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One of the banes of Jamaica's economic pathway since the attainment of Independence in 1962 is that successive governments have focused primarily on "the macro" while paying very little attention to "the micro".
Macroeconomics is defined as "the part of the economics concerned with large-scale or general economic factors, such as interest rates and national productivity. Microeconomics, on the other hand, is "the part of economics concerned with single factors and the effects of individual decisions".
Macroeconomics is defined as "the part of the economics concerned with large-scale or general economic factors, such as interest rates and national productivity. Microeconomics, on the other hand, is "the part of economics concerned with single factors and the effects of individual decisions".
Further research informs this writer that "microeconomics examines the behaviour of individual economic entities: firms and consumers. How do individuals make consumption decisions? How do firms make profits and price their goods and services? The focus of microeconomics is markets: wage markets, the market of gasoline, rent markets," etc.
In the meantime, "macroeconomics is the study of the economy as a whole. Macroeconomics asks questions like: Why does one country experience higher rates of growth than another? What causes inflation? What effect does the national debt have on economic growth?"
Now, I am no economist, but a careful analysis of these two sides of the same coin tells me that macroeconomics applies a top-down approach while microeconomics uses a bottom-up approach. There has been much debate nationally and internationally as to which one of these approaches is the better one. Some have argued against either one while others have posited that the two should be utilised, depending on the exigencies of the moment.
In Jamaica's scenario, as a layman I have become sufficiently convinced that government's obsession with interest rates, inflation, GDP and other such fanciful terms that the average man does not understand has made the majority of our people poorer and poorer. Edward Seaga who was regarded as a financial and economic wizard in the 80s was hounded out of office although at the macroeconomic level the country was doing well. The harsh reality is that while government is busy balancing the books, the worker on the ground is not experiencing anything positive when he goes to the supermarket or pays his utility bills. Having said that, it takes cash to care and in order to make money jingle in Jamaicans' pockets, Mr Seaga soon realised that an impatient populace was not prepared to "band their bellies" anymore and could not be convinced to wait for the macro to ensure that the micro worked in their best interest.
The current Jamaica Labour Party government led by Bruce Golding with an astute macroeconomics-oriented Finance Minister Audley Shaw is now facing a similar dilemma and may well be hounded out of office come the next general election because they are not paying enough attention to the microeconomics dynamics playing out before their very eyes. It is not sufficient to blame the People's National Party and the world-wide recession ad nauseam. Ways and means must be found to help the battered and bruised taxpayer who is yet to see a light at the end of the tunnel.
It is well known in Jamaica that government tends to make grand announcements which very often are not realised. A popular phrase among our politicians is "We going to..." Implementation is not a priority and so as an impoverished and overtaxed people we often get "one-day bellyfuls" which, as we all know, "cannot fatten mawga cow". So the latest "one-day bellyful" being introduced is the massive road works programme islandwide which any discerning, independent-minded Jamaican will conclude is to assist the JLP in the final analysis to return to office after the next general election.
In their speeches at the JLP's 67th Annual Conference on Sunday, both Finance Minister Shaw and Prime Minister Golding spent a great deal of time talking about the macroeconomic indicators, most of which seem favourable and are going in the right direction. But even while they boasted about interest rates going down and the country having passed the latest IMF test and, of course, the icing on the cake for them - the JDX - pensioners are taking home less money at the end of the month, public servants cannot be paid their back money, small business entrepreneurs, although having access to relatively cheap loans, cannot see a bottom line that is positive because consumers generally are spending less.
Indeed, two of the most negative "micro factors" are that poverty has been on the increase and a large percentage of Jamaicans say they have to eke out a living in an increasingly oppressive environment with respect to the cost of living.
