Wednesday, October 12, 2016

Jamaica’s growth – same problems, same solutions

The World Economic Forum has just published the 2016/17 Global Competitiveness Report (GCR), and it shows that Jamaica has improved its ranking from 86 of 140 countries to 75 of 138 countries. This is an improvement of some seven per cent on the ranking when the number of countries surveyed are considered.

In the 2012/13 report, Jamaica ranked 97 out of 144 countries surveyed. This means that on a percentile basis, in just four years we have improved by 13 per cent. This, in my view, is in no small measure due to the partnership between all stakeholders that saw us successfully manoeuvring through the International Monetary Fund programme to date, which started in 2013. It shows us what we can achieve as a country if we all work together, and what it also shows me is that progress in Jamaica will only come through advocacy and involvement from private sector and civil society.

As a result of this, we have seen a significant recovery from the 2008/9 recession which hit Jamaica, and a significant increase in business and consumer confidence. We have also started to grow the economy at marginal rates, and growth for this fiscal year is expect to be just under two per cent.

Although we should realise the improvements we have achieved — which includes being the number one place in the Caribbean to do business — the fact is that we are still a very far way from where we should be. In fact, one of the primary challenges we face is that even as we grow the economy, there is the very real danger that if we do not ensure equitable growth, that it will not be sustainable.

Sustainable growth and development only comes about when growth is evenly spread across all sectors and the entire population. This is how countries like the US and Switzerland have experienced growth. We could also say that the rise of Trump in the US can be attributed to the reports that many middle- and lower-class people in the US say that they are not benefiting from growth in the economy. On the other hand, in Switzerland the benefits are widespread and they don’t have a “Trump” as yet. What is happening in the US as well as the recent Brexit vote show that growth without inclusiveness is not sustainable.

This has been recognised in the report from the Economic Growth Council (EGC), which speaks to the need for “Citizen Security and Public Safety” and “Social Inclusion” as fundamental pillars for any sustainable economic growth. As part of the suggested solutions to these challenges, the EGC refers to much-needed improvement in the delivery of justice, proper housing solutions, and improvement in the education facilities.

In August 2009, I wrote an article titled ‘Are Jamaica’s economic problems also social’. This for me was obvious then and it is also obvious now, as is highlighted in the EGC’s report. The fact is that economics is based on the behaviour of people; that is, their social interaction with each other. So when we speak about macroeconomic solutions and ignore the impact on social behaviour, then we only fool ourselves about economic progress – as we have consistently done with failed fiscal policy and tax measures in particular.

When I look at the latest GCR, it is obvious that we have failed to do anything about the challenges we have always had. And so the problems we face today are the same ones we have always faced and failed to do anything about.

So the top four challenges to doing business remain the same year over year, which are in order (1) Crime and theft (was number two previously); (2) Inefficient government bureaucracy (previously one); (3) Tax rates; and (4) Corruption. Just focusing on solving these issues addresses over 50 per cent of the challenges to doing business. So why have we not done anything to remove them as business challenges?

We have made some progress with corruption (from 10.5 per cent to 8 per cent) and government bureaucracy (from 16.4 per cent to 14.4 per cent), but the challenges of crime and tax rates have worsened. Even though we have made some progress in these areas, they still remain significant challenges.

If we drill further in the report, we see that the main areas of challenges centre around bureaucracy, crime, and tax. So areas such as wastefulness of government expenditure, burden of government regulation, cost of crime and violence, government debt, effect of tax on incentives, trade tariff percentage, and government procurement remain significant challenges and hold back the ultimate progress of the country.

The irony is that these challenges that we speak about today are the same ones that have always been with us, and to date we have failed to address them. So as the chairman of the EGC, Michael Lee-Chin, said, we all know what the problem is and what we must ensure this time is that we implement solutions.

The irony also is that we all know, and have known, what the solution is, but we have never been able to get them done. That for me is a straight failure in our governance at the government and bureaucratic levels.

In other words, we all know what the problems are and we know what the solutions are, but we have just not been able to implement them for decades. And that is what management (governance) is responsible for.

So, as we ponder the latest GCR (2016/17) and also the EGC report, let us not make them just another report, as usual, which we read, analyse and not do anything about.

We must concede that we have made strides in Jamaica, from an economic and institutional perspective. The problem for me is that we could have done much better as a country and do have the potential to easily grow at five per cent per annum.

