Ian Boyne, Contributor
As Opposition Spokesman on Finance, he was glib, fiery and sensationalist. He would thunder against Omar Davies' economic polices, damning them as hopelessly muddled and counterproductive. Audley Shaw has always played well to the gallery. Now it's time for Audley to face the music.
This budget debate will be an interesting one, not because of the economic issues which will be discussed, but because of the politics which will no doubt dominate the contest.
There will be a lot of shadow boxing and blindsiding, grandstanding and ego-tripping. Never has there been a time when independent journalism and analysis will be needed as it now. It will be the task of non-partisan analysts to separate the heat from the light and to go to the gravamen of the issues, while not participating in the games that will be played.
For those of us not interested in scoring any points, there are some positions which must be advanced.
For one, I am happy to see that the Jamaica Labour Party (JLP) has placed at centre stage external issues and their pivotal role in influencing the domestic economy. I hope we no longer have to debate whether global economic factors seriously impinge on national policymaking prospects and economic fortunes.
This must move outside the political football field - though I am not too hopeful, for how can the People's National Party (PNP) resist the temptation to exploit the Government's difficulties in grappling with price increases which the people are groaning about?
How can the PNP resist the temptation to dismiss as 'excuse' the Government's plea that unfavourable external economic factors seriously constrain their ability to fulfil all their campaign promises? Political expediency usually trumps rational discourse, and the people in the PNP are political animals just like those in the JLP.
Indigenous policymaking
So watch out for the switching of positions which will take place during this debate: The PNP will now be pointing to the importance of 'appropriate and responsible' local responses to the global economic crisis, while the JLP government will continue to lament unfavourable global factors - when a year ago the positions were reversed.
Readers will remember my writing frequently about overweening global conditions and how indigenous policymaking was seriously hampered by factors totally outside our control. Indeed, I lamented that during the pre-election national debates, none of the debaters and not one of the journalists paid serious attention to global economic issues. It was as though either party could do it all by itself, once elected.
I have frequently written about the dangers posed by neoliberalism and neoliberal globalisation. But it is not in the interest of the political parties - except when they are in power - to let us know of their finitude and lack of omnipotence. They generally act as though they can bring about the kingdom of God on Earth now, and that paradise is only delayed because of the wickedness, incompetence and malfeasance of their political opponents.
The fact of the matter is that Bruce Golding is not just 'making excuses' when he puts forward the view that international factors have seriously affected his social welfare plans; no more than Omar Davies and the PNP were making excuses when they claimed that they could not do everything they wanted to because of external factors.
Difficult task
Even if we were to get rid of all the corruption in government, unfavourable international economic factors would still make it extremely difficult for Jamaica to make the kinds of social welfare investments it needs to make to deal with its large social deficit. We must not trivialise the enormity of the challenges we face as a small, open developing economy in this post- Cold War globalised era.
The cover feature in the latest Foreign Policy journal (March/April 2008) is on 'The Coming Financial Pandemic: Why America's Economic Crisis Will Infect the World'. The American recession will affect Jamaica severely. Our exports will decline, our import prices will increase, our tourist numbers will fall, investments will not be as buoyant, and it will be more difficult to raise funds on the international capital markets.
Says Foreign Policy: "Making up for the slowing US demand will be difficult, if not impossible. American consumers spend about $9 trillion a year. There's reason to worry that an American financial virus could mark the beginning of a global economic contagion."
Making the point that in today's flat world, trade and financial links "mean that an economic slowdown in one place can drag down everyone else," the journal notes that the US alone accounts for 25 per cent of the world's GDP.
On the cover of the latest BusinessWeek magazine, also, is a special report on the US financial crisis asking the question 'Where is (Federal Reserve chairman) Bernanke taking us?' Only God knows.
BusinessWeek calls the current financial crisis in the US "perhaps the biggest since the Great Depression." (This is not just JLP propaganda, and the sooner PNP Comrades make the masses know that the better - for the country and for the masses, if not for the PNP's short-term political interests).
