Business

Prosperity requires new thinking

DENNIS CHUNG

Friday, March 08, 2013    

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THERE is something the Honourable Dennis Lalor always says to me that has a lot of relevance for the country, and individuals. That is: "Bird seed don't make John Crow sing." For any reader who is not Jamaican, a John Crow is the same thing as a vulture. What it simply means is that no matter how much bird seed you feed to the John Crow, it will never sing like a bird simply because it cannot.

Similarly, Albert Einstein said the definition of madness is to do the same thing over and over again and expect different results.

In effect, what both gentlemen mean by the respective quotes is that if you are doing something that can never produce the result you desire, then doing it over and over again can never give you the result you want. In other words, in order to get the result you want it is necessary to approach the problem with new methods and thinking.

So recently I have heard comments to the effect that the Jamaican dollar is overvalued, and that we need to let it find its true value. There have even been target rates quoted such as J$120 and J$150 to US$1. My question, though, is can we allow the dollar to devalue within the context of the current environment where productivity capacity is limited, where the major component of imports is oil, and where a significant part of our export inputs are imported. Is devaluation going to make us use less oil, if we do not change our energy source first, or are the exporters going to absorb the import cost increases when they price their exports?

Similarly, can we really improve the efficiency of the bureaucracy by just laying off public sector workers, or would it not be more beneficial to approach the problem from the point of view of changing the rules and processes to create a more efficient environment?

As individuals, can we improve our financial situation by the same consumption and investment habits we had before, or do we need to change them?

From both the country and individual perspective, if what we have been doing is giving us the results we want, then obviously there is no need to change it. And you should keep doing what you have always been doing. If, however, you are not happy with the results, then it means that you have been feeding bird seed to a John Crow and expecting it to sing. In other words, if you want to hear singing then you have to realise that it makes no sense feeding the John Crow, as it will never sing. Get rid of the John Crow and get a bird that has the ability to sing.

Only after you have done that do you even stand the possibility of hearing any singing coming from the bird. Note that the John Crow is a bird, but it is not one with the ability to sing.

So, if we want to see a country or individual prosper, then doesn't it similarly mean that we have to ensure that we equip ourselves with the resources that will lead to prosperity? If we change the brand bird seed, and feed it to the John Crow it still won't sing. Even if we increase the quantity, and change the brand, the John Crow still won't sing.

So, irrespective of how much money we get to borrow from multilaterals, and no matter how much tax we put on the people of Jamaica, and no matter how many public sector workers we lay off, or how many wage freezes we have, the fact is that if we continue to make these changes within the context of an environment that is not competitive or productive, it really is nothing more than an exercise in frustration.

The only way for us to see any sustainable prosperity in Jamaica is to fix the structural problems we have. And these structural problems have been with us since Independence, as even the growth in the booming 1960s was primarily because of foreign investments. All the structural challenges existed at that time also.

What are the major structural issues we face? Energy cost, inefficient bureaucracy, law and order, and the need for proper tax and incentive reform. Doing anything else without fixing these is, well, giving bird seed to a John Crow and expecting it to sing.

From an individual's perspective the same applies. If you have financial challenges and it arises primarily because your consumption expenditure is too high for your income, then refinancing any debt you have will not change your financial problems. What you must do is radically change the way you consume in relation to your income. For an individual it is much easier as you can get a good financial advisor to assist. Just make sure you get a good one and follow the advice. In other words, resist the temptation of buying a dog and then do the barking yourself.

In both cases, what is needed for any increase in prosperity has to start with a new way of thinking. This is the first step in changing that paradigm. Regrettably, I do not think that as a country, and as individuals, we have realised that this is the first step. So the old way of thinking persists and what happens is that the same ideas used in the past are repackaged under a different name. And sure, you can always get away with selling a newly repackaged item at least once. But the taste and effect are going to be the same, irrespective of the packaging.

So in order to hear that sweet singing sound that only a bird can make, let us first think about what type of bird can sing, and which one delivers the melody we want to hear, before we start feeding it bird seed.

Dennis Chung is a chartered accountant and the author of the books "Charting Jamaica's Economic and Social Development" AND "Achieving Life's Equilibrium". His blog is dcjottings.blogspot.com

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