how the bank tax is ‘progressive’: it affects the wealthier segments of society and those who are banked, versus those who have lower incomes and are unbanked. Well, I wont argue that. He has also talked about the efficiency and effectiveness of the bank tax, and its ease of collection. I see that, too, but that is not a good reason enough for a tax. If it were, we’d have governments devising ways in which tax could be assessed and collected for almost everything. We could get a compnay to devise a breathing monitor and levy an ‘inhalation tax’, and set up systems that forced all persons to have bank accounts and tag the ‘inhaler’ to their accounts and get automatic payments to the Treasury.

The government has also done something that I see as perverse. Over the years, citizens have been encouraged to make changes in their financial behaviour, notably to use banks more (for receiving pay and making payments). Having complied to a large degree, the government can now use this more-banked society to impose a near-unavoidable tax. Well, try to get people to change other behaviours and see whether the suspicion exists that this will be the first step toward penalising those who have agreed to the new way of doing business.

Former contractor general Greg Christie says the impending tax on withdrawals from deposit-taking institutions sends the wrong signal to foreign investors. He sees tax moves like putting a levy on banking withdrawals as signalling high risk for investor.

Finally, for now, the proposed tax sends a bad message regarding tax evasion.

Tax evaders in Jamaica have an easy time. (Courtesy of The Gleaner.)
Tax evaders in Jamaica have an easy time. (Courtesy of The Gleaner.)

The government has more than enough revenue due but unpaid to cover its residual gap, but seems to have no intention of going after those payments. If that seems to be the approach, then what is to stop economic agents taking the calculated risk of not paying other taxes, given that the government seems less concerned about arrears.

The US financial sector is sharpening its swords for a battle with the Obama Administration over a possible bank tax. In that case, its aim is to recoup expenses incurred in taxpayer bail-outs of financial institutions.

Perhaps, the Minister and his band of advisers have thought through the tax measure and see no problems ahead. Somehow, I think they have a few surprises lurking ahead for them.

Jamaican governments have a low rating for credibility and this new measure does not enhance that reputation. Dr. Phillips has gone the hakuna matata route, looking for low-hanging fruit. Many would love to see either that banks profits were taxed directly. Others would love to see the government making real sacrifices. As someone pointed out, if government officials are allocated J$50,000 a month for cell phone calls, could that not be reduced, to say $10,000? Jeepers, many can survive on much less, why must the public pay for what seems like excessive usage? Without tackling the other side of the ledger well, the government again gives the impression that it is not ready to suffer along with the rest of us.

Get out of my kitchen!

There’s a part of me that ought have been dancing a jig yesterday. I read that the Minister of Finance may be stripped of certain powers related to the banking system. Yipee! In particular, the post holder has lost responsibility for appointing the Governor of the Bank of Jamaica (BOJ) and will also lose the power of having direct responsibility for the monitoring of banks and other regulated financial institutions on the island. In addition, the BOJ Governor to now get the power to grant or revoke licences to deposit-taking institutions. This would bring the BOJ in line with the Financial Services Commission, which is empowered to grant and revoke licences for the institutions it supervises.

One man and his pot
One man and his pot (courtesy of The Gleaner, Las May)

Bills tabled in the House of Representatives recently make these proposals. They propose that the BOJ Act be amended to allow for the governor to be appointed by the governor-general for a period not less than seven years–recommended by Cabinet, we can presume (so, it may not really matter that much).

But, there are a few wrinkles that make one a little uneasy. The minister with responsibility for finance may recommend to the governor-general that the governor may be removed for, among other things, failing to adequately discharge the functions of his office or failing to ensure that the bank achieves its targets. Also, at present, the governor, the senior deputy governor, and deputy governors are appointed by the minister for a period not exceeding five years. Despite a change in the way the governor is appointed, the minister will still be responsible for the appointment of the senior deputy governor and the deputy governors, who will be appointed for a period not longer than five years. I don’t understand that and hope that some consistency in appointments gets inserted when the bill is debated. Under the IMF programme, the bills must be passed by May.

We deh yah still! (We’re still here!)

