Business, Investment and Economics

My Two cents: What really is the purpose of the Economic Growth Council (EGC) of Jamaica?

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It doesn’t take an economics pundit to see through the fluff which surrounds the Economic Growth council of Jamaica. Its membership for one, right off the bat, tells you that this isn’t a unit seriously concerned about the ECONOMIC GROWTH of our country; but rather the LOOK of there being a special machinery in place for our economic growth. Let’s take an actual look at the council itself:

  1. Michael Lee-Chin, OJ Chairman, EGC
    Chairman, National Commercial Bank
  2. Ambassador Dr. Nigel Clarke Vice Chairman, EGC
    Dep. Chairman & CFO, Musson Group of Companies
  3. Hugh C. Hart, OJ Senior Partner, Hart Muirhead Fatta
  4. Patrick Hylton, CD Group Managing Director, NCB
  5. Noel Hylton, OJ, CD Noel Hylton and Associates
    Former Chairman, President and CEO, Port Authority of Jamaica
  6. Paula Kerr-Jarrett Director, Barnett Limited
  7. Pat Ramsay Cultural Consultant and Development Director
  8. Adam Stewart CEO, Sandals Resorts International
  9. Senator Kavan Gayle
    Representative from Jamaica Confederation of Trade Unions
  10. Phillip Gore Owner & Executive Chairman of Gore Developments Ltd.

You’ll notice, for the most part, it’s nothing but a group of businessmen, lawyers and Investors. And if you’re wondering about Dr Nigel Clarke, he has a doctorate in mathematics (not economics). Another thing which stands out for me is the lack of youthful exuberance on this council. If it’s expected that the youth of Jamaica are to be the successors of any efforts coming out of this project, then why aren’t we represented? Where’s the young economics student to offer a different (and more contemporary) perspective to the discussions on growth? And if this Council is in place then what then was the purpose of creating a Ministry of Economic Growth and Job Creation? Aren’t we kind of repeating ourselves here? hmm

There are a few people in society today that I’m surprised weren’t tall enough to get on this ride either. Dr K’adamwe K’nife, lecturer of entrepreneurship at the UWI Mona and sustainable development specialist would make sense as an addition to me; Dr Peter Phillips MP, former Minister of Finance and Planning (who also holds a PhD in International Political Economy and Development Studies I might add), and the only man who could offer insight on our growth over the last 4-5 years; Dennis Chung, CEO of the Private Sector Organization of Jamaica to guide offer insight on the structuring of that public/private partnership; Professor Trevor Munroe, Executive Director of the National Integrity Action (NIA) to advise the proper preventative measures for corruption control in the grand scheme of growth; and the list goes on.

What also concerns me is the overarching mission of this council with their “five in four plan” i.e 5% growth over the next 4 years. Is this even possible? Are they saying 5% cumulative growth by the year 2020, or in the year 2020 they expect to achieve growth of 5% after any given quarter? Below is a graph showing Jamaica’s economic growth trajectory over the last 4 years:

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As you can see for yourself, According to the Statistical Institute of Jamaica on a quarter-on-quarter basis, the GDP expanded 1.6 percent. GDP Annual Growth Rate in Jamaica averaged 0.58 percent from 2003 until 2016, reaching an all time high of 4.30 percent in the fourth quarter of 2006 and a record low of -4.50 percent in the second quarter of 2009. So if you really think about it, if they can replicate what was done between 2003 and 2016 and add 0.30%, 5% “growth” is possible. But will this really translate to socio-economic development? Rather, is this council AT ALL concerned with the socio-economic development of Jamaica or just boosting the numbers on paper? Because they are basically promising another 4 years just like the last 4 years (only a little bit better to account for the extra 0.30%). Is that what the Jamaican people would consider as growth?

A more believable approach to this would have been to extend the trajectory to about 15-20 years with a memorandum of understanding between the two political parties and civil society groups that just like the vision 2030 development agenda, this growth agenda would remain untouched. Notice also, that the current administration’s campaign for government was hinged on the promise of economic prosperity (growth) for Jamaica if elected. Also notice, that this 5 in 4 plan will conveniently conclude just in time for election season again? *hint*hint*

Finally take a look at the Economic Programme Oversight Committee (EPOC) and the newly convened Economic Growth Council (EGC). Notice any similarities? Why did they recreate the wheel that was the EPOC instead of adopt and reform it? Why is the chair of the EPOC, Mr Richard Byles, not even an honorary member of the EGC? *sips tea*

