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Mr Shaw blinded by Statistics
BY DELANO FRANKLYN
Sunday, June 12, 2011
IN an article appearing in the Sunday Observer of June 5, 2011 with the heading, 'The Other Side of the Truth", Finance Minister Audley Shaw argued that the only times that Jamaica has made progress since 1962 is when the Jamaica Labour Party (JLP) formed the Government.
In support of this position, he dangled economic growth statistics and repeated a number of assertions made by JLP spokespersons over the years, the most prominent being former Prime Minister Edward Seaga.
SHAW… repeats the argument that the financial meltdown in 1995 had all to do with Government’s policies and nothing with the manner in which many of the financial institutions were being operated at the time
1/1
It is very clear from the article that Mr Shaw was struggling to find reasons to explain why persons should re-elect the JLP come the next election. As a consequence, he ends his article with this appeal: 'Let us (the people) not commit the errors of the past by even thinking of re-electing a party with such a dismal record of economic mismanagement as that held by the PNP'.
Mr Shaw makes this appeal despite his Government having, arguably, the worst record of leadership in Jamaica since the declaration of Universal Adult Suffrage in 1944.
Record of Leadership
For those who would wish to challenge this statement I will cite only three examples. First, despite the shortcomings of previous prime ministers, whether PNP or JLP, we have never had a prime minister who has put his or her integrity and credibility on the line in defence of a person wanted by another state for gun and drug-running, as was demonstrated by Prime Minister Bruce Golding during the Christopher Coke extradition issue.
Second, no other Government has ever suffered the ignominy and embarrassment of having one of its minister's visa revoked by another country.
1962 to 1972
In his article, Mr Shaw argued that under the JLP Government from 1962 to 1972 (there was) an average annual GDP growth of six per cent and that, 'it is not without irony that after that period of record growth, the Government was changed in 1972 on the PNP's promise of better must come'.
The JLP Government experienced an average of 5.2 per cent annual economic growth during that period. That economic growth occurred largely as a result of favourable commodity prices on the international market and increased foreign investments in areas such as the bauxite industry, tourism and light manufacturing. The main basis of growth then was as a result of heavy dependence on the availability of external investment capital.
Mr Shaw failed to disclose that while there was economic growth there was an increase and consistent negative growth in the country's balance of payments current accounts. The balance of payments grew during that period from minus US$8.4m in 1962 to minus US$151.9m in 1972.
Mr Shaw also failed to disclose that the economic growth of the '60s was accompanied by excruciating social deterioration. During that period, domestic agriculture became stagnant, income distribution was more uneven than ever, the share of the poorest 40 per cent of the population in personal earned income declined by nearly three per cent.
Illiteracy, particularly adult illiteracy, and poor housing remained the lot of a number of Jamaicans, and unemployment doubled. In other words, the inequalities in society grew sharply during the period.
The main lesson to be learnt from this period is that economic growth without social equity will not find comfort among the electorate, so it was not ironic that the PNP won the national elections in 1972.
1972 to 1980
Mr Shaw criticised the economic policies of the PNP of the 1970s, arguing that 'the period 1972 - 1980 was characterised by economic mismanagement and ideological polarisation, where the policy of democratic socialism was formally announced and the PNP declared their intention to take control of the commanding heights of the economy'.
The heavy dependency on foreign capital flows and imports resulted in the economy being susceptible to any significant shifts in the world economy.
This was aptly demonstrated by the 'oil crisis' of 1973 when there was a 300 per cent increase in the cost of oil on the international market. This resulted in a significant increase in the country's import bill and it also eroded the competitiveness of the country's fuel dependent industries such as bauxite/alumina. That oil crisis sent the economy into a tailspin. This was made worse by the global recession of 1973-75 and the second oil crisis of 1979.
In an attempt to correct the imbalance in growth distribution, the Michael Manley-led PNP Government embarked on a more assertive role for the state in national development. It was within this context that the PNP declared its adherence to the philosophy of democratic socialism in 1974. It was not the first time that the PNP was doing so. It enthusiastically promoted such thinking when it was founded in 1938 and further highlighted such intention when it was elected to Government for the first time in 1955.