We already know what the problems are and we know what the solutions are. What we must now do is focus on implementation, which is what has gotten us some gains since 2013.

Friday, September 16, 2016

Government policy’s role in development

Two Saturdays ago, as I drove through Spanish Town, I thought to myself that the disorder I was seeing was nothing but the result of how we have governed ourselves over the years.

Obvious illegal vending was intertwined with cars trying to make it through the intersection before the other car ahead of them; pedestrians were competing for road space with the cars and walked across the road as they pleased. In addition, garbage from some of the vendors littered the streets, and the narrow space between the front of some buildings and the street was just not wide enough to absorb the flow of pedestrians going through the town.

In other words, it was pure chaos.

I then thought to myself, if this is the type of environment that we leave persons to exist in, then what sort of behaviour do we expect from them? I went even further into thought, and reflected on the fact that many of these people grew up in these very same conditions, and in some communities violence was either at the door- step or had entered the house.

Just around that time the entire Jamaica was saddened by the drive-by killing of a two-year-old, only to be followed days later by the killing of a six-month-old. My mind reflected on my own children and I wondered what, possibly, could those two children have done to meet such a horrific death at that age. More telling was what could have happened to those adults who killed those children, to have changed them from innocent youngsters into barbarians.

My mind then went further to think about what causes non-communicable diseases (NCDs), such as diabetes, etc, and the fact that these NCDs are caused by the environment we create for ourselves. So if, for example, we consume a diet high in processed foods, with no exercise, then there is an increased probability of getting diabetes, cancer, and heart disease.
So isn’t human behaviour and, by extension, economic and social development, not also a result of the environment we create? In other words, the innocent child that grows up in an environment of chaos, loud music, lack of proper garbage disposal, violence, and surrounded by music that speaks to the disrespect of women and the promotion of gun violence; isn’t he going to grow up to practise what he knows?

If he grows up understanding violence as the best tool of negotiation, because he might have seen his father or brother being killed by a gunman or the police; or if he grows up with his parents (who at that age he thinks know best) placing a greater emphasis on the latest dancehall fashion over his school fee, or even allows him at his young age to go to the dance or drink alcohol; or if he grows up thinking that the open lot across the road is for dumping garbage, do we expect that he will grow up to be a very productive citizen that will contribute in any significant way to GDP growth?

And if we create an environment where this young man represents a significant number of people in the country, then what do we expect will be the effect on GDP growth, indiscipline and crime?

Would the result be declining labour productivity since 1972, GDP growth averaging 0.8 per cent for the last 40 years, and/or lack of order and high crime rates?

The problem with that young man, of course, is lack of proper parental guidance, as parents have the primary responsibility to provide a proper learning environment for their children. But those parents may also have grown up under the same circumstances, and so are really just victims like their son.

So shouldn’t it ultimately be the responsibility of Government to keep the rules and order in place to ensure that parents and private citizens practise certain behaviours to foster long-term development?

What then happens when the Government, from in the 1970s, starts to tell people that “don’t you worry about a thing” because Government will ensure that your child’s school fee is paid and you never have to pay another cent for hospital fees, even though the country is broke and can’t afford it?

Or what happens when politicians, because they see votes, encourage squatter settlements and do not come down on persons who steal electricity? Instead the people vent their anger on companies like JPS who can’t even collect the money for street lights from Government.

What happens when politicians support music blaring at all hours of night into the morning, depriving working people of sleep, and express surprise when labour productivity is low? Or when we expect that crime will be solved by the police but don’t give them the resources to fight crime, or they are faced with a justice system that places a stop on the speedy resolution of trials?
What do we expect when our fiscal policy over decades is to borrow money, or tax productivity to transfer the wealth to lower productivity areas, and when it doesn’t work we borrow and tax more, expecting a different result, or we create a culture where success is seen as the big man oppressing the poor man, because we love the poor?

As a result, we see GDP growth averaging 0.8 per cent over 40 years, labour productivity declining from 1972, and general indiscipline and crime.

The problem we have is that Government policy over the years has been the catalyst that has created impoverishment of the people and the country. It is not one set of people who have caused hardship on the other. We got political Independence in 1962 and can no longer blame our colonial masters. In other words, where we are today is a direct result of policy creating an inhibiting environment. We reap what we sow, or what policies we put in place.

