JAMONOMICS

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An IMF deal in the making, there had to be some changes. Yesterday night the Jamaican Minister of Finance announced a broadening of the Tax base to include items such as female sanitary napkins, sugar, corned beef and bread. The excuse is basically that they need more revenue o pay back there debt as well as run the government. At the same time the government has been undertaking a public sector cut programme that will identify and see the realization of possible savings in the government apparatus.

There is no denying that some amount of inequity has been reached. The tax exempted items had always been those that the poorest of society need to maintain some amount of decent living. The position of this government seems to be a more 'progressive' type of taxation which no doubt will be easier to collect and will almost definitely raise government revenue, but how will this affect the poor, and who's idea was this anyway?

Of course we need not look any further than Washington to realize where all of this is coming from. The IMF negotiations have been going on for well over 6 months, but not a word has been said about the conditions. Definitely, the broadening of the tax threshold to include the items most needed by the poor is as a result of IMF conditionality, and we certainly would not be getting any 1.2 billion dollars if it were not done. The government acts as though they have no idea what the IMF wants, however there is the Article IV Consultation reports that came out in June 2008, which outlines basically everything the IMF thinks the government should do. There is no hit and miss in these negotiations, we know what they want and Shaw is giving it to them.

So what did we expect? As long as Jamaicans continue to live in the cloud of ignorance as we currently do, these things will continue to occur and take us by surprise. The information is there, we must hold our government more accountable by equipping ourselves with knowledge.

O yeah, and all now there is no talk of how we plan to pay this money back.

Orane concerned global crisis blowing Caricom off course - JamaicaObserver.com

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The financial crisis is taking its toll on the world's richest people, wiping 332 names off the Forbes Magazine's 'rich list' of world billionaires.

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People and politicians are now fixated with the economy and the response that governments are having worldwide in order to fix the worlds problems. It would seem like the majority of people are in favor of some sort of government intervention whilst there are a few who are absolutely against it and there are probably fewer who would favor a totally planned economy. Frequently we are bombarded about thoughts on what the governments involvement in the economy should be if any at all. Some calling for big government and some want small government.

What seems abundantly clear to me is that during the previous century, neither ideal has performed particularly well. The birth of the big government during the period after the great depression didn’t see a boom in the American economy, but what we saw was greater stability and overall growth. At the same rate, the deregulation of the Clinton years saw an economic boom along with the advent of a credit bubble dwarfed only by the current crisis and the great depression. Although Clinton had a higher approval rating than Bush when leaving office, both left an economy on the brink of destruction.

What we have to understand is that there is a trade-off that does not get popularized because this is not politically convenient for any politician to really say. The trade off is between slow sustained growth and quicker more sporadic and more volatile growth. Politicians would rather promise economic boom and prosperity rather than forecast slow growth. But with both of these comes their trade offs, one has severe economic implications while the other has political implications.

Towards "Rational Act(ions)"

The fundamental problem here is not a new one. It has perplexed our liberal philosophers from the conception of their thought. How does one get people to act rationally? How do you get people to make good decisions in a world where you may be rewarded for acting irresponsibly? Their answer was the nuclear family structure. If one have a spouse to look after and children to inherit our world, they believed that people would make all their decisions based on fear of implications for their families well being. Today, although professed to still be the best structure for families, it is slowly being eroded. Feminist have been the group of people dealing with this phenomena and trying to explain exactly why this is happening. Single parenthood is becoming for whatever reasons the most popular way of parenting in many ‘liberal’ societies.
What we now have is a breakdown in the functionalist’s societal workings. Some may be forced to call it a degeneration of society, but from a postmodern perspective, it may just be the next step(even though they don't believe in progress). What needs to happen is an adaptation process should occur and the government should be a facilitator. The economy and economic regulations needs to adapt to the social changes that have occurred. The current family structure does not serve the purpose of acting as moral fiber for the rest of society. Instead it acts as a consumption unit that is obsessed with elevating its lifestyle to a superficial iconographic image sold to us through the mass media.

The government is not equipped to deal with these problems, but they have great potential to support any positive change that might occur. Whether it comes from civil society, NGO’s or politicians themselves. But there is no set in stone way of doing this, society changes and so too should approaches. So in the words of Barack Obama – The question shouldn’t be whether our government is too big or small, but if it works.

If anyone has ever looked into the effects of a recession they would realize that some things remain the same. The rich stay Rich, and the poor get poorer. You think that the severity of the recession and whether or not it becomes a depression would have an effect on this pattern. But it doesn’t. All that happens is the more severe the recession, the greater inequality that develops and the smaller the amount of high elites that benefit from the disaster that unfolds.

The Great Depression
This was probably the worst economic disaster ever recorded. But what happened in the interim. We would see that the big banks in the United States bought out all the smaller banks. They consolidated market shear and in the end increased their own stability and wealth.

Russia after the fall of the Soviet Union also experienced one of the worst depressions recorded. Their GDP fell by about 50 percent between 1990 and 1995. So what do we know about Russia now. They have one of the most powerful oligarchies in the world

“Known as oligarchs, these businessmen wield a great deal of influence over Russia's political and economic life.

