FACTS AND FALLACIES

 by Lipton Matthews

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Elections are won on waves of populism and not substantial messages. I t easier to  appeal to the emotions of voters than to challenge them intellectually. Furthermore, most prospective voters don’t usually care about long term solutions, hence politicians make unrealistic promises and when they fail to deliver, voters complain. It turns out that these are the same voters who refused to rigorously analyze the candidate’s claim and then they wonder why politicians don’t respect them.

There are however some political gimmicks that never get old; in the heat of most elections, candidates usually promise to create jobs or give private entrepreneurs incentives to create jobs. Somehow these magical plans always fail simply because it is not logical for it to succeed.

Government is expected to create an economic environment which is conducive to productivity, then jobs and investments and economic growth will come. Firms only create jobs when there is an incentive to do so.

Since private businesses are not welfare organizations, they do not employ people to meet social objectives and this is why the government’s emergency programmes are not doing so well. Where is JEEP?

Contrary to the popular belief, it is investments in capital equipment and research which drive growth in the long term not consumer spending. The view that emergency job programmes are good, because they employ people who will later boost consumer spending to grow the economy is false (probably grounded in erroneous Keynesian economics). But elections are won on such false ideologies unfortunately.  There is no need for an activist state.

According to research conducted in the early 2000’s by two UCLA Economists, Harold L. Cole and Lee E. Ohanian, the interventionist policies of  Frankin Roosevelt actually prolonged the Great Depression by seven years.  Friedman stated 30 years ago that government failure caused the Great Depression:

Fallacious idealogies are able to permeate the political scene because too many supposedly intelligent individuals share these views and the dissemination of said falsehoods by the media.

An example…..the agricultural sector is one of the areas where this fallacy exists. Many Jamaicans are of the view that we should impose tariffs on imported products or even create a negative/banned list. This concept is bordering on insanity, because Jamaica lacks the capacity to replace its imports, we don’t produce goods in sufficient quantities or quality of reliable supply for the local market. We don’t produce enough for protected export quotas.

Therefore, we should really heed the advice of the EU Ambassador Paolo Amadei who said at a recent forum that, “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.”

Small markets do not enable economies of scale, nor do they encourage competition. 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, during an election you rarely hear politicians speaking about the need to reform the country’s intellectual property laws, but they do make economically unsustainable policies which they are unable to fullfil, especially to public sector employees.

Entrepreneurship and innovation can only thrive in a country when strong intellectual property laws exist. In Denmark small and medium enterprises (SMEs) are able to access important information regarding intellectually property free of charge online. SMEs are more likely to invest in R&D and innovation, when they know that their products will be protected; so reforming a country’s law intellectual property laws makes perfect economic sense, but elections are not won on tangible policies.

Populism has led to Jamaica’s steady economic 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 is a first year law student and is unusual in being a Jamaican Conservative Capitalist Teenager. He can be reached at lo_matthews@yahoo.com

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About RightFromYaad

A view from "the Right", as a source of ideas to create a new vision of freedom and what it promises for Jamaicans, to counter the tyranny of the status quo of Jamaica's reality since 1962. Website: RightFromYaad.wordpress.com Email: rightfromyaad@gmail.com Twitter : @rightfromyaad Facebook: https://www.facebook.com/pages/Right-From-Yaad/244886608978438?ref=ts&fref=ts
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One Response to FACTS AND FALLACIES

  1. estebanagostoreid777 says:

    Thanks for this piece !! It is definitely instructive !!

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