A Bankrupt Country

Jamaica is bankrupt.  A rather dramatic opening statement but with the way things are in Jamaica these days it might not be so far-fetched. If Jamaica was a business entity it would be considered to be bankrupt and its creditors would either force it to reorganize or liquidate.

Today, we have a situation in Jamaica where public sector employees are demanding that they be granted the increase in their wages that was agreed to in their CBA (collective bargaining agreement) with the government.  On the other hand, we have the government claiming that it does not have the money to grant wage increases at this time due to the economic bind it finds itself in.

For the government employees it’s the ‘fact’ that their wages have not kept pace with the cost of living and for the government it’s the fact that compared to those at the bottom, government employees have it good. So, we have something akin to the proverbial ‘Mexican standoff’ going on right now. Read some of the comments in both The Gleaner and the Observer newspapers and you see folks coming down on one side or the other.

The government trots out the statistics that its wage bill is now $125 billion and that it has approx 117,000 employees to pay. That comes out to each employee being paid an average of just over $1 million-plus annually. We all know that’s not the case as some folks make millions while others have to suffice with thousands.

I also see comments in both The Gleaner and Observer where folks are venting about some government employees having to live on something akin to barely subsistence wages. It is understandable that with the cost of living going up and with inflation wages cannot seem to keep pace with expenses. However, folks who work for government should not expect that they’ll be paid the way their counterparts in the private sector are.  Like it or not, if folks in government are looking to be paid what they feel they deserve then there will have to be some heads chopped.

We see where the unions and their members want their promised wage increases but they don’t want to see the government workforce culled. Something has to give because right now neither the government administration nor the employees and their reps can have it both ways.

So, where does this leave Jamaica? On the face of it, in a bind. Below the surface, this is starting to become a challenge to the way things have been and continues to be done and a chance for real leadership to assert itself and get Jamaica out of the rut it has been seemingly stuck in since… well, since ‘the Devil was a boy,’ to borrow an expression from my dearly departed aunt.
In letters I’ve written to The Gleaner and in pieces I’ve submitted to this publication, I’ve called for a culling of the government workforce. This I have done from the time when P.J Patterson was PM, when Portia Simpson was PM and now that Bruce Golding holds the office.

Today, the government workforce represents approximately 4.25 per cent of the population (approx. 2.8 million) while in the US the federal government workforce represents approximately 2.25 per cent of the overall population (approx. 307 million).  This does not include retirees who are collecting pensions as they would further inflate these numbers.
At a time when the government should be looking at trimming its workforce, it is planning to add to it by increasing the number of electoral districts from the present 60 to 63. At a time when the government should be looking at trimming its workforce, the PM is talking about cutting programmes. What happens then to those government employees who administer those programmes? At a time when the government should be seriously entertaining the thought of trimming its workforce, Bruce seems to be waiting for the economy to start growing once more before he’ll even think about it. The one problem with this is that the economy would have to grow at a better than 7-7.5 per cent rate annually for the next decade to really create anything close to a full employment scenario.

Let’s see, by a show of hands, those who believe this will happen with the present leadership at Jamaica House or with what passes for it within the PNP.
Does it appear that I’m advocating that there be a reduction in the size of the government workforce? Absolutely. I understand the reluctance of this government to downsize its workforce in the midst of a recession but the recession in Jamaica is not something that manifested itself since the fall of 2008 but has been the case since the 1970s, with a brief respite in the 1980s.

Instead of creating conditions for the private sector to create more jobs the government has decided to create more constituencies so even more folks can feed at the trough on the taxpayers’ dime. Instead of intelligence, creativity, maturity and objectivity, we’re getting inanity, incompetence, blathering and dithering from the island’s leadership.

Instead of getting good government and governance, Jamaicans are still getting crappy government and governance. Instead of fixing a broken and bankrupt system, Jamaica is seeing more of the same old BS being perpetrated with the exception that the party initials of its practitioners are different.

It is a system where patronage, corruption and cronyism have become the norm and expediency is the means by which one gets to control and indulge in them. So, we see the JLP, as the Opposition, castigating the then PNP-led government as being too big and bloated and now that they have become the governing party the government is not big enough.

We see Audley Shaw, as Opposition MP, talking about doubling nurses wages when the JLP takes over and when it did he realised the money was not there to fulfil that promise. We also saw the same Mr. Shaw talking down and sugar-coating the effects the global recession would have on Jamaica’s economy. We know how that has turned out.  We see and hear Bruce talk about being a transformational leader but finding it most difficult to level with the Jamaican people as to just how badly off the nation is and to make the tough decisions when the times and circumstances demand it.

