GAB Memorial Lecture Bruce Golding Booklet

3rd G. Arthur Brown Memorial Lecture by Mr O. Bruce Golding Former Prime Minister of Jamaica REKINDLING THE HOPE OF 1962 28 July 2022 Bank of Jamaica Auditorium Kingston, Jamaica



REKINDLING THE HOPE OF 1962 Introduction In a little over a week from now, Jamaica will celebrate its 60th anniversary as an independent nation. Three months ago, the Bank of Jamaica marked its 61st anniversary. Your history, therefore, is chronologically intertwined with that of independent Jamaica. Last year, you got your own independence as a central bank with a clearly defined mandate that is so crucial to Jamaica’s well-being and its future. Undeserved though it is, it is a far greater tribute to me than it is to G. Arthur Brown for me to have been asked to deliver this lecture on the 100th anniversary of the birth of this outstanding Jamaican and one of our most distinguished public servants of all times. There have been only two such lectures in the past and you can appreciate my sense of intimidation when I take account of the fact that those lectures were delivered by two titans – Sir Shridath Ramphal and the Most Honourable P.J. Patterson. I come to you, therefore, and perhaps will remain after I am through, as an underdog. G. Arthur Brown’s career is nothing short of spectacular. In 1957, while still in his thirties, he was named to head the Central Planning Unit, the precursor of the National Planning Agency which later became the Planning Institute of Jamaica. It was in that role that he was principally responsible for the preparation of Jamaica’s first National Development Plan and published the first annual Economic Survey of Jamaica – a document that has become a go-to source for any serious discussion or analysis of our performance as a nation over the years. 1

When we attained independence in 1962, he was appointed Financial Secretary and head of the Civil Service. Five years later, he became the first Jamaican Governor of the Bank of Jamaica. His expertise was internationally recognized and in 1978 he became the second-in- command at the United Nations Development Programme. He returned to the position of Governor of the Bank of Jamaica in 1989 in which he served until his retirement from public service in 1992. His public service career, at both the national and international levels, spanned 48 years. It is hardly necessary for me to spend time heaping encomiums on G. Arthur Brown, so much having long been said are a matter of historical record and some of which was captured in the BOJ’s publication titled “To Know the Cause of Things” – a compilation of selected speeches he made and so aptly titled because it is the motto of his alma mater, the London School of Economics. The G. Arthur Brown lily clearly does not need or deserve to be gilded. What I find most significant in looking back at that remarkable career is the fact that it placed him on the pitch during the period, not only of our transition from colonialism to independence, but of our efforts – with both successes and missteps – to find the path to sustained economic development. It is in that latter perspective that I seek to focus your attention today. In doing so, I will allude to his contributions and some of his timely interventions and their sharp relevance to the challenges we face today. But the issue is much larger than G. Arthur Brown. I cannot say that I knew him well at a personal level. But in my limited interaction with him while I served in the Cabinet during the 1980s, apart from being overawed by his expertise, candour, dedication as a public 2

servant and his enduring commitment to Jamaica, I detected some frustration and disappointment. He was a technocrat, a policy technician, a counsellor and advisor but final decisions were made not by him but by politicians (like what I used to be). He respected that separation of roles…...he was faithful to whichever government the people had elected. But I believe he agonized when we screwed up, when we made the wrong choices, when we opted for propitiation instead of sound and proven economic policies and, by doing so, missed opportunities that could have been significant game changers in our quest to achieve economic development and a robust quality of life for our people. Our Failed Mission The late Norman Manley, in his farewell speech as he exited public life in 1969, said that the mission of his generation was to secure political power and win self-government for the people of Jamaica. The mission of the generation that followed, he said, was to reconstruct the social and economic society and life of Jamaica. Of his generation’s task, he proudly proclaimed “mission accomplished”. Three generations have ensued including my own. What can we say of our discharge of the mandate he prescribed? How have we run our legs in that relay? In looking back at the period spanned by these three generations, we are inclined to be cynical, even self-condemnatory. There is much to be cynical about. In our 60 years of independence, the Jamaican economy grew by 135 per cent. That is an average of 1.4 per cent per year. That could not be what Norman Manley had in mind when he identified the mission of the succeeding generation. Although it is higher than it was in 1962, the most recent IMF Article IV Staff Report makes the chilling observation that “GDP 3

per capita is lower today than it was in 1970”1. That is 52 years ago! Let that sink in for a moment. In 1962, Jamaica’s murder rate was 3.9 per 100,000 – one of the lowest in the world. Last year it was 53.6 per 100,000 – one of the highest in the world. That, certainly, was not what Norman Manley was expecting when he spoke about reconstructing the social life of Jamaica. Our social mores have deteriorated. Norman Manley – and, indeed, G. Arthur Brown – would be distressed to see the degradation of our values, the comfort level we seem to be able to find with corruption, our lack of civility and respect for each other, the indiscipline and uncouth behaviour that has become our norm, the level of violence we wreak on each other, the eagerness with which we disagree and confront and our reluctance to find common cause and collaborate. However, our cynicism must not be allowed to obscure our achievements. Our infrastructure is in much better shape today than it was 60 years ago – not by any means as good as we want it to be, but those of us who attend burials at Dovecot may not know that in 1962 you had to travel on unpaved roads from you left the flats of Spanish Town all the way to Ginger Ridge on the border of Clarendon where I was born. Electricity and running water were unavailable outside of the urban centres – not to mention telephone service which hardly existed outside of the Corporate Area, Montego Bay and a few large towns. Access to secondary education which was a privilege enjoyed by the precious few in 1962 is now open to the children of the poor although the quality of that education and the outcomes are not what Norman Manley would have wanted – an issue to which I will return. 1 IMF Article IV Consultation Staff Report, February 2022 4

