[Futurework] Jamaica

[Ed Weick]

Bill Ward and I have been discussing the situation in Jamaica.  I noted Bill's point that Jamaica's problems began in the Reagan era, when Edward Seaga was Jamaican Prime Minister.  I've done some searching on the web and found the following piece, which, while favouring "Washington Consensus" type reforms initiated by the IMF, nevertheless highlights an enormous debt problem (paragraph in maroon). Ed Weick In Jamaica, IMF's 'tough love' democratized our economy Wednesday, April 19, 2000 By E.M. BROWN SPECIAL TO THE POST-INTELLIGENCER LAREDO, Texas -- I recognize the people who have been getting tear-gassed in Washington the past few days. I recognize their Birkenstocks and tie-dye shirts and their idealistic rhetoric. Seven years ago, as an idealistic Ivy League undergraduate, I, too, was a radical. And while I know these protesters are well-intentioned, I also think they are wrong. My childhood in Jamaica in the 1970s and '80s stoked resentments in me about the International Monetary Fund. Every so often, our talk shows lit up with speculation over whether we were going to "fail" an upcoming IMF test. Few Jamaicans have formal education in economics, yet everyone understood the consequences of failing an IMF test: A team of Washington-based economists would swoop in to impose stringent austerity policies and to cut back our already frayed social safety net. More beggars would appear on our streets; crime would inevitably rise. Social unrest would follow. I think that the fund's policies caused much damage to Jamaica's democracy -- in part because the ensuing hardships sustained inept politicians who could use the fund as a scapegoat to deflect attention from their own economic mismanagement. Essentially, we felt we were not masters of our own destiny simply because we were poor. Yet the Washington protesters do not recognize that the picture is substantially more complicated. For all its shortcomings, the IMF helped to democratize capitalism in Jamaica. The best thing that the IMF ever did for Jamaica was to force globalization (yes, the dreaded G word) down our throats. Although it is arguable that some austerity measures were too stringent, the fund forced us to privatize some industries and, more important, to lower tariffs and to drop many of the arcane regulations that had long hampered importing and exporting in our island economy. More open borders gave working-class Jamaicans the opportunity to become entrepreneurs in a system that had long been clogged by bureaucratic red tape and nepotism. Thirty years ago, the majority of the country's wealth was owned by only a couple of dozen families. These families had preferential access to import-export licenses and price collusion was rampant. This affected not only our wallets but also our entire culture. The corrupt system quashed the entrepreneurial spirit of the public. Essentially, working-class Jamaicans knew their place: They could maybe become teachers and farmers and police officers, but they could not run businesses. The opening of our borders was the most important part of a process in which everything was fair game. To some extent, any young entrepreneur with enough initiative and some start-up capital could start an import-export business. The more ambitious among our working classes took the opportunity: taxi drivers imported their own cars; reggae singers could import the recording equipment need to launch their own careers. Of course, many members of this new middle class are only one paycheck away from economic hardship. Start-up capital remains hard to come by. Inflation is high. In the mid-1990s, a leftist Jamaican government severed ties with the IMF, and the national debt has soared from $4 billion in 1995 to $10 billion today (or 150 percent of gross domestic product). But despite these setbacks, the cultural changes brought by democratized capitalism have been resilient. On a recent airplane flight to Jamaica, I sat next to a woman who was an informal commercial importer, or "higgler" in Jamaican parlance. She had been a housekeeper to a wealthy Jamaican family, but had long dreamed of starting a dress shop. She borrowed start-up capital from an aunt in New York, and now she runs a boutique out of her home in Jamaica, selling clothes and makeup from an American discount chain to other aspiring members of the Jamaican middle class. She is an unabashed social climber; she told me she had her eye on a house in her former employer's neighborhood. She is living proof that the new capitalists no longer know their place. Some members of the Jamaican political and economic elite like to say that democratized capitalism would have happened in the country in any event, that sooner or later we would have had the foresight to abandon our tariffs and open our borders. Perhaps. But I doubt we would have had the political will. For that, we have to thank the "tyrants" at the IMF. This is why I am not at the protests in Washington this week. Fellow radicals, take note. E.M. Brown is a lawyer. Copyright 2000 New York Times.