5 Solutions to Jamaica’s Economic Problems

This discussion presents five ideas which will allow Jamaica to secure an IMF deal in the short-term, reduce Jamaica’s energy cost almost immediately and double Jamaica’s GDP in the next 10 years.

1. Sustainable Community and Skills Development Centre (SCSDC)    

Description: 

An actual SCSDC is a combination of a renewable energy (traditional) community center on steroids; a high-rise, renewable energy housing complex; and a renewable energy commercial center. Conceptually, the 24-hour security, gated community housing facilities should be made-up of 60 two bedroom units and 60 three bedroom units, encapsulated within the perimeter of the community center, which is itself within the perimeter of a forty (40) outlet commercial complex. The SCSDC will be equipped with three 1000KW solar generators to take advantage of Jamaica’s sunlight of 8 hours/day on average.

Additionally, roof-tops will be equipped with a Gym consisting of 1000 pieces of equipment which transform the kinetic energy from exercises into electricity. All general entry points should have revolving doors which generate electricity. A police station manned by five (5)officers on each shift, including two senior cops, is to be situated within the SCSDC. Eight member JDF teams are to be brought in, on three separate shifts each day, to provide skills training to persons in the surrounding communities within the walls of the SCSDC. Other civic and corporate groups, as well as individuals may also provide training. The police officers and soldiers will be paid by funds from the electricity. These payments are the return on the government’s mezzanine financing, and will be paid as long as the SCSDC exist.

2. Staggered Billing, Taxes and Fees (SBTF)    

Description: 

The SBTF is a process to stagger the deadline date of payment for different agents in the economy. This will allow for less persons acting at the deadline on any one given day and therefore reduce the need for additional resources on artificially stipulated, coinciding deadline dates for significant masses of economic agents. As an example, Motor Vehicle Registrations (MVR) could be issued such that they expire with exact time reference to the day of issue – MVRs expire six months, or a year to the day of issue. This way, deadline dates for renewals and payment are only dependent on the day each person was first issued a license, the right, or privilege to operate. As another example, companies would be allowed to file taxes and fees at different dates depending on their date of incorporation.

3. 5-5-5 Rule (Debt Exchange and Fiscal Responsibility) 

Description:   

The 5-5-5 rule is a hybrid between a debt exchange and a fiscal responsibility framework. The three 5’s communicate: (i) the rate of interest on all existing domestically owned government debt will be adjusted to a rate of 5 per cent or less within the next five years; (ii) the government cannot accumulate additional debt amounting to more than 5 percent of the five year moving average of GDP in any five year period, except in a global or regional economic crisis; (iii) The government cannot borrow at rates of interest exceeding 5 per cent unless at least one of the world’s largest five economies is borrowing at a rate above five percent on equivalent debt instruments.

The usefulness of the 5-5-5 rule is that it would help to reduce debt-servicing cost, and help to preclude high debt burdens in future periods. Of course, high debt burdens crowd out government spending on important social, human and physical capital. The restrictions imposed on government borrowing will put downward pressure on interest rates, and, therefore, mitigate any upward pressure on interest rates. Upward pressure on interest rates is anticipated as a result of the general policy stance of tight monetary policy and expansionary spending (fiscal and private sector combined) policy, which is also prescribed under this arrangement, and is necessary to stimulate the economy while avoiding inflation. Of course, lower interest rates will promote private investments.

  4. The Labor Sale Rule (TLSR)

Description: 

The Labour Sale Rule (TLSR) is a novel process by which the government provides a zero cost to the government, retroactive discount on the first year of multiple years of labour services employed by firms. The process is zero cost to government because while it is essentially a discount paid for by the PAYE taxes that qualified employees would pay, the process is such that all qualified workers would under normal circumstances not be expected to be employed in the absence of TLSR.

5. Firms Absorbing Civil Servants Initiative (FACS)

Description:

The FACS is a plan which will see private sector entities receiving a discount (see the “labor sale” rule) to absorb civil servants in a transfer of labor from the public sector to the private sector. This will assist in the reduction of the public sector wage bill, while minimizing unemployment which arises from the public sector rationalization/retrenchment. Additionally, with a smaller work force in the public sector the government’s pension obligations will be reduced.

Download a copy of the full paper (pdf): Click here

 

About the Author:

Darron Thomas

Pristine Enterprises Limited

Email: darron.thomas@gmail.com

 

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