I want to end my rant with a word of advice to the powers that be reading this and may be feeling uneasy with the revelations: get over yourselves. The growth and development of Jamaica Land we love should not be a tactic to retain power and/or boost the aesthetics of the party which forms government; but rather a social partnership between ALL stakeholders of Jamaica (Rich, Poor and Young ) committed to the long term agenda for economic growth and prosperity. I would also implore the EGC going forward, to dialogue with the youth of our country and get them directly involved in this mission for economic growth. After all, whatever progress or decline that comes from this initiative will be OUR responsibility as youth to carry on. So it makes sense to give us a seat at the table.

 

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Business, Investment and Economics

Has the Current IMF program furthered your right to an Education at the Tertiary Level?

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Is the current IMF program making it any easier for you to pay for your degree? Do you think it is making the cost of pursuing a tertiary level education any cheaper? In the negotiations happening now, do you know how much effort our government has put into ensuring education is a priority of the program? For all intents and purposes, this analysis will be carried out in reference to the University of the West Indies Mona and the extent to which access to a tertiary level education at this institution has increased since the dawn of this new IMF program.

In a January 2012 Article article entitled ” IMF Talks result in Greater Understanding of Priorities” published on the Jamaica Information Service (JIS) website, it was reported that the major issues in our economy at the time included a reduction in the primary surplus of the central government that was targeted for this fiscal year, and a rise of the overall deficit of the public sector. This, after the PNP administration restarted the conversation with the IMF following their victory in the 2011 general elections to negotiate a new deal with the Fund pursuant of strong policies that would enable Jamaica to address the risks posed by both the global environment and the worsening fiscal realities.

In a May 2013 article on the International Monetary Fund Website (IMF), entitled ” IMF Loan to help Jamaica cope with Growth and Debt challenges”, it was underscored that Jamaica’s very high debt undermines confidence and investment and that the new program will boost growth and jobs, lower debt and improve competitiveness. The IMF’s executive board had extended the arrangement to Jamaica with a loan of JMD $932,000,000 to further the objectives of this new program. The IMF’s mission chief for Jamaica, Jan Kees Martijn, in response to what he considers to be the key priorities in Jamaica for the Fund and the government and the role he envisions for the Fund beyond financial support in promoting these measures, said that adjusting policies to lower debt to a sustainable level and establishing the conditions for durable growth will be the requirement for building a prosperous future for Jamaica. However, it was made clear that the program does have a social welfare component which speaks to the protection of the most vulnerable groups in society (youth in this context). The extent to which these vulnerable groups are protected is the question we are trying answer.

Mr Martijn posited that the new program includes a range of measures to improve competitiveness and the business climate, so that Jamaica can attract investment and create jobs, as well as training opportunities to assist the migration from welfare to work. He went further to say that a second element of the program is requiring a floor on social spending to make sure that it is given priority even when the overall room for government spending is limited. The government, He said, also intends to increase the number and targeting of beneficiaries under the Program for Advancement Through Health and Education (PATHE).

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In a June 2014 article entitled ” Prime Minister Says Growth and Employment Highest Priority” published on the Jamaica Information Service (JIS) website, Prime Minister, the Hon. Portia Simpson Miller says stimulating growth and employment is the highest priority of the Government and the International Monetary Fund (IMF), at this time. Madam Simpson Miller reports that the progress made in the first year of our program (presumably January 2012 – January 2013) include: upfront fiscal consolidation and reform; several structural initiatives aimed at improving the business environment and restoring external price competitiveness; while strengthening the social safety net. But does the social safety net here speak to the educational opportunities afforded to Jamaicans at the tertiary level (with reference to UWI Mona)? Specifically, has this net been strengthened such that more Jamaicans can exercise their right to access a tertiary education from the State?

She went on to emphasize that stimulating growth and employment is, at this time, the highest priority of both the Government of Jamaica and the Fund. From these reports, It can be deduced that while the program is successful thus far in meeting the targets it set out to achieve, the social welfare of Jamaicans has been made less of a priority behind lowering unemployment and stimulating economic growth. With 80% of most SME’s (Small and Medium sized enterprises) failing in the first 5 years of operating and a national unemployment rate at 13.2% (32% of which is youth unemployment), one can understand the need to prioritize these issues in the program. But what we need to now ask ourselves is what of the statistics on enrollment at the University level? Are they significant enough to build an argument for a greater focus on improving access to a tertiary level education?