This more aggressive role by the state in the 1970s allowed for the implementation of radical social reforms as manifested in the introduction of programmes such as Community Health Aid, free education and free health care, the doubling of the enrolment in secondary and tertiary institutions, National Housing Trust, National Youth Service, project land lease, the National Minimum Wage, the eat what you grow and grow what you eat programme, among many others.
The increased cost of oil, coupled with the underwriting of a wide range of social programmes resulted in the Government's expenditure moving from J$974.7m in 1975/76 to J$2,365.3m in 1980/81 and external debt grew from US$127.6m in 1972 to US$1,530.5m in 1979.
The then Opposition JLP bitterly opposed many of those programmes but now, nearly 40 years later, Mr Shaw's JLP Government is trying to re-introduce a number of them.
The JLP opposed the programmes then under the guise that the declaration of democratic socialism by the PNP in 1974 meant the introduction of 'communism'. Despite Manley's constant explanation that his objective was to try and correct the serious economic inequalities which existed in the society, the JLP led by Mr Seaga, especially between 1976 and 1980, became the most belligerent and obstructionist opposition ever in the history of Jamaican politics.
There are four primary lessons to be learnt from this period.
First, national development cannot take place in an atmosphere of deep social discord. Second, the correction of the steep inequalities which exist in the society will require both economic and social engineering working simultaneously; one cannot exist without the other.
Third, both Opposition and Government must find ways to co-exist on critical issues, as a destabilising Opposition will always lead to the instability of an existing Government.
Fourth, democratic socialism as an approach to economic management is antithetical to the deeply entrenched views held by different social classes that it promotes ideological and class division.
1980 to 1989
Mr Shaw outlined that, 'the JLP, led by Edward Seaga, was swept to victory in 1980 on a pro-capitalist, market friendly and management-oriented platform... and that by 1986 the economy began to grow'.
Timothy Ashby, then director of the Office of Mexico and the Caribbean Basin in the United States Department of Commerce, commenting on that period, noted that, 'despite one billion in US development assistance... (the JLP administration) failed to transform Jamaica's economy during more than eight years in office... foreign debt had more than doubled leaving Jamaica one of the world's most indebted countries on a per capita basis. The Jamaican dollar had plummeted in value by 300 per cent against the US dollar'.
Further, by 1982, the JLP Government, by all Carl Stone polls, had become a minority Government. The JLP only got an extension of its time in office between 1983 and 1989 because the PNP boycotted the general elections in 1983.
The continuous economic deterioration in the life of the Jamaican people became manifest in 1985 when public sector workers engaged in a general strike for almost one week. The JLP then, adapted a take it or leave it attitude. This led the workers to declare that while they voted for strong government they did not vote for 'bully' government. Is the situation any different today?
Despite the economic growth from 1986 to 1989 of which Mr Shaw speaks the electorate voted the JLP out of office in 1989, because once again, as in the period 1962-72, the combination of growing inequality in the society and 'bully government' led to severe discomfort among the electorate and the ultimate rejection of Mr Seaga's managerialist, if not totalitarian attitude in dealing with national issues. The said Carl Stone described Mr Seaga's approach thus, 'he behaved like an authoritarian colonial governor and inspired fear rather than love and admiration'.
1990s to 2007
Commenting on the 1990s to 2007 period Mr Shaw focused on the reasons for the creation of the Financial Sector Adjustment Company (Finsac) in 1996.
According to him, Finsac had to be established because of the effects on businesses of the 'sudden liberalisation of the Jamaican economy and the high interest rate policy pursued by the former PNP Government'. Mr Shaw repeats the argument that the financial meltdown in 1995 had all to do with Government's policies and nothing with the manner in which many of the financial institutions were being operated at the time.
I agree with Mr Shaw that the financial meltdown of 1995 was caused by different factors including the liberalisation of the financial sector without the full implementation of the attendant regulatory framework. This is indisputable. Most of the regulatory requirements were introduced after the meltdown. These include the Financial Services Commission, the Jamaica Deposit Insurance Corporation and the Fair Trading Commission, among others.
The high interest rate policy at that time also affected the loan portfolios of some owners and managers of companies.
However, what Mr Shaw has failed to outline is that the establishment of Finsac led to over 600,000 depositors, including pension fund and insurance holders, being saved from a total wipe out. It is this fact which led former Prime Minister Patterson to say that if Finsac had not been established, 'there would have been a bloodbath that would have made the Morant Bay rebellion look like a Sunday school picnic'.