Monday, August 15, 2016

The problem with Jamaica’s hustler mentality

The last Global Entrepreneurship Monitoring report, showed that Jamaicans are one of the most entrepreneurial in the region. It, however, goes on to state that even though this is the case, most business startups happen out of necessity. In other words, most Jamaican businesses start because people are trying to fill a gap, for example because of loss of employment.

So, as a friend of mine said, most Jamaicans are “doing a business” and are not “in business”. What this basically means is that many of us are really just trying to earn money through “hustling”.

This is not only restricted to business startups, but it seems as if Jamaica has a culture of “hustling”. So the youngsters who start off selling or wiping the car glass, is doing it for a hustle. Or the politician, or public sector worker, who engages in corrupt practices thinks it is ok because they are just doing a “hustle”. Or the university student who applies for a job and when you ask them what their career goal is they say they don’t know yet but just want the job as something to do and make a money.

What is even more frightening, is the Jamaican culture, and our governance, supports the “hustler mentality”. When for example, I posted on social media that we need to get the men and boys removed from the stoplights, who are harassing drivers, the response from some persons is that they are just trying to make a living and what else will the government do for them. Those in authority also refuse to do anything about the situation, and we even have formal government programmes that promise job creation through mass employment. These are nothing more than programmes that give people a fish rather than teach them to fish. That is nothing more than an election promise of a “hustle”.

So it seems that in every sphere of Jamaican life, everything is a just a hustle. The persons who sets up a business, which he/she has no previous experience in, to benefit from his political party being in power; the student with no career path but just want “any” job that they can make some money; the boy who grows up on the street hustling every day to make a dollar; and the authorities who support the hustling by refusing to address the children on the street, or turns a blind eye to informal settlements.

Because of this hustler mentality we have created today a huge problem of a large informal economy, numerous informal settlements, and a set of persons who are unable to create any value for themselves, because they have for example grown up learning how to sell on the streets or wipe car glasses.

Effectively, the lack of action by the authorities, and the support of this “hustler” mentality has ended up creating greater poverty. This is because governance has been about giving someone a fish rather than teaching them how to fish. So we have a significant part of our people today who rely on hand outs from either government or others to survive, because we have failed to teach them how to create their own value. And the persons/businesses who are serious about creating value for all are scared away by bureaucracy or taxes that always seem to extract more out of the productive and give it to those who are less productive.

In other words, we have created more and more poverty amongst the Jamaican people.

The spin-off of that, of course, is crime, lack of law and order, and declining productivity and compensation. And as productivity and compensation decreases, political expediency means that we need to promise more handouts, which lead to greater poverty, as the only way the government can get more to give is through loans (which the IMF agreement has restricted) and/or taxing the productive more, which results in the productive becoming unproductive, thereby leading to even more stringent tax measures in the current IMF environment.

The problem we face now is that because of the IMF measurements, government must ensure fiscal discipline. But doing so means also that less money is available for handouts to those who have been taught to “beg” for a fish rather than learn how to fish. The dilemma is that increasing taxes will reduce investments, so the only practical option now is for the compensation levels to match productivity levels. The result being that “real incomes” will decline, as generally we have been seeing declining labour productivity since the 1970s.

And not much can be done to address that situation also, as any attempts for government or the private sector to address the productivity issues are met with stern resistance from our labour laws, which don’t care much for productivity. We can’t do much to improve productivity by improved processes and execution also, because the inefficient government bureaucracy, which includes the procurement rules, ensure that any implementation of private sector investments or greater public sector efficiency is held to ransom.

Examples include the building approval process or I know of investments (hundreds of US$ millions) waiting to happen but because of public sector bureaucracy we delay thousands of jobs, and GDP growth. Even when we talk about people losing their lives on the roads there is no urgency as the new Road Traffic Act may more than likely not be passed until 2017. And when you speak about trying to prevent road carnage by bringing discipline and accountability to the private taxis and buses, you hear that you are trying to stop their “hustling”.

One of the major challenges we face today is that Jamaicans are so dependent on “hustling” to make a money, that any attempt to bring order to the society is going to be faced with strong opposition and can result in hardship for many Jamaicans. This has not been by accident, however, as the government policies over the years have ensured that we find ourselves in this position today.

