Dear Editor,
Elections are won on waves of populism; it's easier to appeal to the emotions of voters than to challenge them intellectually. Furthermore, most voters don't usually care about long-term solutions. As such, some political gimmicks never get old.
In the heat of elections candidates promise to create jobs or give entrepreneurs incentives to create jobs; this plan always fails. Government must create an economic environment which is conducive to growth, only then jobs and investments will come. Firms only create jobs when there is an incentive to do so; businesses are not welfare organisations, they do not employ people to meet social objectives.
Contrary to the popular belief, it is investment in capital equipment and research which drive growth, not consumer spending. So the view that emergency job programmes are good, because they employ people, is false. But elections are won on these false idealogies.
According to research conducted by UCLA'S economists, Cole and Ohanian, the interventionist policies of Frankin Roosevelt actually prolonged the Great Depression by seven years. Fallacious idealogies are able to permeate the political scene because too many supposedly intelligent individuals share these views. The agricultural sector is one area where these fallacies exist. Many are of the view that we should impose tariffs on imports or create a negative list. This concept is bordering on insanity simply because Jamaica lacks the capacity to replace its imports. Therefore, we should really heed the advice of Ambassador Amadei. The EU's ambassador to Jamaica said: "I think the key is not to increase production, and therefore produce more distortion in the market, but to take measures to make the national produce more efficient and to invest in research and technology."
Import substitution should not be our aim, our aim should be exporting competitive products. South Korea has a dynamic economy, but protectionist policies exist in the agricultural sector and it is still inefficient. Hong Kong and Singapore rank first and second respectively on the Economic Freedom Index, both countries have low barriers to trade and high rates of growth. Tariffs only lead to higher prices for consumers and greater inefficiencies.
Although innovation is crucial to growth in a modern economy, it is not an attractive topic for voters. Rarely during an election do you hear politicians speaking about the need to reform the country's intellectual property laws, but they do make economically unsustainable promises that they are unable to fulfil -- especially to public sector employees, and then they wonder why politicians don't respect them.
Entrepreneurship and innovation can only thrive when strong intellectual property laws exist. In Denmark, SMEs are able to access important information regarding intellectual property free of charge online. SMEs are more likely to invest in research and development and innovation when they know that their products will be protected. So reforming a country's intellectual property laws makes perfect economic sense, but elections are not won on tangible policies.
Populism will lead to Jamaica's downfall. In the words of The Economist, "Detroit shows what can happen when leaders put off reforming the public sector for too long." Jamaica's economic crises have been in existence for many years, and since public sector reform is moving really slowly and pension reform has been extended to 2016 we may end up worse than Detroit, and we will have no one to blame but voters who refused to test unsound policies.
Lipton Matthews
lo_matthews@yahoo.com
Facts and fallacies
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Elections are won on waves of populism; it's easier to appeal to the emotions of voters than to challenge them intellectually. Furthermore, most voters don't usually care about long-term solutions. As such, some political gimmicks never get old.
In the heat of elections candidates promise to create jobs or give entrepreneurs incentives to create jobs; this plan always fails. Government must create an economic environment which is conducive to growth, only then jobs and investments will come. Firms only create jobs when there is an incentive to do so; businesses are not welfare organisations, they do not employ people to meet social objectives.
Contrary to the popular belief, it is investment in capital equipment and research which drive growth, not consumer spending. So the view that emergency job programmes are good, because they employ people, is false. But elections are won on these false idealogies.
According to research conducted by UCLA'S economists, Cole and Ohanian, the interventionist policies of Frankin Roosevelt actually prolonged the Great Depression by seven years. Fallacious idealogies are able to permeate the political scene because too many supposedly intelligent individuals share these views. The agricultural sector is one area where these fallacies exist. Many are of the view that we should impose tariffs on imports or create a negative list. This concept is bordering on insanity simply because Jamaica lacks the capacity to replace its imports. Therefore, we should really heed the advice of Ambassador Amadei. The EU's ambassador to Jamaica said: "I think the key is not to increase production, and therefore produce more distortion in the market, but to take measures to make the national produce more efficient and to invest in research and technology."
Import substitution should not be our aim, our aim should be exporting competitive products. South Korea has a dynamic economy, but protectionist policies exist in the agricultural sector and it is still inefficient. Hong Kong and Singapore rank first and second respectively on the Economic Freedom Index, both countries have low barriers to trade and high rates of growth. Tariffs only lead to higher prices for consumers and greater inefficiencies.
Although innovation is crucial to growth in a modern economy, it is not an attractive topic for voters. Rarely during an election do you hear politicians speaking about the need to reform the country's intellectual property laws, but they do make economically unsustainable promises that they are unable to fulfil -- especially to public sector employees, and then they wonder why politicians don't respect them.
Entrepreneurship and innovation can only thrive when strong intellectual property laws exist. In Denmark, SMEs are able to access important information regarding intellectual property free of charge online. SMEs are more likely to invest in research and development and innovation when they know that their products will be protected. So reforming a country's intellectual property laws makes perfect economic sense, but elections are not won on tangible policies.
Populism will lead to Jamaica's downfall. In the words of The Economist, "Detroit shows what can happen when leaders put off reforming the public sector for too long." Jamaica's economic crises have been in existence for many years, and since public sector reform is moving really slowly and pension reform has been extended to 2016 we may end up worse than Detroit, and we will have no one to blame but voters who refused to test unsound policies.
Lipton Matthews
lo_matthews@yahoo.com
Facts and fallacies
-->