Heartbreaking

MORRIS CARGILL
Jamaica Gleaner
April 01, 1999



Morris Cargill

JUST RECENTLY tonnes of compressed ganja, due for export, were confiscated by the security forces. It breaks my heart to see good ganja going to waste. If instead of being confiscated that ganja could be sold abroad, it would not be long before we could pay off the whole of our foreign debt.

However, while our foreign trade in ganja is severely handicapped, our local trade flourishes. In the tourist areas ganja has managed to legalise itself for buckets of it are available to tourists without much in the way of police intervention. These sales of ganja amount to a considerable underground business.

I now see that we've got another one in the tourist areas. According to one investigation, sex is now a $1 billion enterprise within the tourist industry. Indeed Howard Hamilton is quoted as saying that our sex industry is a US$200 million "powerhouse". Whorehouse would be a better word. I'm told that when the cruise ships arrive large numbers of young girls (and boys) can be seen offering sundry sexual services to tourists. Goodness knows that I'm not against sex, but I've always felt that the buying and selling of it is excessively vulgar. Nonetheless, as we seem to live in a largely vulgar and ill-bred world I suppose I shouldn't complain.

Ganja and sex do not, of course, comprise our only unofficial or underground industries. The other day I needed some expensive repairs to my house, which entailed obtaining the services of carpenters, plumbers and electricians. These artisans were all 'private' individuals, not companies. None of them charged any GCT. I suppose, strictly speaking, I should have demanded GCT numbers, but I didn't fancy the idea having my bills increased by 15 per cent. I have no doubt that none of these artisans paid any income tax. There must be thousands of householders and others who use the services of these efficient artisans so there must be a huge chunk of industry that the Government knows nothing about.

Just the other day the Minister of Finance was hallucinating about an increase in GDP this year, but I have no doubt that if our vast underground economy could be measured GDP would certainly show an increase. But how can it ever be measured? Although I'm sure that it's very large, I have nothing to go by except observations and anecdotal evidence. I have no doubt that if it could be measured we'd find that inflation has not been controlled at the level at which the Government prides itself. The Government calculates inflation by the choice of certain 'baskets' of goods and services, but I don't think that the Government knows half of it.

At all events the Government is correct in claiming that the prices in orthodox shops have been kept down. I doubt however that the Government can claim much credit for this. It is true that the reduction in money supply might have had some effect on keeping inflation in check. But I believe that the real reason is that the increasing poverty of people has made it impossible for the merchants to increase prices. I suppose, though, I should give the Government the credit here too, for it is Government's policies that are making us poor.

The rate of exchange

Another thing that the Government takes pride in is what they call the 'stability' in our rate of exchange, but this seems to me to be a Pyrrhic victory. People are always complaining about high interest rates. But high interest rates is the terrible price we pay for maintaining exchange rate 'stability'. At present people with lots of money prefer to invest their money in Government paper for the good reason that interest on US$ investment would be much less. But as the Government increasingly depends upon borrowing money locally, and as the sale of Government paper is the means by which it does this, any sharp reduction in interest rates would divert money into US$ and the Government's local borrowing efforts would be in a pickle.

In any case our local dollar is busy devaluing itself as the US$ has been going as high as $38 or $39 to one.

This is a strange business for when the BOJ sets about 'defending' the Jamaican dollar it sells US dollars to banks and cambios for up to $2 less than the open market price. The banks and cambios love this, of course, because they can use BOJ US$ to make a nice profit. This seems to be a weird sort of way to maintain exchange rate 'stability'. It seems to me that up to now the Government's 'cures' have been worse than the disease.

* Morris Cargill is The Gleaner's senior columnist who has been writing for more than 45 years.

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au:cargill dt:04/01/1999 sc:jg