This is going to be one of the most difficult things to change in Jamaica, but unless we start to reverse it then we will sink further. The economy will grow of course, but the problem is that participation in that growth will be minimal, and the majority of persons can end up being left out.

Jamaica lacking a strategic long term vision

Recently someone said to me that the reason why our politics has not been able to solve our challenges and have sunk us further into economic and social problems is because either politicians don’t understand what to do or just don’t care. After reflection, I thought to myself, that I do know many politicians who care about Jamaica and are also quite competent. And so the problem could not be explained away as simply as that.

After giving it some thought, and a recent experience, I thought to myself that the real reason why our governments have not been able to bring us to the “prosperity” being talked about now, is that the objective of politics is many times different from the objective of long term economic and social development.

In other words, because of our political system, and the needs of the supporters, the expediency of politics (and ultimately governments) have been at variance with the much needed economic and social development. So if you think of economic and social development as going to Montego Bay, the problem is that the objective of politics has been either going to St. Thomas, or at best going to Ocho Rios and stopping there. In the latter case going in the correct direction, but stopping short of the long term objective.

So in my view, politicians are very competent at achieving the objectives they set. The problem is that the objectives are different from what we as Jamaicans want for economic and social development. Maybe I shouldn’t include all Jamaicans, because many, as a result of ignorance, party colour blindness, or personal goals, also don’t mind the political objectives being different from the needed economic and social ones.

Because of this, the policy directions are geared towards the political objectives in many respects. And because we have had too many bureaucrats who are willing to accommodate political, over economic and social objectives, we end up with the political objectives being implemented in preference to long term developmental objectives. This also results in the systems and processes of government bureaucracy being set up to really do nothing but push a lot of paper.

It is for this reason why persons from the private sector will find it difficult to work in the public sector because in the private sector we are used to things happening, and the achievement of organizational growth. The problem with government bureaucracy is that it doesn’t need prosperity or effectiveness of itself to survive, as all government has to do to make up for the revenue loss from being unproductive is raise taxes on the productive persons (private citizens). The problem is that sooner or later you end up with significantly fewer productive persons to tax, and then you end up in a situation as we are in Jamaica, where debt to GDP ratio goes to 150% before we realize we have a problem.

Even our well talked about Vision 2030 is nothing but a pipe dream, because our political objectives are at variant with its objectives. The result is that the Vision 2030 objectives (which were well thought out) flies under the radar, and may be soon forgotten when 2030 finally arrives.

So while we talk about a long term developmental objective, the truth is that the preference of political objectives will always ensure that these are not met. The only way for that to happen is for the political objectives to align with our “Vision 2030” developmental objectives.

The irony is that this is easily possible, and can result in very real economic and social development in Jamaica. However, the probability of Jamaica achieving its full potential in the near future though is maybe less than 50%, primarily because the existing institutional infrastructures do not allow it. It is still early days for this administration, however, and if the desire is real prosperity then we may very well see the structural issues being addressed. Up to this point though the probability of that happening anytime soon seems to be less than 50%.

The reason I say so is because for that to happen, then political objectives would need to be sacrificed for long term development plans. The political objectives I speak of does not include remaining in office, as any government that achieves real economic and social development in Jamaica will, in my view guarantee office for years to come. The objectives I speak of include (1) short term benefits for the party and constituents; (2) power benefits; and (3) the need to make out the opposition as doing the worst things in the past 5 years when the problem is the accumulation of the past 54 years.

So we continue to put the right framework in place to address these serious structural issues like the OCG, INDECOM, Public Defender, Auditor General, and the new Corporate Governance Framework. But we also underfund or ignore their recommendations, and expect that they will work. For example, we say we are serious about solving crime, but we continue to underfund the security forces and refuse to address a very inefficient and underfunded justice system. Never mind that crime robs us of 4 to 6 percent of GDP, as the longer term benefit of solving crime never seems to get preference over the shorter term political objectives mentioned above.

One of the major problems also are the supporters, who as I said in a recent social media post, even if a political party put Hitler to represent them against Obama, they would still be voted in because many Jamaicans vote based on colour and not objective reasoning. Obviously this is the theory of the effect of crowds, as individually they will be very rational but put them in a group and the reasoning changes.

