The Jagdeo-Ramotar approach to private enterprise

Part 1

Former President Jagdeo has carved out his own method of promoting private enterprise. The strategy has largely been adopted by current President Ramotar. Both men had strong Marxist-Leninist upbringing. This socialization is quite evident in the manner in which they go about promoting private investments in Guyana. On the surface, they appear to be strong proponents of a private sector led economy where economic activities are guided by free private markets and firms. However, if we delve deeper we would see the Freedom House hand instead of the invisible hand of markets driving private investments. The Freedom House hand, which appears pro-business on the surface, involves significant control of who can invest and in which sectors. Mr Jagdeo made it clear a few years ago that he is promoting a new private sector. He was dead serious and indeed his approach includes punishing the old private sector as he builds up the new one using the resources of taxpayers.

Even the Private Sector Commission appears to be pro-Jagdeo and pro-PPP these days. So much so that it appears like the Marxist-Leninist PPP has become the pro-business party, while the opposition looks mainly like the party of negativism and budget cuts. Instead of crafting a new social, political and economic vision for the country, the opposition is now the party of many nays. It is not that active opposition is not needed, but to overcome the incumbency advantage positive alternatives have to be given as much as the nays. Although my sample of observation of young people – some of mixed ethnicities – in Guyana is cursory at best, it suggests some of them (very likely your swing voters) are coming around to accepting the PPP as the party of young professionals. Let us try to understand why the Jagdeo-Ramotar (hereafter the JR) method versus the opposition’s way could be turning some middle voters to accepting the status quo.

Firstly, the entire edifice of the JR approach is to produce so-called symbols of development. These symbols, when combined with the ample new hang out spots that emerged owing to the underground economy, provide powerful visuals in favour of the government. The PPP and Jagdeo prefer a “development” programme that is premised on drinking, partying, gambling and 20-20 cricket. Tertiary education will take a back seat as we can see with the brinkmanship this week played out over the University of Guyana. The Social Sciences – from where the critical thinkers are more likely to emerge – in particular will take a big hit. Expect unaccredited bottom house “universities” and degree mills to fill this niche.

20101215developmentwatchMany young people, independent voters and the PPP East Indian supporters are given a choice between the so-called symbols of development and the purely negative approach of the opposition. The Guyana Times recently wrote an editorial “Cricket in nation building”. The editorial provides a key insight into the JR approach, which is not too concerned that the crowds frequenting the artless 20-20 cricket matches at the stadium are mainly East Indians. Nor is it too bothered by the disintegration of Bourda and its great legacy in West Indian and world cricket. Development does not include social cohesion and preservation of history and great legacies. It is the PPP’s way or the highway! Nevertheless, middle voters are given two choices: (i) the JR approach of hot and wild party spots, gambling, drinking, gyrating, swanky new houses located in areas with recurring floods, ample rum shops and no green parks in which children can play, a ritzy cricket stadium and 20-20 cricket; and (ii) the opposition’s negative way.

Furthermore, in the JR approach gyrating and artlessness are not subtle. One has to only go back to the party’s 2011 election campaign song “dem a watch we” to get a feel for the in-your-face method. The song encapsulates the methodology and mentality of those proposing the JR way quite well.

It says we the oligarchs will capture the state, the PPP and eventually the government to offer ourselves all the advantages for plunder and patronage. We shall acquire the wealth via patronage and nepotism rather than personal abilities, sacrifices or education. Therefore, civil society is just envious of our oligarchic wealth; hence the message “dem a watch we.” The meaning of the song is quite clear: join the wine up party or just be envious of our plunder and blunder.

A second aspect of the approach is the desire to completely control the media and information space.

Even data from the Bureau of Statistics are now suppressed. As this column is written, the website of the Bureau of Statistics has been suspended. It is the first time this writer has seen the website suspended after visiting it regularly for the past 14 years. State resources are used to nurture a new like-minded private media. The Guyana Times was created while Kaieteur News and Stabroek News were boycotted by the Jagdeo government. Monopoly rights are given for the purchase of medicines so that the monopoly profits can be used to buy up private TV and radio stations. Radio licences were given mainly to friends and families associated with the government.

Thirdly, the strategy above is in keeping with the desire for limited complementarities of investments. A Marriott hotel was established in spite of the low occupancy rate that already exists in the hotel industry. The government did not see the need for a sound feasibility study. The purpose of the Marriott – subsidized by taxpayers’ money – is to eventually corner the market and gradually kill off other hotels that will eventually be bought up cheaply.

This is the exact opposite of how the Asian economies (Japan, South Korea, Singapore, Taiwan and Malaysia) used complementarities in industrial policy to nurture their domestic business sector.

The same principle is used for the suppression of the independent private media. It is hoped that eventually the pesky independent private media will just go away as the oligarchs create a new one.

Fourthly, only dubious foreign investors without a credible track record are allowed to invest in Guyana. No reputable global publicly traded company (except the obscure CGX that was traded) subjected to strict disclosure laws or an American company subjected to the Foreign Corrupt Practices Act (FCPA) has ever invested here since 1992. The FCPA is an American law that prohibits its companies from offering bribes in foreign countries.

The PPP government therefore found a natural ally in the natural resource sharks from Asia. The sharks often make great promises to invest in manufacturing and ship building here. But as the private media shows, it’s all a ruse meant for clouding the real intention of only extracting and exporting raw materials. The sharks also hardly rely on local workers. The tax base and NIS contributions are not expanded from these investments in natural resources.

The next column will pick up on these themes providing data to demonstrate that the overall private sector is actually contracting instead of expanding. The main thesis of Development Watch is the contraction is determined because of the lack of complementarities and the deliberate crowding out of traditional private investors.

Comments: tkhemraj@ncf.-edu



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