PERSAUD

Wilberne Persaud, Financial Gleaner Columnist

I want to try to answer two questions recently put to me. The first is easy. "You seem to be writing on issues of political choice. What competence do you have to be dealing with these things?" Sometimes I feel I have to and yes, I have no competence in matters of politics.

I comment in the same way West Indies spectators tell Lara what to do from the stands. Having watched the glorious game, recalled statistics and performances, they know they are experts. I watch the political game and do know some stats though I won't claim to be an expert.

The second is more difficult precisely because I do have a bit of competence in the area. The question is: 'How do you define a good economy?'

Jamaica is simultaneously described as growing by government and its agencies and as a kleptocracy by the U.S. State Department, while Bear Stearns downgrades our bonds.

Now there is an anecdotal story that has circulated for decades: Forbes Burnham, late former Prime Minister of Guyana, confronted with advice of economists, instructed his top aides to find him a 'one-handed economist'.

Sadly, to answer the second question I have to resort to caveats like those that perplexed Burnham.

I might actually need a more than two-handed economist.

A good economy depends upon the objectives the assessors have in mind.

For instance the East Asian economies that suffered a financial crisis have been described as having had generally good fundamentals.

Wrong-headed policies

In light of that, IMF measures were seen as wrongheaded policies that deepened a speculator-induced crisis. Closer home, the U.S. economyis described as good while simultaneously there are those - qualified and competent - who worry that the population saves too little or is dissaving, government deficit is too huge, trade imbalance and resultant accumulation of U.S. dollar reserves by China is unsustainable.

Comedians proclaim an absurdity: the U.S. economy is ripe for an IMF standby arrangement.

I have to admit, this is a question that must be answered by invoking 'on the one hand this and on the other hand, that'.

So, if in Jamaica a kleptocracy really exists, does it necessarily suggest a good or bad economy? There is no straight answer. It all depends on whether strong economic activity requires maintenance of the kleptocracy.

It can go either way. Destruction of the kleptocracy may enhance economic efficiency and productivity or it could reduce economic activity. A Bear Stearns downgrading might also occur simultaneously with either a 'good economy' or a 'bad economy'. Why? Bear Stearns ratings look to the future, making judgment calls which admittedly, do carry significant weight.

So relative to the issues raised, I can only suggest that a 'good economy' should provide a reasonable standard of living for its citizens. This should include access to jobs, health care, education, housing and so on.

Economists have a clear definition in principle, of this set of circumstances known as internal and external balance: an economy with no unemployment except the frictional type, with equilibrium in the balance of payments alongside low or no inflation and a reasonable rate of economic growth as measured by GDP numbers.

Here's a piece of belated clarification. In a December column I praised Scotiabank CEO Bill Clarke for both insight and courage. A reader interpreted my comments to be its exact opposite - that Clarke and BNS were disrespectful to and exploitative of Jamaicans.

I reread the column perhaps with greater care than I wrote it, finding no ground for that interpretation. Yet if there is one misinterpretation, there can be many. So I reiterate: Clarke referred to Jamaica as a failed state. I heard a patriot's plea seeking to place on the agenda issues that were likely to destroy his country's chances for egalitarian sustainable development and democracy. It took courage to do that.

I referred to Clarke as 'undergraduate', relative to Crawford and others who had 'graduated' to form an Owners Club with independence of action in the 1990's indigenous financial services sector.

My point was that Clarke, lacking the so-called independence of the 'Owners Club Membership', saddled with Head Office oversight, managed BNS in such a way as to maintain profitability albeit investing in government paper and making profits.

Indeed Scotiabank was most helpful to the government's agency Finsac, assisting in the rescue of unsuspecting innocents marooned by spooky decisions and behaviours of the Owners Club.

I apologise to readers for any confusion my fuzzy prose may have created.

wilbe65@yahoo.com