Holness and the whole truth

The Gleaner has, in a series of page one and editorial-page editorials, been pressing the political parties to tell the people the truth, the whole truth and nothing but the truth about our economic conditions and prospects. Will Andrew Holness attempt to do that today? Can he afford to? Andrew Holness has been generally saying the right words since he was anointed to his new position, but today will be a special moment. Today, he is expected to officially launch the election campaign and set its theme.

He will, no doubt, touch the right buttons. He needs to set out, importantly, how his party differs from the PNP and what he has to offer that Portia Simpson Miller and her party are not likely to offer. This newspaper and others will be judging him not on his rhetoric or his ability to rouse the crowd with platitudes and promises, but on the quality and creativity of his thinking. The Gleaner, which has been calling on "thinking Jamaicans" to make their voices heard and to enter the discourse, will be judging the young leader on how far he distances himself from old politics.

At a time when our economic options are few in light of our subservience to the International Monetary Fund and a fickle global environment, the JLP leader must clearly show us why he is the best option for us.

The people have already been speaking. In an RJR Group/Boxill poll last week, 45 per cent said unemployment was the major problem troubling them, ahead of crime, which only 27 per cent had as their No. 1 issue. In April, 41.5 per cent had crime as their major concern, ahead of unemployment. And in this November poll, as much as 52 per cent said unemployment was the major problem facing their community. Clearly, the unemployment crisis is deepening.

heightened focus

Interestingly, with all of the heightened attention which The Gleaner has been paying to the economy, unemployment, or the creation of jobs, has not been a focus. The major focus has been our debt albatross, our high government deficit, bloated public sector and the need for fiscal austerity. Now The Gleaner would be absolutely flawless in arguing that our unemployment crisis is not likely to be fixed with a 130 per cent debt-to-GDP ratio, unsustainable debt-service ratios, high fiscal deficits and balance-of-payments woes.

These urgent problems have to be tackled if we are to create net new jobs. But The Gleaner and other neoliberal voices must be careful to point out to readers and listeners - in this whole quest for the whole truth and frankness - that while macroeconomic stability is necessary for employment creation, it is not sufficient.

In a rare stroke of comprehension, one of my consistently uncharitable online critics, in a terse reply to Peter-John Gordon's sober and respectful rejoinder to me, pointed out insightfully that I was not questioning whether the patient (Jamaica) was sick, but whether the IMF medicine would provide the cure.

The issue for Andrew Holness, Audley Shaw and other apostles of neoliberalism is that they have correctly diagnosed the sickness, but seem too credulous about the IMF prescription.

The masses who will be shouting and prancing today at the National Arena have no idea that the stabilisation and belt-tightening measures favoured by their party - and which are absolutely necessary - don't speak directly to jobs, jobs, jobs. I heard Finance Minister Audley Shaw on Impact on Thursday night, reminding that "if you want good, yuh nose haffi run", but that light was at the end of the tunnel.

Let me make some things clear: I totally agree with The Gleaner and the neoliberals that there must be pension reforms and that public servants must contribute to their pensions. That public-sector pensions have moved from $12 billion four years ago to $22 billion today. That is absolutely unsustainable. I support the IMF and the Government's thrust towards tax reform. The country must get behind the IMF proposals to slash waivers.

Measures taken by this Government to reduce interest rates, inflation and to maintain a stable foreign-exchange rate are commendable. Privatisation of lossmaking enterprises is eminently sensible, and this Government must be lauded for getting out of legacy agreements which were draining our coffers. I do not side with the left in being contemptuous of fiscal responsibility. I believe that economies like ours which are in crisis must adopt some austerity measures.

It is, indeed, foolish, I would agree with the neoliberals, to clamour for unbridled social spending and to wantonly increase entitlements without a sound macroeconomic foundation. We cannot go on living by borrowing or taxing our people to death. The problem I have with the neoliberals is that they don't usually go any further than the necessary truth about the need for austerity, belt-tightening, stabilisation and fiscal prudence. They have too great a faith in the market and appear to be way behind in their reading of what is actually happening in the world.

