Thursday, August 28, 2014
Caricom must empower small producersFranklin Johnston
CARICOM is not robust enough for economic integration. It cannot bridge the transport gap between the EC in the south and us in the north. The English bridged this gulch intermittently and though Canada gave us ships we could not sustain it. Mr LaRocque is right, we should not leave Caricom because the "soft" benefits - camaraderie, culture, courts, collegial and technical services can work.
Still, he will not show us Caricom's finances. Why must I integrate my economy with a group of small islands thousands of miles away that I can't even afford to visit? Big Spanish and French-speaking markets on my doorstep are my priority. LaRocque's priority is not ours. We are a big market to Caricom, but they can't float our boat. As for Trinidad, I love Kamala for sparing her citizens the crippling light bills we plead with Portia to take off our backs. I would not wish JPS bills on my enemy. Our serial Cabinets have not loved us enough. They did not delay treaties but opened up our economy long before others did. Cabinets berate farmers for wanting subsidies, yet they import subsidised food from the USA and EU and do not care one bit. Do they really love our farmers?
So how can we get a leg up in Caricom trade? Shipping. We misguidedly focus on goods, but logistics is the key: "If we build a road they will use it". Caricom must break the shipping monopoly. Movement of people and goods is its lifeblood. A vendor can tell where to go in Miami to buy stuff; not Bridgetown or Port of Spain. Honestly, would you integrate your economy with ours? We are a big market! But we too need big markets, so we must look at our neighbours. Cabinet must prime the trade pump with subsidised shipping, then we rev up small producers. We do not produce in volume. Few producers can fill a container so we need flexible, cheap shipping for small volumes. A container is some 40 per cent cheaper from the USA or Japan into Caricom. Cheap shipping would get us trading, visiting and would bring Caricom alive. We may spend half-day getting to an island, but so what? "Nutten nah gwaan yah suh". Airlines do not work. We spend on airlines for ego and consumption. Now let's ship goods to make money. Traders want our products, but Barbados cannot absorb a container at one go. We could sell a little of a lot, but we need open seas. Cabinets are concerned about phone, energy monopoly, but shipping is not on their radar. Logistics is a big barrier to trade. Could the Caribbean Maritime Institute crew dry-lease vessels? The EC countries trade daily by boat, so we are the odd one in any economy integration. We just do not fit. Caricom, yes! Integrate our economy with others thousands of miles away? No way!
Peter Phillips's "Declaration of Mile Gully" is huge. He is shaping to be the best finance minister ever. No one plans history. Welfare and free education in the UK exist because millions of the working class laid down lives for country in the great wars, and the Lords who run things could not deny the socialists. A finance minister who speaks education? "Education will... command the highest share of the budget after debt." An unprecedented avowal - history! IMF, take note. Sir Aub would be proud, but let us keep his feet to the fire. Parents, business and the church must now raise their game and Peter must help them. Big Public Private Partnerships (PPP) investors are welcome. What about small ones? Last week finance ideas for education excited some, so let's up the ante. First, hard issues. Faith and for-profit schools outperform state ones, so why should the state run schools? If it must, which types? The case to divest school operations is made. All parents must invest in education. Banks must create the products - savings, shares, bonds, loans, legal partner, and Peter must incentivise parents to invest in community schools. Kids leave Clarendon every day for North Street. Imagine four hours on a minibus and three contact hours with a teacher. Cruel. Better to let teachers drive minibuses and increase contact time. There is a big market for education bonds and shares, so if Peter agrees for MOE to pay interest on education bonds or quarterly dividend on ordinary shares, billions in taxes would be freed up.
Jamaica Institute of Management was the first education institution to float affinity bonds to finance its buildings. Most people could not donate a thousand, but invested five. Peter must deepen the market for education investments by incentivising investors. Can he entice the $25 billion spent on remediation into investment in new schools and quality? Big USA education groups as De Vry and Apollo are listed on NYSE as are China's Xueda, Tal and AMBO with portfolios of primary and secondary schools (K to 12), learning centres, after school tutoring and English. Some parents can't invest regularly, but may buy shares in Munro and Hampton or education bonds when they "get a money". The finance regulator and US Department of Education keep tabs on for-profit education and in the last quarter over 100 schools were sanctioned for failing the metrics they live by. We can do the same. Our education stocks and shares would sell and if CXC or Prof Ying's OEC or Fritz's CMI were to list on the Junior Market, buy. We must create a suite of education financial products - PPPs, bonds, ordinary shares, loans, co-op shares. Parents must have no problem buying into education. Even as we deploy new entities our advances are behind modern, flexible, parent-driven, child-centred, fungible education. An investment-driven environment would push education and schools to high quality and cutting-edge innovation with the state as regulator, not main operator.
A few e-mails expressed fears that shareholders might "milk schools" and harass principals to get profit. This is ludicrous. Do shareholders harass firms? Coffee Co-ops? Credit unions? School standards and financial products are under law and regulation. Invest in a building society to get a mortgage later. Invest in an education group as in a few years your child will have a place in one of their schools. Buy into an education portfolio - property or lease-backed and affinity bonds, PPP shares and firms with IP selling content, curriculum, ICT systems for school management, inspection, to Africa, locally or Latin America. As long as children exist, investment in education will be "Blue Chip". Peter's PPPs presage a new genre of products for investors and parents and quality schools. Go for it!
The colour of homophobia: The 44 Commonwealth countries in which homosexuality is illegal are black, poor, very religious, mainly illiterate, violent and mostly corrupt. Is this conundrum a coincidence? Does God have a sense of humour? Stay conscious, my friend!
Dr Franklin Johnston is a strategist, project manager and advises the minister of education.
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