According to the enrollment statistics produced by the University of the West Indies (UWI) Mona , over a 5 year period (2009-2014) enrollment into full-time and part-time first degree programs has averaged at 11,358 students. According to Education Statistics produced by the Ministry of Education for 2012-2013; 84,847 students were enrolled in secondary school who were between 15-16 age group; and in the 17-19 age group only 32,697 students were enrolled in secondary schools. Cumulatively, 117,544 students were enrolled in the secondary school system between 2012-2013.

With reference to the enrollment statistics produced by the UWI Mona for the year 2012-2013, only 12,105 students were enrolled into the institution. So of the 117,544 students eligible for matriculation to the tertiary level that year, only 10.3% made the cut to attend UWI Mona. Is this acceptable? What of the other 80.7% students eligible to read for a tertiary degree?? Have they been appropriately placed in the other tertiary institutions island-wide? Collectively, do these other tertiary institutions have the absorptive capacity to enroll that 80.7%? Has our government done enough so far to afford more students that right to higher education? Essentially this is saying, approximately 1 in every 10 Jamaican youth in 2012-2013 had a chance at exercising their right to higher education at UWI Mona.

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The fact that the current IMF program fails to produce a positive surplus in our economy affects our government’s ability to contribute more to subsidizing tertiary education than they currently can afford. At present, the Jamaican government allocates a total of JMD $5 billion yearly to UWI Mona, which is intended to subsidize 80 per cent of fees students pay to attend the institution. The issue however, is that this amount has been frozen for some time amidst rising costs to operate the University due to externalities of the same IMF program, such as rising inflation rates. Therefore, we see a unique relationship here which explains the extent to which the Jamaican government can actually further the right to seek a tertiary level education at UWI Mona. Your ability to pursue a degree at UWI Mona hinges primarily on the extent to which this IMF program can yield a surplus to aid in advancing our development agenda.

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In the interim, I would suggest to our government that they look to establishing a stronger social partnership with the private sector to offer more assistance where tertiary financing is concerned. Create internships for students in a particular field that will allow them to work part-time with a select firm in the private sector while increasing their ability to finance themselves through university. More public-private partnerships such as the recent housing development between the National Commercial Bank (NCB) and the UWI Mona should also be encouraged in other areas such as facilities upgrading and student mentorship. Firms need to understand that creating that intimate relationship with your customer before they have the purchasing power, is how you create a loyal customer base for the future. Finally, I want urge Dr. Peter Phillips and his team to aggressively advance the notion that greater access to tertiary education should be a priority of this program, and is equal in status to lowering unemployment and stimulating economic growth.

  • G.B
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Business, Investment and Economics

Network Marketing and Entrepreneurship in Jamaica are NOT the same

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Network Marketing has become quite a phenomenon in Jamaica over the last 5 years; and probably even longer. It has presented a much easier way of achieving financial prosperity, and would even lead you to believe you can escape the woes of our economic reality with no strings attached, that so many Jamaicans are battling with daily. Before delving into this article, let me just set the record straight in saying I have nothing against network marketing and the people who engage this as their means of livelihood. I class it as I would any other legitimate income earning job in our society, and would even go further to endorse it in providing (especially to our unemployed,disenfranchised youth) a viable alternative to making a life in Jamaica; instead of the narcotics/drugs or scamming business. Where my reservations lie, however, is with the delusion that so many network marketers are under in believing so fervently that they are entrepreneurs because of what they do. Entrepreneurship and Networking Marketing might share similarities yes, but they are NOT the same.

wv11 wv15Entrepreneurship is a process whereby an individual(s) who sees an opportunity to create value, assumes the risk of organizing the factors of production (land/labor/capital) to create a product or service that offers that value; in exchange for profit. Network Marketing is a sales strategy in which a salesperson attends meetings of organizations whose members are likely to be interested in a particular product or service in order to develop a book of business. So essentially, Entrepreneurs create then sell whereas Network marketers identify then sell. But the biggest distinction between the two lies not in what each does, but rather the risk that each takes in doing what each is doing.