Money supply in the US is up 15 per cent from a year ago, "the biggest increase in 37 years," says BusinessWeek.
The director of the Western Hemisphere Department of the International Monetary Fund, Anoop Singh, in a paper delivered at a conference on Latin America in Brazil on March 17 said "this is a period of exceptional uncertainty". Singh says that "The external environment has abruptly changed, led by mutually reinforcing financial shocks in the United States that are spilling over into the global economy."
In its most recent forecast, the IMF's World Economic Outlook revised downward the growth rate for almost every region, including China.
Growth prospects downgraded
Amazingly, the IMF has downgraded the prospects for growth this year from the robust 4.2 per cent projected in July 2007 to 4.1 per cent in January this year, and now to an anaemic 1.1 per cent. That is how drastically things have changed globally. It is not just JLP propaganda, but pardon the people's scepticism, for in past the JLP did not show sufficient recognition of the constraining international factors.
In the 1970s Michael Manley's quest for a New International Economic Order was ridiculed. He had the foresight to see that it was futile to be simply "getting the fundamentals right" and being busy with production, oblivious to the big wide world out there and its impact on us. That was why he spent so much time focusing on necessary global reforms - which, if we had, would redound to the world and Jamaica's benefit.
Scholarly discussion
The need for global governance in this globalised era is not just a socialist refrain these days. No, it has been mainstreamed. See the December, 2007, issue of the IMF's main quarterly magazine, Finance and Development, for a scholarly discussion on the issue.
The response of the US Fed to lower interest rates is not slowing the boom in commodity prices, as Jeffrey Frankel points out in an illuminating article in a recent issue of Vox (March 25). He points out that the reigning orthodoxy that it is a fast-growing world economy, particularly growth in China and India, which is fuelling the rise in commodity prices is contradicted by the fact that since last summer the US economy has been slowing down and yet commodity prices are still rising.
(They have gone up 25 per cent since August last year. Again this is not JLP propaganda). There are serious problems with the monetarism which governs the present orthodoxy, but the current gurus and fundamentalists who are running the world economy will not budge from their theology and won't be confused by the facts.
We in Jamaica have to be creative and heterodox in applying economic policies and strategies. No doubt some will be attacking the JLP government for spending $85 billion more this year, saying that while this represents just a three per cent increase in real terms, the Government should practise fiscal discipline and "recognise the crisis we are in" by cutting social expenditures.
Some would even say that this is a political budget, to save face after making so many pre-election promises. Whatever people want to say, I am glad the working class has gleaned some benefits from this budget. They will benefit from the free health care which will begin from Tuesday.
Keep in mind that a budget is not just an economic instrument. It is a philosophical instrument. It is a reflection of values and priorities.
The financial analysts whom the talk shows like to feature give the impression that budgets are philosophically neutral instruments and that only economic factors must be considered. But deciding that you are going to starve the social sector and not implement the abolition of user fees or free tuition, or spend on the youth and security is a philosophical matter; it is an expression of what you value; of where your priority is.
Class interests
The debate over the budget reflects class interests and, interestingly, these class interests cut across party lines. For there are JLP people who feel that this Government should have been more fiscally conservative in its budget, dispensing with the goodies for the masses in the budget. But a person like Portia Simpson Miller, who has always been a champion of the poor and oppressed, must clearly support those measures in this budget which benefit the Jamaican people.
Initiatives to strengthen small business, foster entrepreneurship, deal with the youth crisis and to improve the educational and health status of the Jamaican masses are good. That Audley Shaw might have some words come back to haunt him is a small price to pay in the struggle for people development.
It is no shame for a person to be proven wrong for statements made in the past. The only shame is not to be able to learn from mistakes. We face real problems. Let us not trivialise them with our political games. At least outside of Parliament, let's have a rational budget debate.
Ian Boyne is a veteran journalist who may be reached at ianboyne1@yahoo.com.
