Don Robotham, Contributor
Audley Shaw (foreground), Shadow Minister of Finance, listens attentively to Finance Minister Omar Davies speaking during the finance committee meeting at Gordon House on Tuesday. - Rudolph Brown/Chief Photographer
THE JAMAICa Labour Party (JLP) has been scoring some important points in its criticism of the People's National Party (PNP) on the economy.
Opposition Spokesman on Finance, Audley Shaw, has been very effective in highlighting the many irregularities and cost overruns which have become the standard operating procedure of the PNP government.
But there is a problem. Such criticisms and exposures Netserv, Solid Waste, White-house and the whole lot of them which seem to go on and on without end are excellent if what the JLP intends is to remain in Opposition forever.
If you wish to become the Government, the exposure approach by itself is not enough.
GOVERNMENT-IN-WAITING?
In order to move from the posture of just being a critical Opposition to the posture of a government-in-waiting, the leadership of the JLP must begin to propose and propose convincingly. It must set out its own vision of where it wants to take the country and how it would get us there. This it has failed to do so far.
It has placed itself in a quandary in developing a vision for the future because of its current line on the economy and on the new government.
The line is that the current economic model is wrong and that as long as Dr. Omar Davies remains as Minister of Finance, then there can be no hope of economic progress. This is the substance of their position that the new government is the 'same old bus'.
They have inculcated this line of attack deeply into their supporters and they repeat it by heart. But this line has a very serious problem which is going to sink the JLP.
The problem is this: The JLP has not been able to come up with any alternative economic model to the one being implemented by Dr. Davies.
Despite all sorts of promises of such a model for over a year now, the mysterious alternative model has not been fished out of the JLP hat.
The reason why the JLP has not come up with its missing model is simple: It has no such model.
It is perfectly obvious to thinking people in the JLP leadership that the economic model being pursued by Dr. Davies is the only viable one.
The JLP leadership knows this and that is why it concentrates on the corruption issue and is silent about the much more fundamental question of the economic model behind the Budget details.
SILENCE ON EXCHANGE RATE
A classic example of this JLP silence is the way in which they have evaded taking a position on the exchange rate dispute which has been raging. The JLP leadership has yet to utter one word on this vital debate.
Do they agree with the proposal to fix the exchange rate or do they not? We need clear-cut answers!
I maintain that Jamaica has a grossly overvalued exchange rate and needs a devaluation. Look at our merchandise trade deficit figures and you will see what I mean.
In 2002, our goods deficit was US$1.8 billion. In 2003 and 2004, the deficit rose somewhat to US$1.9 billion.
In 2005. the deficit has ballooned to the enormous figure of US$2.5 billion! This is an increase of about one third in a single year!
In any other country really governed by market forces, the Jamaican dollar would have drastically devalued.
This shows how ridiculous the proposal to fix our exchange rate politically is. The Jamaican dollar is in fact crying out to be devalued, not to be artificially fixed by some backdoor political cabal.
Of course, one reason (not the only one) for this huge increase is our immense oil bill. This is the result of the consumption mania of the Escalade brigade currently running Jamaica.
They set the name brand example and the whole country follows madly consume, consume, consume!
The Government has little real interest in or understanding of production or productivity. This dancehall/carnival ethic is the real reason for the carnival of waste and corruption in Jamaica by the way, which is by no stretch of the imagination confined to the public sector.
The private sector has as much to answer for, if not more. This is why so much fuss is being made over religion and sports. Panem et circenses, as the Romans called it.
But the JLP leadership has not only been silent on this fundamental debate. They have hinted that they agree with the fixed exchange rate nonsense.
But they dare not say so plainly and forthrightly. Instead, they lead their supporters on with the belief that Omar Davies' economic model is wrong and that they have an alternative model which is different. But by now it should be clear even to die-hard Labourites that their leaders have no such model.
TIME TO COME CLEAN
The only way out of this problem is for the JLP leadership to come clean. They have to tell the country that in fact, if they came to power, they would pursue the same economic model now being pursued, but more consistently and possibly more harshly.
They need to explain to their supporters that they have misled them and made an awful mistake. They need to say plainly that the current economic model is the right one.
The real criticism of the PNP is not that the model is wrong. The real criticism is that the Prime Minister and her supporters reject the economic model of their own Minister of Finance and don't even bother to attend committee meetings of Parliament to discuss the Budget.
They need to show the country that this is a government pulling in two opposite directions and that this cannot and will not continue after the elections.
The JLP leadership needs to explain to its supporters and the whole nation what these arcane debates about exchange rates, budget deficits, interest rates and debt to GDP ratios are all about.
They need to help people understand that these terms are not at all a way to avoid analysing the real economy. These terms are in fact how the real economy expresses itself in a market context.
ECONOMIC REALITIES
When we talk about debt to GDP ratios, and interest and exchange rates, and inflation, this is simply a technical language discussing the underlying economic realities.
These terms are telling us that we cannot have sustained growth unless we achieve macroeconomic stability.
We cannot have development of any sort social, economic, community or individual unless we balance our national books first.
The purpose of macroeconomic stability is not to avoid or ignore growth or to willfully impose hardship to people.
The purpose is to remove distortions in the market so that a solid foundation for investment and development can be laid. The purpose is to make us competitive, through the pressure of market forces.
We have to get the prices right. This will not solve everything by a long shot, for the market is no miracle worker. But it is the necessary precondition for development.
It is very important for my sincere religious friends to understand these relationships, hard as it is to stomach the terrible social and personal consequences.
Our dismal merchandise figures tell you what the real source of our economic problems is.
The root cause of our indebtedness, interest and exchange rate problems and lack of economic and social development is our dismal level of productivity in the real economy. We want to consume but we do not want to produce.
LEADERSHIP QUALITY
Macroeconomic stability also requires a different, more austere, personal and social ethic, especially at the leadership level.
Such leadership has not existed in the Jamaican government perhaps since the passing of Norman Manley.
His famous Drumblair ethic of service and sacrifice has been abandoned and scorned by the present PNP leadership. In the interests of Jamaica, the JLP leadership has to change its tune and explain these harsh truths to the people.