Our health services are far from what we would like them to be but life expectancy today is 76 years compared to 65 years in 1962; infant mortality 11 per thousand compared with 57 per thousand in 1962. In terms of institutional development, we have much to be proud about – in the financial sector, commercial activities, social development, democracy safeguards and accountability framework. Social legislation to address many of the legacies of slavery and colonialism have been enacted. A variety of social protection programmes for the vulnerable, inadequate though they may be, is in place. As much as he was a patron of the cultural arts, Norman Manley could not have envisaged the impact that Jamaican music and its reggae artistes have made on the world stage. He would have been overjoyed at the continuing success of our athletes, he himself having held the 100 yards schoolboy record of 10 seconds for 41 years – a time that would have qualified him for the 100-meter final at the 1912 Olympics in Stockholm. By any objective measure, our scorecard for the last 60 years is a mixed bag – a goulash of successes and failures, progress and regression, triumph and disappointment. Could we have done better? Undoubtedly! Should we have done better? Absolutely! Our impressive beginning In the decade prior to independence, Jamaica under successive governments had pursued a model of economic development pioneered by one of the Caribbean’s great development economists, Sir Arthur Lewis. It has been referred to as “industrialization by invitation”. It was specifically designed to achieve economic development in the context of a virtually unlimited supply of labour. It required a tightly protected 5

domestic market, import substitution and considerable incentives and concessions to lure investors and capital. By modern day orthodoxies and the Washington Consensus, it would be an anathema. By current standards of industrialization, it was primitive. These were back-end factories – the assembling of imported components or what has been called “screwdriver industries”. What goes around, it is said, comes around. What was called “screwdriver industries” is hardly different in concept from current supply chain practices where the manufacturing process takes place in different locations and in different countries, the key determinants being the economies that are achieved and the value that is added. Primitive though it was in the early days, it worked. It started absorbing surplus labour and, perhaps, more importantly, it started the transfer of technology and the inculcation of a workplace discipline that was far different from what obtained in the cane fields and banana walks. Historical data bears this out. I mentioned before that in our 60 years of independence, the Jamaican economy grew by 135 per cent. Three quarters of that growth occurred in the first 10 years after independence when the economy was growing at an average of 7 per cent each year. We spent 50 years growing the other 25 per cent. Our macroeconomic fundamentals then were in relatively good shape: a debt to GDP ratio of 33 per cent with debt service requiring only 9 per cent of the budget, a fiscal deficit of less than 1 per cent, a balance of payments deficit of just under 4 per cent – one may call it a beneficial deficit because it was driven largely by imports of equipment and raw materials (not including fuel, transportation equipment and construction materials) that accounted for 44 per cent of total imports, inflation at 6 per cent and foreign reserves equivalent to 16 weeks of imports. 6

During that period, G. Arthur Brown held the positions of Financial Secretary and Governor of the Bank of Jamaica and, before that, head of the Central Planning Unit. He, clearly, was not a mere spectator in the spectacular advancement that was being made. The story is often told of Lee Kuan Yew’s visit to Jamaica shortly after we gained independence in 1962.how he took careful note of our approach to economic development, went back to Singapore and adapted it...and the rest, they say, is history. I have never seen where he acknowledged it but it could very well be true. In preparing this presentation, I came across an interesting press release issued in 1962 by the International Bank for Reconstruction and Development, the precursor to the World Bank. It announced that 20 senior officials from 18 countries would be visiting Jamaica for two weeks to study programmes of economic development. It went on to say that Jamaica was chosen “because of the broad attack being made there on economic development problems”.2 Consensus – A Key Component Critical to our success in the first ten years of independence was the fact that there was broad consensus between the two political parties on the development strategy to be pursued – the Arthur Lewis model. The Industrial Development Corporation was established in 1951 during Alexander Bustamante’s watch and was headed by Robert Lightbourne. At his turn at the wicket, Norman Manley created a range of statutory bodies to provide the regulatory framework to enhance it. It was he who introduced the Industrial Incentives Act in 1960 and that same year laid out the plans for the foreshore development along Marcus Garvey Drive to provide factory space and modern port facilities to support the industrialization effort. 2 IBRD Press Release, February 17, 1962 7

