A word to Dr Phillips: Credibility has a short shelf life

Sunday, January 29, 2012

Credibility is a highly perishable asset. Indeed, a good reputation earned over many years can disappear in a second, especially given the general feeling of scepticism about the integrity of political leaders.

Traditionally, governments enjoy their best moments of credibility during their early days in office. Thereafter, that credibility declines and its speed is determined more by the governments' deeds than their words.

Of course, credibility can decline because of real or imagined reasons, as perception is shaped by facts, insufficient information and misinformation prompted by rumour or deliberately spread propaganda.

Public opinion is therefore shaped by the amount and accuracy of the information provided by the government, how this information is conveyed to the public, and how much of this information is imbibed and understood by the public.

When a government takes office it is given the benefit of the doubt about statements on goals to be achieved and policy measures to accomplish those goals. When it comes to economic policy, the standards are more rigorous because statements can be evaluated based on economic data. Above all, statements are assessed by whether they match actual economic outcomes.

Former Prime Minister Bruce Golding and former Finance Minister Audley Shaw changed the course of Jamaica's economic policy both in word and deed by successfully tackling difficult tasks, like divesting Air Jamaica and lowering interest rates.

Those measures gave them credibility locally and with the international financial institutions such as the International Monetary Fund (IMF).

It was this credibility that facilitated the Jamaica Debt Exchange and the enormous borrowing from the Inter-American Development Bank.

Unfortunately, that credibility and good reputation as a Government pursuing sound economic policy in the very difficult circumstances of a global financial crisis and a fiscal policy with the "ball and chain" of a huge national debt suffered some damage by the time of the general election in December 2011.

Obviously, the Administration had to take the rap for its failure to meet fiscal targets, both for expenditure and tax collection. However, the technical team at the Ministry of Finance cannot escape taking some of the blame.

With the change of Government, the credibility of Jamaica's economic policy rests on the solid reputation and quality of mind of Dr Peter Phillips — the new finance minister — and the competence of the Bank of Jamaica and the Planning Institute of Jamaica. But a minister is only as good as the technical team that advises and supports him.

Dr Phillips has inherited the same team that Mr Shaw depended on to his detriment. Same horse, same distance, same weight but different jockey. Maybe it is just a matter of chemistry or that the whip will be used. Let us hope the results are better this time around.

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COMMENTS (12)

4/20/2012

Any advice for a ilrfay new blogger who made prob one of the biggest mistakes a blogger could ever make?A reader wrote a sarcastic comment to one of my posts and I was so upset I wrote back a very angry reply, garnering even more negative comments after which i decided to remove the whole post as looking at it made me feel so down how does one make a positive rebound after that? just move on, leave the past behind? My blog was meant to be an online support group but i kept getting this one visitor who makes sarcastic remarks so on a bad day, i blew my top and PUBLISHED it! Sigh

0o k
1/30/2012

Reminder!
In 1989 the then JLP Government besides the $30b debt, left:
5% year on year growth.
Industries that were the first to come to Jamaica on a mass scale employing over 45k
Low Inflation
Low exchange rates
Low Debt to GDP
Low Crime
Even they inherited a toasted economy that had lost 25% of it GDP value.

FABIAN BROWN
1/30/2012

THE JLP Administration too it over in 1980 it was J$2.4b, when they left office in 1989 it was J$30b. It grew to J$950b by 2007. It rose by J$650B Now you need to have caveats for the rational to borrow

FABIAN BROWN
1/30/2012

Here the naional debt numbers.
http://jamaicagotsoul2.blogspot.com/2011/11/jamaicas-national-debt-trap.html#!/2011/11/jamaicas-national-debt-trap.html

Wayne L
1/29/2012

None of you posters make any sense whatsoever.

Ramon Castro
1/29/2012

All the talking heads here had offered no one iota of evident to support his/her analysis/view. I must conclude that everyone is looking through lenses of "of their political bias." Economics and finance entail numbers. Give some numbers to support your argument. For example, JLP lowered the interest rate -- what was it when they took offer compare to leaving office. Don't fool yourself that what your wrote or is responding to is factual.

John Smith
1/29/2012

Don't forget the JLP has many friends in high places in the PSOJ and therefore enjoy a more influential relationship with members of that organization. Objective judgements on credibility can be severely impaired by 'friendship'. If the business community's interests surmount politics they may want to be as forthcoming as they were with the previous administration.

Noel Richards
1/29/2012

The problem for both the JLP and the PNP is their economic strategies, they are totally wrong. The JLP's Macroeconomic successes completely ignore JA Microeconomic issues, but the unfettered borrowing and irresponsible 18 years of Patterson's PNP gave no Return on Investment, unless you have extremely low standards. Is JA close to being able to support itself? No way! The JLP erred immensely with JDIP, Dudus and arrogance. None seem to be aware of the simple answers hidden in plain sight.

Mark Forbes
1/29/2012

I see it practically everyday. A claim to the effect that Golding, Shaw or the JLP Govt. lowered interest rates. But there is never any explanation as to how it was done. Why? Because people are of the mistaken assumption that correlation = causation or is it because the claim serves an agenda?
The JDX didn't need any credibility. It was possible only because of the recession. The alternatives were 1) default, 2) significantly lower returns elsewhere or 3) the JDX. Anyone could have sold it.

Adam Godson
1/29/2012

Credibility may have a short shelf life,but this is Jamaica.
I doubt credibility is high on the electorate's list of priorities when choosing who to lead the country.

0o k
1/29/2012

Do you recommend bitter medicine or fire the team and get new personnel? Comrade Phillips has already signaled his intentions I think......Staff Monitored Programme.

fall mouth
1/29/2012

You talk about the large “ball and chain,” of a large national debt, making it appear that it was due solely to an inheritance by a JLP administration; but fail to tell us what the debt was when they took office and what it became shortly after. Makes me wonder whether you need some of the credibility advice which you so readily give to Dr. Phillips.
Your editorial speaks about the JLP administration’s effectiveness even in light of unfolding JDIP events and incredulous revelations coming out of the auditor general’s department, some of which is even reported in this newspaper today.
Have you ever wondered Sir, what would have happened if they had been returned to office and some of the revelations coming now to light were muted? It is frightening.

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A word to Dr Phillips: Credibility has a short shelf life