So after my many years commenting on Jamaica’s economy, and seeing events like the current rise of Donald Trump, I am convinced that the reason why the world (and Jamaica) is in economic and social decline for most persons is because of our failure to ensure that political objectives align with development objectives. We only have to look to Singapore to see the positive effect the alignment of those objectives can have on a country.

Friday, July 29, 2016

We need a serious approach to development

The current government has economic growth as its main thrust. The phrase coined by the Growth Council — “Five in four” — refers to the objective to have five per cent growth in four years. If this is achieved this would be a significant boost to our economic fortunes, and already we are seeing increased economic activity and higher levels of business and consumer confidence.

As a part of the boost to economic activity, the government has started to implement it’s $1.5 million tax threshold promise, made in the run-up to the general elections.

So far we have seen the threshold move from $592,000 to approximately $1 million, with the final move to $1.5 million slated for April 1, 2017.

In addition, the government has indicated that the aim is to move completely from direct to indirect taxes — a very good move, and Finance Minister Audley Shaw indicated on the On Point discussion programme on Business Access TV, that the aim is for this to be done before the end of the current five-year term.

Shaw also indicated that there was the possibility of a small tax package next fiscal year to accommodate the threshold increase, but that this would be on the consumption side.

The fact, however, is that while this tax threshold increase will result in short-term stimulus to the economy, and the move to indirect taxes will assist with greater tax compliance, this by itself will not give us the much-needed development. And without certain other actions or policies being implemented, it will be improbable that we will see the consistent 4.0 to 5.0 per cent growth rates needed.

Further, even if we are to see improved growth rates, this does not equate to the economic and social development needed. Economic growth is one part of the equation — but by itself is insufficient.

Economic and social development means an improvement generally in earning capacity and living conditions for most Jamaicans. This means that the increased capacity of persons to earn, infrastructure development, and personal safety must be at the core of government policy.

The challenge that we have is that our politics, and government policies, have been too much focused on handing out a fish rather than teaching Jamaicans how to fish.

And the reality is that Jamaica will not see true economic and social development unless we build the capacity of everyone to improve their income, and create opportunities for them to earn — instead of policies that seek to increase income without increasing productivity.

We may think that we are doing good for “poor” Jamaicans by “giving” them more — but what we have effectively done by applying those policies is actually caused greater poverty.

The welfare type policies that we have applied over the last 40 to 45 years in Jamaica have done nothing more than cause more long-term impoverishment, as is shown by the devaluation of the Jamaican dollar.

Whenever our governments have talked about improving the lives of Jamaicans, we have spoken in terms of specially created job programmes, housing for the poor, land distribution, tax breaks etc. Instead we should be talking about greater educational opportunities, facilitating more private sector investments (particularly SMEs), and tax incentives for investments (such as the Junior Stock Exchange).

The effect of what we have created can be considered in the example of raising a child.

If every time a child says they want money or a car etc you give it to them — without insisting that they develop the ability to earn it for themselves — then what happens is that you create a child that becomes totally dependent on you to live and maintain the lifestyle he has become accustomed to.

If on the other hand you insist that the child goes and gets an education or starts a business, and puts what he has learned to work, and earns his own money, then the child would eventually be able to earn much more than you can give to him.

And in the end there will be two incomes in the household rather than one income supporting two persons.

So what our policies have done over time is create a dependency syndrome: which we have not only shared what we have earned, but in order to maintain a “high” lifestyle for everyone we have gone out and borrowed to supplement the income.

And because our government policies support more and more dependents, we have continuously increased taxes on those who are more productive — the result being that overall productivity declines, as capital stops working to escape the increased taxes and bureaucracy by becoming dormant or going overseas.

One person recently said to me that every time something starts to do well in Jamaica the policy is to tax it in order to earn more income for the voracious fiscal appetite. In other words, we always kill the goose that lays the golden egg and then when we end up with no goose we wonder why there is no egg.

Because of this approach to policy, and the need to “please” every five years, then we not only create a dependency syndrome, but we also fail to focus on the important issues that hold back development. These include law and order (as this is seen as fighting against the small man who wants to set up his house or business anywhere — squatting, illegal vending, tourist harassment), infrastructure development, and the creation of rules such as the procurement process because we don’t want to face the real monster of accountability and corruption.

