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Leave emotions out of policy decisions
Dennis Chung
Business
Dennis Chung  
October 17, 2020

Leave emotions out of policy decisions

BOJ remittance companies, cambios consultative document; COVID-19 response, virtual learning policies must have long-term viability

In the Netflix movie Enola Holmes , Sherlock Holmes tells his younger sister (Enola) that in order to solve a mystery one must not think about the circumstance as to what you want it to be but what it actually is, and only then can you see what is required to solve it.

In other words, once emotions enter a strategy/policy then it is almost certain that it will not achieve the desired outcome.

So it is with many of the policies implemented not only in Jamaica, but globally, when it comes to economics, social and even health challenges (such as COVID-19).

One sees this at the individual level also, when it comes to relationships, or when making investments it is often said there are two emotions that cause people to lose money — greed and fear.

As intimated by Holmes, the ability to control an emotional decision, and look objectively at a situation is what leads to the best long-term solutions. Sometimes the best long-term solution will cause some short-term dislocation, which again is primarily because short-term effects are usually influenced by emotions.

So a Government is faced with a problem in a sector and is influenced by the immediate commentary and backlash from the loudest constituent. Or faced with an immediate challenge, with the pressure to solve the problem they take a sledgehammer to it, and it may create an immediate fix but medium to long term will cause more damage, like the decimation of a competitive industry.

Two examples as it relates to the financial industry in Jamaica are firstly, I was recently sent a ‘Consultative Document’ for the rationale for amending the Bank of Jamaica (BOJ [Act]) to impose fines and penalties on remittance companies and cambios for breaches. When I read through it I could see the challenge the BOJ was having, which are issues that need to be dealt with. But the proposed fines and solutions will do nothing but cause issues such as legal cases (as the proposal is for the BOJ to take on powers without independent checks) and fines and penalties that will no doubt cause future dislocation, as they are too high and do not have any equitable process of implementing those fines.

Secondly, I recall sparring with my good friend Fitz Jackson, on a motion he had introduced to the Parliament to regulate banking fees. Again, the long-term impact of this would be uncompetitiveness and a reduction in service levels in the banking industry eventually.

In both cases the issues they are trying to resolve are real, but the solutions proposed will no doubt create a larger long-term problem than they are trying to solve. You also don’t want the market to see Government as oppressive or a dominant force in societies but rather a referee that ensures equity while fairly and effectively implementing rules of play.

This is the problem with policy in Jamaica. For example, most of our fiscal life (budget) as an independent country we have raised taxes most years, and one could argue that it is when we stopped raising taxes, and even decreasing them, recently that we saw the greatest confidence and prospects for growth since 1970. We can all agree the Government did have a revenue problem, but the emotional response was to raise taxes to get immediate gratification, instead of reducing taxes to elicit long-term economic expansion.

Similarly, with COVID-19, the response from many is to lock down everything (or most things) until the virus suffocates and dies (which can only happen with immunity from a vaccine or naturally). This includes cancelling school attendance, shutting down economic activity, and forcing people to stay home (some against their will) until the virus passes.

The problem is that, because of the immediate emotions attached to the possible consequence of the virus, too many of the policies implemented worldwide will cause a worse longer-term impact than the short-term impact of a well-crafted, and thought out, COVID-19 response strategy.

For example, finally the World Bank and World Health Organization (WHO) have both come out and told us that the COVID-19 response will push 150 million people (this year alone) into extreme poverty and the only thing lockdowns achieve is poverty.

My question is, weren’t these things known from long before?

I have (with limited access to resources) been writing about this for months. The problem is that these same organisations were being led by emotional responses, just like we have crafted policy in this country for decades.

Another issue that comes to mind is the obvious negative long-term impact that will occur from children not being able to attend school physically. These consequences will be seen very quickly, and longer term we will have a less productive workforce (lower economic growth) and increased social challenges (depression, crime, among others). As Mutty Perkins used to say, eventually the problems of the lower income levels start to affect the higher income levels, and by that time it is too late. We see that has already happened with the crime levels, which many ignored early on.

The fact is that, especially in a society like Jamaica, online schooling alone is unsustainable, and a large population of students will be left very far behind and pushed towards a dysfunctional life of crime. Those who can afford private schools and lessons will prosper but what is the sense of prosperity in a society that is crumbling around you. The comments I have seen are not only emotional but show a lack of empathy.

This is why policies must be thought of with the end in mind objectively, without the emotions as Sherlock Holmes implied.

Dennis Chung is the author of Charting Jamaica’s Economic and Social Development AND Achieving Life’s Equilibrium. His blog is dcjottings.blogspot.com.

Email: drachung@gmail.com

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