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To become a network marketer is similar to becoming a franchisee to a franchiser; just like the network of KFC fast food restaurants worldwide. The owner of a KFC restaurant in Downtown, Kingston cannot call himself the entrepreneur for KFC because the risk he takes in managing the franchise equates nowhere near to the risk the Franchiser took when the first KFC was founded in 1930. Harland Sanders, more popularly known as Colonel Sanders, saw the opportunity to create value for customers with his fried chicken and took on the financial risk of organizing all the labor, ingredients and facilities he would have needed at the time to produce and sell his fried chicken to the prospective customer base. The franchises that followed the birth of this first restaurant (the franchiser) already had the full risk of the venture minimized to a smaller investment due to the Colonel bearing that burden with the first undertaking in 1930. Essentially, all the back-end work of inventing the right mix of capital, ingredients and labor to produce the fried chicken has already been completed, and the role of the franchisee is to sell this product on behalf of the Colonel. I know you might be thinking that the investment to set up a restaurant as a franchisee and market the fried chicken to prospective customers is an argument to say that franchisees are still entrepreneurs; but I’m not trying to measure the extent to which one is more entrepreneurial than the other. I am saying the entrepreneur is the man who started it all; and anyone else who follows suit is just an ambassador of that entrepreneur. 

I chose this example to show you the difference between the marketer and the entrepreneur, in the grand scheme of network marketing. This is why I believe our Jamaican network marketers representing their respective international companies are seriously deluded to be thinking that the job that they are doing makes them an entrepreneur. What you are is just like the KFC franchisee downtown in my example above; someone selling another man’s fried chicken for a profit. Even if after a time of building your network around the product/service, it appears as if you can “retire” while your “employees” in your network make money for you, you are still an employee to a higher person in the network.  

While some network marketers may be earning upwards of USD $2000 (JMD $234,000) monthly from their “businesses”, I disagree with the view that because they are making so much money from selling a service they should still be considered “successful entrepreneurs”. For me, It’s the principles and processes behind that USD $2000 that should differentiate them from entrepreneurs. Where have they identified a need in the market that wasn’t already identified for them? How have they organized factors of production in a way that innovates on the existing formula by the Franchiser or is completely new? How much of the real risk of the venture are they bearing in their income statements?? To say they are still entrepreneurs even after that previous line of questioning is just like saying a graduate in Marketing from the University of Technology has acquired the same kind of education as a graduate in Marketing from the University of the West Indies. While the finished product, being the degree in Marketing is the same on paper, given the differences in environment, resource distribution and approaches to teaching; the applicability of each degree will naturally differ.

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Labels are very important, and I believe it saves a lot of us from sprinkling poison on our eggs instead of black pepper when making breakfast in the mornings. If you’re a network marketer, or considering to enter network marketing consider this post as another label to save you from the delusion that so many of your counterparts are currently in; but let it not discourage you from pursuing or continuing to pursue your dream to be a network marketer.

-G.B

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Business, Investment and Economics

Part#1: Lessons for the Budding Entrepreneur from the Rise and Fall of Vybz Kartel

 

 

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Some say he’s a menace to society, a villain to our culture and the worst possible role model for our youth that we could have asked for. Others see him as a cultural visionary and a musical genius that saved Dancehall from the mundane, regular path it was heading down. I say he’s everything above and more.

Vybz Kartel is the best thing that has happened to our Dancehall culture since the days of King Yellowman and Supacat. He singlehandedly rebranded our music to capture audiences around the world, and set in motion a legacy that may very well outlive him.  But he is also a convicted murderer, a big proponent of male chauvinist views,  and a strong advocate for violence against any person or force that sought to contest his order.  So like other greats before him, there were serious flaws in his design. He led a life that I believe any budding entrepreneur could learn from, if we were to just look at him objectively.  This article is the first to a series of articles that will attempt to look the Vybz Kartel we knew Before, During and After the Gaza and the lessons to be learnt from his rise and fall in Dancehall.

Before the Gaza Empire

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1) Learn from the best before you try to be the best: Believe it or not, BountiKilla aka Rodney Pryce had a most profound effect on Vybz Kartel’s rise to stardom; and I think Kartel made the smartest decision in his younger  years when he sought mentorship from him by joining the Alliance. The Music business, like any business, comes with it some barriers to entry, the hardest of them all being Respect, Personality and Connections. Kartel did well in being the “loyal son” to the Alliance boss Bountikilla, because it was through this relationship that he was able to get the respect of one of the biggest Dancehall artistes in the industry at the time, and by extension other big dancehall artistes due to Bountikilla’s promotion of his new prodigy to his peers. When Kartel got Bountikilla’s respect, he was also able to get the industry’s attention, which gave him the platform to create his stage personality. For an upcoming artiste like him, he was able to test different attitudes on the industry, using the industry as a focus group, at a much cheaper cost than he would have to incur if he was as established as a Bountikilla.

