I reluctantly must confess that I have never heard of any success story associated with the International Monetary Fund in relation to its dealings with any poor or Third World country.
Certainly, in its dealings with Jamaica, the record is one of unrelieved disaster after disaster with both political parties fleeing in impoverished terror from the helpful arms of the Fund.
I will never forget the spectacle of Mr Albertelli, the Argentinean principal of the 1977 IMF team, as he scuttled away to hide from journalists in the then Sheraton hotel after delivering the coup de grace to Jamaica's hopes for rational development.
It was therefore with some surprise that I read in the Gleaner on Wednesday a story suggesting that the Michael Manley government had more or less willingly surrendered its sovereignty to the IMF in 1977. According to Gary Spaulding, Senior Gleaner Writer:
"There was no global economic crisis 32 years ago to shoulder the blame for Jamaica's economic predicament, but on Tuesday, January 19, 1977, when Prime Minister Michael Manley told the House of Representatives of his administration's intention to pursue a borrowing relationship with the International Monetary Fund (IMF), his rhetoric closely matched that of the present government."
Oddly enough, I remember not one, but several international crises that provided a background for the Manley recourse to the IMF. These included the so-called Arab Oil Shock of 1973 et seq. because of which – according to the most easily accessible source – Wikipedia: "A world financial system already under pressure from the breakdown of the Bretton Woods agreement experienced a series of recessions and high inflation that persisted until the early 1980's, and elevated oil prices until 1986."
Among the crises I remember was the devaluation of the US dollar, the quadrupling (or worse) of the price of gasoline and to quote Wikipedia again: "Underscoring the interdependence of the world societies and economies, oil-importing nations in the noncommunist industrial world saw sudden inflation and economic recession. In the industrialized countries, especially the United States, the crisis was for the most part borne by the unemployed, the marginalized social groups, certain categories of aging workers, and increasingly, by younger workers. Schools and offices in the U.S. often closed down to save on heating oil; and factories cut production and laid off workers. In France, the oil crisis spelt the end of the Trente Glorieuses, 30 years of very high economic growth, and announced the ensuing decades of permanent unemployment."
If the effect of these crises on the developed countries was so profound and long-lasting it should not take a genius to understand the effect on totally open economies like Jamaica, totally dependent on imported oil and overwhelmingly dependent on imported food.
Put briefly, the IMF thought our aspirations were too ambitious and decided to put us in our proper place. I believe that this judgment was both racist and political, made by a bunch of 'crazy baldheads' of the same ilk as are now persecuting Haiti.
You can see their point: We had a National Minimum Wage while the English and Americans were still talking about one, we had free education from basic school to university, we had ambitious unemployment relief schemes – the Emergency Employment Programme and the Pioneer Corps, among others, we had decreed maternity leave for every woman worker in the country, including domestic helpers and sugar workers. For the First Time At Last!
There was also serious intrigue. Jamaica had prepared a negotiating position with the IMF – a top secret document. Imagine the delight of the IMF and the total discomfiture of the government when this 'Top Secret' document was broadcast on RJR by the leader of the Opposition, Mr Edward Seaga.
It was a blow from which this country has never recovered. A Minister and a Permanent Secretary were initially found guilty of breaching their trust. They were later acquitted on appeal.
I have never understood why Mr Seaga, a former cabinet minister and bound by the same oaths and undertakings as those in office , was never prosecuted for his breach of trust. He was, however, later excoriated by the Prime Minister of Trinidad and Tobago Eric Williams for his disloyalty to Jamaica when he went to the IMF and World Bank, arguing that they should not help Jamaica. As it was, and as Seaga discovered for himself while Prime Minister, the IMF and its sibling were never about helping Jamaica; and when Mr Seaga had the opportunity in the 80s, he ran away from them as fast as his little legs could carry him.
I wonder what my friend Clovis would do now if the current leader of the Opposition were to behave now as Mr Seaga did then?
Brutal and Procrustean
What I called "the brutal and Procrustean strictures of the World Bank and the IMF, forced us to cut taxes and public services, to raise interest rates to farmers and in fact, to turn us back, back to desperation.
In 1998 the then head honcho of the World Bank, one Wolfensohn, lied like a trooper to more than a thousand Anglican bishops at the Lambeth conference, saying that the had given US $200 million to Jamaica to ease poverty. He had not. But Argentina, with a preponderantly European population and considerably richer than Jamaica, got $200 million for poverty alleviation. The World `bank gave them the money to do some of the things the IMF suggested amounted to criminal mismanagement when we did them in Jamaica
In other words, Michael Manley's Emergency Employment Programme – the Crash Programme – and the Pioneer Corps became living realities in Argentina thanks to the World Bank but were a wicked misuse of money in Jamaica.
What we should be looking for in these times of trial and tribulation is not an IMF recipe which basically, calls for cutting expenditure, chopping jobs and going even further into recession.
In my opinion, the most significant statistic of all the dread figures bandied about is the drop in the precipitous drop in remittances from Jamaicans abroad. Remittances account for 17% of Jamaica's GDP which means that one in every six dollars worth of Jamaica's output – or more crudely – one in every six dollars spent in Jamaica comes courtesy of Jamaicans abroad.
Since remittances have dropped by 17% in the first six months of this year and may drop even further. This money goes mainly to people at the bottom of the society so it is my guess that for these people, the drop in remittances represents much more than a twenty percent cut in their living standards – it may represent twice as much.
What we need now
This should tell us where the development aid should go. I once said to Michael Manley that it might make more sense if our foreign aid were simply distributed in cash and benefits to the poor rather than being spent on planning and Pajeros.
According to the newspapers, Badrul Haque, special World Bank representative, is looking for a plausible explanation as to why one third of `Jamaica's potential workers remained outside the labour force.
The answer is in monoculture –sugar cane – our shopkeeper culture and the effects of our openness to IMF solutions. The IMF's answer to everything is for us to become more competitive, which means that we need to reduce the take-home pay of our workers until they can compete with the near slave labour of Bangladesh, Indonesia and other southeast Asian labour forces.
Earlier this year, in April, Robert Zoellick, president of the World Bank predicted that the present global crisis could become an economic disaster for poorer countries with millions being driven into unemployment. "Poor people could suffer the most and we must act in time to prevent a human catastrophe."
I believe that the Emergency Production Plan of the 1970s – produced by the people themselves – was a superior option to the private sector-driven retreat to the IMF. Both involved hardship, but the Jamaican self-reliance plan would have had the effect of building social capital, encouraging cooperation and cementing communities while producing small scale enterprises especially in the production and marketing of food. The IMF solution simply produced misery.
Today, we are offered alternatives, the alternatives offered to poor people whenever they are in problems – sell your capital assets and further impoverish yourselves, borrow large amounts of foreign exchange for building facilities for foreigners. We will be building a gigantic public sanitary convenience for Royal Caribbean cruise lines by destroying Falmouth, capturing Up Park Camp to build another deadly ghetto in the middle of Kingston while ignoring the desperation in the slums of Kingston, Spanish Town, Ocho Rios, Montego Bay and Negril – concrete time bombs which, one day, who knows when, will explode with devastating consequences for the rich, the poor and everybody in between.
Let's give the multipurpose stadium to UTECH to produce thousands of Masters of Business Administration who will end up on the streets here or abroad while the food they could be growing is imported from abroad, produced by 'farmers' who fly planes to work. Let's take away the beaches and the playing fields from the poor because they won't know how to use them and instead of producing more Bob Marleys and Usain Bolts they will be producing more Sandokhans and Jim Browns.
We have a choice. We have always had a choice and we almost always make the same mistake.
Copyright © 2009 John Maxwell