Not only was there broad consensus on the strategy, there was no significant disagreement on how it was being executed...how it was being managed. It is said that Wills Isaacs and Robert Lightbourne, as ministers from opposing parties responsible for trade and industry over the period, constantly argued with each other as to who cut the ribbon to declare open more factories. The two political parties found other things to quarrel about – Bustamante’s Sandy Gully project, Manley’s construction of a road to open up the seven miles of white sand beaches in Negril and the national stadium that he built, the JLP’s introduction of the National Insurance Scheme. Our economic development strategy, however, transcended partisan politics and it was all systems go. This policy consensus – one might call it the Jamaica Consensus – was vital to our success then and history would show how vital it would always be and the negative consequences that would ensue when it was ruptured. It is important to note that the essentiality of this consensus is directly related to our political and constitutional framework. Development strategies need years and even decades without interruption to achieve their objectives. In countries with one dominant political party or political systems that are less than free democracies and where fundamental rights are not vigorously asserted, continuity may be assured. In free and competitive democracies, continuity needs consensus. Ever since adult suffrage in 1944, we have had two dominant political parties operating in a fiercely competitive democracy. Individual rights and freedoms are protected by a Constitution that has withstood the test of time even when buffeted by gale force winds. When we marvel at Singapore’s success, we must ponder whether it could have been achieved within a political and constitutional system like ours. Lee Kuan Yew had some peculiar views about democracy and its relationship with economic development. He had no qualms in declaring 8

that “One-man-one-vote is a most difficult form of government. Results can be erratic”3 and that “With few exceptions, democracy has not brought good government to new developing countries.”4 This is what he had to say about elections in a democracy: “To win votes you have to give more and more and to beat your opponent in the next election, you have to promise to give more away. Presidents do not get re- elected if they give a hard dose of medicine to their people. So, there is a tendency to procrastinate, to postpone unpopular policies in order to win elections and problems such as budget deficits, debt and high unemployment are carried forward from one administration to the next.”5 Sounds familiar? Changing Course Jamaica’s growth momentum went into reversal during our second decade of independence during which the economy declined by 22 per cent. It coincided – although it was much more than just a coincidence – with the abandonment of the Arthur Lewis model and its replacement by a socialist model of development – a dominant state in control of the “commanding heights of the economy” and being principally responsible for the creation and distribution of wealth. The consensus and continuity that had guided and undergirded our efforts for the previous 20 years had been completely dismantled. I am obliged to put this in perspective. I served in Parliament with Michael Manley. I have absolutely no doubt that he meant well. His passion for the 3 “The Wit and Wisdom of Lee Kuan Yew” (2013) p.46 4 Speech delivered in Tokyo – “Democracy, Human Rights and the Realities”, November 20, 1992 5 “Lee Kuan Yew – The Grand Master’s Insights on China, the United States and the World” – Interviews and Selections by Graham Allison, Robert Blackwill and Ali Wyne (2013) p.154 9

upliftment of the poor, for economic equality and justice and for protecting the rights of the working class cannot ever be questioned. When he came to power in 1972, unemployment was recorded at 24 per cent. Stark poverty stared you in the face especially in the overcrowded settlements that had mushroomed in the Corporate Area and major town centres, populated mainly by people who had migrated from rural communities in search of a piece of the industrialization pie. The trickle- down wasn’t trickling down fast enough. The rural folk hardly fared any better as they became casualties of the precipitous decline of the export agriculture sector – sugar and bananas. Inequalities in income and standards of living were an embarrassment. This provided fertile ground for discontent: “better must come” and a yearning for change: “power for the people”. Considerable effort had been made to provide opportunity-creating and social protection programmes. Fifty junior secondary schools were built to expand access to secondary education, several trade training centres were opened, cash transfers were provided through the Old-Age Assistance Programme and the National Insurance Scheme was established. Special incentives were offered to investors to locate their factories outside of the Corporate Area in order to spread the employment opportunities. But these were not nearly enough to staunch the discontent. Michael Manley was the perfect champion. Many people hold fast to the view that the period of the seventies is when Jamaica’s economic journey was derailed and that is the root cause of our anaemic performance since then. I believe that this is over simplistic – a too convenient way of finding someone or something to blame. There is no doubt that in terms of the economy that period set us back considerably but there are countries that 10

have suffered far greater calamities including devastating and protracted civil wars but have been able to recover and find a path to sustained growth. Many of those who boarded the five flights a day in the seventies subsequently returned even if their luggage was lighter on the return journey. Lee Kuan Yew gave his assessment of Michael Manley’s adventure into socialism when he wrote that on his second visit to Jamaica in April 1975 to attend the Commonwealth Heads of Government conference, he found that Manley “presided over the conference with panache and spoke with great eloquence. But I found his views quixotic. He advocated a redistribution of the world’s wealth. The policies of the government were ruinous. Thereafter, I read the news of Jamaica with greater understanding”.6 Singapore is slightly smaller than the parish of St. Thomas. In reference to Jamaica, Lee Kuan Yew is quoted as once saying “If they had given me an island of this size, close to the United States, instead of a too small, distant, poor and dirty little island, how much more would I have been able to do?”7. We will never know what were G. Arthur Brown’s thoughts on the policy direction of the seventies or what advice he may have given to the decision makers. He was too astute and circumspect a public servant to ever disclose that. To put it in his own words: “As a public servant and technician all my life, I advocate no system and seek support for none. 6 “From Third World to First – The Singapore Story 1965- 2000” (p.364) 7 Article “Singapore: The Harbinger of the Lion in the Orchid’s Garden” – Francisco Gutierrez Munoz (2014) – Amuraworld.com 11