An IMF team is on the island to assess economic progress through December 2013 and look at prospects for coming months. Some of the Jamaican financial officials whom I know commented casually in recent days that “everything is alright”. The official numbers seem set to pass the levels needed to satisfy the Fund. All’s well with the world. Well, yes and no. Jamaica’s economy is not on its knees, but it walks with a gait and with a bent back. It’s not striding confidently ahead and may yet find some rocks over which to stumble. But, apart from the official data, what do our eyes and ears tell us?

I cannot go anywhere in Jamaica without thinking about the state of the country–it’s economy and its social structure. I’m more struck to think when I get out of Kingston. Yesterday, I headed to Mandeville, in the hills of the parish of Manchester. It’s economic base has been based on bauxite industry activities and agriculture. In more recent times, the parish has gained from being an attractive location for returning residents. Coming back to Jamaica, often with foreign currency incomes, these people have been able to deal with harder economic times in Jamaica. They are not super-rich by any measure, but can enjoy a comfortable life. Some have found readjustment to Jamaican life a real challenge. Others have thrived on being able to get back to their national, if not really local, geographical roots. Of those, a good number try their hand at market gardening, planting and rearing enough to provide much of their daily fruit and vegetable needs, maybe with a little poultry rearing thrown in.

The parish is mainly rural and spread out. The decline in bauxite activity has taken its toll on the fortune of what is Jamaica’s third city (it’s a large town, really). A report last year noted that one of Mandeville’s former private schools, Belair High, was becoming government-funded, and begun to open itself to a wider market, in part because the fee-paying base has declined. Changes such as this are not easily seen by the occasional or casual visitor, but they are still real.

What appears more evident is the hustle and bustle of the town centre of Mandeville, or that of towns one passes on the road, such as Porus. At a glance, not much seems different from a year ago, but it seems less than in years before then. Taxis and Coaster minibuses ply their trade as usual, but I heard from some drivers that business is harder to find. People have no other options to get from settlements outside Mandeville to the centre, or from the parish to other places. Of course, the market for public transport is tough: taxis and buses will fill themselves with people and belongings and try to maximise fares from each journey. That, sometimes, means a tough time for the riders. I got an impression from people I know who use taxis a lot and a driver that the operators are fewer. (I’m frustrated that I cannot find figures to prove that.) I know, from press reports that the business has become more dangerous, with reports of attacks on drivers, and a recent report of a driver being allegedly beaten by police.

Crime has risen and that has begun to take its toll on business confidence, especially as several businesses and their owners have been targets for violent attacks. Police commentators talk about the area still being safe. Everything is relative: more crimes are reported than before, but fewer crimes occur than is say the more populous areas of St. Catherine and Kingston/St. Andrew.

I did not get to go outside Mandeville town centre yesterday, so I cannot say how things appeared in the field, so to speak. I did not go to the area near the normally bustling market, either. I still saw a good number of vendors on the road side, selling oatahite apples (in season)

Oatheite apple, a Jamaican favourite
Oatheite apple, a Jamaican favourite

, pineapples, yam (of which, I read there is a glut, and also in abundance at the Melrose Hill yam park, where I wanted to stop to grab some soup). As I pulled into the area, a flock of vendors waving roast yam and sweet potatoes rushed towards my car. “Buy one, nuh, sah!” I waved them off and focused on the lady with a large soup pot. I asked her how business was. “It’s up and down,” I heard. It’s on the busy main road that brings traffic from Kingston and east through to Montego Bay and west and south. During the week, the business will be the passing travellers, who, like me, are hungry and need a filling and easy meal to break their journeys. I reflected on the fact that it’s not an area where many tourists will reach–their loss (but that’s another story).

Soup seller, ladelling corn soup; Melrose Hill, Manchester
Soup seller, ladelling corn soup; Melrose Hill, Manchester

A few vehicles were parked and travellers were standing, enjoying what they had bought. I started drinking my soup, put down my corn for later, and headed back on the road; I wanted to get to Kingston before traffic got too heavy in the city.

Vendors at Melrose Hill, Manchester, yam park
Vendors at Melrose Hill, Manchester, yam park

Life lived abundantly would not be a bad phrase to apply to the parish, most of the time. As I noted, I did not get out of the town centre. I went to a supermarket to buy bottled water. I also went to a large pharmacy, to get school supplies for a geography project. Both were quiet; but a 10 am in the morning, that was not surprising. It was also a day on which a funeral was being held for a well-known son of the soil, and the car park to the church was jam-packed. I saw a lot of people also standing near the church. Not invited, but interested?

