Dawn Ritch, Contributor
ALONG WITH everything else the socialist backlash has begun. The hunt for scapegoats is on. Sundry 'speculators' are being blamed for the rapid devaluation of the Jamaican dollar. The rapid depreciation of the dollar, however, is a little more complicated than that.
There is no production going on in the country, just the shuffling of Government paper by institutions and individuals, and a great big public debt increased not least of all by an admitted and mammoth overspending last year in order to secure a fourth term for the People's National Party. An overseas investment manager has even suggested "Perhaps now would be an excellent time for the Ministry of Finance to offer an exchange-indexed bond."
In my opinion this demonstrates the continued naivety of some individuals who believe that the continued pushing of paper is the solution to our problems. (Subsequent to writing this column the Government has announced that they will offer such a bond to the market for subscription. Let there be no doubt therefore, about who it is that keeps issuing the paper and short-circuiting production).
LACK OF GROWTH
The lack of growth and escalating public debt in the country (1990 Domestic Debt $11.9 billion, March 2003 $310 billion) were caused by the policies of the Government itself. It has run the highest and longest-lived interest rate regime in the world, and borrowed the most money in our history. This has beggared the productive sector, retarded recovery, and thrown Jamaicans out of work.
There is only one class of person in Jamaica today whose prospects are protected by fat salaries and perks. They are all seated in the House of Represen-tatives, or employed to the bloated Jamaican civil service. Even the Most Honourable Prime Minister P. J. Patterson is paid far more than he is worth. According to the Sunday Herald, he is paid more highly than any other Caribbean prime minister. Indeed his basic salary is nearly twice that of the Prime Minister of Trinidad and Tobago. These countries thrive while ours sinks deeper into poverty and social disorder. Nevertheless the very people who so badly administer the island are shortly to be rewarded with the payment of the last half in their doubled emoluments. Is there a single serious person among the political and civil administrators of the country?
In order to finance this on-going stupidity and their ineffectualness, we are asked to endure everything that could be taxed. So much so that there is a lingering uncertainty about the new tax regime, and the new rates are being slapped on everything out of an abundance of corporate caution. The previous flashpoint, gasolene, has been scrupulously avoided for new taxes. Nevertheless its price has gone up sharply due to the significant devaluation of the Jamaican dollar over the last five months.
Economist Dennis Morrison wrote recently in the Observer that "Our regulators ought to be learning some lessons from the failures of the U.S. Securities and Exchange Commission that allowed costly manipulation of financial markets." He accuses so-called "speculators" in a financial market created and regulated by the Government itself, and the financial entities, of driving down the value of the dollar. Jamaican regulators shouldn't need the current American situation, however, as an example of financial melt-down. Jamaica had one of its very own just eight years ago.
The only admission of fault made by the then virtually same Government was that they failed to adequately regulate the financial system and market. It is revealing that Mr. Morrison thinks the Government's memory so short that today they need reminding with an external example. They should have learnt every lesson possible from the first collapse, and need no reminders. The financial entities and their owners were blamed then for the collapse, as well as all the private investors and depositors who were accused of being "greedy" by Finance Minister Dr. Omar Davies. The same thing is happening all over again eight years later. A recent Gleaner front page intoned "With many of the country's leading financial institutions holding on to their U.S. dollars, speculators have borne the brunt of the blame for the dramatic depreciation of the dollar."
It is not speculation to hold onto your U.S. dollars when the Jamaican dollar is collapsing, and the country faces a new and major financial and debt crisis. It is plain ordinary common sense. Of course blaming the "speculators" started only after this newspaper reported that the Bank of Jamaica had blamed the depreciation on the traditional fluctuation in supply of foreign exchange, called "tamarind season". Everyone knew after that there was no point asking them any further questions. The country's economic planning was in a clueless state of shambles. The Most Honourable glibly mentioned in his Budget presentation that a "social deficit" has been avoided by virtue of the budget just tabled in the House. It seemed to escape him that the rest of the country began slipping into social deficit, meaning a dire lack of gainful jobs or opportunities, a long time ago, and from as far back as 1995.
UGLY SOCIALIST
Conditions have not improved. They have only deteriorated further, and more sharply so in recent months. The PNP Government has been unable to reverse it. Not surprisingly Dennis Morrison has reverted to the use of ugly socialist rhetoric from the 1970s. He writes things like "venomous force" (about the private sector) and "merciless disciplinary action" (about the Government). Indeed in his article called "Assault on the Jamaican Dollar" he wrote "The latest cry of those who play these dangerous games with the currency and provoke interest rate hikes is that they have no confidence in the budget, presumably because the Government did not make massive cuts in public expenditure. Yes, there is room for rationalisation..." Surely he jests. The PNP Government has been "rationalising" the public sector on paper ever since 1992 when I was invited to sit on the Nettleford Committee.
GOVERNMENT TO REFORM
This was the first of its kind to be mandated by Government to reform and reduce the size of Government and public expenditure. Since then we have no end of such committees, and all the while Government expands instead of shrinking. The hard fact is that the largest part of public expenditure is public wages and salaries. The Government preposterously proposes to double theirs and the civil service salaries, impossibly at the expense of the already beleaguered citizens and taxpayers of this country. In these appalling conditions people need to keep more of the money they earn just to afford the basic necessities of life. The dollar has devalued 34 per cent since January 1st. It seems hardly worth mentioning that the PNP inherited a dollar at 5:1 in 1989, and it's now 70:1 and climbing. Is this the "Log on to Progress" we were encouraged to support and endorse?
One day soon I hope they start to face reality and freeze all salary increases in the public sector, cut salaries and even some positions in the civil service. The people of Jamaica are struggling. These have been long hard years in profound economic recession, and we cannot afford to pay them any more money. A halt to this public profligacy must be called. Cuts must begin in the Cabinet and be carried through to the rest of the public sector. It was the Patterson administration that took the Jamaican economy off track in the first place. They must now put it back. This is only poetic justice. Welcome to the Fourth Term.