There are and have been a band of us who have imposed a self-denying ordinance on ourselves not to interfere other than by casting our ballots in the political act of choosing the direction in which the society should move. We have dedicated ourselves, once the decision has been taken to move in a certain direction, to apply all our skill and knowledge to the process of getting to the set goals. If we disagree with the goals and feel that we cannot honestly give our best, we cannot sabotage the efforts of others. We must go. Once we remain, we must apply our knowledge efficiently and impartially.”8 One can only surmise that having been so intimately involved in developing the successful economic strategies of the fifties and sixties, he would have been discomfited by this drastic shift in policy direction. One can surmise further that his decision in 1978 to accept appointment as the second-in-command of the United Nations Development Programme – a post for which he was clearly over-qualified – was his way of taking a sabbatical. G. Arthur Brown was not an ideologue but he was much more than a pragmatist. He sought to understand not just the cause of things but to nail down the things that make other things work. Straightening Up, But Not Flying Right The third decade of independence saw a major policy shift, not a return to the Arthur Lewis model of encouraging foreign investment in a sterile, protected space – the new dynamics of the western world, insisted upon by the multilateral institutions, would not have allowed that. It involved a strenuous programme of structural adjustment, privatization, the 8 Address to graduation ceremony University of the West Indies following conferment of Honorary Doctor of Laws, December 4, 1976. 12

elimination of price and import controls, redefining the role of government in the economy and the move to a market-driven economy. The transition was far from painless. As G. Arthur Brown candidly acknowledged, structural adjustment inevitably meant reduced standards of living in the short term9. Fiscal compression, wage restraint and public sector retrenchment were some of the tools that had to be used. But it started to work. Toward the end of that period, GDP growth reached 6 per cent per annum. Then, aided and abetted by the IMF, we fumbled the ball at the start of the fourth decade. Premature and untimely foreign exchange liberalization – I say “premature” because the fundamentals and the regulatory framework required to defend it were not in place – and “untimely” because loose monetary policy in the months preceding it had created a perfect storm for financial instability. Inflation soared to 80 per cent in 1991, the kind of inflation that Sri Lanka is now experiencing. The measures that were employed to mop up liquidity and rein in inflation shook the very foundations of our financial system at the same time that we had declared a free-for-all in chasing US dollars. We created a mess in trying to clean up a mess. Cash reserve and liquid assets ratios for commercial banks were hiked to 25 and 50 per cent respectively. Cash withdrawals in excess of J$10,000, except for known, well-established businesses, had to be referred to the Bank of Jamaica. Treasury Bill rates peaked at 51 per cent in April 1992. Commercial banks’ lending rates naturally fell in line or, to be more accurate, climbed in line. Businesses went bankrupt. Banks and insurance companies which we thought were impregnable collapsed as if explosive charges were detonated at their foundations. 9 Grace Kennedy Foundation Inaugural Lecture, January 1989 13

The government, with no fiscal surplus and its net international reserves in the red, had to step in ... almost like a drowning man trying to save another drowning man. Enter FINSAC and all the pain that was caused to businesses and individuals who were indebted to the banks and whose assets pledged as security were now to be foreclosed on and all the pain that the taxpayers had to bear in footing the bill of hundreds of billions of dollars. These missteps could not have occurred at a worst time. We were now facing new headwinds all wrapped up in something called “globalization”. It was heralded as something that would create a borderless world offering huge opportunities for countries like Jamaica by providing access to vast markets. The fine print read differently. We ourselves were to become a part of that vast market by reducing tariffs and eliminating subsidies to domestic producers. We were now required to compete with the most advanced industrialized and technologically superior countries not only in their markets but on our own supermarket shelves. Many local producers found their products being displaced by cheaper imported goods. It was hardly a level playing field and we were not ready for this. Our labour productivity had been in constant decline for more than 20 years. Many of our factories were inefficient, producing goods with 30-year old machinery. Our labour laws were inflexible and obstructive to producers and investors who now had to contend with the ferocity of global competition. Our public sector lacked the agility to be a facilitator rather than a humbug to investment and economic activity. Our financial institutions, battered and bruised by the recent meltdown, were in no shape to respond to the new challenges with the aggressiveness and the appetite for risks that the new paradigm demanded. 14

