The PNP and Responsibility for Past Economic Policy

A member of the Jamaican Parliament during the 1990s, Mr Karl Blythe, confessed this week that the PNP government Made a mistake by holding to a high interest rate policy for over a decade. These statements were given in response to statements from the Former Prime Minister and the Former Minister of Finance about the financial meltdown in the 1990s. The former Prime Minister, PJ Patterson, Blamed the Banks for a Meltdown. The former Minister of Finance, Omar Davis, said that the enquiry about the financial meltdown were filled with Half Truths and Full Blown Lies.

Mr. Blythe's statements put pressure on the PNP opposition party in which Omar Davis is the current spokesman on Finance. The PNP responded to Mr Blyte, calling his statements Unfortunate. In the run up to the 2012 election, the PNP would have us believe that businesses should be demonised. They essentially suggest that a policy of 18% to 25% interest rates sustained for more than a decade was appropriate. I fail to understand how this environment was friendly to business or economic health of the country.

Most undergraduate business majors know that business cannot thrive in a high interest rate regime. This is especially so for capital intensive sectors such as manufacturing. The average profit margin on companies trading on the New York Stock Exchange is under 20 percent. Simple analysis could show that the 18% to 25% regime Jamaica had in the 1990s would kill any economy. The businesses that could survive such an environment include those who did not need to borrow, Drug Traffickers, and Money Launderers. The evidence is there to show that businesses closed and major job loses resulted.

If you look at the FINSAC rolls you will find a host of manufacturing companies such as thermo plastics. Others, such as Grace Kennedy, moved off-shore or closed down. Business can survive a short period of high interest rates but not the decade long period imposed on Jamaica by the PNP government. If you look around you see evidence that some businesses were propped up by money laundering. Job losses were replaced by a high crime environment and a larger emigration exodus than in the 1970s.

Talk as they might about a strategy to control the Jamaican Dollar exchange rate, in the back of the comrades minds was a method to use the capital system to invoke a large transfer of wealth from the middle class to the poor. What they succeeded in doing is to bring Jamaica to the brink of failed state status. Were it not for remittances, I shudder to think where we would be today. Portia, Omar, and the PNP cannot admit their mistake. To do so would be political suicide.

The role of civil society in Jamaican Politics

The Jamaica Gleaner has been publishing a series of editorials titled "The Gangs in Gordon House." In the latest article we have the suggestion that civil society is disillusioned with the political process.

It seems to me that disengagement from the political process is ineffective approach to change. When the PNP storms out of parliament it acts like a spoiled child and does nothing to advance their agenda. When the PNP decided not to contest the elections in 1983 they took their ball and when home because they were being denied their socialist way.

In a working democracy we should see engagement, consensus building, cooperation, and compromise . When Portia hugs Bruce in parliament it suggests a promise to work together for the common good.

I have to restate however, that civil society has very few cards they can play that will force the parliamentarians to give up the dictator's game. The dictator's game calculates how little to give the people while still maintaining power.

Civil society may try to withhold financial support, but the political parties have shown that can use the government's treasury to finance an election. We have the Trafigura incident and allegations of misuse of funds from road works projects that documents this approach. Coupled with misuse of the government treasury we have no laws that compel the political parties to disclose the source of funds used to finance elections. The PNP demonstrates real fear that the JLP will use JDIP funds to finance the 2012 elections.

Civil society has also to contend with the garrison constituency. Parliamentarians seem to hold dictatorial power in the places that ensure them a seat in Gordon House. What can civil society do in a garrison community when the police struggle to enforce common law? Again we have allegations that voters come to the polls only to find out that their vote has already been cast.

Its seems to me that civil society has to work to change the rules of the political game. That means we need to make meaningful changes to the Jamaican constitution. But how do you change the constitution when the parliamentarians in Gordon House are the only ones empowered to make such changes? Its a catch-22.

The lawful and constitutional answer is that civil society needs to support a third party. A third party will provide a counterbalancing force. Many will dismiss the approach. They will say that it has been tried before and has failed. If you believe that success is measured by a third party majority in parliament then you would be correct. If you understand that an effective third party can deny power to one or the other political party, then civil society can force consensus upon Gordon House by requiring a coalition government.