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Don't laugh at Cash Plus investors, cry shame on the government
HENLEY MORGAN
Wednesday, April 23, 2008
If there is one thing that the rapid ascent of Olint, Lewfam and other such foreign exchange investment clubs tells us, it is the degree to which the middle class has been trampled by the economic policies of the last 25 years. I have long suspected it to be so, but each story of a life transformed or restored through involvement in one of these schemes confirms how unviable and financially depressed this group (the middle class) has been allowed to become.
HENLEY MORGAN
Cash Plus, a different and more controversial type of alternative investment scheme than those involved purely in foreign exchange trading, gives further expression to the desperation. In its short-lived tenure, it attracted by the tens of thousands those the system has made into a permanent social underclass.
The mad rush by people to get into the alternative investment schemes, reflect what Chilean development specialist and author Manfred Max-Neef has dubbed "the crisis of utopia". The schemes have their success in the fact that a significant number of our people are "losing the capacity to dream" of ever achieving a prosperous life through productive work or by other conventional means.
With the failure of Cash Plus and some foreign exchange trading clubs, the legality and viability of these entities and their promise of an easy path to riches, is open to questioning. But the verdict is already in on the conventional economic prescriptions pursued by government and the traditional financial and banking arrangements, which have failed to lift the country out of the protracted depression in which it is trapped. And trapped we are, for there can be no denying the fact that for over two decades (some would say, four) our country has been like a ship without a rudder, adrift in the middle of a vast ocean of economic and social despair.
What are people whose lifestyle and very existence are at risk in a stultifying no-growth environment supposed to do? Many will stand their ground and slug it out, working themselves to the bone, but knowing that they will never get beyond hand-to-mouth existence. Others will seek a route to escape the suffering. For some, the escape is through emigration; for others through corruption and crime; and for others, still, through risky ventures such as Cash Plus.
Nero has been fiddling while Rome burned, or maybe it is that the proverbial ostrich has had his head stuck in the sand. Whichever analogy is most appropriate, there is one thing of which we are sure: those who are in command of the economy have allowed things to slip badly. The following quotation from Max-Neef's book, Human Scale Development, describes accurately the Jamaican scenario. "There are different reactions to the current situation. There are those, for instance, who hold that disaster has not taken place after all. They make their point by stating that over the last two-and-a-half decades income levels have more than doubled; that there has been remarkable economic growth and exports have multiplied. All of this is true. There are, however, those who unveil the other side of reality: that poverty is increasing in the popular sectors, that social deficits such as inadequate housing have escalated; and finally, that the foreign debt is clearly unpayable and may increase our poverty and deplete our resources to structurally irreversible levels." Again I ask, what are people whose lifestyle and very existence are at risk in a stultifying no growth environment supposed to do?
I have a theory that explains in part the high-risk behaviour dominating the investment choices of many Jamaicans these days. When people suffer serious deprivation of life's necessities over protracted periods, they develop pathologies that cause them to look for help from sources they would not ordinarily turn to, and to take risks no rational person would.
There is a tendency for the self-righteous among us to snicker at the misfortune of those who enthusiastically went into so-called alternative investment schemes and are now reaping sorrows. It is easy to blame greed or to call for increased regulation. But we should also cry shame on successive governments whose policies have led us to this unhappy pass where people who have acted imprudently can justifiably claim there is no viable alternative open to them.
Until those whom we have elected to lead understand this and fix the underperforming economy, which is at the root of many of the country's ills, the promise of prosperity expressed in our national pledge will remain but an illusion and a crisis of utopia will prevail.
hmorgan@cwjamaica.com
HENLEY MORGAN
Wednesday, April 23, 2008
If there is one thing that the rapid ascent of Olint, Lewfam and other such foreign exchange investment clubs tells us, it is the degree to which the middle class has been trampled by the economic policies of the last 25 years. I have long suspected it to be so, but each story of a life transformed or restored through involvement in one of these schemes confirms how unviable and financially depressed this group (the middle class) has been allowed to become.
HENLEY MORGAN
Cash Plus, a different and more controversial type of alternative investment scheme than those involved purely in foreign exchange trading, gives further expression to the desperation. In its short-lived tenure, it attracted by the tens of thousands those the system has made into a permanent social underclass.
The mad rush by people to get into the alternative investment schemes, reflect what Chilean development specialist and author Manfred Max-Neef has dubbed "the crisis of utopia". The schemes have their success in the fact that a significant number of our people are "losing the capacity to dream" of ever achieving a prosperous life through productive work or by other conventional means.
With the failure of Cash Plus and some foreign exchange trading clubs, the legality and viability of these entities and their promise of an easy path to riches, is open to questioning. But the verdict is already in on the conventional economic prescriptions pursued by government and the traditional financial and banking arrangements, which have failed to lift the country out of the protracted depression in which it is trapped. And trapped we are, for there can be no denying the fact that for over two decades (some would say, four) our country has been like a ship without a rudder, adrift in the middle of a vast ocean of economic and social despair.
What are people whose lifestyle and very existence are at risk in a stultifying no-growth environment supposed to do? Many will stand their ground and slug it out, working themselves to the bone, but knowing that they will never get beyond hand-to-mouth existence. Others will seek a route to escape the suffering. For some, the escape is through emigration; for others through corruption and crime; and for others, still, through risky ventures such as Cash Plus.
Nero has been fiddling while Rome burned, or maybe it is that the proverbial ostrich has had his head stuck in the sand. Whichever analogy is most appropriate, there is one thing of which we are sure: those who are in command of the economy have allowed things to slip badly. The following quotation from Max-Neef's book, Human Scale Development, describes accurately the Jamaican scenario. "There are different reactions to the current situation. There are those, for instance, who hold that disaster has not taken place after all. They make their point by stating that over the last two-and-a-half decades income levels have more than doubled; that there has been remarkable economic growth and exports have multiplied. All of this is true. There are, however, those who unveil the other side of reality: that poverty is increasing in the popular sectors, that social deficits such as inadequate housing have escalated; and finally, that the foreign debt is clearly unpayable and may increase our poverty and deplete our resources to structurally irreversible levels." Again I ask, what are people whose lifestyle and very existence are at risk in a stultifying no growth environment supposed to do?
I have a theory that explains in part the high-risk behaviour dominating the investment choices of many Jamaicans these days. When people suffer serious deprivation of life's necessities over protracted periods, they develop pathologies that cause them to look for help from sources they would not ordinarily turn to, and to take risks no rational person would.
There is a tendency for the self-righteous among us to snicker at the misfortune of those who enthusiastically went into so-called alternative investment schemes and are now reaping sorrows. It is easy to blame greed or to call for increased regulation. But we should also cry shame on successive governments whose policies have led us to this unhappy pass where people who have acted imprudently can justifiably claim there is no viable alternative open to them.
Until those whom we have elected to lead understand this and fix the underperforming economy, which is at the root of many of the country's ills, the promise of prosperity expressed in our national pledge will remain but an illusion and a crisis of utopia will prevail.
hmorgan@cwjamaica.com
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