Martin Henry THE JAMAICAN national economy has just too many of the features of the ghetto economy, trapping it in the no-growth and poverty conditions which have come to be the persistent state of affairs. Ghetto economics has been widely studied, particularly in the United States. We have an excellent profile on the economy of the ghetto, and the Jamaican economy fits that profile all too well.
The ghetto economy is largely an informal economy. Government regulatory mechanisms are weak and ineffective, or absent. People live by beating the system indeed are marginalised rather than included by the system. A recent study, which got a lot of media play, is estimating the 'legal' informal economy at 43.5 per cent of GDP. The study divided up the informal sector into three categories: Pure tax evasion, the irregular economy which covers the production of legal goods and services in unregistered and untaxed operations, and illegal activities. That study did not attempt to measure the strictly illegal economy, that is, economic activities which not only breach tax and regulatory laws but the criminal law.
When this criminal economy is tacked on to the estimate of the size of the informal economy, clearly the total size or the informal sector exceeds 50 per cent of real GDP just like in the ghetto.
Another news report said, "Jamaican economy propped up by dirty money". "The Jamaican economy continues to rely heavily on money from the illicit drug trade which represents a significant portion of the country's GDP", local law enforcement officials were reported to say. These officials are estimating that money inflows from the drug trade far surpasses the combined revenues of tourism and remittances, accounting for more than 30 per cent of foreign exchange income.
The drug trade, and trade in contraband in general, is a prime feature of the ghetto economy and a principal means of sustenance. One has to chuckle in amusement and amazement as learned economists and Government officials drone on and on about a widening trade deficit year after year. Consistently importing more than is earned from exports simply cannot be sustained for any length of time. The trade gap is closed, in practice if not in economic calculation, with off the books, dirty, strong dollars without which the Jamaican ghetto economy could not survive.
Remittances into the Jamaican economy are the equivalent of welfare benefits into the ghetto economy of developed countries. Income without work. Another significant source of ghetto income is extortion. Hol' down tek wey from those who produce something to support those who don't. An inequitable tax system to which income earners in the formal economy face maximum exposure, under the table payments to speed up slow and inefficient public services, and the national borrowing to support an unearned national lifestyle and which cannot well be repaid carry many of the features of extortion in the ghetto economy.
The ghetto economy exports capital and skills rather than attracts them; so does the Jamaican economy. There is little hard data on investments lost or which failed to materialise. We prefer to crow over the crumbs picked up. There is much better data on the net outflow of skills. Teacher migration is back in the news and it isn't even summer when recruitment is highest for the new school year. The nurses are leaving in a steady stream. There have been recent estimates that up to 75 per cent of those educated to university degree level live and work outside the country.
But the ghetto economy is characterised by high unemployment and there is no need for skills to stick around. The unemployment figure in the Jamaican economy has hovered around 15 per cent since the 1960s. From time to time getting worse; seldom getting better. When under-employment and quite marginal hustling, illegal and 'legal', are tacked on the real employment situation is even worse. In the ghetto and Jamaican economy, the principal business of young women is to breed and of young men to hang out on the corner. In the youth category unemployment is not unknown to crash the 50 per cent barrier.
Sheer waste of human energy not applied or poorly applied to productive purposes is a hallmark of the ghetto economy. The whole Jamaican economy has managed only marginal growth in productivity and has in fact experienced extended periods of substantial reversals in productivity since Independence.
In the ghetto economy, consumption rules and saving and investment are weak. Designer clothes, fancy hairdos, music equipment, parties, you name it; but not capital accumulation. Whatever little accumulation takes place is invested mostly in safer locations outside the ghetto itself.
Low savings rates characterise the Jamaican economy. Consu-mer loans are number two after loans to Government from the domestic banking sector. Capital is sequestered in safe Government instruments and is kept out of production.
Crime is the principal growth industry in the ghetto economy, and it controls everything else. It kills opportunities. It drives away capital and skills. It blocks investments, both from within and without. It breeds fear, raises risks and cramps confidence. And it gives people bad addresses. You don't get employed from community X, and you don't enter Britain from Jamaica without a visa.
In the scholarship of ghetto economics there are endless debates about how ghettos develop and how to fix them. I am not jumping in today. They have their own economic and social patterns. I'm just comparing. The Jamaican economy resembles the classic ghetto economy too much point for point.
Economies rest on psychological and cultural pillars. If we can't fix the ghetto mindset and way of doing things we cannot create an alternative economy and society.
Martin Henry is a communication specialist.