It’s easy to say that this present government has not been doing the best it can do in running the country but that does not mean that the Opposition gets a free pass. In the 18 years that the PNP were in charge, the Jamaican economy barely averaged 1per cent annual economic growth. Their time in office was marked by scandal, corruption, the aforementioned patronage and cronyism.

Between PJ and Portia, they found it most difficult to rid the party of the corrupt and scandalous. Today, it is a party with a leader but it still has leadership issues; a party with no message and even worse, no messenger with enough credibility to deliver it – even if they had one.

In the sense that Jamaica is bankrupt, and I imagine one could make a serious case from a financial viewpoint, it is as a result of the poor to non-existent leadership from either of the two major political parties. Michael Manley might have had the charisma and the oratorical flourish; Eddie Seaga the financial wizardry; P.J. Patterson the unruffled demeanour and Portia Simpson Miller the supposed street smarts but none of them, plus Bruce, seem to possess a combination of these characteristics. With the exception, to a degree, of Mr. Seaga, they have all screwed up or are screwing up and, in the process, Jamaica is getting screwed – politically, morally and financially.

True leadership is not about making the easy decisions nor is it about making those politically expedient ones. Rather, it’s about making the tough decisions. Think of it like friendship – true friends are not those who are around when times are good but when they aren’t so good and who care enough to keep you from destroying yourself and others by your actions. Bruce, you still have time to exhibit leadership to the wider Jamaica and not in front of select audiences.  Just do it.

     

6 comments on “A Bankrupt Country
  1. Once again the premise of cutting the size of government is presented; yet again, there is lack of understanding or sufficient research done to back up this position other than slating anecdotal information. For instance, there appears to be a lack of understanding that in cutting government programs, employees are cut; ergo, the size of government is correspondingly reduced.

    This lack of understanding goes back to the notion that simply reducing the number of MPs and/or combining ministries is synonymous with reducing the size of government. The former, which will obviously not happen anytime soon, will have little impact on JA’s $500 billion plus expenditures, and the latter, unless synergistically planned as in the US’ H.E.W. Department of the 1960s, will also have little impact on reducing the size of government.

    Perhaps the misunderstanding has to do with the number of employees versus the total salary-wage expenditures. Who do we layoff and/or make redundant? Which arm of government do we axe – are not all relevant? How many, (underpaid) workers are willing to accept a 5% to 10% pay reduction at this time; especially as their pay is much less than in the US or other countries?

    So how does a government deal with the politico-socio-cultural decision to reduce it expenditures/size? Pragmatic governments seek to cut programs that have little worth or those that duplicate services already offered in a more efficient-effective way. They may also seek to increase expenditure in programs that may lead to short, medium, or long term (future) social and/or fiscal benefits (e.g., education-teachers, health-nurses, roads-unskilled/unemployed labor).

    The modern practice is to evaluate government projects/programs to determine if the social costs outweigh the social benefits with the aim of determining if they foster the efficient and effective use of public (or borrowed) funds. Some of the modern tools used include PPBS and ZBB that rank projects-program in relation to expenditure and possible revenues. Therefore, cutting programs will reduce the size of government in a rationale and less controversial way.

    Another faulty premise is to suppose a government operates in the same manner as a privately owned organization. To help with this issue one must realize that a government creates growth by expenditures and stimulates its economy through borrowing, the advancement of credit, and the creation of money.

    We must realize that the World is in an economic recession, which tiny JA did not create, and that the key strategies to manage a recession are to (1) increase government expenditures to stabilize and jumpstart the economy, and (2) provide a cushion or safety net for those who will be most adversely affected. Yes, our nation and world are experiencing hard times; however, it cannot be said that JA and its people (locally or abroad) are bankrupt, financially or intellectually.

  2. I realize, Richard, that the wold is experiencing a near-Great Depression and that to lay off folks now would seem inconsiderate. The problem is that the public sector in Jamaica is too bloated and that’s not just my opinion but that of most objective observers and there have been editorials in both The Gleaner and the Observer newspapers that have said as much.

    The gov’t today says it cannot afford to raise employee salaries because it does not have the money to do so. How do you propose to increase the salaries of 117,000 employees when/if you don’t and cannot find the money to do so? As for where to cut in gov’t, you start by reducing the number of ministries from the present 18 to 12; instead of increasing the number of constituencies to 63 as proposed, decrease them back to 45; merge the army and police into a single public order/safety entity; go to a county council system of local gov’t instead of Parish Councils w/each council having 25 members; have the gov’t renovate and retrofit buildings they own in downtown Kingston. and relocate a number of ministry offices in them. You can also cut programs, as you suggested. The point is whatever you do folks are going to lose jobs.