Against this background, it behoves Minister Shaw to begin to pay more attention to the "micro" while crowing ebulliently and incessantly about the "macro". After all, the taste of the pudding is in the eating. Jamaicans are tired of this top-down approach to socio-economic development which frankly has not worked. Government must put people first, not last or somewhere in the middle where they are suffocated and left frustrated. As Mr Seaga insinuated recently in an interview with Ian Boyne, the purpose of fixing the economy at the macro level must translate into meaningful benefits for the working class. That must be the intention and focus of any government that genuinely wants to be the people's servant and not their masters.
lloydbsmith@hotmail.com
Read more: http://www.jamaicaobserver.com/colum...#ixzz16746Pyk0
In the meantime, "macroeconomics is the study of the economy as a whole. Macroeconomics asks questions like: Why does one country experience higher rates of growth than another? What causes inflation? What effect does the national debt have on economic growth?"
Now, I am no economist, but a careful analysis of these two sides of the same coin tells me that macroeconomics applies a top-down approach while microeconomics uses a bottom-up approach. There has been much debate nationally and internationally as to which one of these approaches is the better one. Some have argued against either one while others have posited that the two should be utilised, depending on the exigencies of the moment.
In Jamaica's scenario, as a layman I have become sufficiently convinced that government's obsession with interest rates, inflation, GDP and other such fanciful terms that the average man does not understand has made the majority of our people poorer and poorer. Edward Seaga who was regarded as a financial and economic wizard in the 80s was hounded out of office although at the macroeconomic level the country was doing well. The harsh reality is that while government is busy balancing the books, the worker on the ground is not experiencing anything positive when he goes to the supermarket or pays his utility bills. Having said that, it takes cash to care and in order to make money jingle in Jamaicans' pockets, Mr Seaga soon realised that an impatient populace was not prepared to "band their bellies" anymore and could not be convinced to wait for the macro to ensure that the micro worked in their best interest.
The current Jamaica Labour Party government led by Bruce Golding with an astute macroeconomics-oriented Finance Minister Audley Shaw is now facing a similar dilemma and may well be hounded out of office come the next general election because they are not paying enough attention to the microeconomics dynamics playing out before their very eyes. It is not sufficient to blame the People's National Party and the world-wide recession ad nauseam. Ways and means must be found to help the battered and bruised taxpayer who is yet to see a light at the end of the tunnel.
It is well known in Jamaica that government tends to make grand announcements which very often are not realised. A popular phrase among our politicians is "We going to..." Implementation is not a priority and so as an impoverished and overtaxed people we often get "one-day bellyfuls" which, as we all know, "cannot fatten mawga cow". So the latest "one-day bellyful" being introduced is the massive road works programme islandwide which any discerning, independent-minded Jamaican will conclude is to assist the JLP in the final analysis to return to office after the next general election.
In their speeches at the JLP's 67th Annual Conference on Sunday, both Finance Minister Shaw and Prime Minister Golding spent a great deal of time talking about the macroeconomic indicators, most of which seem favourable and are going in the right direction. But even while they boasted about interest rates going down and the country having passed the latest IMF test and, of course, the icing on the cake for them - the JDX - pensioners are taking home less money at the end of the month, public servants cannot be paid their back money, small business entrepreneurs, although having access to relatively cheap loans, cannot see a bottom line that is positive because consumers generally are spending less.
Indeed, two of the most negative "micro factors" are that poverty has been on the increase and a large percentage of Jamaicans say they have to eke out a living in an increasingly oppressive environment with respect to the cost of living.
Against this background, it behoves Minister Shaw to begin to pay more attention to the "micro" while crowing ebulliently and incessantly about the "macro". After all, the taste of the pudding is in the eating. Jamaicans are tired of this top-down approach to socio-economic development which frankly has not worked. Government must put people first, not last or somewhere in the middle where they are suffocated and left frustrated. As Mr Seaga insinuated recently in an interview with Ian Boyne, the purpose of fixing the economy at the macro level must translate into meaningful benefits for the working class. That must be the intention and focus of any government that genuinely wants to be the people's servant and not their masters.
lloydbsmith@hotmail.com
Read more: http://www.jamaicaobserver.com/colum...#ixzz16746Pyk0
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