These are not my words. This headline appeared in today’s Sunday Gleaner and it is coming from the unlikeliest of sources….the Director General of the Planning Institute of Jamaica (PIOJ), Mr. Colin Bullock.
Given Jamaica’s economic progress (or lack of it) and given the policies that Mr. Bullock has produced, overseen, implemented and failed at, with his roles at various helms, it was quite a shock for me to see this statement coming from him.
What is doubly shocking is that his defacto boss, the current Finance Minister the Hon. Peter Phillips, has been quoted as saying : “I am more Keynesian than others.”
As far as I am aware, it was under Mr. Bullock’s watch at the Bank of Jamaica (BoJ), from 1986 to 2005, that Jamaica lagged behind her Caribbean counterparts and the rest of the world in economic stability and growth. And was he not part of the status quo applauding the way toward our ruinous monetary and economic policies, masterminded by then Finance Minister Omar Davies? Bullock, was a Deputy Governor of the BoJ from 1996 to 2005 until he was seconded to the Ministry of Finance.
As Financial Secretary in the Ministry of Finance from 2005-2008, his responsibilities included fiscal budgeting and management of budgetary operations, fiscal policy advice, public debt management, revenue administration and protection, and public finance reform. Are we any better today for his efforts?
Will Bullock be the lone rational voice in the Jamaica economic black hole? Has he turned the corner and transitioned from the Left to the Right? I for one am not optimistic about his changed view and Jamaica’s economic outlook. For one he said:
“The Keynesian economy will not work everywhere.”
Can he give us an example of where it has worked? Government spending has not helped the Jamaican economy, according to a BoJ report earlier this year.
Maybe Mr. Bullock wants a sustainable legacy at the tail end of a stellar and glittering career as a public servant. Maybe he is a repentant socialist, or a repentant Keynesian. Maybe he has been truly awakened to the nonsense that he had partaken in, over the past 20 plus years. I sincerely hope for Jamaicans’ sakes that is the case.
Read the full JAMAICA GLEANER article below: http://jamaica-gleaner.com/gleaner/20131201/business/business4.html
KEYNESIAN STIMULUS WON’T WORK FOR JAMAICA, SAYS BULLOCK
by Avia Collinder, Business Reporter
Director General of the Planning Institute of Jamaica (PIOJ), Colin Bullock, has pushing back against the suggestion that heightened stimulus spending by Government should be considered as a growth elixir.
“The Keynesian economy will not work everywhere,” Bullock said Tuesday.
Strategies of stimulating economic growth through higher government spending are less likely to work in small open economies such as Jamaica, he said, in response to audience questions at the PIOJ Dialogue for Development Lecture on Tuesday.
In Britain where Keynesian policies have been implemented, he said, the economy was largely self-sufficient.
“Most of what is spent there is produced there,” he said.
“In Jamaica, we are very indebted now because we have been raising fiscal deficits for the last 40 years. We have not generated a surplus. This is because in Jamaica most of what we spend on is imported. We are not stimulating the Jamaican economy through government spending,” Bullock said.
Keynesian economists advocate that in periods of recession, governments should spend more to create aggregate demand.
Bullock said, however, that Jamaica’s circumstances do not fit into the Keynesian construct because there is, he told the PIOJ forum, no deficiency of demand.
“The problems are more on the supply side – in productivity and being able to produce,” said Bullock, a former central banker, and who before he was appointed head of the PIOJ, had shifted into a career in academia as an economics lecturer.
“Jamaican entrepreneurs need to start investing in producing for the external market. The solution to growth is not internal, it is external,” the PIOJ head said.
Richard Byles, president and CEO of Sagicor Life Jamaica, who was keynote speaker at the PIOJ event, also pointed to some classical economic fixes, which have failed in Jamaica, including higher government spending.
“Typically, governments would embark on a programme of spending on infrastructure projects like roads and bridges which generate employment and economic activity during construction and ultimately lead to greater economic efficiency on completion,” said Byles.
“With a debt to GDP ratio of 150 per cent, the GOJ is not a creditworthy borrower and has no headroom to spend. Most of its primary surplus has to be deployed in paying down the debt.”
Tax policy is also used as stimulus for capital investment and jobs.
“But, there is a delicate balance to be struck in undertaking tax reform,” said Byles, “as the Jamaican Government cannot reduce vital tax revenues required to create the primary surplus that pays down the debt.”