Ian Boyne
DON ROBOTHAM is saying some important and noteworthy things about the Government's budget and the need for macroeconomic stability, but he has been overstating his case and is running the risk of being unbalanced in his analysis.
I am happy to see that a former high priest of Jamaican Marxism-Leninism, otherwise known as vulgar Marxism, has finally come to see the folly of redistribution without growth and the fantasy about the Emergency Production Plan. Robotham was one of the most fiery and loud-mouthed Marxists of the 1970s, who regularly took to the airwaves to denounce capitalism and the imperialist transnational corporations, while extolling the gospel of Marxism-Leninism, Soviet-style.
DAMASCUS ROAD CONVERSION
His Damascus Road conversion is very welcome and academia has regained a fine intellect. (Everyone who reads these columns knows the high respect I have for Professor Robotham. No single academic is quoted more frequently by me). It is often said that converts to a faith once bitterly denounced are usually the most fanatical and hard-line, and Robotham has to be very careful of trading one dogma for another. Having once so passionately espoused Marxism-Leninism, Robotham seems to be just as uncritically embracing neo-liberalism and the Washington Consensus.
Because Robotham is an intellectual for whom I have the highest
respect, I feel duty-bound to correct his flirtation with excess. He is absolutely
right in stressing the importance of fiscal discipline, budgetary controls,
competitive exchange rates and general macroeconomic stability. For too long
populist and leftist thinkers have downplayed the centrality of economic growth,
inflation control, fiscal discipline in the quest for equity and poverty reduction.
SOUND MACROECONOMIC POLICIES ESSENTIAL
But, it must be accepted that while you can have economic growth without development, you cannot have economic development without economic growth. You don't have to read the darlings of neo-liberalism Jagdish Bhagwati, Ann Krueger, or Dollar and Kraay to acknowledge that sound macroeconomic policies are essential to any sustained poverty reduction, employment-generating strategy.
It has been equally established, and is now beyond a shadow of a doubt, that economic growth and macroeconomic stability in themselves do not guarantee economic development or the upliftment of the general population. The trickle-down theory has been shattered from the late 1960s and was absolutely discredited in the 1980s. Latin America has been the poster child of neo-liberalism and yet it is also the poster child for underdevelopment and persistent poverty.
TRUISM
When the Jamaican Prime Minister talks about the importance of "balancing people's lives while balancing the books", she is not expressing populist sentiments but is reflecting the best development thinking of the past 20 years.
It is now a truism in the Bretton Woods institutions of the World Bank and the International Monetary Fund that employment expansion, equity and poverty reduction must be integral strategies in any sound macroeconomic policy thrust.
Robotham is out of step with the development literature. He is rightly concerned that the populists don't steer the new Prime Minister in the wrong directions and is on a one-man campaign to have Omar Davies retain his job as Finance Minister. I, too, believe that Davies has been generally on the right track in terms of the need for fiscal
discipline and inflation control.
I am with Robotham in battling the ignoramuses who critique Omar
without the facts or any understanding of development economics. But, he cannot
in the process downplay the importance of inner-city renewal,
small business expansion and employment creation. (I am firmly with him, though,
in the campaign against any attempt to fix the exchange rate. There is enough
empirical evidence to show this would be an unwise course).
EXCESSIVE ATTENTION TO INFLATION
The excessive attention to inflation targeting at the expense
of employment creation is being robustly critiqued in the development literature,
and Robotham needs to acquaint himself with this work if he is going to be commenting
on economic matters. (I know he is primarily an anthropologist and sociologist).
As the former director of the Division on Globalisation and Development Strategies
at UNCTAD says in a paper delivered in Geneva in February (From Liberalisation
to Investment and Jobs: Lost in Translation) in a critique of neo-liberalism,
"With few exceptions macroeconomic policy has not been directed towards maintaining
a high and stable level of employment and rapid capital accumulation..."