So while we strive for much-needed economic growth, we must also support the Growth Council by ensuring that we have policies that support the development of the average citizen of Jamaica, through increasing his capacity, opportunities, and safety.

Adopting a serious approach to economic and social development is the only way to sustainable “prosperity”. This should be the primary focus of the Government and its Economic Growth Ministry.

Friday, July 08, 2016

The chickens have started to roost

The phrase “The chickens have come home to roost”, can refer to a situation where something bad happens after an action, or inaction, occurs. So if a person goes around defrauding people, and is finally caught and goes to prison, then one could use that phrase.

This phrase can be used in relation to the present economic and social conditions Jamaica finds itself in today. When we think about the untenable crime situation in St James (the tourist capital of Jamaica) and the general levels of indiscipline and lack of law and order in Jamaica today, we can safely say that the chickens are starting to roost. That is to say that what we are seeing in Jamaica today is a direct consequence (even if long term) of the way we have practised our governance, and politics in particular.

When Commissioner Williams said that the problems we are seeing with crime in Montego Bay are deep-seated social issues, he is correct. This is the same reason why I have repeatedly said that Jamaica’s economic problems are social.

The fact is that the crime situation we see in Montego Bay today, is not unique to Montego Bay. We have had similar crime spikes in places like Kingston and Spanish Town. In all cases, they have left the nearby residents in a state of fear. So the Montego Bay situation may be what is current but it is certainly not isolated.

And each time we have these upsurges, we normally find a short-term solution, but fail to address the underlying problem. This of course does not mean that short-term solutions are not necessary, but they must always be accompanied long-term solutions also.

It is this lack of long-term solutions, that causes the predictable upsurge in crime to occur every few years or so. And although we do need far more resources, especially in the short term, the fact is that the main problem is not a lack of resources. It is one of political will and enforcement of our laws.

One of the problems with how we manage our resources is that we wait until there is an emergency and then find the resources to throw at it. Never mind that when the emergency occurs it costs you five times more than the preventative cost.

As I always say, fiscal policy in Jamaica is a simple math exercise of addition and subtraction. There is no real strategy about how fiscal policy can be used as a tool for development, and not just focus on how much money is being spent on a project, but rather what is the value added. But then again maybe most of our people in authority don’t understand the concept of value added.

It does not take a rocket scientist to figure out that is we create an environment where women have nine children without any way of feeding them properly; if taxis, buses, motor cyclists, and pedestrians are allowed to use the road as they wish; if people are allowed to squat and build communities as they like; if the justice system turns at a snail’s pace; and other such forms of lack of order are allowed; then what we are doing is laying a fertile ground for criminality.

But what we do is fail to enforce traffic laws or demand order on the road; we fail to enforce the Noise Abatement Act; we turn a blind eye at the squatter communities, until they develop into major communities; and we fail to enforce zoning laws. And when we fail to demand that laws be obeyed and that indiscipline must be rooted out, then we wonder why after many decades of neglect of enforcing the laws that we now find ourselves facing the social and economic challenges we have today.

In other words, how do we expect children to grow up and be successful professionals, if when they are young they are not taught what is right and what is wrong.

If we fail to do this, then the major role of the police will be to react to crime, and if there is a prevalence of crime, as we have today, that effectiveness is significantly reduced. Then what we do is apply a “shock and awe” action to the problem. Crime then dies down for a year, or two if we are lucky, and then rears its ugly head again often with more aggression.

This of course is because we have failed to address the deep-rooted social issues faced daily by our citizens, including children.

And then when these very same children, who have grown up in deplorable conditions (because of lack of urban planning), or grown up listening to deviant musical lyrics (because of lack of not enforcing the Noise Abatement Act), or see their father being abused by the police, or are abused themselves with little consequence in many instances — these children grow up and become criminals. We send the police to address the situation, by which time many of those children are lost, and further exacerbate our social issues.

Minister Montague has, in my view, spoken to some short-term approaches that are needed. However, what we must start to address immediately, and at the same time, are the longer-term solutions like enforcement of road discipline, and other laws like the Noise Abatement Act and the protection of our children from abuse.

Unless we can do these things, we will not be solving the crime and indiscipline issue, but rather just placing a band aid on a sore that will become worse. As we saw when we celebrated the reduction in crime in 2010, but which was just a temporary reprieve.

