Tweet
Henley Morgan
Thursday, August 24, 2006
THE perennial issues surrounding poverty - what causes it, who is responsible, how to eradicate it - are explored by renowned economist Jeffrey D Sachs in The End of Poverty. This book is a must-read for persons having an interest in these matters.
The level of poverty suffered by the nations of the world roughly equates where they are on the economic development ladder. At the bottom of the ladder are the "poorest of the poor" who survive without most of life's basic necessities. They represent roughly one billion of the world's population.
A few rungs up the ladder are the "poor", numbering close to 1.5 billion people. Like chickens, they must scratch the earth to eke out their daily subsistence. Along with the "poorest of the poor" they constitute about 40 per cent of humanity.
Another 2.5 billion people are deemed to be middle income. Living next to pockets of extreme to moderate poverty that remind them of the conditions they narrowly escaped, they enjoy a reasonable living standard; adequate nutrition, schooling, health and running water, even if many of their fellow countrymen cannot attain the same.
The remaining one billion people are at the top of the ladder. Residing in the so-called developed world, they produce and consume a disproportionate percentage of the world's goods and services.
Although it may feel like it sometimes, Jamaica is not numbered among the poorest of the poor. With a GDP per capita of US$3,388 (2005) and less than 20 per cent of households living below the poverty line of J$221,130.78 annually for a reference family of five (2004), Jamaica is realistically in the upper end of the low income range but more widely accepted to be in the lower end of the middle income range.
Sachs, in addressing the issue of why some countries fail to thrive, serves up the standard menu of reasons: lack of saving, absence of trade, technological backwardness, natural resource decline, population explosion and adverse productivity. One can be more prescriptive than that in explaining what went wrong with Jamaica.
Jamaica was on an upward growth trajectory in the 1960s. The 1970s and 1980s marked two periods of reversals in the country's fortunes. There is no longer any debate about where the development train jumped the tracks with Michael Manley at the controls. The egalitarian motives were well intentioned; rescuing the hungry and dispossessed from the quagmire of poverty and bringing them into the mainstream.
Without any concept of how to generate growth and even less knowledge of how to manage change, the investments in human and social capital could not be sustained. There was a resulting collapse of the key economic indicators and a public debt requiring generations to repay.
In the 1980s, Mr Seaga assumed the reigns of government. His was the task of implementing the International Monetary Fund and World Bank prescribed structural adjustment policies. There is today wide consensus that the policies common to structural adjustment - devaluation of the domestic currency, tightening of monetary and fiscal controls, removal of subsidies, deregulation, privatisation and trade liberalisation - increased the suffering of the poor. By eliminating investments in human and social capital (closing down trade training centres and the like) something looking like economic growth was contrived. By the 1990s, the economy was comatose. Trying to get production out of it was and continues to be like asking a man who has had his vas deferens severed to produce children.
Today, we face the prospect of being caught not just in a poverty trap but a fiscal one too. While the private economy is buoyant, government is lacking in the resources necessary to make those critical human and social investments. The idea of increased income tax is unfeasible given the burden borne by PAYE employees, a large number of whom are working poor. The government is already carrying a huge debt stock (a worl
Comment