The establishment of the Finsac Commission is a given, but ought not to be used for partisan political purposes. The current enquiry must be driven by balance and objectivity. This includes the calling of persons to testify who are able to speak to the impact of the then high interest rate policy, the regulatory framework, if any, which existed at the time, and the performance of some of the managers and owners of financial institutions in whom many savers had reposed their confidence.
Shaw's Blame Game
Based on other points raised by Mr Shaw in the article, it would appear that he has still not yet realised that he and his Government have been in power for 3 1/2 years, and that it is now time that the Government shows its ability to manage without constantly trying to explain its ineffectiveness on the 18 1/2 years of the previous Government.
Mr Shaw also needs to understand that it is very easy to throw economic statistics around about negative or positive growth, but that numbers by themselves, although important, explain nothing and must always be analysed within the context of prevailing circumstances.
Mr Shaw must also remember that, despite the economic variables and numbers of which he was aware during the election campaign in 2007 he, as the shadow minister of finance, met with different categories of public sector workers -- inclusive of the police, teachers, nurses and civil servants, -- and promised them that the JLP, if elected, would pay them, on time, all that was due to them. In relation to the nurses he promised them significant increases in their salaries. Now the same Mr Shaw is asking the electorate 'to regard the next election as a referendum on economic management'.
Mr Shaw can rest assured that come the next election the concept of economic management will also include, among other things, what workers were led to believe when he was in Opposition and how they were treated when he was in Government; how many workers have lost their jobs since 2007; whether taxes were lower or higher during his reign; whether the cost of food, accommodation and transportation is cheaper or more expensive.
Yes, statistics are important, but the conditions of the lives of the majority of our people are even more important. This is the primary issue that the electorate takes into consideration when voting and it will be no different in the next national election.
Finally, Mr Shaw must be aware of the fact that leadership is not only about the generation of positive economic growth, as important as that is, but it is also about moral authority to govern.
Delano Franklyn is an attorney-at-law and member of the People's National Party
delanofranklyn@cwjamaica.com
Read more: http://www.jamaicaobserver.com/colum...#ixzz1PTV5hS9g
BY DELANO FRANKLYN
Sunday, June 12, 2011
IN an article appearing in the Sunday Observer of June 5, 2011 with the heading, 'The Other Side of the Truth", Finance Minister Audley Shaw argued that the only times that Jamaica has made progress since 1962 is when the Jamaica Labour Party (JLP) formed the Government.
In support of this position, he dangled economic growth statistics and repeated a number of assertions made by JLP spokespersons over the years, the most prominent being former Prime Minister Edward Seaga.
SHAW… repeats the argument that the financial meltdown in 1995 had all to do with Government’s policies and nothing with the manner in which many of the financial institutions were being operated at the time
1/1
It is very clear from the article that Mr Shaw was struggling to find reasons to explain why persons should re-elect the JLP come the next election. As a consequence, he ends his article with this appeal: 'Let us (the people) not commit the errors of the past by even thinking of re-electing a party with such a dismal record of economic mismanagement as that held by the PNP'.
Mr Shaw makes this appeal despite his Government having, arguably, the worst record of leadership in Jamaica since the declaration of Universal Adult Suffrage in 1944.
Record of Leadership
For those who would wish to challenge this statement I will cite only three examples. First, despite the shortcomings of previous prime ministers, whether PNP or JLP, we have never had a prime minister who has put his or her integrity and credibility on the line in defence of a person wanted by another state for gun and drug-running, as was demonstrated by Prime Minister Bruce Golding during the Christopher Coke extradition issue.
Second, no other Government has ever suffered the ignominy and embarrassment of having one of its minister's visa revoked by another country.
1962 to 1972
In his article, Mr Shaw argued that under the JLP Government from 1962 to 1972 (there was) an average annual GDP growth of six per cent and that, 'it is not without irony that after that period of record growth, the Government was changed in 1972 on the PNP's promise of better must come'.
The JLP Government experienced an average of 5.2 per cent annual economic growth during that period. That economic growth occurred largely as a result of favourable commodity prices on the international market and increased foreign investments in areas such as the bauxite industry, tourism and light manufacturing. The main basis of growth then was as a result of heavy dependence on the availability of external investment capital.
