PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

Three industries recorded increases in employment over the period - Agriculture, Forestry
& Fishing, Hotels & Restaurants Services, and Finance & Insurance Industries.
7.0 Danger of Public Sector Growth
Against the background of the dispirited economic performance evidenced above, the
private sector must understand and appreciate that, when the public sector grows faster
than the national economy and the private sector, it diminishes our ability to modernize
and robustly grow our economy, and more importantly, robs us of our personal and
collective development, well-being and freedom of ambitions.
Such a situation ultimately erodes our ability to exercise agency in the pursuit of our
preferences – just read the wailing over the constrictions of the multi-lateral programmes
— and is an important source of un-freedoms. It therefore amounts to public “bads,”
because of its inescapability despite our best private efforts to abate its negative
consequences. A second-rate education system, poor health-care, high levels of
criminality and crime, corruption, and business enterprises with outmoded and
uncompetitive structures of production come immediately to mind as examples of how
government failures can inflict an economy with public “bads.”
These public “bads” contribute to the creation of two Jamaicas with no transitivity of
fairness and opportunity of justice between them. Public “bads” are also complex
because they are collectively consumed and require our collective effort to negate their
societal harm. Since transitive fairness and justice, broad-based opportunities, equity and
a “good economy” are all accepted as “public goods,” so too then should the collective
aspirations of Vision 2030 Jamaica for all the reasons just discussed.
8.0 Government’s Role in Private Sector led Growth
In an August 1997 PSOJ Investment Policy Paper, your members endorsed the findings
that micro-economic incentives like industry-specific tax incentives and subsidies were of
secondary importance to the abatement of macro-economic and infrastructural constraints
in the modernization, revitalization and growth of the economy. This point has been
made by the World Bank and by a slew of researchers. I appreciate that these incentives
can influence business decisions at the margin, and that they are often sought to
compensate for how the poor macro-environment taxes firms and industries into
uncompetitiveness; at other times, to match tax incentives and subsidies being granted to
competing industries overseas; sometimes to assist in the modernization of domestic
industries or to grow new ones; and sometimes for pure economic rent. Whatever the
reason, aside from their unaffordability and the perverse incentives they create, they
represent a losing and irrational proposition for our debt-ridden and public capital-starved
economy. Micro-incentives should never be used as a compensating factor for
government failure to adequately address critical macro-economic and infrastructural
impediments to economic growth.
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