Not surprisingly, we ended the fourth decade of independence with paltry economic growth of 3.6 per cent. Getting Things Right Again We began the fifth decade of independence in the new millennium still picking up the pieces of our earlier setbacks but we started to get things right...slowly but progressively. In the first five years of that decade, we recorded growth of 9 per cent – meagre by any measure but almost twice what we had achieved in the previous 10 years. The policy adjustments, although headed in the right direction, were modest. The heavy lifting was yet to come and was forced on us by the impact of the global recession of 2008 – the worst of its kind since the Great Depression 75 years earlier. To our credit, not one of our financial institutions went under as happened in many parts of the world but the effects on Jamaica were still severe. Foreign exchange earnings plummeted. Exports shrunk. The bauxite industry virtually collapsed. Tourism arrivals declined. So did our revenues. Even remittances fell as our benefactors in the diaspora were facing their own financial problems. Oil prices soared to a historic record of over $150 per barrel. In order to keep the country going, the fiscal deficit that had plagued us for many years widened, we had to borrow excessively and our public debt which was already high climbed to 148 per cent of GDP. We had suffered external shocks many times before: the oil price shock of 1974 and periodic steep price hikes since, sudden downturns in the bauxite and alumina market, sharp fluctuations in critical commodity prices, several cyclical recessions in the US and global markets. Ours is an open economy extremely vulnerable to what happens in the rest of the world. In addition, the economy was frequently disrupted by natural 15

disasters - hurricanes, severe drought in one year and devasting floods in the next. Healthy economies have the reserve capacity to withstand these shocks and quickly recover. It is like the human body that has an immune system that springs into action when we contract a disease or suffer injury. Our country’s immune system had long been compromised. Our macroeconomic situation, for a long time, has not had the resilience to withstand these shocks and their effects have persisted long after the events. Why have I burdened you with this historical narrative? Dwelling on the past isn’t of much help in moving forward but it is necessary to identify where we went wrong, what caused us to stumble when we did and what helped us to succeed where we did in order to establish some dos and don’ts for moving forward. Over the last decade or so, we have made some important advancement in fixing the engine. The institutionalization of a fiscal responsibility and debt management framework has already had a significant impact toward achieving the macroeconomic stability that has eluded us for so long. The independence of the Bank of Jamaica and the establishment of an Independent Fiscal Commission are among the critical tools that have been employed in ensuring sustainability of that achievement. The results have been impressive: record low inflation, record low unemployment, fiscal surpluses, significantly reduced debt to GDP ratio and significantly reduced interest rates. In terms of economic reforms and transformation, we have achieved much more in the last ten years than we did in the previous twenty. The World Bank’s vice president for Latin America and the Caribbean, Mr. Axel van Trotseburg, was moved to say “I don’t know of any country that has achieved over a sustained period of 16

time the fiscal adjustments and reforms as Jamaica has done. It’s certainly a world achievement that probably would be number one in terms of that success”10. Some of those gains have been eroded by the COVID pandemic and are now being even more seriously threatened by global inflation pressures and the likelihood of a global recession which, from experience, could persist for the next two years. Bad luck, they say, is worse than obeah. We were on track but we are nowhere near achieving the level of resilience that would enable us to adequately mitigate the effect of these shocks. The Dawn of a New Day? As we batten down to weather this new storm, there are important lessons that must guide our recovery and our way forward. Among these is the essentiality of the policy consensus and continuity of which I spoke earlier. To the credit of both the Government and the Opposition, this consensus held and the programme of reform did not skip a beat despite two elections and a change of government. It is reminiscent of what obtained in the fifties and sixties. Secondly, this consensus must not be allowed to be compromised by quarrelling over its implementation and management. The hardships being felt by the people because of rising prices and the slowdown in job creation that is likely to result from higher interest rates and the shelving of investment projects are real. It provides political opportunities and the temptation will be there to kick up a rumpus and destabilize the programme. Times of instability like this one inevitably undermine business and consumer confidence. We don’t need to worsen that by 10 Media briefing, Office of the Prime Minister, Kingston, Jamaica April 30, 2019 17

fertilizing doubt as to whether we are on the right track and whether we should change course. Both the Government and the Opposition have a crucial responsibility. If ever there was a time to huddle, confide in each other, reaffirm and strengthen the consensus, it is now. The macroeconomic stability that prevailed up to and during our first decade of independence when the economy was humming was vitally important then; today it is indispensably necessary. Back then, external loans were easily raised in the London capital market because they were backed by the balance of payments surpluses of the colonies that were pooled with Crown Agents. Today, we must source our loans through highly marketable instruments in equity and bond markets all over the world which pay very close attention to our macroeconomic fundamentals and their projections. Although we have done well in recent years, the market knows our past and it is constantly looking out for the slightest signal that we might slip back into our old ways. Certainly, there must be sufficient flexibility in the programme to allow for adjustments to meet extraordinary circumstances such as have arisen over the last two and a half years but we must not allow the poor visibility created by the haze and dust of those circumstances to cause us to take our eyes off the prize. When the winds of a hurricane are beating down on the house and the kitchen and the living room are flooded, it makes no sense for the occupants to start quarrelling with each other as to who would have put on sturdier hurricane straps or who would cork up the door bottom better or bail out the water faster. Instead, we must all get busy to save the house and protect the furnishings because it is the only house we have. The private sector also occupies that house. It cannot be seen to be only concerned with the bedroom it occupies because that bedroom will be of 18