I also went to the post office, to try to help draw pension money for my father. However, the post office had no cash! This was a first for me. I don’t know how the government funds the agencies such as post offices, who are charged with paying benefits. I thought about the wasted journeys that had been made that day, with money and time spent for no purpose. For those, who needed to cash to do other things that day, tomorrow would have to be better. I thought of the simpler arrangements that exist in places like the USA or UK, where payment could be made through bank or even post office accounts, and then spending could be done with check or credit/debit cards or online. But, Jamaica is not there. I thought about lost productivity and lost production. Another brick in the inefficiency building.

We went to buy paint supplies. We checked prices at one hardware store, then found that they did not have the colour we needed for the exterior. We went to the next store, a few minutes away. We found all we needed. A reasonable number of customers were there for the mid-afternoon. Outside the store was a large armoured truck with a guard clutching a shotgun rifle (I think, not being an arms expert). Prices were a little higher than in the other store, but we were stuck because of choice. I asked if we got discounts for bulk or for being senior citizens. We were told to ask at the cashier’s desk: we got a 10 percent reduction.

Outside the first store, a man was selling cucumbers, two in a bag, but sold as a pound; they looked really nice and we bought two pounds. I asked why he didn’t sell them by number–they all looked about the same size. “I weigh them and know it’s right,” he replied. (It’s fairer to buyers to sell by weight, but without a scale, at time of sale, the question about true weight will always be there.) Outside the other store, another man was selling yam, but we did not need any; he backed off readily and looked for the next arrival. Typical of Jamaica, people freely try to sell things and make a little living. Where there are people passing, there be markets.

On the way home, we stopped to buy fruit from a lady on the roadside, just as we entered Clarendon, from Manchester–as planned. We know her well and she was pleased to see us. We bought ortaniques, bananas, sour sop (for juice),and limes; she gave us two papayas as brawta (a little extra). She lives in her roadside shop, and I looked through the opening behind the fruit, where she had her bed. The room looked to be about 9 feet square. I wondered what else was there besides a bed. She guarded us as we tried to cross the busy road, back to the car and gave us her blessing. Screenshot 2014-02-07 07.00.51

We made one last stop, also planned, near a bend in the road where the river passes. We’d seen in the past young boys with bags of janga (fresh water shrimps/crayfish). We wanted to make soup with them. As with the yam sellers, as soon as we stopped, three youth came running with their bags aloft. They were selling one pound bags, and we got two to be sure we had enough. We bought from a boy we’d seen before, but missed out on buying because we hadn’t known the sellers would be at that spot. Now, we were ready 🙂

The car was full inside and in the trunk. That’s how it’s supposed to be when you visit the country, we joked to each other. The land is very productive and we enjoy that when we see its riches on display. But, we only see the surface, and usually that is the result who hard work and struggles needed are hidden from us.

On the radio, the first report was about the struggles of pineapples farmers in St. Elizabeth (which borders Manchester), who are being blighted by disease, low prices, and bad roads that hamper getting produce to markets. Reality check.

Christmas is here…well, nearly

“Rip van Winkle, wake up!”

The last few days of Tessannetasia have been like a 20-year sleep, allowing me to forget about the other Jamaica that was there before I looked the other way and tuned into The Voice for two straight nights. Now, I have to get back to what some would prefer us to focus on all the time–“serious news”, they call it. So, what did I let myself lost sight in Jamaica?

  • Crime, especially murders (some 1,100 and counting).
  • Road accidents (300 deaths for the year is quickly approaching).
  • Minimum wage increase (from $5,000 to $5,600 per 40-hour work week, as of Monday, January 6, 2014. Also, effective January 6, the minimum wage for industrial security guards, will be increased from $7,320.40 to $8,198.80 per 40-hour week–a 12 per cent increase, during a period when inflation has risen about 18 percent). IMF programme (US$30.8 million disbursed to Jamaica).
  • The PM’s travel schedule (with or without fatuous justifications from PNP politicians). I heard that she gave an interview to a local TV channel, so her relative silence with regard to the local media is no longer an issue: Jamaicans love nine-day wonders.
  • Vybz Kartel’s trial goes on. What’s new?
  • The Cuban light bulb scandal goes on. What’s newer?
  • Bad roads (Thank you Tessanne for making their “worst” condition an international issue :-)). Thank you Ministry of Works for taking the point.
  • Trinidad (Who’s still boycotting?). Their central bank just downgraded its growth forecast from 2.5 percent to 1.5 percent for 2013. Surely not because of you know what?
  • West Indies cricket (Can they win a match?).
  • Who is Clovis ridiculing?
  • The Jamaican dollar’s continuing decline.

