Recently I saw a post on social media saying Jamaica is ranked second poorest nation in the Caribbean.
While that isn’t much of a surprise since this nation under the PNP hasn’t been able to muster up anything remotely near proper growth for the pass twenty odd years in power that could move Jamaica out of the quagmire it is in it does make rather sad reading. Jamaica is only ranked above Haiti and if the Haitians get there act together we could end up at the bottom of the pile.
One is left to wonder why is it that the once thriving economic juggernaut of the Caribbean has swung so far down the pike, and so quickly. The PNP comes to mind. Cumulatively for 18.5 years the PNP has stumbled along at 1 to 2 per cent growth rates while the rest of the world was growing at an average of 9%. Not only that, but while they were destroying the economy, they were racking up debt, hundreds of millions worth and wasting it or most of, it fattening up a small set of people, in cost overruns and other such schemes, and wasting it on winning elections. I remember Mr. Pickersgill saying some years ago that they believe that what is good for the party is also good for the country. Frankly the permutations of that is very terrifying. That statement however, gave a pretty good insight on many of the fool hardy projects that never got anywhere, started by the Government of the day and the subsequent millions wasted putting these projects together.
But the real thing that set back Jamaica into the middle ages (so to speak) was the destruction of the economic base of the country- manufacturing and services that was laid by the previous labour party governments from independence onwards, by the PNP under Michael Manley. Once that was over the economy was set firmly on a path to development again, by a Labour Party government. During that period of the 1980s the average growth rates was around 5%, but as figures showed, 1986 and 1987, the economy recorded over 7% percent growth rates per year! Rates never seen before and we probably will never see again. But true to form, the destructive, tyrannical nature of the PNP came back to shred the economic base of the country, once again, this time wiping out the financial sector. Once the financial sector went, so did the rest of the economy. Mind you, those banks and other institutions were mostly homegrown, started by business men that saw an opportunity to invest in their country-not out of patriotism only, but because they saw an opportunity to make money and thereby enrich themselves and the country by extension. To give an example of the poor state of affairs under the PNP, look at what happened in the 1990s in the following which is taken from the Inter American bank study entitled, Productivity and Competitiveness in the Jamaican Economy. It gives sober readings.
Over the decade of the 1990s the performance of the Jamaican economy was rather poor according to most macroeconomic indicators. The period was characterized by negative or very low rates of economic growth as well as high levels of unemployment. After achieving a growth rate of 5.5 percent in 1990, the highest growth rate Jamaica was able to achieve during the 1990s was 2.0 percent in 1993. Negative rates of growth in real gross domestic product (GDP) were recorded over the 1996 to 1999 period. The unemployment rate remained at over 15 percent of the labour force during the period. The inflation rate has only recently been brought under control after reaching a rate of 77 percent in 1992. The control of the inflation rate in a low-growth economy along with remittances from abroad enabled persons to go over the poverty line. The number of persons below the national poverty line declined from a peak of 44.6 percent in 1991 to 15.9 percent in 1998 but increased to 16.7 percent in 2001. Jamaica’s external debt service ratio was over 15 percent for the decade, while the trade balance deficit grew over the period. The value of export goods fell between 1995 and 1999, while visitor expenditure grew at a slow rate. The government struggled to keep the fiscal deficit under 8 percent of GDP.
Two things of note here: the 5.5% growth rate achieved in 1990 was a spillover from the 80s, and even though poverty declined from, 44.6% according to the report it was due to remittances, not an expansion in economic growth. So do we have to wonder why we are the second poorest in the Caribbean?
From the same report look at what happened in the 60s and compare who is better at creating wealth.
Jamaica enjoyed relatively high rates of economic growth during the 1960s and early 1970s. The real GDP grew between 2.0 and 8.6 percent during the period 1960 to 1973. The inflation rate was also relatively low during the 1960 to 1972 period.
The ironic thing is that even in the 80s when we had negative growths rates of 2, 5% it was better than the positive growth rates in the 1990s!
What caused all those business men to invest in Jamaica in the 1980s?
Simple. There was an economic model that was working and producing wealth. An economic model not based upon ideology, but pragmatism and common sense, put into place by a group of people headed by a very sensible Prime Minister, who knew about development. Mr. Seaga demonstrated what is necessary to produce wealth, and create goods and services that people want to buy at a very competitive price.
The Chinese are doing that now. Very efficiently I might add. He also knew something that is very important. By creating an environment that is conducive to wealth creation, smart people, not so smart and plain old Uncle Tom can see opportunities to start up a business and thereby create wealth. Unlike the nonsensical approach that the PNP took in 1990s of deficit spending, that ran us into the ground, the Seaga approach produced wealth and provided employment for thousands. After the Manley years where unemployment soared to ridiculous levels, the administration of the day sent back thousands to work, thereby allowing workers to go about creating wealth for themselves, and enriching the country. The island’s GDP for 1985 was US$1.7 billion. That isn’t ‘chicken feed’ money. That common sense approach to development was the hallmark of the government then, whereby the economy was well on its way to producing wealth and is what is needed now to turn this economy around.
Good economic management is not about “black man time” but an understanding that a country cannot barrow more than it earns and cannot develop based on borrowings. That is the PNP growth model. The great Winston Churchill said that a country cannot develop on borrowings as its like a man standing in a bucket and trying to pull himself up by the handles.
The wayward economic policies of the PNP administration over time that has sunk Jamaica to be ranked second poorest in the Caribbean!
There persistent policies of destruction have been an albatross around Jamaica’s neck. They can win elections, primarily due to being blessed with charismatic leaders (curse to the Nation) and an intelligentsia (not so intelligent I might add in their choices), backed up by the media and a divided opposition, but are extremely poor at governance. Even in the last budget presentation there was no indication of a path to prosperity by the Finance minister as the budget was lacking in every important detail.
What is needed in Jamaica right now is a re-thinking of our economic policies and a re-ordering of the priorities of the government. It’s ironic that Jamaica is loaded with so many economists but does so poorly at producing economic growth. Maybe it’s because they actually think orange or red and not clear. Jamaica needs to get from second to last and quickly if this nation will ever prosper. I think that cannot be achieved with the present crop of politicians on the PNP side. They are the same ones that got us in the mess we are in, and sadly from what we are seeing the young ones are the same. It’s not a laughing matter that we desperately need a new way forward. A way that actually puts Jamaica on a firm footing to make her great.