They bought most of Russia's national resources at bargain basement prices, often in return for favours to key politicians.” BBC 2000

This group rose to power during the turbulent 90’s after massive deregulation and privatization was said to be the cure to Russia’s economy. State assets were sold at rock bottom prices and the most powerful businessmen who were usually the members of the old soviet power structure purchased everything.

Today
Well this probably won’t be the same story today since we are no longer blaming communist policies or market irregularities like too much regulation for the ills in the worlds economy. Instead we are blaming a lack of regulation and free market principles as the root cause of the problem. The solution today is not less regulation but more.

President Barrack Obama has signed into law the largest stimulus package ever by the US government and the government has continued to purchase banks in order to build trust in the financial sector and maintain some amount of stability.

This recession will have exactly the opposite effect than what every other recession has had because there is a paradigm shift. State intervention is seen as the solution to economic ills. The United States will see a middle-class benefiting while a upper-class become practically stagnant in growth after an 8 year reign.

Jamaica
Our economy has always behaved differently because the market does not operate efficiently at all in Jamaica. However I believe that those who will profit from Jamaican turbulence don’t even live in Jamaica. They live among other places in China and Spain. A state visit from his majesty in February as well as the Chinese Vice President cannot be dismissed as just courtesy visits. The queen said she always wanted to come to Jamaica, but why now? Probably it has something to do with the massive investment Her country has made in our tourism industry building all of the biggest hotels we have now. I have already explained the relationship between China’s ‘altruism’ and their national interest.

The sale of some of Air Jamaica's most lucrative routs to Virgin Atlantic for less than 5 percent of its actual worth may have been signs of faulty neoliberal policies spreading wings in Jamaican political economic thought. but if you dismissed it as policies of a previous administration, get this - The new administration wants to sell the entire air line! lets just wait and see how much it goes for.

What we may see in this time is other governments and other middle classes benefiting from Jamaica’s strategic position and resources rather than our own. If we are not careful, we may not benefit at all.

So, the Chinese Vice President was in Jamaica some time around Valenties day...

they signed a line of credit to Jamaica worth 100 million US dollars to purchase chinese goods and loaned us another 10 million for concessional financing.

Jamaica has 2.5 million people and bauxite with some lime stone and hotels.

What does china see in us, and why are they lending us so much money?

well its a simple strategy. they are slowly creating a jamaican dependency for chinese products and services. It's the Chinese way. Soon we will all belearning and speaking Chinese.

Awesome!

Apparently Jamaica has problem with child labour and the indiscriminately enforcing International Labour Laws in the workforce. Now I don’t expect you know all these laws, but in your experience, do you believe Jamaica to have a serious problem with treating the workforce fair? And do children in Jamaica work too much?

context
The International Labour Organization has recently released a damning report on labour conditions in the island. According to the Observer in the report several concerns were mentioned including
• Restrictions on the right to collective bargaining and the right to strike,
• Sexual harassment
• The existence of gender bias in the workplace.
• Wage differences between both sexes, particularly in the top end of the labour market.

Research of the ICFTU says that 4% of children between five and seventeen were involved in some form of economic activity including begging. Also it was found in 2000 that girls under the age of 11 were soliciting sex.

The ministry responded by acknowledging that there is a problem, but the research grossly exaggerated many of their stated problems and that Jamaica is not even on the radar in terms of violations of International Labour Standards.

Observer Article

Pricemart is one of my country's two real wholesale shops. The other is Megamart that to my knowledge has two branches. One branch is in Barbican and the other is in Portmore that is a satellite city to the capital.

Today there was the signing of the Confucius center to be built by the Chinese at the University of the West Indies Mona campus and this is of course as a result of the growing interest in Jamaica as a hub for exporting Chinese manufactured goods to the rest of Latin America and the Caribbean. The total population of this region is approaching some 900 million people and most of the countries rank as emerging markets of the developing world.

I am currently reading the book "the world is flat" by Thomas Friedman who postulates a great thesis and explains that through telecommunications, the Internet and greater technology in general, the world has become extremely small and hyper-charged. He explains in detail the evolution of Wal-Mart and how their success lied in their ability to become super-efficient through Supply Chaining.

I believe that the Jamaican Private sector should take advantage of this opportunity that has come solely from our strategic position in the Western World. I propose to business people in the country to explore the possibility of establishing a retailer store like Wal-Mart with headquarters in Jamaica that will have braches all across South and Central America to sell to and further develop these emerging markets with consumer items.

The rational behind this is that China is currently one of the worlds cheapest producers of manufactured items. Also the Wal-Mart model has shown us the benefits of taking advantage of crude and ingenious inventory management through giving the suppliers direct preview to sales figures so they can accurately match output to consumption. This is the direction the most successful type of retailing is going towards. This is proved by the fact that sales by Wal-Mart stores in the United States surpassed expected sales for the month of January in 2009 amidst the worst financial crisis the world has seen in over sixty years.

We as a country cannot afford for this opportunity to pass as annual sales of Wal-Mart that serves a population of about 400 million in the United States, is almost 30 times our Gross Domestic Product. If we are able to capture and take advantage of this market, it would not only boost our services sector, but we will also gain important links to a part of the developing world that we have neglected for so long.

Just my Views on Economics and Jamaica!

please comment!