And beyond our shores?

  • Santa “is white” (I heard it on FoxNews, so it must be true). I guess that means Megyn Kelly believes he’s real (he is a man?).
  • Screen Shot 2013-12-20 at 5.39.51 AMThe Chinese are on the Moon. What does that mean for its environment and possible development options. Intergalactic logistic hub up there?
  • The UK has been battered by “severe weather”, with wind gusting at over 70 miles per hour. So severe that football matches have had to be abandoned or suspended mid-kick for weird things like hailstorms. What’s the world coming to?

Some people have taken the whole Tessanne-winning thing and seen it as a glimmer of hope in an otherwise dark time. How could they be so crass? Of course, what we all need is more despair and signs of insensitivity towards each other. We all need a good dose of more grief. Who has time to smile at someone’s wonderful achievements when they could be poring over the obituaries of persons’ lives snubbed out callously?

Christmas is coming, the geese are getting fat/Please do put a penny in the old man’s hat/If you haven’t got a penny, a ha’penny will do/If you haven’t got a ha’penny, then God bless you!

No more sitting on hands

LETTER OF THE DAY – Private Sector Must Get Off Its Butt!
Published: Saturday | September 7, 2013

THE EDITOR,
Sir:

Friday’s report that “sections of the private sector remain sceptical about the extended fund facility’s chances of success …” and that “this doubt is borne out of the previous failed International Monetary Fund (IMF) programme, as well as the magnitude of the challenges Jamaica faces,” is truly troubling.

Finance Minister Dr Peter Phillips said last week that there was “a slight but important and significant improvement in investor confidence” from approval of the IMF arrangement. He added that “business confidence will improve further with Jamaica having passed the first quarterly IMF test”.

Now, we know that the private sector is not a homogeneous mass, but for this doubtful view to be given prominence makes me wonder if Dr Phillips has been misled or if he has misinterpreted the mood of local entrepreneurs. We would expect that foreign investors would be even more sceptical than locals.

My concern is that, if the Government is really going to rely on the private sector to get Jamaica growing, we have a bigger struggle ahead than we realise. If the view is that Government’s failure to adhere to the previous IMF programme holds so much negative weight, how much success under the current programme will be needed to shift that view?

Clearly, if investors wait until the programme period is well under way to get off their hands, the likelihood of growth by the end of the programme would seem to be limited, if not impossible.

Catch-22

This is a real catch-22. I’m not faulting the private sector for its doubts, because Government has betrayed trust badly in the past. This is one of the costs of lack of commitment to reform.

However, if the new social partnership is to mean something, the so-called emphasis on consensus should mean that the private sector has to show that it takes the Government’s latest commitments seriously and believes in the State’s policies and commitment.

If not, let’s all stop fooling around and talking about making more sacrifices. Let’s not hope for more foreign direct investment. If the private sector wants to get behind the effort to move the economy forward, it has to be behind the Government.

Maybe I misunderstood the views expressed, but my feeling is that the private sector wants to play a wait-and-see game, and I fear the patient may well be dead and about to be buried by the time they are ready.

DENNIS JONES

Economist

dennisgjones@gmail.com

The good, the bad, and the ugly (August 25)

Good:

  • Jamaica passed the first test under the latest IMF arrangement, subject to Executive Board approval. Can performance remain good?
  • Queens Park Rangers (QPR) start off the football season well, with 3 wins and a draw to lead the English Championship, and are favorites to take the title and rebound immediately to the English Premier League. 🙂 Early days, yet. But, you have to realise that my heart has a soft spot for the team of my childhood.

