Sunday, March 14, 2010

Prediction, Action and Outcome


SUNDAY OBSERVER column | Sunday, March 14, 2010

My friend, the great economist Ralston Hyman, usually starts his commentaries by quoting noted international economists who have given thought to particular macro-economic problems. I, being far less sophisticated than Ralston, will therefore have to rely on my practical nature to endorse for the country of Jamaica P X A = O. Where P is prediction, A is for action and O is for outcome. Readers, please note that it is a multiplication sign between P and A, therefore, if one of the multipliers is zero then the outcome will also be zero.

For over two years, this writer has been making predictions (P), which I feel need to be acted on with alacrity. I get the feeling that action (A) is not one of our strong points in the political or productive sectors, and therefore it is no surprise that we are going to have to be governed by the IMF. So much for our vaunted "sovereignty". With that said, I wish to examine 10 issues:

1. Economic Depression
I had indicated to the public that what we were going to experience was not a mere "financial blip", but rather a full worldwide depression similar to that experienced between 1929 and 1938. We, of course, laughed at that prediction and tried to cover up the possibilities of disaster. The massive unemployment and deterioration in living conditions is a result of a lack of action, and therefore we have no positive outcome.

2. Closure of Bauxite Companies
I had predicted that due to the depressed nature of world markets we would see a closure of bauxite companies. This was treated as if it was some safely guarded secret, and no one spoke about it until reality has given us a zero outcome and severe loss in foreign exchange earnings.

3. Engineers and Machinery
I had suggested that several engineers would be out of work as a result of the fallout of the bauxite industry. In addition, many pieces of earth-moving and construction equipment would become available, and perhaps the rental rates would be less than customary as heavy equipment which is left unused often deteriorates at a faster rate than when in use.

4. Infrastructure Employment
The suggestion was made that said engineers and equipment could have been used for major infrastructure undertakings such as the construction of roads, as well as projects involving the storage of additional amounts of water and the replacement of leaking pipes, which would lower the line losses experienced by the National Water Commission. This suggestion was also disregarded. We have wasted one year in commencing operations, leaving many persons with skills without jobs.

5. Gabion Baskets
It was suggested that we engage persons with low skill levels in the production of Gabion baskets, which would be necessary for road repairs, hillside retention, river training, and sea defence. This was ignored. Today, the unskilled sit by the sidewalk, smoking 'you know what', and by not earning a penny sink deeper into depression while contemplating a life of crime as a survival strategy. The Government has lost revenue as well as consumption in the domestic market, and the poor are getting poorer. We currently import Gabion baskets from China. The outcome is negative.

6. Bank Closure and Unemployment
At lower interest rates, many banks that had over-expanded, I had indicated, would have to close several of their branches. The positive to this is that banks will now have to earn their money through good banking practices, but at the same time they will have made a significant number of people unemployed. Unfortunately this will continue for several months.

7. China's Mineral Policy
I had carefully explained the items and actions highlighted in China's strategic plan as published as part of their development programme. I indicated that their need for aluminium would allow them, as one of the few countries with cash, to buy mining resources worldwide. This is true for Jamaica and it is only a matter of time before we hear who will buy our bauxite companies. It seems we are about to sell an asset that is extremely valuable not due to our own initiative, but because of geographical location. Jamaica is in the best position for providing north/south and east/west container traffic. So let us see how cheaply we can give away this natural resource. I can almost guarantee that if we do sell them, within three years there will be no Jamaicans working at these facilities. Start studying Mandarin and Spanish, please.

8. Caricom Rules
At the time of some trade disputes, I had advised that the unilateral lowering of the Common External Tariff would be in contravention of the Revised Treaty, and businesses would be protected through the Caribbean Court of Justice (CCJ). To date awards have been made against countries that insist on ignoring the rules. So here we are again today with another dispute over cement importation, which appears not to have been handled in accordance with the correct procedures for obtaining derogation. Waivers continue to be a very topical matter, and each time they are issued they seem to smack of political favouritism. So the government willingly or perhaps inadvertently continues to set itself up to be accused of corruption, which is certainly shared by the IMF based on their stance against waivers.

9. Transparency
The suggestion was made that to take a path other than the purely transparent route would be to intentionally ask that accusations of impropriety be levelled against government officials. The Contractor General's department now seems to have their hands full with investigations into areas which could have been avoided if a more open communication policy was adopted. Perhaps the Contractor General's department will have to beef itself up with the redundant employees from bauxite and Air Jamaica.

10. The Rule of Law
I have said very publicly and clearly since 1996 that if politicians choose to remain in the company of criminals and/or criminal gangs, then they would be unable to effectively govern this country. That day is here and both political parties are not blameless, and must realise that they have lost control. I can see where a simple situation as the protests by the Nurses Association of Jamaica about pay owed to them can tip a snowball down this slippery slope, and gather tremendous momentum, perhaps leading to a general strike as has been the case in other countries.
My prediction (P) is that any helpful comments will continue to be ignored, no effective action (A) will be taken, and therefore the outcome (O) will still be zero.

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