Business

Sandy reveals our vulnerabilities

Dennis Chung

Friday, October 26, 2012    

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HURRICANE Sandy has, based on media reports, had a devastating impact on Jamaica. From media reports we will be left with a bill of billions, something we can ill afford now. It will no doubt change the IMF negotiations flavour and result in having more relaxed targets. Any other approach could prove suicidal to our economy.

There are reports of widespread flooding, damaged infrastructure, at least one life lost, and downed trees. This comes when the world is going through their own economic challenges, and in particular Europe (including the UK) and the US, which are our largest donor countries. This implies that the economic aid we have become used to, after disasters, will not be what we are used to, which has never been enough.

Let us remember that this was only a category one hurricane, and we must give thanks for that, else we could have been seeing much more significant damage to our very fragile economy and infrastructure. I deliberately did not say “natural disaster”, as my friend Leachim Semaj would remind me that there are no natural disasters, there are only disasters caused by man’s actions. This is true of the situation Jamaica faces after Sandy.

The fact is, the reason we have so much damage and displacement is because of poor leadership and governance since Independence. It is due to poor governance why we find ourselves in the situation where we still court the IMF in an on-off relationship, since the 1970; why our real per capita GDP is what it was in the early 1970s; why the Jamaican dollar was more valuable than the United States (US) dollar in 1969 to where one US dollar now buys in excess of 91 Jamaican dollars; why law and order generally, murders, in particular, has got so bad that Jamaica is known just as much for reggae music and athletics , as its criminals. I could go on.

So when I hear of persons being flooded out, damaged infrastructure, persons at shelters asking for pampers, or of Jamaicans risking their lives to pick up fallen fruits off downed trees so they can eat dinner; I know it results from poor governance.

Because if we had any idea of what vision we wanted for this country after we received political independence then we would not be where we are today.

I don’t know if anyone else sees it, but we are rapidly getting closer to Haiti than to other countries. What we must understand is that these situations do not happen overnight, but with continued neglect and degradation over time. If we do not start seeing reality, instead of ignoring the signs by saying we should look at positives only, then we will be there soon.

The blame of where we are today, however, is not of our leaders only, but all of us. We were the ones who continuously elected our leaders, even though they neglected us during the five years between elections, and won our affection back with a plate of curry goat, a beer and a rental car. This is the majority electorate, but there were some also who sold their souls to the politician for a waiver or favour. This culture is so chronic that the hotel I wrote about last week was willing to offer only me, of all the dissatisfied Jamaicans, some redress because I threatened to write about the experience.

I know we are not serious about development because we have failed to recognise what will really solve our problem. Unless we see that our fundamental problem is productivity and the balance of payments, then we will always be courting the IMF. I have on many occasions pointed out that addressing our energy crisis and law and order are the only things that will solve our economic, social and fiscal challenges. Anything else is fiddling while Rome, I mean Jamaica burns.

The irony is that addressing these challenges will mean less economic and social pain for Jamaica, than the fiscal approach the IMF has only three years after espousing austerity indicated it was an incorrect approach, and is now supporting stimulus along with responsible fiscal spending. As far as I am concerned, responsible fiscal or personal spending should be in place even in good times. In good times you should save and invest to ensure that in bad times you can spend. The simple logic of Keynesian economics.

I cannot understand why we have not been able to address the energy crisis. Let me first say I agree with the Government’s decision to reduce their involvement in the LNG project. Apart from the fact that Government should rightly, as Paulwell always says, not have any role in determining the energy choice, my view from the start has always been that coal is a much better option for Jamaica, from a cost and supply perspective, for industrial use.

For retail use I am very much in favour of renewable energy. I have personal experience to show. My last light bill was $2,663, and I was able to have electricity when JPS went down during Sandy and the batteries powered my refridgerator, lights, phone batteries, and the radio throughout the night. While I have electricity, my Internet provider’s service went down, which is the frustrating part. This from a system I started three years ago, and added to it as able to, and I am now almost off the grid, which I don’t want to be as the wise financial decision is to use the cheaply provided first 100 KWH from JPS.

Imagine if we had kept the GCT on electricity and used it to create a fund that could provide a credit to persons who install renewable energy at home. The benefits would have been (i) permanent energy use reduction in the short run; (ii) increased disposable incomes; (iii) increased productivity; and (iv) reduction of approximately US$300 million ($27 billion) to US$400 million in imports. Combine that with providing JUTC another $1 billion per year to roll out a much more comprehensive service, reducing the need for personal transportation. This could reduce our import bill by another US$300 to US$400 million. And then if we improve law and order, and add another $50 billion (conservative) to the economy. We would solve our fiscal, economic, and some social issues all at once, and it could be done within six to twelve months.

Instead we have created a situation where our people risk lives to pick up fruits off fallen trees during a hurricane, after 50 years of self-governance. Indeed, Sandy has revealed our vulnerabilities, which in my mind is more in the way we have governed ourselves. Indeed Leachim, there are no natural disasters, only disasters created as a result of man.

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. Email: dra_chung@hotmail.com

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