Are we going back to the dark days of the mid-1990s?

Mark Wignall

Thursday, March 07, 2013

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'I run my business on the basis that in this country you will always have bad Government, with the PNP being worse than the JLP. And my survival, the survival of my company, my 10 employees, is based on me seeing Jamaica as a hustle. I have to fit within it because that is what it is.'

Jamaican businessman of 30 years, age 57.

Months ago the prime minister launched an economic fallacy — something that was mostly rooted in her need, as a politician, to convince most of the people of this country, that she had their economic interests at heart.

So she launched 'Jamaica Employ', a loose and probably undocumented (show me your papers?) agreement with private sector firms that they would employ at least one more person. To her way of seeing it, we could see about 40,000 more of our people employed.

Immediately I scoffed at it, and not because I needed the prime minister to provide me with more fuel to comment on her clear misunderstanding of what a market-driven economy is all about. I scoffed at it because I knew that there would not be a single Jamaican businessman brave enough to commit himself in these times by openly admitting that the prime minister's 'initiative' was antithetical to what the objectives of running a business was.

In the 2008 US presidential election, the biggest surprise of the run-up to the elections was John McCain choosing Sarah Palin, governor of Alaska, as his Republican running mate. Weeks after, when the McCain team realised that they had made an error of historical proportions, they were still forced to allow the press to gain access to the mindset of Palin. Disaster!

Professor Fareed Zakaria of CNN's programme, Fareed Zakaria GPS, in commenting on Sarah Palin's lack of understanding, suggested that it was not that Palin could not answer the questions asked of her. Instead, he said, it seemed obvious to him that she didn't understand the questions.

Months after, leaders in business are admitting that the programme has failed miserably, even though it is quite obvious that their circumspect words indicate that they do not fall too much on the wrong side of this PNP administration. What, I ask, are they really afraid of?

We have been told that, in the chase for US dollars, in 2013 one large organisation has resorted to using a man on a bike, with huge wads of cash, like in the early to mid-1990s, trying to buy up all the US dollars he can for the company.

In the 1990s when the PNP administration at the time was running true to form, in that, it was hopelessly out of touch with understanding the complexities of a market economy, the old 1970s PNP socialists found that where the rate of exchange for the US dollar was quoted officially at one level, the Bank of Jamaica (BoJ), found it useful to utilise the services of licensed 'foreign exchange agents'. These agents were given millions of Jamaican dollars in the basement of the BoJ, drove out in their cars and bought US dollars at much higher, realistic rates on the streets of this country.

It was not until one agent was held up and robbed that the matter was admitted to the public. By that time, the finance ministry had begun to lose the grip on the rapidly slipping dollar. Patriots like the Hon 'Butch' Stewart and Dr Leahcim Semaj made their brave inputs and saved the country millions of dollars. For a while.

In the end, the market won, in that, as business confidence turned down and, in general, businessmen realised that the PNP's monetary policy, said to be designed to 'mop of liquidity' (of people buying US dollars) betrayed a gross misunderstanding of Capitalism 101. As the interest rates soared, many people found that investment in Government paper was far easier than actually running a business. In the end, the financial sector crumbled.

Since 2008, there has been a paradigm shift in employment. Although it was probably trending that way before the global recession hit, after the 'right-sizing' of businesses in 2009, many employers have resorted to rehiring on the basis that most workers are on contract, whether it be for two weeks at a time or six months. Beyond that, nothing is guaranteed. Gone were the days when one had a job with a company, 'for life.'

Painfully, that fact has still not sunk into many poorer Jamaicans who were once able to secure jobs in factories at low levels but with a guaranteed salary. Too many of our young people, educated and barely educated, are still in the mode that there is a job for them out there, meaning, a building with an office or a desk in the corner where one can sit at, do 'work' and collect a pay packet on a regular basis.

Small business, which is where a large bulk of Jamaica operates, will be significantly hit. Women who are often the breadwinners in households are oftentimes the first to head out into the unknown of business and 'start a thing,' whether it be a bar, a beauty salon or renting 200 sq ft to operate a buy-and-sell business.

Those who either need to source goods via the Chinese stores downtown or through direct purchase from the US, are already feeling the pain.

'When I go downtown for my supply,' one man said to me. 'I am at the mercy of the Chinese. Even although I know that they have ways of importing goods cheaply, I believe some of them are taking advantage of the slipping Jamaican dollar and hiking the prices.'

One woman said, 'I buy directly from the US and due to the US dollar slipping, and, shortage, I have told my regular customers that certain things will increase in prices. My problem is two-fold. The resistance of customers to the increases and the unavailability of US dollars.'

On a medium-term basis, I have expressed more than hope that minister Anthony Hylton's plan for the huge build-out of the Jamaican Logistics Hub between now and 2016, will be successful.

My main concerns, however, are with what I see as too much time being taken up with the problems of the present, where business confidence is down, consumer confidence is probably between low to non-existent and the leader of the party which forms Government really believes that making an appeal to private sector companies to stock their staff with 'just one more' is sensible political leadership.




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