    You are quick to note how seemingly difficult it is for the public sector to be pared but I notice you never comment on the seeming ease with which it has grown. Think about the size of government when Michael Manley first became PM in 1972, when he was PM again in 1989 and now that Bruce Golding is the PM. Look at the US federal government after Ronald Reagan left office in Jan. 1989 to now. When you look at the number of employees in both the J’can and US federal governments from 1989 to now you’ll see that one actually has less employees now than then and it’s not the Jamaican gov’t.

    I have written letters to The Gleaner in the past, when PJ was PM and when Portia was PM advocating this so this is not some loony idea I just conjured up in the last month or so. At some point it will have to dawn on leadership in Jamaica that things simply cannot continue the way they have been and expect the results to change. That’s madness.

    If you take time to read the Jamaican papers online you’ll see that Jamaicans are crying out for changes in the way things are done. You might be wedded to the old ways of doing things but I’m not and I’m getting that distinct feeling that a sizable portion of the Jamaican public, especially the young folks, aren’t either.

  3. Trevor – We have debated this many times before and yet you have never identified which ministries will be cut and the rationale for such, much less show how the cuts will reduce fiscal cost without increasing social cost. By the way, what is the measure to indicate that JA’s public sector is too bloated? Give us real data and/or quantitative analysis and not mere opinion and/or propaganda. The same was said of the US’ Social Security Administration (a creature of the Great Depression) but empirical studies show that it is well staffed, effectively run, with a response time better than most private organizations.

    I believe you are confusing ministers of government with government ministries (e.g., agriculture, education, health, etc.). Even if the cabinet is reduced from 18 to 12, this has little impact on the size of government that I again ask, which will you eliminate? You again propose consolidating the police and defense force, demonstrating a lack of understanding of why they exist separately, much less the historical basis for their creation and the distinctive purpose of each.

    You again propose a county council system not realizing that this will add another layer of government (again more cost and bloat) that will not adequately address local/community needs. This also shows that you have not studied JA’s evolution from the county system, when the population was very small with colonial masters who did not cater to the Black masses, to the current system that caters to a larger population and more local needs. A better proposal would be the direct election of Senators, two for each parish. The JIS website gives an overview of the government of JA.

    The “seeming ease” that the public sector has grown is in response to the (A) growth in population, (B) more attention to the poor and Black Masses, and (C) desire to modernize and cater to a developing nation. If you travel to other Caribbean territories, you will find that even though JA may have deteriorated from our youth (e.g., best roads after France, etc.), we still have paved highways as compared to other nations which have bolder ridden, dirt tracts for highways. You will find few traffic lights, health centers, reservoirs, power plants, schools, and sanitation services in many other territories. Do you want to cut these?

    Finally, you are wrong about the Reagan Administration. All he did was shift funding from domestic programs that helped the poor and minorities especially, Blacks and Native Indians, to increased defense program spending. The end result was an economic depression with massive budget deficits that crippled the US economy, which Reaganomics (Supply-Side Economics) could not fix until the Clinton Administration re-distributed funds back to the people. Repeating the same proposals without careful study is Voodoo-Economics (as per Bush I). Crying out for change is fine, but making viable proposals for change is vital.

  4. Clarification: The number of folks employed by the federal gov’t in the US as of the end of March 2009 was just under 1.971 million (excluding folks employed by the USPS – U.S. Postal Service). This was info I got from the federal gov’t itself on Sept. 2, 2009. Even if one were to include those employed by the postal service, the number of federal gov’t employees today would represent less than one percent of the total US population (approx. 307 million). The government workforce in Jamaica is approximately 4.3% of the total population (approx. 2.7 million).

  5. You made an error in saying the US federal government is smaller than the JA national government, which I ignored. But now that you have repeated the Republican/NEOCON propaganda, I must remind you that along with the federal level of government., there is a state level, a local level (county, commissions, and councils), a district level (schools, water, etc.), and authorities (air and roads), that your are not considering, which all together, far exceeds tiny JA by per capita measure. You have to be careful not to compare apples to oranges. You cannot drop the USPS and other figures and not drop the JA Postal Service and similar figures and say you are making a true comparison. You also cannot exclude the state governments and other federal and state authorities and agencies then claim a true comparison to JA’s national government.

  6. Trevor your last paragraph is what those with vision should debate. The country needs some tough decisions and they are needed now!. If they are delayed any further we will never become the developed nation that both our political parties tell us is the focus. Frugality now or never! We cannot continue to have our cake and eat it. Jamaica cannot continue to take decisons for poliical expediency! We cannot afford most of the luxuries of life. We cannot live ‘ A magzine’ life on the current GDP.

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