no use if the house collapses. Recently, some elements in the private sector have lambasted the BoJ for raising interest rates. Leave interest rates alone, they say. Then, what is to be done about inflation, one must ask? Run with it? G. Arthur Brown made the point in an address at the UWI graduation ceremony in 1976 that when sectoral interests are advanced that will inflict economic loss on the rest of the society, especially the poor, it is like snatching milk from the mouths of babes. If we pull together, we will protect the gains we have achieved, validate the sacrifices we had to make and ensure a speedy recovery and resumption of our momentum. Calibrating Our Expectations Assuming that we find the perspicacity, the common purpose and the will to get through this current turbulence with as little damage as possible, what should we expect? A concern that I believe many of us have is whether the macroeconomic stability that we have achieved, even if it is preserved and enhanced, will necessarily and automatically lead us to the robust growth that we have longed for. No, it won’t! I, myself, marvel sometimes that despite the achievements especially in the years leading up to COVID, economic growth has remained anaemic, almost defiant...barely over 1 per cent each year – hardly any better than in some of the darker days. What it tells us is that macroeconomic stability is essential but not sufficient. G. Arthur Brown provides some valuable insights as to what we need to do to close the circle. He begins by identifying our resource base: land, a limited amount of mineral resources and a large pool of labour. Like Arthur Lewis, he saw that abundance of labour not as a burden but as an undeveloped, under-utilized asset. He recognized that standards of living 19

could not improve unless that pool of labour was gainfully employed. But employed where and to do what? When he was once asked why the government persisted in subsidizing the loss-making sugar industry, he said it was to mop up labour because the alternative would likely lead to social unrest. He argued that if agriculture was to be efficient and competitive it would have to employ technology and dis-employ much of its labour. Jamaica’s economic future and its hope of absorbing the resource that it had in abundance, he argued, lay in the services sector which had become the dominant sector in advanced economies both in terms of job creation and contribution to GDP. He cited the tourism industry as an example of Jamaica’s potential in services. To achieve a higher standard of living, he contended that a country need not be in possession of large land areas, mineral resources and other raw material but rather of trained people. Lee Kuan Yew concurs. Speaking of the vital role played by an educated population in the Singapore miracle, he said “Supposing we had oil and gas, do you think I could get the people to do this? No. If I had oil and gas, I’d have a different people with different motivations and expectations. It’s because we don’t have oil and gas and they know we don’t have and they know that this progress comes from their efforts. So, they do it and do it well.”11 Former Prime Minister, Edward Seaga, once made the observation that there is no country in the world with a well-educated population that is poor. 11 Interview by International Herald Tribune, Singapore, August 24, 2007 20

The G. Arthur Brown Prescription G. Arthur Brown laid out in simple terms the priorities for development and growth: education & training, infrastructure, appropriate legislation and regulations, bureaucratic transformation and communications. We have made good headway in terms of infrastructure and communications; an enabling legislative and regulatory framework is in place; the bureaucracy has improved significantly although we still have some way to go. It is in the area of education and training that we have fallen down…….no, not fallen down – failed miserably! Our education system is “in a state of chronic”, to borrow Ezroy Millwood’s colourful expression of alarm. Our schools operate like factories. We run a conveyor belt that moves our children from one grade to the next regardless of how they perform in each grade and it spits them out after five years of secondary school. In a factory, there is a quality controller who separates the good products from the rejects. In this case it is the potential employer who does that. The recent Orlando Patterson-led Education Transformation Commission report tells us that of the children moving from primary school to secondary school, 33 per cent are unable to read, 56 per cent are unable to write and 57 per cent are unable to identify information in a simple sentence12. But we transition them to the secondary schools only for their confusion to be more confounded. Not surprisingly, the school leaving results at the secondary level are equally “in a state of chronic”. Approximately 41,000 students leave secondary school each year. Only a little over a half of them do well enough to even sit the CSEC exams and of that number only 28 per cent 12 Reform of Education in Jamaica 2021 21

(i.e. only 16 per cent of the total cohort) obtain five or more passes including mathematics and English – the bare minimum to properly equip them for a skills-based future, productive employment and financial independence. What constitutes the “current generation” – those between the ages of 20 and 40 – number approximately 900,000 and make up about 70 per cent of the labour force. Approximately 650,000 of them left school without the bare minimum of five CSEC passes including mathematics and English. How are they going to find a place in a fast-changing world where any job, whether operating a complex piece of equipment or dealing with waste management, will require critical thinking and problem-solving dexterity? More than 30 years ago, G. Arthur Brown spoke of the increasing use of robots to displace unskilled labour. Email and WhatsApp, downloads and print have all but made the office messenger redundant. Artificial intelligence is now threatening the jobs of even some skilled workers. What has caused our dismal performance in educating our children? Is it that we have not allocated sufficient resources? This year we are spending $122 billion on education – one-fifth of the budget after debt servicing is taken out. Around $70 billion (almost 60 per cent) of that is allocated to our primary and secondary schools. Sure, we would love to be able to spend more but are the results that the Transformation Commission revealed commensurate with the $70 billion that we are spending? Put it another way: if we were able to pump in another $30 billion, would the outcomes be significantly better? I am inclined to doubt it. The Patterson-led Commission report is freshly minted. Its findings and recommendations for reform are not dissimilar to those of the Rae Davis- led Task Force of 2004. More than $500 billion of expenditure later, the 22