Bad:

  • The ‘will he, won’t he?’ nature of the brewing leadership race in the Jamaica Labour Party. Audley will Shawly run? With Pearnel Charles 20130824-165741.jpgheading things, I would look at the shifting hair colour for guidance.

Ugly:

  • The bubbling discontent shown by Renee Anne Shirley, former Executive Director of Jamaica Anti-Doping Commission (JADCo). She has tried over recent weeks to set the record straight about the agency’s drug testing record and its weaknesses. 20130824-211140.jpgShe went ‘rogue’ this week by penning a condemnatory article for Sports Illustrated. Most of her claims were left unchallenged, but in response, JADCo has issued a statement with more data and explanation of its recent records. Good to be reactive? Would they have done so without being ‘put to the fire’? Why do I think not?
  • QPR’s new away uniforms.20130824-163447.jpg Those green and yellow hoops look fine on a rugby team. But, really?

Where is the Jamaican economy’s ‘Donkey man’?

The Moscow 2013 World Athletics Championship saw the birth of a new Jamaican superhero. Javon Francis, an 18 year-old high schooler at Calabar, who hails from Bobo Hill. He unleashed an explosive last leg gallop in the final of the men’s 4×400 meters relay, which catapulted the Jamaican team from 5th place to 2nd, then held off a fast-advancing Russian for dear life to win his team a silver medal.20130822-172105.jpgAt the end of the race we had the now iconic image of one of his team mates shaking his legs while he lay on his back, trying to shake the lactic acid out of the limbs and revive his body. Soon, the world learned that this youth was nicknamed ‘Donkey man’. The story is that a coach at Calabar once set him to catch another younger star athlete, and when Francis was asked why he’d not caught that gazelle, he answered “I’m not a donkey.”

Today, the IMF mission reported that Jamaica had passed the first test under the latest arrangement, so should be eligible for a disbursement once these results are confirmed by the IMF Executive Board. Starting programs well is normally not a major problem: they are designed to have reachable near-term targets, which are easier to hit. The real test, like in the passing of a relay baton, is whether the country can go the full course, hanging on to get the prize, like ‘Donkey man’.

Analysts and politicians often speak about an economy’s engines of growth. To my mind, Jamaica has a real short- term problem, because the economy does not appear to have any robust or reliable engine that could pull the Jamaican train out of the terminus and head to some destinations along the train line.

The IMF program is meant to lay foundations for growth. It discusses several areas. Measures will be introduced to improve the business climate. Labour market reforms will be made to improve flexibility in the job market and reduce mismatches between training and job opportunities. The government will aim to improve public sector operations, including fiscal reforms, and enhance the courts system. Measures will also aim at lowering the cost of energy. Planning is underway to make Jamaica a logistics hub. The government will develop micro, small and medium enterprises. Small farmers will be helped with the introduction of nine agro parks to help establish an agricultural supply chain. Other measures will aim to improve the resilience of rural communities at risk from climate change and natural disasters.

Laudable though they are, I see no ‘donkey man’ in that set who will run from a losing position, screech past the crowd ahead, and continue driving its economic legs and financial arms to the finish line, to rousing applause from national and international onlookers.

The cynics out there hold a natural fear that Jamaica will not make any major changes and the economy will continue to limp along in its seemingly casual ‘business as usual’ state. Growth numbers will remain anaemic.20130822-181646.jpg We will perhaps see some signs of newness, like with the uniforms for the last major championships, but much of what is underneath is the same tried and tested.

I’ve not seen or heard much recently about the engines whom some thought could–creative industries, information and communication, agriculture, construction. Have they withered and died, like many other green shoots? Or, were they never really as muscular as some suggested?

Finance is a necessary lubricant to this whole exercise and the IMF money is an important part of that. More funding is needed, but its not enough. The PM’s current visit to China may see her bring back a few crocus bags filled with funding, and she will roll off the jet like the market women on the jitneys to Kingston, ready for a new day’s business.

Of course, none of it may matter because the whole thing is wrong and can’t work without some fundamental changes, from top to bottom.