Mr Shaw failed to disclose that while there was economic growth there was an increase and consistent negative growth in the country's balance of payments current accounts. The balance of payments grew during that period from minus US$8.4m in 1962 to minus US$151.9m in 1972.
Mr Shaw also failed to disclose that the economic growth of the '60s was accompanied by excruciating social deterioration. During that period, domestic agriculture became stagnant, income distribution was more uneven than ever, the share of the poorest 40 per cent of the population in personal earned income declined by nearly three per cent.
Illiteracy, particularly adult illiteracy, and poor housing remained the lot of a number of Jamaicans, and unemployment doubled. In other words, the inequalities in society grew sharply during the period.
The main lesson to be learnt from this period is that economic growth without social equity will not find comfort among the electorate, so it was not ironic that the PNP won the national elections in 1972.
1972 to 1980
Mr Shaw criticised the economic policies of the PNP of the 1970s, arguing that 'the period 1972 - 1980 was characterised by economic mismanagement and ideological polarisation, where the policy of democratic socialism was formally announced and the PNP declared their intention to take control of the commanding heights of the economy'.
The heavy dependency on foreign capital flows and imports resulted in the economy being susceptible to any significant shifts in the world economy.
This was aptly demonstrated by the 'oil crisis' of 1973 when there was a 300 per cent increase in the cost of oil on the international market. This resulted in a significant increase in the country's import bill and it also eroded the competitiveness of the country's fuel dependent industries such as bauxite/alumina. That oil crisis sent the economy into a tailspin. This was made worse by the global recession of 1973-75 and the second oil crisis of 1979.
In an attempt to correct the imbalance in growth distribution, the Michael Manley-led PNP Government embarked on a more assertive role for the state in national development. It was within this context that the PNP declared its adherence to the philosophy of democratic socialism in 1974. It was not the first time that the PNP was doing so. It enthusiastically promoted such thinking when it was founded in 1938 and further highlighted such intention when it was elected to Government for the first time in 1955.
This more aggressive role by the state in the 1970s allowed for the implementation of radical social reforms as manifested in the introduction of programmes such as Community Health Aid, free education and free health care, the doubling of the enrolment in secondary and tertiary institutions, National Housing Trust, National Youth Service, project land lease, the National Minimum Wage, the eat what you grow and grow what you eat programme, among many others.
The increased cost of oil, coupled with the underwriting of a wide range of social programmes resulted in the Government's expenditure moving from J$974.7m in 1975/76 to J$2,365.3m in 1980/81 and external debt grew from US$127.6m in 1972 to US$1,530.5m in 1979.
The then Opposition JLP bitterly opposed many of those programmes but now, nearly 40 years later, Mr Shaw's JLP Government is trying to re-introduce a number of them.
The JLP opposed the programmes then under the guise that the declaration of democratic socialism by the PNP in 1974 meant the introduction of 'communism'. Despite Manley's constant explanation that his objective was to try and correct the serious economic inequalities which existed in the society, the JLP led by Mr Seaga, especially between 1976 and 1980, became the most belligerent and obstructionist opposition ever in the history of Jamaican politics.
There are four primary lessons to be learnt from this period.
First, national development cannot take place in an atmosphere of deep social discord. Second, the correction of the steep inequalities which exist in the society will require both economic and social engineering working simultaneously; one cannot exist without the other.
Third, both Opposition and Government must find ways to co-exist on critical issues, as a destabilising Opposition will always lead to the instability of an existing Government.
Fourth, democratic socialism as an approach to economic management is antithetical to the deeply entrenched views held by different social classes that it promotes ideological and class division.
1980 to 1989
Mr Shaw outlined that, 'the JLP, led by Edward Seaga, was swept to victory in 1980 on a pro-capitalist, market friendly and management-oriented platform... and that by 1986 the economy began to grow'.
Timothy Ashby, then director of the Office of Mexico and the Caribbean Basin in the United States Department of Commerce, commenting on that period, noted that, 'despite one billion in US development assistance... (the JLP administration) failed to transform Jamaica's economy during more than eight years in office... foreign debt had more than doubled leaving Jamaica one of the world's most indebted countries on a per capita basis. The Jamaican dollar had plummeted in value by 300 per cent against the US dollar'.
