An interrogation of the Jagdeo US$30 million laptop policy

Information and Communication Technology (ICT) is seen as an important aspect of President Jagdeo’s economic policy. So much so that it has been placed prominently into the Low Carbon Development Strategy (LCDS), which is to be financed by an environmental fund or potentially by selling carbon credits to a market with flexible prices. The idea is for the advanced economies to compensate us for the opportunity cost of not cutting down our trees – or at least harvesting our trees in a sustainable manner (it should be noted that all of this is unlikely in the post-Copenhagen world). ICT in itself makes sense as people overall and labour in particular become more productive with computers and internet. They can have access to vast amounts of information that are available. Any government ought to have ICT as a key component of its economic policy.

It appears as though the most important part of the President’s policy is the distribution of laptops to poor families in Guyana. The President has committed US$30 million to the promise. On the surface this sounds good. After all, which columnist or politician would want to argue against poor and dispossessed children using computers? It is obviously a good political move by the President; especially with elections coming next year. It certainly sounds good at the political level, but the economic and long-term merit is far from certain.

The obvious and immediate question one can ask is there an alternative way to make sure the poor and children get access to computers? Would it be better if we set up IT labs in each high school in Guyana? And make sure that teachers are available to teach information technology. Could this be cheaper in the initial price (relative to US$ 30 million) the President intends to spend? What about the long-term cost? If the government owns the computers in public schools, then the government must maintain them – thus the future cost of teachers and maintenance are shifted to the government.

On the other hand, would poor families be able to bear the burden of maintenance of the laptops, which can be very troublesome after two years of ownership? Will the laptops come loaded with the relevant software for word processing, spreadsheet management and other applications? Who bears that cost: the government or poor families? If families are burdened with an extra expense, how does this take away from other necessities? Can poor families afford to pay the price for broadband internet?

Will the laptops be affected adversely by Guyana’s erratic power supply? When I bought my first computer (a desktop) in Guyana in 2001, I came home in time only to see the computer emitting smoke owing to the fluctuation of voltage. My surge protector did not help. That day several villagers lost their refrigerators, which have to be imported with scarce foreign exchange. Of course, this affected my productivity for several months as I had to wait on funds to service the computer. Therefore, this simple example shows that the government’s failure imposes more cost on the society, the unnecessary loss of foreign exchange, and the wastage of productivity. Have the power supply and stability of the supply improved in 2010? Laptops tend to be very sensitive to erratic power supply. Furthermore, they have batteries that can cost a fortune to change and replace.

What would be the impact on job creation? How many poor families will be able to participate in business processing outsourcing (BPO)? Does the present education system equip them with the necessary skills to take advantage of BPOs?  Would it be better if the government’s ICT policy focused on setting up IT centres that will create jobs and a sector? What production linkage is created when laptops are given to the poor? The parts to maintain the laptops will have to be imported much like most housing components to build homes. The government never saw it fit to couple industrial development with its housing drive.

Has the University of Guyana been positioned to lead in the training of computer engineering, IT and computer science? It would also be important to have vocational schools doing computer training on the practical aspects of the trade. This could be done in addition to training in landscaping, carpentry, masonry, electrical technology and refrigeration. Could Critchlow Labour College be made to focus on these wealth-creating professions?

We have to look at how this whole project of distributing US$30 million will be financed. Will it be foreign aid? Or foreign borrowing? I have already noted that the world is a very far way off from accepting a large-scale carbon compensation framework as envisaged by the LCDS. Would spending US$30 million take away funds from other areas that would require taking on new foreign currency loans? Money is fungible. That means the use of funds for one project takes away monies from other projects. However, it works in the reverse also. When the government receives new aid funds it frees up monies for other purposes. And with elections coming up a lot of the free cash flows will suddenly be spent on “special” projects. After the election there will be none of these “special” spending until another four years. Hopefully Guyanese will be smart enough to figure out this political ploy.

Finally, would this policy emerge as another oligarchic transfer of state funds to friends of the government without long-term economic benefits? As I have noted in several columns, the Guyana post-1992 oligarchy has been and continues to be harmful to development. Of course, other societies have their oligarchies.

For instance, the South Korean government maintained industrial support for chosen industries and families. However, the Korean government made sure a mighty industrial enterprise was created in the process. The Korean bureaucracy always had some legitimacy and independence to allow weak companies to fail and nurture strong ones. As I have noted in previous columns, the Jagdeo oligarchy is deliberately building its own submissive capitalist class while destroying the old investor class which possess tremendous business acumen. The net effect so far is the perpetuation of underdevelopment.

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