There have been many very insightful studies that we have just placed on a shelf, and not sought to implement. Either because of our inefficient bureaucracy (the number one problem to doing business) or lack of political will to do so. The fact is that no one who has had responsibility for policy to date can claim success, as where we are today is testament to what the efforts have been before.

One of the things I would love to see put back in place is the Rule of Law Committee, a private and public committee that was focused on addressing the crime problem — just as EPOC and ESET were set up. This is needed urgently, as because of our actions, (or inactions), in the past — the chickens have started to roost.

Friday, June 17, 2016

Jamaica needs fewer hedgehogs

A book I am reading called “Superforecasting” looks at the way in which people go about making forecasts, and draws some conclusions why some people – a select few – are consistently more accurate than others. These people are referred to as superforecasters.

One of the reasons mentioned is that most people think like hedgehogs, while the superforecasters think like foxes. Hedgehog-type thinkers make forecasts or predictions that are influenced significantly by their own biases and experiences. In other words, they lack the ability to think “beyond the tip of their nose”. Foxes, on the other hand, are those who are able to objectively take all surrounding information into consideration, and look beyond their own biases and experiences.

No doubt, foxes in most cases will be much more accurate than hedgehogs. So if we consider someone who can make good investment predictions or economic projections, it is usually someone who thinks like a fox. That is, a person who considers all the information objectively and does not pay attention to the short-term market reactions.

One person who thinks like a fox, and he always speaks to it, is Michael Lee-Chin. He always expounds the same principles of investing, always looks beyond short-term market moves, and believes in the information he has analysed, for long-term gain.

This principle is also very important in organisations. When we think about people who are seen as transformational leaders, more often than not they are “foxes”. In other words, one of the significant characteristics a transformational leader has is his/her ability to look into the future, and consider all the information available, and implement strategies based on that objective analysis.

Some transformational leaders we know include Lee Kuan Yew, Steve Jobs, Henry Ford, and more recently, in my view, Barack Obama. Closer to home we can think of people like Michael Lee-Chin, Butch Stewart, and Chris Blackwell. And if I were to think of politicians who implemented transformational ideas, I would say Michael Manley, Edward Seaga, and PJ Patterson.

These leaders were able to think about and implement ideas that were not the “talk of the town” at the time. In other words, they looked at the information and the environment around them, and made decisions even when others couldn’t see the reason for it.

One of the challenges Jamaica has, in my view, is that we have too much hedgehog-type thinking. This has frequently caused us to take two steps forward and three steps backward, and has robbed us of innovation and progress.

The fact is that too many of us are not able to see beyond our own personal biases. Because of that (and thanks to social media), you can see where some people have two different views on the same issue, depending on which political party is in power.

When a statement or forecast is made by someone who is not in alignment with other people’s political or personal preferences, some people attack the person and say that the idea is backward, stupid, or political. But if someone who holds their political conviction makes that same statement, they will support it. This is because of their hedgehog style of thinking. In other words, they are unable to think beyond “the tip of their nose”.

After reading this reasoning in the book Superforecasting, I began to realise what makes normally rational people think irrationally, or with unsupported bias, when they enter groups (such as political parties). This also explains why a normally rational person, when he or she takes up political office, would shelve a tried and proven plan in favour of another, sometimes doing the same thing, but with another name. Examples can be found in both parties.

I think this is why we are unable to get consensus many times on governance priorities, because irrespective of how well a plan has performed, because it was implemented by the other party, it must go. Or because someone has always been aligned to the opposing party, then they are not useful. The result is that potentially every five years we can throw out good ideas and start the same process all over again, and then we wonder why after 54 years of independence, it seems like we are still in the starting blocks.

There is no doubt that the only way we will move forward is if more of us as citizens, and at the leadership levels, start to think like foxes. We do see some ministers who are more inclined to be foxes, but there are still too many of us who think like hedgehogs. And we know only too well in Jamaica, from our crime situation, that all it requires is a critical minority that can wreak havoc on any well intentioned plan or idea.

If we are to move this country forward though, there must be an unwritten code that we are going to ensure that we shed our hedgehog-type thinking and start focusing more on objective thinking about national development.

We must learn (especially many of the younger political activists) that it is important to look beyond the messenger and properly analyse the message. Or we must learn to be able to properly assess information, and look beyond our personal biases. If we fail to do so, then we will always be in the starting blocks as a country.