20130822-183233.jpg

Take your marks

News media should always be on the look out for good metaphors. Today’s Gleaner ran a leader entitled ‘What policymakers might learn from athletics‘, and had a wonderful sentiment: ‘As a country in economic crisis and with deep social problems, Jamaica’s athletic power matters. It, in a sense, stands in vindication of our worth and as a metaphor for Jamaica’s possibilities.’ Fraser-Pryce_2642119b

Let me try to take the baton handed by the Gleaner and run with the metaphor a little. I’m going to say that Jamaica needs to think of itself like Shelly-Ann Fraser Pryce, who won the women’s 100 metres final a few days ago in the Moscow World Championships, rather than Usain Bolt. The lady is nicknamed ‘Pocket Rocket’ for the power that seems to come from her small frame; as Jamaicans say, “Little but tallawah”–small but strong, not to be underestimated. That is more Jamaica’s stature than being Boltian, which suggests that we are faster, bigger and stronger than most. But, Jamaica is Boltian in its characterUsain Bolt: tall, brash, light on its feet, engaging, maybe also a real ginal–the Anansi in all of us.

But, we need to watch out. Jamaica’s economy, or rather management of the Jamaican economy, is also like some of its best athletes–full of promise, yet faltering at key moments. I’ve met Asafa Powell and found him one of the nicest persons I ever met: physically almost perfect, yet gentle in that giant’s frame. I love what Asafa Powell has done for the status of Jamaican athletics–held the world record for 100 metres during 2005-8; he has more (nearly 100) legal sub-10 second times for that event than any athlete in the world. Despite his winning big international individual events (100m and 200m), such as during the IAAF World Athletics Finals, however, he has come up short when put to the biggest tests–Olympic Games and World Championships. But, not only did he ‘underperform’, he did it in ways that cast doubts on his psychological make up. In his own words (after losing to Tyson Gay in the 2007 World Championships–my emphases): “When Tyson came on and gave me a little bit of pressure I just panicked. When I saw I wasn’t in gold medal contention, I gave up in the middle of the race. I just stopped running.” He did not embody the name of his running club, MVP (Maximising Velocity and Power). Try and fail, but don’t give up! He has had injuries at crucial times. Finally, after not qualifying for the national team for the current World Championships, he has come under scrutiny after a failed drug test. He (and another, female, star athlete) did not follow MVP club protocols, and now the club coach has cast them aside, saying he’s “they are on their own“. Asafa represents the image of ‘not taking the chances that are given to you’.powell Asafa runs the risk of people not believing that he will deliver his best. Some would say that is Jamaica, too, after a series of IMF programs and a stream of promises regarding economic policy actions.

The image of Asafa losing a major final or pulling up lame, or wilting when put under pressure, eyes downcast, stands large in front of me. Asafa makes us suffer!

Jamaica also reminds me of the 400 metres runner: after trying to sprint hard for most of the distance, lactic acid builds up and the muscles begin to feel like lead weights in the legs. The arms pump and legs try to push, but it feels like you are running in wet cement. The feeling is worse, if others in the race are not so badly affected, and pass you in a way that makes it seem that you are going backwards. Kirani James suffered that way, it seems, as he faded badly in the 400m final this week. Shock! In truth, the flagging runners could not maintain their form while others did not drop off so drastically. When you run this race, you feel sick to your core at the end of the race. Spent. Drained. Never again. Till the next time.

Eventually, the athletic body’s basic strength cannot give any more and, on bended knees, it stays motionless: the Jamaican economy, with its potential to do many great things, has been stagnant and underperforming, according to official statistics. Anecdotes and what the eyes see, however, do not support that picture fully. The body has moved better than seemed plausible. Have drugs been injested and are they flowing through its veins to enhance its performance? That’s literally and figuratively very likely. It has had its cocktails of old-style, over-the-counter ‘performance enhancing drugs’ (IMF loans, World Bank loans, Inter American Development Bank loans, Caribbean Development Bank loans, bilateral grants). It has had ‘acupuncture’ too (Chinese investments). It has tried mysterious ‘herbal remedies’weed (supplied by many local ‘collie men’ and foreign dealers). It has rubbed itself with different oils (Ecuadorian, Mexican, Trinidadian, Venezuelan), all of them work a little, but still don’t give enough energy and flexibility; joints are still stiff. It’s tried some local solar treatments, but finds that it prefers to be bathed in oil. It’s performance could be improved if it made better use of the wind, but it often blows in the wrong direction. What to do?