results coming out of our primary and secondary schools are as shameful as Orlando Patterson and his team found. There are many things that we need to get right to compliment the macroeconomic stability that we seem to have finally grasped if we are to achieve the annual growth rate of 4 and 5 per cent that has eluded us for more than 30 years. Yes, we have to fix the crime problem. It drives up the cost of production and fighting it gobbles up precious resources that could be spent to improve education, healthcare and infrastructure. But even if we were able to completely eliminate crime and say to investors here and across the world “Invest your capital in Jamaica – the only crime-free nation in the world”, where would they find the skills to make those investments work, to handle the technology and provide the intuitive innovation that today’s competitiveness requires? As we embark on implementing the recommendations of the Patterson- led Commission, let us not repeat the mistakes of the past. It is good that an oversight committee, chaired by Dr Adrian Stokes, has been established to monitor the implementation. It uses the template of the Economic Programme Oversight Committee which was first co-chaired by Governor Richard Byles and which played such a significant role in the economic transformation that we have achieved. But we need to be realistic and strategic. Speaking at a conference at Oxford University in 1974, G. Arthur Brown said “It will take many generations to upgrade the unskilled labour force to the levels needed for modern technology.”13 Three generations have passed and we are yet to leave the starting blocks. 13 Duke of Edinburgh’s Study Conference, Oxford July 1974 23

The Friction between the Present and the Future An aspect of our current efforts that requires special attention is the struggle between the present and the future. Anyone who has been involved in government at the political or administrative level knows the pressures of the here and now...the myriad of things that need to be fixed, the demands that have to be met and with the urgency of now. We are being forced to take the position that we will deal with tomorrow when tomorrow comes. I suggest that our policymakers will have to make a paradigm shift. We cannot continue to focus on today at the expense of tomorrow. Let me use an anecdote to explain what I mean. When I was active as a member of Parliament, we had a programme of back-to-school assistance for students. It was part of the much-maligned Constituency Development Programme. Students were required to present their school reports so that we could monitor how well they were doing. These were all students from depressed, inner-city communities where the problems of poverty, lack of proper parenting, noise and distraction created an environment that was not conducive to proper learning. Almost all of them were performing poorly. But there were two students – a brother and a sister – who attended two of our top performing high schools and they were an exception. They placed in the top five of their classes every term. They lived in a single-parent household and I sent for their mother because I wanted to find out what made the difference. She did not have a fixed job. She earned a meagre living by selling snacks at her gate. She said that good health and the two children were all that God had given her so she had to work with that. She said that when she went to church on Sundays and the other church members saw her wearing the same frock, “dem look pon mi a way but mi caan afford fi buy nuh whole heap a clothes; mi tie up mi head because mi caan afford fi 24

spend di likkle money pon hairstyle; dat money haf fi mek sure di pickney dem eat good, dat dem have dem bus fare and lunch money”. Every evening, she said, after they had dinner, she saw to it that they sat at the dining table to do their homework. During the long summer holidays, she told me, some of the teachers gave private lessons for which they charged a fee. She made sure to find the money to send them to private lessons. Her motivation was simple: “Mister Bruce, mi nuh want dem have it hard like mi so mi haf fi try wid dem and if mi mek it wid dem, den maybe when mi caan help miself nuh more, dem will look after mi”. I saw her at a funeral a few years ago and asked about the children. Her daughter had graduated from UTech and was now working with a shipping company. Her son had received a scholarship and was in his final year of medical school at the UWI. Is there a lesson here for our policy makers? Is there a lesson here for all of us, faced with all our pressing needs, the many things that we want the government to fix and fix now…otherwise we are going to block roads? If there is one thing that we need to carve out and say this is what we are building for the future, this is what we are going to concentrate on, this will be the legacy of this generation and this is where we are going to spend every cent we can squeeze out of our limited financial resources, it must be education. And that carve out means that we must also carve it out of political cass- cass and finger pointing. Talk about consensus and continuity? That carve out means that Government and Opposition must join forces to face down the opponents of change, to beat down the institutional resistance to reform wherever it is found – in education, public sector transformation, economic reform. The Jamaica Teachers Association is the most powerful 25

pressure group in the country. They know how to play off the Government and the Opposition against each other. Their ultimate weapon is to all fall sick on the same day. Performance pay is resisted. Certification requirements are resisted. Schools are closed for 13 weeks out of the year. The children are sent home. So, too, are the teachers. Yet the teachers are entitled to four months’ vacation leave after five years of service and it’s hell and powder house if the government doesn’t forward up with the money. Which enterprise, what type of business could afford to pay their workers to stay home for 13 weeks and, on top of that, pay them to stay home for another 17 weeks every five years? Listen out for the JTA’s response to the Patterson report and try to pick up the pieces after it has been shredded! We must be strategic, too, in the skills we seek to develop. G. Arthur Brown told us in 1976 that primary and secondary schools must prepare our students for the tertiary level and at that level we must concentrate on the hard options – mathematics, physics, chemistry, engineering, biological sciences, accounting and economics. Today, he would no doubt have added information technology and environmental sciences. We are producing more lawyers than we need, more mass communication graduates than we can absorb. A student must be free to pursue studies in Greek mythology or Turkish archeology if that is his passion but, with all due respect to academic freedom, he shouldn’t expect the publicly-funded universities to provide the courses or the Student Loan Bureau to finance the studies. We allocate about $13 billion each year to the government-subsidized universities. I think the government should seriously consider specifying the courses of study to which those funds should be applied. We need to 26