For this to happen, only transformational leadership will set that tone.

Sunday, June 12, 2016

Maximising Jamaica’s full potential

AS I listened to the PIOJ’s recent review of the Jamaican economy, I thought to myself that we have become a nation that is too used to mediocrity. The PIOJ estimated that the Jamaican economy grew by 0.9 per cent for the fiscal year just ended, and in the current fiscal year it is expected to grow between one and two per cent.

In the context of how the economy has performed, one could easily say that this is welcome news, as since around 2009 we have seen what the economists love to refer to as “negative growth”. In layman’s term, the economy has shrunk.

On the other hand, while we are happy for the growth, our willingness to accept that meagre growth rate is symptomatic of the way in which we have grown to accept mediocrity as a standard. In other words, we should be very concerned that as a country with a lot more potential to expand at much faster rates, we have failed miserably to achieve that full potential.

This is the same way we accept poor customer service, indiscipline, poor governance by our politicians, bureaucracy, and the list goes on. It seems as if we have been shell-shocked by our mediocre performances, and so we set our standard very low and any politician that comes and tells us how nice we look, we are ready to go with them. This, I think, is one of the major impediments to our economic and social development.

If you grow up in a community where it is expected that garbage will be disposed of anywhere (gullies, sidewalk etc) or loud music is as natural as birds chirping, then it becomes a natural part of the environment. And you can’t imagine your life without it. In other words, what is the big deal about these things? Until finally one day, as we are seeing now, it is no longer just confined to a single community, but rather is very much the accepted culture for the whole island of Jamaica.

So we are numb to murders when they happen, or the number of road fatalities. We also see indiscipline as a way of life in the form of road use or squatting, among others. Because this culture and degradation is now ingrained in us, we then begin to celebrate it through our music.

So songs speak about the abuse of women or violence and we cheer when we hear them. Or, one of the new trends is violence in dancing, where men jump from roof tops on women, many times causing physical harm. But it is so accepted as a part of our culture that the patrons at the dances cheer when they see it.

The irony, also, is that we try to sell Jamaica on this “No Problem” culture, as Jamaicans seem proud to display their indiscipline when overseas. Many times when travelling and Jamaicans are on the aircraft, they have to put on some display, including speaking loudly. Recently I saw a sports team representing Jamaica (funded by the Jamaican Government and in Jamaica-branded shirts) playing music and speaking loudly on the aircraft. I had to speak to one of them to get the other to shut up.

But when I think about it, you can’t really blame Jamaicans too much for how they behave because this is how they have been socialised. Because of the failings of government policy and action, over the decades, we have developed an environment of indiscipline and acceptance of mediocrity, hence the reason for falling labour productivity since the 1970s.

Governments have further solidified this mediocrity by creating labour laws that go way beyond protecting workers rights to harming them, as the stringency of the laws have now led to a situation where a great majority of the workforce do not have any health or pension benefits, because it is best to hire people on short-term contracts.

These same Jamaicans, though, when they go to live in other countries, do conform to the social behaviour in the majority of cases. And then we ask the question why do Jamaicans conform when they migrate, but are indisciplined here. The answer, of course, is that the environment we have in Jamaica encourages indiscipline and mediocrity.

It seems logical to me then that if we truly want to realise our full potential as a country, we must as a priority look at the environment we promote.

For example, the best-selling book Rich Dad, Poor Dad speaks to the belief that the environment for learning created by two different fathers can determine the outcome of the child. So, as long as we teach our citizens to be indisciplined, unproductive and give them handouts, then we will continue to create a country where underperformance and indiscipline is rampant.

It is for this fundamental reason why we will always find it difficult to achieve any sustainable growth about three per cent. It is also for this fundamental reason why we have so many Jamaicans earning very low wages. It is also a fundamental reason why child abuse is so high, why squatting continues to grow, and why crime is a challenge.

For me it seems logical, and I can’t understand why we have not seen it expedient, to fix these underlying issues rather than encouraging celebration of our mediocrity as “No Problem”. It is perplexing that we celebrate the very high standards of people like Usain Bolt, Shelly-Ann Fraser-Pryce and Bob Marley, but we seem too ready to accept a mediocre society.

Until we can do so, then we will continue to speak about one to two per cent growth and be willing to accept mediocrity as our highest standard.