An IMF team is due to arrive in Jamaica today to review economic data and government policy implementation under the latest arrangement. I found it quite ironic that yesterday it rained all day and into the night–a flash flood warning was issued. I couldn’t help but think of the comments attributed to Madame de Pompadour, official chief mistress of France’s Louis XV (15th), in the mid-1700s: ‘”Au reste, après nous, le déluge” (“Besides, after us, the deluge”). France had just come out 2nd in a devastating war, losing its American colonies to the British, its status diminished and virtually bankrupt.

Jamaica never had any empire, but it stood head and shoulders above other Caribbean countries and acted imperiously in 1961 when its people supported the idea of leaving the West Indies Federation. That led to the famous statement of Dr. Eric Williams, the then Premier of Trinidad and Tobago that, “One from ten leaves nought”. Jamaica then decided to stand up alone, for its independence from Britain, over 50 years ago, in 1962. Jamaica has since become bankrupt, in some senses, with its public debt now standing at an unsustainable level–150 percent to GDP–its status diminished.

But, once again, Jamaica has found herself qualified for a major event and a chance to get it right, to win the race that will vindicate its promise. She’s had lots of time to prepare and training went well. She has not reported any major injuries to hamper performance. The time on the warm-up track looks to have been well spent, and she is relaxed. The crowd waits patiently as she approaches the stadium and then heads to the blocks laid out for the start of the final race. She takes up position in the starting blocks. Eyes seem focused. Some sweat beads form on her brow, as anticipation builds and nerves start to jangle. She’s like Bolt, not known for her fast start, but knows that a good start is really important. Oh, if only she could be like Shelly-Ann, and blast out and be leading from the first stride. So, which performance will be we see? All hands are clasped in prayer, and voices can be heard whispering: “Don’t stumble out of the blocks. Don’t false start and end before the race begins. Hold your form till midway. Finish strongly through the tape.” The eyes of the people standing in Half Way Tree look up at the big screen. How will this race be run?Start

Jamaica started as a sprinter, then turned into a middle distance runner, and now, aged, it is trying its hand at the marathon. No matter what the event, to succeed in each takes a lot of hard work and dedication. Can Jamaica take on the Olympics motto of “faster, higher, stronger”? Or, has it adopted the Olympic creed, The most important thing in the Olympic Games is not to win but to take part, just as the most important thing in life is not the triumph but the struggle. The essential thing is not to have conquered but to have fought well“?

My eyes will be glued to how Jamaica performs in the IMF version of athletics over the next few days.

It’s a great house, but it needs some work

Many literary works are best remembered for their opening lines. For that reason, amongst many, I have always loved Jane Austen’s Pride and Prejudice, which opens:

‘It is a truth universally acknowledged, that a single man in possession of a good fortune must be in want of a wife.’

Likewise, I have to love the most recent IMF report on Jamaica, which opens:

During most of the past three decades, Jamaica has suffered from very low growth, high public debt, and serious social challenges.’

That may deserve a ‘Wow!’ Put differently, the IMF said that Jamaica had pretty much wasted the second of its two generations of independence. That wastage has shown up with an economy that has done little to produce higher real incomes and jobs, a system of government that was based on spending and borrowing much more than its revenue, and a fractured society. Let’s hear another ‘Wow!’

The Encyclopaedia Britannica defines political economy as a ‘branch of social science that studies the relationships between individuals and society and between markets and the state, using a diverse set of tools and methods drawn largely from economics, political science, and sociology. The term political economy is derived from the Greek polis, meaning “city” or “state,” and oikonomos, meaning “one who manages a household or estate.” Political economy thus can be understood as the study of how a country—the public’s household—is managed or governed, taking into account both political and economic factors.’

I’m going to take the liberty of making a tour of Jamaica’s political economy along various paths, with no precise end-point in mind other than an attempt to look at, and think hard about, many things Jamaican, economic and political, trying to remember the stark assessment given by one of the world’s leading institutions of economic analysis and policy formulation.

