Recently, CEO and Chairman of one of Jamaica’s mega-retail powerhouses, Gassan Azan, made some lucid and intriguing statements about the challenges of doing business in Jamaica. Mr Azan did not stop there. He also talked about the need for greater innovation and creativity, and suggested the establishment of a university campus on the site of the Tower Street Adult Correctional Centre to assist in redeveloping the downtown Kingston commercial district.

To begin with, it is not just government that must innovate and become efficient; the private sector too must do likewise. But as far as the state is concerned, it must be embarrassing and frustrating for every Jamaican who has to climb mountains and descend valleys to get simple things done. Inevitably, we must improve the mechanisms for hiring, deploying and training public servants. And we must also reduce the number of agencies and approval authorities and simplify the confusingly written and designed transaction forms. And as we make these changes, we must also do everything to build trust – trust in the way we transact, interact with and behave towards one another in our society.

The lack of trust is one of the greatest deterrents to social and economic development. Nowhere else is this more evident than in the cumbersome design and functioning of our bureaucracy and in the attitudes of some private sector leaders towards government and workers and vice versa. The relationships are too adversarial in tone, discriminating in purpose and too transactional in scope. That aside, I evaluated Mr Azan’s remarks not only within the context of the historical functioning and performance of the private sector, but also to determine if it has been operating in tandem with global shifts in enterprise development, or if its behaviour is consistent with, or contrary to the overarching rhetoric its principals usually espouse.

Obviously, segments of our private sector have been stuck in the pre-industrial era, where businesses identified profit maximisation, almost exclusively, as the reason for existing. They do so without realising that the focus on profit maximisation was suitable and relevant to that time, when capital was scarce and entrepreneurs relied strictly on retained earnings to grow businesses. Times have changed; the easy profit focus was not intended to become a 21st century objective from which Jamaican businesses do not want to emerge. And although it may appear paradoxical to assail profit maximisation and then encourage profitability, there are many ways businesses can innovate and expand to achieve profitability, besides clinging to a model that ignores equity partnerships, fair risks, ingenuity and competition. We need to start making things again.

The truth is that there is little evidence that some Jamaican businesses are even remotely interested in forming strategic alliances, in pursuing business models that embrace or practise backward integration as a conduit to cost and risk controls, innovation, expansion and profitability. The private sector is not innovative enough to capitalise on the opportunities around it, and because it does not maximise its innovative capacity, the strategies for growth will always be discordant with the rest of the world and wholly dependent on government’s actions. The best way to maximise profit over the long term is to not make it the primary goal of the business. The Japanese could teach us a thing or two about how not to make profit the primary goal; just look at its success with its auto-industry and the Toyota brand.

But back to Mr Azan. He bemoaned the practice of government funding its retention of political power by extracting too much reinvestable capital from the private sector. We are at one here on the effects of extraction, Mr Azan. Taxes are indeed extractive; the less tax we pay, the greater our disposable incomes for consumption, investments and savings. But while evidence of political spending does exist, it is not the dominant feature of our treasury. For despite the many manifestations of corruption, most of government’s revenue ends up funding state activities, and in some instances, toward subsidising private sector operations, especially tourism. There is no denying that government has grown too big, and in an effort to finance itself it has been borrowing and taxing too much. We must change this behaviour.

But the sad irony is that some of the growth in the cost of government is attributable to some private sector activities. Let us examine health-care costs, for instance: tobacco-related illnesses such as lung and oesophageal cancers drive up government’s health-care costs. Similarly, heavy consumption of salt, starches and sugar from pastries, food and drinks manufactured and sold by the private sector, helps to drive up the cost of treating diabetes, obesity and high blood pressure. Herein lies the conundrum, because the government has to care for its primary resource – the people. This also underscores precisely why businesses must have a greater purpose for their existence other than profit maximisation.

The idea of replacing the prison with a university implies that government would have to find another location for the prison. In addition to securing funding, which would have to come from additional taxes or borrowing, or both, the move seems incongruous with the business sector’s desire for lower taxes. I wonder if Mr. Azan has any idea about what we would do with the current prisoners at the “GP”. Should we release them? As I see it, having access to a university education is determined less by geography, but more by affordability. Consequently, it would be an act of good corporate citizenship were the private sector to establish an endowment fund to build and finance such a university. And because Mr Azan is correctly concerned about the lack of innovation and creativity in the country, this university could be positioned as Jamaica’s top institution for innovation, research, science, technology, development, learning and excellence.

Burnscg@aol.com