Wed | Feb 26, 2020

Mark Ricketts | Devaluation is our reality

Published:Sunday | January 26, 2020 | 12:22 AM
Professor Franklyn Prendergast
Don Anderson
Mark Ricketts
1
2
3

In my last column, I thought I had given an excellent explanation of the tough choices many individuals as consumers and parents must make to insulate themselves against devaluation and the initiatives public- and private-­sector leaders must embrace to prevent many workers from being left behind due to the ravages of devaluation.

After the article appeared, the insightful and probing ­interviewers Danielle Archer and Jodi-Ann Quarrie on Power 106 FM ‘Morning Agenda’ pushed me hard to elaborate my thoughts on devaluation and what must be done to insulate citizens in 2020. At the end, they offered an excellent summary of my ideas.

Still, readers of my Sunday column and listeners to Power radio, in phone calls to me, and emails, and in buttonholing me in public places, wanted to hear more on the subject or required further explanation.

One good example was an email from the Opposition Spokesperson on Finance, Mark Golding, who wrote: “You say our leaders must implement better policies this year to insulate its citizens against devaluation. What do you have in mind in terms of policies to insulate against devaluation?”

The several questions, mini-debates, discussions, and challenges got me wondering whether people just disagreed with my conclusions, or misinterpreted the thrust of my position, or, probably believed that I was not strong enough or good enough in my analysis for them to understand what I was saying.

Devaluation is our reality. The precipitous decline of our currency (massive devaluation), where it has fallen from $43 to one US to $135 to one in 20 years has been destructive for us as a nation, but ­devaluation can also be significant. As a warning sign, it lets us know that misplaced priorities or misguided policies by the private sector and public sector must change, and, so, too, must responsibility on the part of individuals. In 2020, the nation had better start getting it right.

There has been instability, including deterioration and heightened volatility, in the currency market because the Jamaica dollar has lost competitiveness in international markets. Our trading partners’ economies have outperformed ours, and the country has had a greater penchant for imports than exports, accounting for our worsening trade deficit.

WORRYING DOWNWARD TREND

Last Tuesday, Don Anderson, ­managing director of Market Research Services, presented the findings of the Jamaica Chamber of Commerce business and consumer confidence, indices. These painted a worrying downward trend in business confidence starting in the second quarter of last year, then the third quarter, before worsening even more in the fourth quarter. Not surprisingly, the main reasons given for the decline were devaluation and fluctuation of the Jamaican dollar and crime and violence.

Many structural impediments account for the underperformance of our economy. This is most evident in our uninspiring economic growth rates as against robust expectations four years ago. Such underperformance affects our ability to compete internationally, which makes it difficult for our currency to remain competitive with our trading partners and makes it increasingly more difficult for our highly indebted nation to allocate sufficient resources to insulate its hard-working citizens, who are below the liveable wage.

The country’s productivity has been decreasing for decades. Douglas Orane, who studied industrial engineering, in an excellent column on productivity in The Sunday Gleaner, January 12, 2020, pointed out that there can be paradigm shifts in productivity gains in the country. These would have a positive impact on wages and output, but would need inspired, competent, well-experienced, and well-trained leaders in both the private sector and the public sector.

Orane provided insights into the remarkably successful initiatives undertaken by GraceKennedy, the company he led at the time. Probably, the prime Minister could coax Orane out of retirement, and appoint him as minister of Productivity for two or three years.

Other leadership initiatives, I would contend, are clearly needed in offsetting wage rigidities in the labour market, and the country should adopt more aggressive approaches to incentivising wages, especially in the public sector.

We have to begin making a more meaningful impact on efficiency in resource allocation and on the attainment of a liveable wage for more individuals. In this way, they would be better able to cope against the ravages of devaluation. It would also help the country to be more internationally competitive.

TRANSFORMATIVE EDUCATION

If citizens are to be given a reasonable chance of offsetting their limited options against devaluation, then the Government must realise that an economically resilient and growing economy requires a well-educated total population and not just the brilliant few.

Education has to be transformative because it is the most critical of institutions, more akin to an industry. For this to happen, it has to have an outstanding administrator/educator, with vision, experience, and intellect, and with a first-rate team around him or her, especially with the advent of disruptive ­technologies and with the country having 60 per cent of its population either not certified or trained.

I thought Professor Stephen Vasciannie would have been the ideal choice to be minister of education. The ministry still limps along, hoping, I suppose, for a miracle.

On emphasising new thoughts on education, Professor Franklyn Prendergast, Musgrave Gold Medal winner, Jamaican Rhodes scholar, and the second-longest serving administrator at the prestigious Mayo Institute said, while in Jamaica this week: “The country has not been preparing for the success of the people it educates. It is losing a lot and missing many great opportunities.”

As for crime and violence, they extract a heavy toll on our annual growth rate, and, by extension, our global competitiveness. This, in turn takes its toll on the value of our dollar.

I am yet to understand how our society can spend so much time talking about soft policing versus hard policing as against effective policing.

When our stations are without vehicles, or without enough of them, or the minister of national security has to put a hold on station renovation and appropriateness, or there is still an absence of promised technology, is that the result of soft or hard policing. Or is it a reality that effective policing is hampered?

Unfortunately, since the start of the year, crime and violence are still ignoring pause.

Adding to that is our culture of social dysfunction, where the concept of family is bypassed, and many children are brought up by a single mother without even knowing their father.

Government’s inability to redistribute to all those having limited options arising from weaknesses in the currency means that responsibility and accountability must take precedence.

 

- Mark Ricketts is an economist, author, and lecturer. Email feedback to columns@gleanerjm.com and rckttsmrk@yahoo.com