INVESTMENT IN SOCIAL SECTOR
Robotham himself, about a year or so ago, wrote in this very
newspaper stressing the importance of making investments in the social sector,
warning gravely that serious social catastrophe would result if we continued
to neglect the youth, the unemployed and the inner cities. That was when he
was writing almost weekly about the galloping crime rate.
If Jamaican policy-makers are ideologically blinded enough by
neo-liberalism to ignore the poor and the marginalised, then you can forget
growth of the tourism sector and any investment boom from Cricket World Cup
2007. Extortion, crime and assorted antisocial activities have a deleterious
impact on macroeconomic stability. You don't have to be a genius to know this.
People's lives have to be balanced along with the books. This is common sense,
not populism or rehashed '70s socialism through the back door, as Robotham might
be saying in his next article.
MAINSTREAM THINKING
The view expressed by the Prime Minister has become mainstream
development thinking, in case Don has not noticed. In the latest World Development
Report, put out by the World Bank and titled 'Equity and Development', it is
stated bluntly that "Equity is complementary in some fundamental respects to
the pursuit of long-term prosperity."
Listen to this, coming from the World Bank no less: "Economics
itself provides strong arguments for redistribution. In fact, a policy that
increases the income of the poor by $1 can be worthwhile even if it costs the
rest of the society more than $1. From this perspective it might make sense
for
governments choosing between alternative growth paths to choose the option that
generates the biggest return for the poor even where overall growth effects
are less certain." What a bombshell of a statement coming not from a populist
or Leftist institution, but from the traditional citadel of conservatism, the
World Bank!
And the UNDP's latest Human Development Report adds its voice
by saying that "Poverty will fall faster ... the bigger the share of any increment
to growth captured by poor people."
EQUITY ISSUES
Equity issues are not peripheral to economic growth. As the World
Development Report itself says, "Bringing equity to the centre of development
builds on and integrates the major emphases in development thinking of the past
10 to 20 years." It is not something to be afraid of, Don. There is nothing
"notorious" or frightening about wanting to balance people's lives along with
balancing the books.
Indeed, if we don't balance people's lives, the books will never
be balanced. We should have learnt that by now!
Worrying about populists and fantasy-seekers taking over the
Government and marginalising the sound-thinking First Class Finance Minister
should not cloud your judgement, Don.
GREAT DISILLUSIONMENT
All over the developing world there is great disillusionment
with the fruits of liberalisation, neo-liberalism and globalisation. It is not
just the Leftists who are documenting this. Says the latest Human Development
Report: "Economic stagnation has been a widespread feature of the globalisation
era ... most developing countries are falling behind, not catching up with rich
countries."
We have to be equally concerned that after the masses have borne
the hardships and sacrifices for macroeconomic stability, it is the elites who
benefit and they are left further behind. The masses can't wait indefinitely
for growth to take place in order for them to see the revitalisation of their
communities and to access loans to start businesses.
Of course, we can't redistribute what we don't have (and we have
to seek to reduce our thirst for borrowings), but let us not make the good the
enemy of the best. Absurd, unthinking proposals, such as those for a 50 per
cent salary increase from the Nurses Association of Jamaica, must be shown for
what it is by thinking people. Even some reasonable wage demands must be resisted
in a context where our productivity and economic stagnation cannot support such
increases.
Robotham is absolutely right in inveighing against our "dancehall
ethic" of bling and consumerism, and he is bang on target for showing that even
our churches are victims of that bourgeois trap. Of course, there are many silly
people thinking that Sister P can work magic or call on the name of the Lord
to provide jobs, housing and free medical care for every needy Jamaica. You
can't run an economy on faith-based initiatives.
But, there is no need to ridicule the imperative of employment
creation and community renewal for, while the grass is growing the horse is
starving, to use the kind of colloquialisms Robotham likes.
We must oppose both those who would trick the people by promising
the moon as well as those who feel we need to do nothing differently from what
has been done over the last few years. The neo-liberal model allows for some
policy manoeuvre and the Portia Simpson Miller administration must creatively
and sagaciously negotiate that space.
Ian Boyne is a veteran
journalist. Email him at
ianboyne1@yahoo.com.
