IN 2008 I watched a documentary called IOUSA that was focused on the federal debt and trade deficits of the United States of America. It outlined the rising costs as well as the effect of a trade deficit that has been growing due to the US importing more than it exported.

It resonated with me, but one particular segment was seared into my brain both because of who presented it — Warren Buffett — and the analogy he used — two islands.

Buffett explained that economics “tends to put people to sleep” and so he came up with a short animated film that explained the concept of trade deficits and the results very simply. I quote his narration below (you can watch the video yourself at bit.ly/iousaisland).

“If you own a lot of property, an island in this case, you can trade it off for the things that you eat and consume every day. You can do that for a long time, but eventually you run out of property and then you have to work a whole lot harder to provide your own needs but also to pay back for the debt you’ve incurred.”

The video clip starts with two islands, one blue, named Thriftville, and one green, named Squanderville. Thriftville sells products to Squanderville for cash but eventually the cash runs low and so Squanderville puts up a ‘For sale’ sign on some property in order to continue importing. By the end of the clip Squanderville is no longer green, but instead is entirely blue.

When I first saw the video I immediately thought about Jamaica, not the USA, especially because it seemed that food was the main import in the video. There is no question that Jamaica comes across as one of the “Squanderville” countries today, because we have done very little to curb our appetite for imports despite the many discussions about our import bill, the lack of adequate foreign exchange income, and the clear ability to produce some substitutes locally.

Based on the number of potential divestments on the table, it is clear that we have now reached the point where Squanderville has run out of cash and started to sell parts of the island to continue to fund its imports. The outcome will be the same in real life as in the film if we continue down this dangerous path and do not immediately start to implement a wider range of solutions.

Yes, there are some things we simply cannot produce in Jamaica. We do not manufacture cars nor have we found oil (yet?). However, we have not seriously tried energy conservation, which would make a real dent in our oil import bill, one of the largest demands for foreign exchange.

While there is much talk about reducing electricity rates, which I agree would be helpful, especially for manufacturing, I do not see enough effort being made to reduce our energy demand.

After the nuclear disaster in Japan, access to electricity was a real issue for the citizens, with other nuclear plants being taken offline. The Government introduced a national dialogue on conservation which was drilled into the consciousness of every citizen. The respnse was overwhelming.

I have no knowledge of any major energy conservation campaign in Jamaica to educate citizens about ways to conserve. We have had some lukewarm campaigns, but they have not been consistent. In our case we should be starting at the primary school level right up.

Legislation can also play a major role. In Barbados, a homeowners tax benefit has helped foster installation of solar water heaters, estimated by the organisation ‘Acclimatise’ to save some US$11.5 million — US$16 million per year (I will dig into the Barbados story in a future column).

Our National Housing Trust provides low-interest loans for solar water heaters, a definite step in the right direction, but we can go further like Barbados.

The import duty structure can also play a significant role in reducing our oil import bill. With regard to vehicles, engine size is less relevant than the miles-per-gallon rating. Thankfully, Jamaicans are generally required to import modern vehicles so the fuel efficiency ratings have trended up as the overall market has moved in that direction, but more can be done to steer the market towards even more efficient engines via duties such as a gas guzzler tax.

In terms of appliances, generally the largest consumers of electricity, a charge can be assessed for appliances below a certain efficiency or energy rating, thus steering people to buy more efficient appliances. This would reduce electricity use, thereby directly contributing to a reduction in the oil import bill, or at the very least, slowing the growth.

The last idea I leave you with is finally removing roadblocks for the waste-to-energy projects languishing in Jamaica. As I understand it, there is some issue regarding who owns the garbage in Jamaica, and so the various investors and companies interested in setting up waste-to-energy plants are still on the drawing board.

These projects would see massive amounts of garbage transformed into useful energy while helping to clean up the dumps and keep the streets clean.

Jamaica is in danger of following Squanderville’s lead and selling off the island just to pay off debts and cover costs of importing products. Let us ensure that we stay independent for another 50 years.

David Mullings was the first Future Leaders representative for the USA on the Jamaica Diaspora Advisory Board. He can be found on Twitter at https://twitter.com/davidmullings and Facebook at https://facebook.com/InteractiveDialogue