Trade, investment and poverty

Delroy Chuck

AS JAMAICA slides into deeper poverty, increased indebtedness, greater unemployment and more hopelessness everywhere, the question is how to change path and start to make life better for everyone? That cannot happen, however, until the present administration acknowledges or understands the crisis, which seems unlikely during its tenure. Ministers, technocrats, and others with fat contracts fanatically believe we are on the right track, point to the build up of the NIR, the stable exchange rate and low inflation, and feel the problem is simply that the rest of the society won't fall in line. Yet, something is wrong when so many people are out of work, when workers are still being laid off, when the debt of the country escalates, when the total taxes collected cannot even meet half of our budgetary expenses and when the main investment is to put one's resources into government paper or secured in foreign exchange accounts.

Jamaica is poor, and will remain poor, if we continue on the present path, while our neighbours and countries that understand how to create and accumulate wealth are able to improve the quality of life and generate meaningful economic growth. What then is really wrong with our economic direction, policies and governance? The fault, I dare say, is the commitment to socialism and the socialist mentality guiding our government. Economic problems, socialists feel, come from the unfairness and unwillingness of rich countries to share, aid and give more to poor, fourth world countries like ours. The poor suffer, they argue, because the rich are greedy and unconscionable. But, is there some moral or ethical obligation on the part of the rich to help the poor? It is a fact that if wealth were properly distributed in Jamaica and across the world, there would be less poverty. It is a fact that the 400 richest people have more wealth than the poorest 3 billion. It is a fact that the top 100 multinational companies have much more disposable wealth than the poorest 100 countries.

These are known statistics that cause left-leaning intellectuals, well-meaning moralists and misguided socialists to seethe and feel the real problem is the inequitable distribution of the world's wealth, which is really undiluted nonsense. Yes, I acknowledge that the glaring inequalities within national boundaries and internationally are actually growing and possibly incompatible with peace, justice and stability, but it is not going to change by wishing and talking it away. Really, it is mindless to think we can find some moral, ethical or political principle to distribute the world's wealth.

Equitable distribution

Interestingly, if we ask for an equitable distribution of the world's natural resources then the poor countries would need to give to the rich countries, which would be preposterous. Rich countries such as Japan, Taiwan, Hong Kong, Singapore, Germany, and so on, have very little or no natural resources and it is the African, Latin American and tropical countries that would have to share earth's natural resources in any equitable distribution.

What is the lesson from this plain fact? The socialists, moralists and others who have no idea how wealth is created need to understand that wealth is not in earth's mines but created from people's minds. That is why wealth is not a constant and fixed, like earth's natural resources, but an expanding quantity and increasing exponentially with the ingenuity and creativity of brilliant minds. Each day, trillions of dollars move across the stock exchanges, monetary boards and financial institutions of developed countries, but little comes into poor countries. Why? Little Cayman Islands that could easily be fitted several times in any of our parishes have in excess of five hundred billion dollars deposited and directed from their five hundred banks. Tens of trillions of dollars are tied up in stock exchanges and monetary instruments, waiting to be invested and to create more trillions but, in Jamaica, we are happy if a few hundred millions descend on our shores when billions await an attractive economic environment.

Countries are poor through lack of trade and investment, and they fail to get investment because of wrong policies. Jamaica needs a new mindset, in government and elsewhere, that understands some simple economic principles such as how wealth is created, why business is the driving force of the economy, that money makes money, that our quality of life can only be improved through the creation of wealth or economic growth, that wealth comes through the production of goods and services, and jobs and opportunities will come when we trade more, be investment-friendly, and can produce cheaper and better than our competitors. It is through trade and investment, and not by begging and borrowing, that we can make life more meaningful and beneficial for our people.

Still, we cannot trade and get investment unless we are prepared to compete in the global economy and, so far, we are not heading towards that goal. When multinational corporations are leaving our shores to invest elsewhere then we are in serious economic crisis. We need multinational corporations to remain here and others to join them. So why are they leaving? I would argue that the simple answer is that they cannot make a reasonable return on their investment and the economic environment is not competitive in spite of the comparative advantage that Jamaica offers.

Investment and money-making

Businessmen invest to make money and look for opportunities to do so. We need to have the right mix of economic policies to make businessmen eager to invest here. But, we need to understand that they owe us nothing and when they come to our shores to invest and make money they are actually doing us a favour by providing jobs, taxes, economic activity and connections with the international economic network. When businessmen make profits, their enterprises provide work and create wealth for our country, and for that we should be grateful. When businesses decline and disappear, then poverty is the natural outcome.

Global poverty, and the poverty of our nation, will not be alleviated by the search for some elusive economic or political order to redress the inequitable distribution of wealth ­ however laudable that may be. Poverty, and all its attendant problems, can only be alleviated and cured through trade, investment and economic activity. When therefore, our people sink into economic rot, social despair and increased hopelessness, it is because our government has yet to find the right economic policy mix to increase trade, attract investment and make our products more competitive and desirable in the international marketplace.

Delroy Chuck is an attorney-at-law and Opposition Member of Parliament. He can be contacted by e-mail at delchuck@hotmail.com.

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