Ian Boyne -fileThe Prime Minister has made her clearest statement yet divorcing herself from the populist ideology to which her critics had wedded her, making it plain that, "You cannot eliminate poverty without producing economic growth and removing the distortions in the economy."
Before her election as Prime Minister, it was feared that Portia Simpson Miller, a passionate and relentless advocate of the poor and oppressed, would be reckless in economic policy, and that Finance Minister Omar Davies would have a difficult time reining in her populism. But in her budget presentation, the Prime Minister gave unequivocal public support to the macroeconomic policies normally associated with neo-liberal economics.
"When I talk constantly about raising the living standards of the poor and marginalised, it is always with an appreciation of the economic fundamentals," she declared, going on to trumpet the achievements in the macroeconomy and quoting both the Wall Street Journal and the International Monetary Fund, bastions of capitalism. If the international community had any doubt about her direction, that signal would have been welcome.
Jobs, jobs, jobs
Bruce Golding also put a fundamental issue on the agenda when he insisted that "the principal objective of our strategy must be JOBS, JOBS and more JOBS!" He could have made the debate far more useful and challenging to his political opponents if he had focused his critique on whether the policies of the Government would be able to produce enough quality jobs - or "decent work", as the Prime Minister put it, in language popularised by the International Labour Organisation.
In other words, can neo-liberal policies produce the kind of employment which will give people a liveable wage rather than the subsistence existence which Golding highlighted?
So the issue is not to quarrel with the unemployment figures or to raise scepticism about the methods used by STATIN. Both the Prime Minister and the Minister of Finance effectively and decisively countered those cynical concerns. (Though, incidentally, in fairness to Golding, he did say clearly, "I am not quarrelling with the statisticians," but showed that his real concern was with the quality of the employment.)
I am interested in a serious debate on the issue of employment, but in this pre-election period it is almost impossible to get that discussion going, for the partisans will be too busy tainting serious analysis. The Prime Minister responded to the jobs issue by showing that, indeed, many decent jobs had been created by the boom in construction which is as a direct result of the Government's aggressive infrastructural development programme.
Some J$36 billion has already been spent on highway and export expansion with more to come. The highway construction provides a major boon for the investments in tourism.
Impressive telecoms
Telecommunications infrastructure has also been very impressive. Jamaica is a regional leader in this area. From the beginning of liberalisation in 2000 until last year, network capital investments by the three largest telecoms firms have been estimated at J$88 billion. Many businesses have been spawned as a result of the liberalisation and phenomenal growth of the telecoms sector.
There is a fundamental point to keep in mind and that is that work itself has changed markedly over the last few decades. The typical Jamaican's mentality about employment is about "opening some factories so the youth dem can get work." The days when the creation of employment was synonymous with the opening of factories are long gone. The service sector now accounts for the majority of jobs in emerging economies, as economies have continued the historical shift from a primacy in agriculture to manufacturing and now to services.
It is time we start educating people about how profoundly employment has changed in this globalised era. When the factories do come, they are often capital-intensive and labour-saving. Politicians still continue to talk nonsense about attracting foreign direct investment as the answer to the under-employment crisis.
If they don't have time to read, they should employ people who do, so they can know what is happening in real economies.
Jobless growth
The phrase "jobless growth" is well-known in the economic and development literature-and even finds its way in the news magazines. This is why the issue Golding raised is so important, but he did not pose it in as incisive a way as he could.
The issue is: Can the neo-liberal, minimalist state produce growth with expanded employment? The issue is not really that "the fundamental problem with the Government's economic strategy is that it is not geared to stimulate growth," as Golding posed it. The issue is this: Even if the Government's model produces respectable growth, is it the kind of growth that will lead to appreciable decline in under-employment and subsistence existence? Can the minimalist state really oversee a significant expansion in employment, and what specifically pro-employment growth strategies need to be used to maximise employment?
Golding made a telling point in his budget debate when he said, "Job creation cannot be a hoped-for byproduct of our economic strategy. It has to be the central purpose of that strategy." This is a profound point which Golding could have built his entire speech around to produce a really stimulating debate with the ruling PNP.