make studies in the disciplines that are crucial to national development much more affordable and securely bond those students upon graduation to work in Jamaica – whether in the public or private sector – for a minimum period. G. Arthur Brown, in delivering the Grace Kennedy Foundation inaugural lecture in 1989, expressed confidence that Jamaica had the capacity to achieve the goals he had enunciated and make Jamaica a great little country by the year 2000. We have let him down. We need to atone and make good. We must do what we can afford to do for the present but we must shift our focus to the future. That future is not just something that is yet to come. The future lies in the hands of the present. When it formally arrives, it will be in the form that it was designed to be and the time to design it is now. A Shared Vision and a New Crusade We need to embark on a new crusade and it has to be rooted in a shared vision – shared not just by the Government and Opposition and Private Sector but by the people of Jamaica. It will require sacrifice – the kind of sacrifice that was shown by that mother I spoke about. We will have to draw an imaginary line. Those 650,000 “current generation” persons in the workforce who left school unqualified – some will manage to upgrade themselves; the majority will have to make do with what jobs the economy is able to generate and for which they are capable. Those jobs are not likely to be well-paying jobs or 52 weeks-a- year jobs. But whatever expenditure we can squeeze out from the today, let us spend it on the tomorrow. Let us draw another line – this time a line in the sand. Let us grab hold of the Patterson Commission recommendations and put every dollar we can squeeze out into making 27

them work. Let us make the commitment that as of year X, the vast majority of students entering primary school will ace the PEP test, will go on to secondary school and whip the CSEC exam and enter the labour force or go on to university equipped and eager to work and to be further trained. Persons in that labour force won’t have to seek jobs; jobs will find them and their purchasing power will create less skills-demanding jobs for those who preceded them and who were not so fortunate. Let that be the start of a new generation that will have investors beating down our doors because we have what they need; a new generation that will demonstrate a level of innovativeness, productivity and competitiveness never seen before; a new generation that will truly make Jamaica the place of choice to live, work, raise families and do business. God knows it won’t be easy. Our people have been called on to make sacrifices for much of the last 60 years and much of that sacrifice has been to nought. They are suffering from sacrifice-fatigue. They will need to be re-inspired; they will have to be persuaded that to do otherwise is to condemn the future to be even worse than the present, that it will make life for their children even worse than what they are going through. They will have to be convinced that this time will be different and it will require a vision that is so broadly shared and a consensus that is so tightly woven that there is no gap through which they might be inclined to wander. Speaking of the time of independence, G. Arthur Brown said “There was a feeling of pride and love of country which permeated everyone. There was a spirit of cooperation manifested in working together to achieve independence and, therefore, a release of boundless energies to reach the top in whatever field of endeavour we chose. There was outward migration of unskilled labour seeking a better life but those who had skills were much 28

less inclined to migrate because that better life could be found right here in Jamaica”14. I remember that period well. I was a fifth former at St. George’s College. My father took me with him to the National Stadium to witness the lowering of the Union Jack and the hoisting and unfurling of the black, green and gold. I remember the goose bumps that gripped me, the overwhelming feeling of hope and expectation that there was nothing we wanted to do that, with hard work and dedication, could not be achieved because this was a new Jamaica. Can we re-create that spirit? Can we find that new Jamaica that we allowed to slip from our reach? Can we vindicate the life and work and service of G. Arthur Brown, all of which were dedicated to placing that new Jamaica not just within our reach but within our grasp? Yes, we can! And, for God’s sake, we must! 14 Grace Kennedy Foundation Inaugural Lecture, January 1989 29

Profile on G Arthur Brown George Arthur Brown, former governor of Bank of Jamaica, was born in Black River, St Elizabeth on 25 July 1922. He was educated at Gayle Primary, Oracabessa Primary, St Simon’s College and London School of Economics. He was married twice, first to Jean Ferguson and then to Leila Gill. He was father to David, Katherine, Isabel and Alexia. During his career in the Jamaican civil service, he played a major role in the country's economic development. He drafted Jamaica's first five-year development program and was an economic adviser to the Government as well as a negotiator of aid agreements sought by Jamaica to develop its oil, bauxite and other resources. As a United Nations administrator, he had responsibility for technical aid programs operating in 157 countries. William H. Draper 3rd, administrator of the aid program, said Mr. Brown \"had few equals in the United Nations system\" in his understanding of foreign assistance. G Arthur, as he was affectionately known, contributed significantly to Jamaica’s development activities, serving on the boards of Air Jamaica, the Sugar Manufacturing Corporation, Jamaica Stock Exchange, UDC, UWI, SLB and JCCUL, among others. He also was an alternate Governor of the World Bank and its affiliates. During his active life Mr Brown was awarded with the Issa Scholarship (1947), Order of Jamaica (1973), Honorary Degree of Doctor of Letters, UWI Mona (1976). His hobbies included boating, fishing and hiking. G Arthur Brown retired from Bank of Jamaica in 1992 and died on 02 March 1993. 30

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