Devon DickRECENTLY, GLEANER Honour Awardee and managing director of the influential National Development Bank, the Honourable Kingsley Thomas, suggested, while speaking with Power 106's talk show host, Ronnie Thwaites, that the high interest rate policy be changed.
It is not surprising that this idea was expressed on that programme facilitated by former PNP Member of Parliament and deacon of the Roman Catholic Church Ronnie Thwaites, who has the interesting thesis that the high interest rate policy has led to the greatest transfer of wealth from persons who are poor to persons who are wealthy.
In response, the Most Honourable Prime Minister PJ Patterson, a former Minister of Finance, defended the need for that level of interest rate to defend the value of the Jamaican dollar against the other foreign currencies. A devalued dollar would lead to runaway inflation, instability in the economy and its attendant consequences.
SHOOTING DOWN IDEAS
This was not the first time the Prime Minister has had to shoot down an idea posed by Mr. Thomas. Late last year, this civil servant called for a State of Emergency to deal with the then rising murder rate. Arguably, Kingsley Thomas knows little about security and defence so his ball bowled concerning a State of Emergency was easily dispatched to the boundary. However, he has greater knowledge about economics and has a track record in development projects in Jamaica, notably Highway 2000 and Emancipation Park. He also claimed in an interview with The Gleaner that the hotel resort project for this year will make Highway 2000 pale in comparison. Perhaps he also feels that a high interest rate policy might affect other projects.
There is merit in re-examining the high interest rate policy and I would like to re-hash an old idea I had some time ago. After the April 1999 riots, Rev. Dr. Burchell Taylor, Rev. Dr. Peter Morgan, soon to be bishop, and I were asked to present papers to some church leaders on the way forward. Dr. Taylor suggested for the medium-term that the Church should develop and manage a type of values and attitude campaign. I made some short-term suggestions, including a call for churches and their members to accept a lower interest rate on their deposits. The Church, being the largest organisation in terms of committed membership and adherents, could lead and make a difference. In addition, there are Government agencies that have deposits and people of goodwill who could be persuaded to accept a lower interest rate on financial instruments in the national interest. This could be for a period of 15 months and would give the country a breathing space to save jobs, develop projects, grow the economy and reduce the debt of the country by billions of dollars.
This idea would be similar to the Butch Stewart/Leachim Semaj save the dollar initiative. There are persons who claim that it is the market or market forces, meaning some unseen hand, that determines the value of the dollar.
LONG-TERM BENEFIT
Psychologist Dr. Semaj and businessman the Honourable Gordon Stewart prove that the market or its force is not some abstract thing out there but rather 'we are the market'. For that alone Dr. Semaj should be offered a national award. The market is comprised of persons and people who have a body, mind and spirit. People usually make rational decisions that will benefit them, their families and their country. If persons recognise that it is a long-term benefit to have a lower interest rate then most will buy into the idea.
Economics is not an exact science. Demand and supply theory is not uniform. Normally, the more expensive the good, the demand weakens but for goods of ostentation such as perfumes, the more expensive is the greater the allure.
Another example of people determining the market was couple days ago, a hotel in Ocho Rios was purchasing one British pound sterling for $85 while the banks have passed the $100 mark. This hotel is saying that they are not prepared to go higher than $85. A similar thing can happen to the interest rate. The Government needs to have a social contract on the interest rate.
It is hoped that from the PNP's NEC meeting and the JLP's meeting over the weekend, ideas to deal with the high interest rate will emerge because there needs to be a rethink concerning the interest rate strategy.
The Rev. Devon Dick is pastor of the Boulevard Baptist Church.