Interestingly, in the development literature Golding's point is precisely the point being made by progressives who are wary of neo-liberalism. But it is interesting that in Jamaica it is capitalists who supposedly believe in "the magic of the free market" who are talking about "what is the Government doing to create jobs?" I thought that according to the capitalist model the Government was only supposed to create the right macro-economic conditions, get out of the way and watch the private sector grow! How come in this market economy private sector people are now talking like socialists and asking plaintively, "what is the Government doing about jobs?" Weren't they the ones who said government should leave that to business? They want to eat their cake and have it.
Foolishness
I hear financial analysts talking foolishness about the budget having "no plan for jobs or growth," when according to the neo-liberal model and the Washington Consensus it is entrepreneurs who are supposed to create jobs and economic opportunities in a liberalised economy.
One of the problems we have is an uncreative, non-entrepreneurial, non-risk-taking, rent-seeking capitalist class spoilt by years of import-substitution and Government protection and largesse. The economy has been liberalised but not their mentality. This will be a problem under any political administration unless the paradigm changes.
While I accept that a number of the elements of neo-liberalism are necessary for social transformation-for, as the PM said, "you cannot have social development without economic growth". I believe in an activist state.
One of the lessons of economic history is that the states which oversee economic growth have to be flexible, creative and non-doctrinaire. There is no perfect model. This is why there must be a philosophy behind state action. The philosophy could be that of employment expansion, equity and social development. It can't be just growth and trickle-down economics. And this is where, interestingly, both the Prime Minister and the Opposition Leader are agreed. She is strong on a pro-poor, people-centred development strategy. And Golding is no doctrinaire free marketer who believes that we should just free up the economy with the expectation that jobs will be automatically created.
Gov't must strategise
Golding is saying, rightly, that Government must strategise for employment expansion for "we will never be able to lift our people out of poverty by way of crash programmes, PATH programmes or poverty alleviation programmes. We just don't have the money." He is absolutely right. Both the Prime Minister and the Opposition leader are saying some similar things, but it is not expedient to make that point in an election year. The PM believes strongly in growth and fiscal discipline-balancing the books while balancing lives-and Golding also believes in a growth which results in decent employment and hence poverty alleviation.
What they must tell us in their upcoming personal debate is how their strategies would best achieve that.
I have always said small business and entrepreneurial development has to be given priority.
The PM has done the right thing by using $1 billion from the National Insurance Fund to support small business. The Small Incubators Programme is also an excellent idea. But what is still needed to really push small business and youth employment is for genuine venture capital facilities to be created - true development banking.
Create a $500 million fund to support the business ideas of the many bright, innovative and out-of-the-box thinkers and doers we have in Jamaica who don't have the traditional collateral requirements. Making money available which many people can't access is not enough. Take some risks with the poor. Some will fail. That is the price we have to pay for the successes of those whose productivity will help transform this country.Foreign investments won't solve the jobs crisis, and politicians must stop telling poor people this nonsense from political platforms. The rise of India and China has pulled away potential investments from places like Jamaica. And remember also low-income countries like Vietnam, Laos, Cambodia which are also doing well. Wake up and smell the coffee. We haveno overseas saviours, whether multi-lateral lending agencies, foreign investors or institutional investors.
Also, to those financial analysts who believe that focusing on the poor, as the PM is doing is a drag on prosperity, I recommend just one book - the 2006 World Development Report put out by the World Bank and titled "Equity and Development". It shows that supporting social development actually assists, not inhibits, prosperity and growth.
"Equity is complementary in some fundamental respects to the pursuit of long-term prosperity. Greater equity implies more efficient economic functioning, greater trust and better institutions, with dynamic benefits for investment and growth."
The pro-poor emphasis of the Prime Minister and Bruce Golding's centre-piecing the provision of jobs rather than just macro-economic stability provide the basis for any prosperity and wealth-creation, dear financial analysts and private sector spokespersons.
Ian Boyne is a veteran journalist who may be reached at ianboyne1@yahoo.com