Further, by 1982, the JLP Government, by all Carl Stone polls, had become a minority Government. The JLP only got an extension of its time in office between 1983 and 1989 because the PNP boycotted the general elections in 1983.
The continuous economic deterioration in the life of the Jamaican people became manifest in 1985 when public sector workers engaged in a general strike for almost one week. The JLP then, adapted a take it or leave it attitude. This led the workers to declare that while they voted for strong government they did not vote for 'bully' government. Is the situation any different today?
Despite the economic growth from 1986 to 1989 of which Mr Shaw speaks the electorate voted the JLP out of office in 1989, because once again, as in the period 1962-72, the combination of growing inequality in the society and 'bully government' led to severe discomfort among the electorate and the ultimate rejection of Mr Seaga's managerialist, if not totalitarian attitude in dealing with national issues. The said Carl Stone described Mr Seaga's approach thus, 'he behaved like an authoritarian colonial governor and inspired fear rather than love and admiration'.
1990s to 2007
Commenting on the 1990s to 2007 period Mr Shaw focused on the reasons for the creation of the Financial Sector Adjustment Company (Finsac) in 1996.
According to him, Finsac had to be established because of the effects on businesses of the 'sudden liberalisation of the Jamaican economy and the high interest rate policy pursued by the former PNP Government'. Mr Shaw repeats the argument that the financial meltdown in 1995 had all to do with Government's policies and nothing with the manner in which many of the financial institutions were being operated at the time.
I agree with Mr Shaw that the financial meltdown of 1995 was caused by different factors including the liberalisation of the financial sector without the full implementation of the attendant regulatory framework. This is indisputable. Most of the regulatory requirements were introduced after the meltdown. These include the Financial Services Commission, the Jamaica Deposit Insurance Corporation and the Fair Trading Commission, among others.
The high interest rate policy at that time also affected the loan portfolios of some owners and managers of companies.
However, what Mr Shaw has failed to outline is that the establishment of Finsac led to over 600,000 depositors, including pension fund and insurance holders, being saved from a total wipe out. It is this fact which led former Prime Minister Patterson to say that if Finsac had not been established, 'there would have been a bloodbath that would have made the Morant Bay rebellion look like a Sunday school picnic'.
The establishment of the Finsac Commission is a given, but ought not to be used for partisan political purposes. The current enquiry must be driven by balance and objectivity. This includes the calling of persons to testify who are able to speak to the impact of the then high interest rate policy, the regulatory framework, if any, which existed at the time, and the performance of some of the managers and owners of financial institutions in whom many savers had reposed their confidence.
Shaw's Blame Game
Based on other points raised by Mr Shaw in the article, it would appear that he has still not yet realised that he and his Government have been in power for 3 1/2 years, and that it is now time that the Government shows its ability to manage without constantly trying to explain its ineffectiveness on the 18 1/2 years of the previous Government.
Mr Shaw also needs to understand that it is very easy to throw economic statistics around about negative or positive growth, but that numbers by themselves, although important, explain nothing and must always be analysed within the context of prevailing circumstances.
Mr Shaw must also remember that, despite the economic variables and numbers of which he was aware during the election campaign in 2007 he, as the shadow minister of finance, met with different categories of public sector workers -- inclusive of the police, teachers, nurses and civil servants, -- and promised them that the JLP, if elected, would pay them, on time, all that was due to them. In relation to the nurses he promised them significant increases in their salaries. Now the same Mr Shaw is asking the electorate 'to regard the next election as a referendum on economic management'.
Mr Shaw can rest assured that come the next election the concept of economic management will also include, among other things, what workers were led to believe when he was in Opposition and how they were treated when he was in Government; how many workers have lost their jobs since 2007; whether taxes were lower or higher during his reign; whether the cost of food, accommodation and transportation is cheaper or more expensive.
Yes, statistics are important, but the conditions of the lives of the majority of our people are even more important. This is the primary issue that the electorate takes into consideration when voting and it will be no different in the next national election.
Finally, Mr Shaw must be aware of the fact that leadership is not only about the generation of positive economic growth, as important as that is, but it is also about moral authority to govern.
Delano Franklyn is an attorney-at-law and member of the People's National Party
delanofranklyn@cwjamaica.com
Read more: http://www.jamaicaobserver.com/colum...#ixzz1PTV5hS9g
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