Columns

Denial is disastrous

ID: INTERACTIVE DIALOGUE

David Mullings

Sunday, November 11, 2012    

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The USA elections are finally over and much of the world is breathing a sigh of relief because they do not expect a war with Iran or a trade war with China to begin in the next four years.

A number of developing countries are also grateful because they do not have to prepare for the possible deportation of millions of their citizens who now live illegally in the USA and who contribute to the local economy via remittances. As expected, some people are in denial as to why they lost or why President Obama won a second term.

Denial about the impact and meaning of the US elections extends beyond conservatives and Republicans; it extends to developing countries and political parties in those countries that have lost recent elections.

To those on the right, President Obama's decisive victory is not a result of extreme stances or failed economic policies that they wished to repeat. It has nothing to do with other Republican candidates during the primaries calling Mitt Romney a "vulture capitalist" and repeatedly bashing his time at Bain Capital as a "corporate raider", or with their total disregard for votes of minorities. To them, it is because people want "government handouts" or because it is not the America of their fathers.

Some say it is the result of media bias. These reasons are also used to explain the loss of seats in the Senate as well. The policies and the way they are presented, the candidates chosen to run, none are to blame. It is pure denial.

That denial reminds me of denial outside of the USA, especially with regards to the economic headwinds many countries currently face. Any country that is highly dependent on remittances from the USA for foreign exchange earnings is in denial if it believes that this is good, that it will continue to be that way and that the next generation will be able to continue the same migration trends.

It cannot be wise to build part of your fiscal house on the economy of one massive trading partner whose trade with you is massively unbalanced.

Jamaica is just one of those countries in denial. Let me be very clear that remittances coming from the USA are simply providing the US dollars to import goods from the USA, so the money goes right back where it came from. Our trade imbalance is simply unsustainable, and as the Jamaican dollar continues to weaken, imported goods will get more expensive.

Yet, little has been done to ensure that more of that foreign exchange stays in the island. Our productivity remains below that of other developing countries, especially our neighbours like Trinidad and Tobago, despite what some Jamaicans like to think about them.

The inefficiency of government spending continues to be rooted in waste and corruption. Our agriculture sector still requires major modernisation, yet banks refuse loans to farmers to buy tractors and other equipment because there is no land title to provide as security.

If we believe that Jamaica will be better off in a generation based on the current path, then we too are in denial. Republicans and conservatives took issue with the Math which showed Mitt Romney would have a hard time winning and definitely not win by a "landslide" as some predicted. Some went as far as to call the statistical analysis of state-by-state polling data "math gobbledygook".

Here is some factual data for Jamaica: In 2006, Jamaica ranked 43 out of 166 countries on the Doing Business report from the World Bank. This year it ranked 90 out of 185! Although excuses can continue to be made, let us look at Colombia: facing an arguably worse crime and violence problem than Jamaica, it went from 66 to 45! Colombia's political leaders were not in denial. They decided that excuses had been made long enough and that they needed to start making changes and deliver a better country to future generations.

The denial to date has been disastrous for Jamaica and other developing countries. For all our boasting about democracy and smooth handovers of power, Jamaica is in its present tough situation because of lack of leadership on key issues, deep partisan division and corruption within both major political parties.

China now ranks 91 and will certainly surpass Jamaica. I am not advocating Communism, just better decision making focused on achieving the state goals of growth and prosperity. Chinese leaders deserve credit for setting goals and working hard to achieve them, uplifting their people with the newly created wealth.

Few tough decisions that needed to be made have actually been made in Jamaica over the last decade. As I sat with a colleague two months ago to discuss business and the future of Jamaica, they said to me that despite his other failings, Bruce Golding made three tough decisions that simply had to be made but were put off by successive administrations.

He divested Air Jamaica, which was costing us tens of millions of US dollars every year; he divested the Sugar Company of Jamaica, which had racked up massive losses over decades; and he executed the debt exchange, a selective default on government bonds, in order to give the Government breathing space.

Yes, their IMF deal fell to pieces, the way the JDX was communicated left much to be desired, and tax reform was piecemeal, but those are three tough decisions, any one of which could cost you the next election (I doubt any of those were the cause of the loss).

It is now time for Jamaicans, and especially the political class, to overcome denial. The country is in a bind, tough decisions are needed today, a population needs to be properly informed about how each decision positions the country better for the future, a future that benefits them and their children when they are older.

Do not make the mistake of conservatives and Republicans by dismissing what the data and the clear trends indicate. 2013 will be a crucial year for Jamaica.

David Mullings is Chairman and CEO of Keystone Augusta and was the first Future Leaders Representative for the USA on the Jamaica Diaspora Advisory Board. He can be found on Twitter at twitter.com/davidmullings and Facebook at facebook.com/InteractiveDialogue

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