I don't find a serious grasp of the forces shaping the global economy, the rapid and dynamic changes in global production chains and technological developments driving 21st-century globalisation; or the effects on countries like ours as a result of the rise of China, India, Brazil and countries like Indonesia, Malaysia, Thailand and other high producers.

I agree with The Gleaner: "Like Greece, Jamaica's debt is unsustainable. It will require tough action if it is to be serviced and reduced ... ." (November 9). In another front-page editorial ('A crisis is upon us'), The Gleaner says, "The situation is unsustainable. If we do nothing, the economy will collapse. So spending has to be brought closer in line with income ... ."(November10)

In yet another front-page editorial, 'Do Holness and Simpson Miller have the courage to confront reality?' The Gleaner opines that our situation demands "cutting spending to suit available resources and/or earning more by collecting or increasing taxes and/or contracting public expenditure." (November11)

not sufficient

All The Gleaner is calling for is necessary - but not sufficient for either economic growth or the development of people's lives. Our discussion in Jamaica is taking place in isolation from some of the best and most current thinking and research in economic policy. One of the most celebrated economists in the world today, Professor Jeffrey Sachs, whose book The End of Poverty, our prime minister is featured browsing through in his library in a photo in his inauguration booklet, has just come out with his latest book, The Price of Civilization: Reawakening American Virtue and Prosperity. I recommend it to our prime minister and other neoliberals. It's an excellent treatise on the current global economic crisis and its causes and cures.

In this work, Sachs lashes the free-market fundamentalism which has been the dogmatic staple for the last number of years. In a chapter titled 'The Free Market Fallacy', he says, "Unfortunately, free markets, by themselves, are not able to ensure the efficiency of the economy ... . We should turn to government to ensure fairness and sustainability of market outcomes, including the broad distribution of income in the society."

I saw a fascinating interview on Fareed Zakaria's 'GPS' last Sunday with the former governor of Michigan, Jennifer Granholm, who has just published her book The Governor's Story: The Fight for Jobs and America's Economic Future. She mentioned that she did all the things neoliberals call for: She cut taxes, slashed spending, reduced debt and still Michigan was losing jobs. Her book shows that the answer to the jobs crisis requires far more than what neoliberals are proposing, and it shows that they simply misunderstand the nature of the challenges of globalisation.
The Gleaner is calling on the politicians to tell people the truth. Well, the truth is that neoliberal policies - tax and pension reform, public-sector cuts, debt reduction, fiscal prudence, generally - are not enough to create jobs and deal with voters' main problem, which is unemployment. Selling snake oil is not just leading people into the path of populism. It is building up the hopes of the poor and marginalised that if they tighten their belts and bear more sacrifices, they will reach the promised land of growth and increased employment. It is simply not true.

Neoliberal economics has been more concerned about inflation than reducing unemployment. You hear about inflation targeting, but not unemployment targeting. That is why you have the phenomenon of jobless growth all over the capitalist world. It is no accident. We must tell the people the truth: They can make all these sacrifices, bear the brunt of the IMF adjustments and have an economy which is growing but one which is not producing new jobs. That is part of the harsh reality people must be told.

time for a better alternative

The country is ripe for a real alternative involving a combination of austerity and Keynesian measures. (No contradiction there, just one requiring a creative mix) I notice there is little concern about issues of equity and inequality here at a time when the global community - including important voices in capitalist society - are putting great emphasis on that. The 2011 Human Development Report is about Equity and Sustainability. The November-December issue of Foreign Affairs has a lead article on 'Inequality and Social Decline- in America'. I repeat: macroeconomic stability and fiscal discipline are necessary but not sufficient for job creation and poverty alleviation. You can't have development without growth, but you can have growth without development.

The Economist of October 22 is instructive: cuts have often been associated with civil violence. In a separate study of fiscal consolidation in Latin America between 1937 and 1995, Mr Voth pinpoints a tight link between fiscal consolidation and instability across democracies and autocracies alike. And a study of Europe between 1919 and 2009 found that "episodes of instability occur twice as often when spending cuts reach five per cent of GDP". This is part of the truth which must be told to the many hopeful unemployed persons who will be turning up at the Arena today.

Ian Boyne is a veteran journalist. Email feedback to columns@gleanerjm.com and ianboyne1@yahoo.com.