I try to point out to people that when they have conversations with Jamaicans they need to keep good eye contact: many messages are sent non-verbally and if you let your eyes stray you may miss some very important cues given by the body. For the same reason, you need to maintain bodily control in case you give cues mistakenly by the careless movement of some body part. Examples? Watch what Jamaicans do with their mouths and eyes: they can quickly give approval or disapproval without a break in speech, or without any need for speech at all. The rolled eyes. The pushed out mouth. The headed shaken side to side. The hands on hips.

I was waiting in my car yesterday afternoon in Mandeville town centre. I’d double parked and was getting tooted by a few taxi drivers and yelled at by a few people, “Muv de cyar outta di rode nuh, Dadda!” Then, my eyes caught two things: a bill poster and some vendors on the roadside. I wanted to take a quick picture of the vendors while they sold gineps and newspapers. One female vendor noticed my roving eye and said “Me cyan ‘elp yuh?” I quickly adjusted my glasses onto my head and replied, “No, I’m just trying to read the poster behind you.” Her eyes opened a little wider and she smiled, cocking her head a little to the side. Oh dear, I thought, she thinks I was making a proposition and now I need to make sure that she understands that I am not interested in anything she may be selling. The verbal exchange might have seemed clear, but the ocular exchange was fraught with danger. I was saved as the person on whom I was waiting came out of the Top Loaf bakery, bullas in hand, and jumped into the car. I pulled off hastily.

I don’t know how many Jamaicans have bothered to read the IMF’s report, or even looked at its table of contents (noting that the country has above average literacy rates). Let’s assume that at best it’s no more than half of the population within the island. The majority of the population, therefore, is not really focusing on what the IMF has to say. It is more likely–as good Jamaicans would–to be taking good note of what it can perceive of the IMF’s body language and what the IMF appears to be doing: Is it nodding, shaking its head, smiling, tapping its fingers, drumming its foot, kissing its teeth? Those ‘non-verbal’ signals come and will come in the form of how the IMF reacts and the money it’s prepared to dole out. Talk is cheap; money buys land. The IMF’s no charity, mind, and it has said basically that the country is in a major bind: ‘Repeated efforts to overcome these economic problems, often with Fund support, have failed to result in an enduring recovery.’

Mandeville is far from Hell in anyone’s eyes, and it’s no Paradise, either. It’s a lovely spot, sitting on lush hills and benefitting from cooling breezes. It’s local economy and society has many features which mimic Jamaica as a whole: it has a strong base in the bauxite industry; it has excellent educational institutions at all levels; small-scale agriculture is still an important part of its life; small businesses abound; it has a strong religious base; remittances from abroad have helped many people sustain a decent life style. It is in a Parish that has produced many brilliant politicians and thinkers. It has many hard-working people. Its economic fortunes have gone down in recent years, with the demise of activity by the bauxite industry. People have seen income-generating opportunities dwindle, and that manifests itself in many ways, including in house-building projects that remain stalled and homes that cannot be rented. However, it does not have the swathes of shanty dwellings common in parts of Kingston. Poor people are plentiful, for sure, but with the land and families as their support, most people appear to be doing better than getting by. It has begun to see an upsurge in certain kinds of violent crime, but that is still on a relatively lower scale. It does not reflect a wasted generation of opportunities. Despite the evidence that economic fortunes have faltered, much of Mandeville seems to bustle now as it did years ago. I get that same impression about much of Jamaica. I note this to say that the ‘truth universally acknowledged’ about Jamaica needs to be stripped down. I’m not implying that the IMF assessment is wrong, but suggest that it begs one to dig much deeper than the words and numbers. So, along my path, I’m going to try to scratch a little to see what I can find under the surface.

A friend asked for my opinion about what to do with a family homestead in Mandeville. I visited it with my in-laws yesterday, and we all agreed that it has a wonderful location, with stunning views to all sides. The house shows its age, but within that aged body are some strong bones: the old iron stove in the kitchen looked as good as new and we could imagine the smells of what had been cooked in it over the years. However, the house needs a lot of renovation. Whether it is sold or rented, it will remain a great place. It would be a wonderful permanent home. It would be a great guest house. It would be fabulous for functions. It needs energy and some money spent on it to bring it up to date. I took my in-laws from that house to Bloomfield Great House, and looked at it and its views over Mandeville. “You see the potential that has been realised, at least in part, here? The homestead has the same opportunities,” I said to my in-laws. They nodded. Sounds familiar?