Thoughts on Institutional Change

Material Opportunity for Jamaica by Damion Brown

 

The thin parliamentary majority of the current government may be interpreted as a risk to macroeconomic stability by some due to perceived inability to push through tough measures.  However, I consider it to provide a wonderful opportunity to push through fundamental institutional changes that will improve confidence, the quality of governance and transparency.

  • An independent investigative body focused on politicians and public sector, with ability to prosecute so as to reduce major instances of corruption. There is a perception that significant state resources are regularly wasted by giving contracts/deals to the politically connected, which significantly misdirects government expenditure from where it would be most productive and reduces the impact of actual spend. The likelihood of being actually sent to prison for such actions would result in much lower waste and greater productivity from government expenditure (even if contracts are still given to politically connected they would at least be required to provide reasonable value/performance)
    1. To my mind more important that the actual money lost to corruption is the dynamic it creates where instead of focusing on efficiency and productivity, businesses focus on maintaining patronage and keeping their party in power even if the policies are questionable and performance poor. We blame poor people for being mindlessly loyal to parties (“willing to vote for a dog dressed in the party’s colours”), but it may be that business owners are even more biased due to the even greater benefits they get (large contracts are much harder to walk away from than the rum and curry goat meat meal that the grass roots supporters get). Changing this dynamic will lead to a much better dynamic where focus is placed of the efficacy of policies and actual execution, rather than simply defending one’s party due to the great financial benefit of maintaining them in power.
    2. There are significant efficiency gains beyond just more effective government expenditure, to the extent some of the “powerful” in our society have become so not from true entrepreneurial talent or the ability to create value but from behind the scenes patronage. The result is that their voices are the ones that drive society/private sector views and not necessarily those of the truly intelligent/capable. Actions of civil society/private sector will be influenced/stymied by their objectives as they can only truly desire conditional change (ie. corruption and political access remains for them, while change is limited to removing impact of criminals and populist elements), which prevents us from effectively addressing the underlying governance problems and corrupt system.
  • Greater inclusion and partnership with the private sector and civil society. The uncommitted vote is larger than the committed vote for any party, the problem is that the uncommitted vote mainly reflects apathy and therefore does not respond to the party that displays better governance and policies. This reduces the incentive for any party to pursue good governance and policies and increases there need to pander to populist views and the needs of their committed political base.   If the perception that the PNP has greater “committed/ die hard” support than the JLP is true, then the JLP does stand to benefit substantially by engaging the politically uncommitted, increasing transparency, and pursuing sound policies that have been endorsed by civil society.    It is for us within civil society to strongly agitate for sound policies and endorse /criticize the current government based on policies and create political pressure for performance.
    1. This has been the missing dynamic in Jamaica, however the “success” of the “IMF programme” and broad consensus that macroeconomic stability is necessary and the thin majority in parliament, means that the impact of civil society is potentially even greater than it has ever been before.
    2. Both the previous administration and current administration have pursued broadly responsible and politically difficult policies. Even with the “questionable” election promises for income tax, the current administration has actually executed in a responsible manner that does not threaten stability (whether it actually achieved its election promise is a different conversation)
  • While both parties have consistently spoken to “private sector led” growth, there are serious questions as to whether they were committed to this or were simply forced by circumstances to follow prudent policies under an IMF programme (current administration failed the earlier programme and the current opposition also did not execute on some of the most politically challenging reform aspects, such as public sector size and efficiency and pension reform). This is a significant opportunity for society to align on the role of government in support of the private sector, broadly what form that will take and what the priorities are in the medium term (touch decisions will still have to be made given our debt burden) in the context of the Vision 2030 framework that is still considered a very good overall blueprint for development.   Private sector led growth will also have to be redefined as it can not be limited to those who currently hold capital and power, but mechanisms (capital market development and financial inclusion) must be introduced to ensure that resources and opportunities flow to those with the “best and brightest minds”, not to old money that are “most connected and lightest skin tones”.
    1. The sense of social exclusion and perception/reality that economic opportunities are mostly limited to those with connections and inherited wealth must be addressed. We cannot achieve true efficiency and dynamic growth if competition is largely limited to established wealth.
      1. In North America, the most dynamic companies (especially in the digital economy) do not reflect inherited money but more so capabilities, if not luck (yes the system is still biased to white males, but everything is relative). In Jamaica we speak about families as if they are genetically imbued with business ability, however if we actually browse the stories of Jamaicans who do incredibly well outside of Jamaica we hardly ever see the last names of those families…. maybe they are so patriotic that the only limit their awesomeness to Jamaica, or maybe as in other developing countries the concentration of capital, lack of strong financial infrastructure, and corruption /absence of rule of law results in a few having significant advantages within the country, relative to others.
    2. If we can get strong alignment across civil society, business and politicians then continued macroeconomic stability will eventually stimulate the local private sector to greater levels of investments or at least facilitate foreign investment. I am not a fan of the “diaspora will invest and transform the economy” argument, but we have successful entrepreneurs and technical people living abroad. This would really be an opportunity for them to utilize their skills/technology/ business networks and raise the capital to execute within Jamaica.
  • Reorienting the public sector is necessary but politically difficult given potential job losses, however a program to have any savings placed into specific capital programs could offset this. To ensure the capital programs are material some sort of public/private partnership structure would be required, possibly with government providing defined risk sharing.  Additional fiscal space could be earmarked for this transition,  with credibility in the overall programme maintained despite the resulting deviation by ensuring the capital projects are endorsed by private sector/ civil society supported by multilateral technical assessments that the projects provide high value added and will support long term growth.

This may appear to be a very optimistic outlook but based on a presentation I attended recently, other countries have executed on similar initiatives and done very well. While we have seen improvements in policy making and political maturity over the last few years, if there is one thing I am convinced off is that simply waiting for “them” to fix the country is not the best solution. The question is are we going to sing the same old song that the “powers that be” are the problem or are we brave enough to push for the changes that are necessary to move our country forward?

 

 

 

Advertisements

One thought on “Thoughts on Institutional Change

  1. One important problem in Jamaica is that some people are appointed to TOO MANY positions at the same time in addition to their full time substantive jobs.. They are offered the positions and they accept them.They do not realize that they are spreading themselves TOO THIN and are therefore unable to concentrate on anything in a meaningful way. They “show their faces” at various meeting ,attend them for par of the time , make some casual comment and then go to another meeting !
    Can a country cannot progress in this way?
    Why do they accept too many appointments ? When appointments are considered is this factor is taken into account?
    Sushil Jain

    Like

Please leave us a comment or question. We'd love to hear your views!

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s