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When you’re a “nobody” in business, you’re able to try and fail again and again, until you get it right; and I think Kartel understood this very well. When he got it right, that’s when the connections started flowing in. That’s when every producer wanted to work with him, every corporate  sponsor wanted to use him to push their products and ever promoter wanted him to perform at their shows. Kartel was successful, after many tries, in creating the perfect product to virtually monopolize the Dancehall market

2) Know when to leave and chase your dreams: I am not of the view that Kartel only left the Alliance and started the Gaza Empire solely out of disrespect from Bountikilla, and a need to be independent. I think Kartel had it up his sleeve all along, to learn  what he needed from the experience with the Alliance then break away and use this new knowledge to start chasing his real dream, of being his own boss. But the biggest part of this lesson to takeaway, is knowing WHEN to break away. Timing is everything, and in business you need to understand this first before any new venture you choose to undertake.  Kartel had to know exactly when was the right time to branch off and start a new. He had to be constantly abreast of the market’s movements and be ready to penetrate the industry when a spot opened.

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3) Choose your team carefully. A good thing with being an entrepreneur is that it affords you some level of choice in how you organize your factors of production. One of the biggest differences between a successful entrepreneur and an average entrepreneur is the organization of human resources. You need good, diligent, enthusiastic people to start something from scratch and turn it into an empire, and Kartel understood just that. Kartel understood that to build his Gaza Empire he needed listeners, thinkers and die-hearted Dancehall lovers to carry out his vision for the Gaza. In life, you will need to be just as selective with who you bring into your dream. These people need to be just as hungry, just as motivated and just as willing to jump off a cliff if it’s necessary for the overall mission to reach further.

 

To be continued..

 

Sincerely,

 

-G.B

 

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Business, Investment and Economics

The Exchange rate, Entrepreneurship and Tertiary Education in Jamaica

Off the bat these three things might seem to have “diddly-squat” in common, but you’d be surprised at how much they interlink. Thanks to the IMF, our exchange rate has been doing wonderfully to serve them and their plans for foreign direct investment. The local man with his enterprise naturally suffers, and will continue to suffer as it gets harder for him to remain competitive. Should we be surprised that this is happening? No. We should in fact take some of the blame for it because if it wasn’t for this unhealthy appetite we have for imported goods, those foreign capitalists wouldn’t have an incentive to set up shop here, and our local guys would be smiling.

As our exchange rate continues to depreciate against the US dollar, Jamaica could benefit greatly if you’re the type of Jamaican that believes in selling a piece, to gain a whole. It’s common sense: the cheaper it gets to do business here, the more attractive it will be to foreign investors. The more investment from them in Jamaica, is the more tax revenue and employment for us, thereby providing more money to spend on even bigger Grand Gala celebrations; and maybe some upgrades to the newer models of Toyota Prados that our Prime Minister gifted to her ministers some time ago.

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But on the flip side a lot of businesses might fail, and if they don’t fail then they’re going to have to offer up a couple more gallons of their blood and sweat to stay in the game. This is why I’m indifferent towards the government’s “Buy Jamaica” campaign, which essentially is suppose to encourage Jamaican consumers to buy locally produced/manufactured goods and services. If the exchange rate is eventually going to make it harder for our local entrepreneurs to compete with their international opponents whom carry with them an obvious advantage in cost of production, then why even promote such a campaign? And why try to link it to entrepreneurship and it being the right mindset to have when venturing into business? It’s all a sham really.

Probably some political plot to get the consumers to buy locally produced/manufactured goods from Big Local Brands for some reason too deep for the layman to understand. Probably it’s their way of ensuring a steady pool of contributions during election time? Or maybe the same politicians are just looking out for their friends at the top. The real joke though is that most of these Big Brands don’t even produce/manufacture most of their goods locally; they do it in another country where it’s cheaper, then ship it here to be packaged locally. When Jamaicans started to wise up to what was happening, this is when they switched their perspective from “Buy Jamaica” to “Invent Jamaica”.

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All of sudden tech entrepreneurs and businesses based on S.T.E.M (Science, Technology, Engineering and Mathematics) are the potential saviors of our ailing economy; the nerds with blueprints for inventions that we used to overlook. I guess the successes of Mark Zucherberg, Steve Jobs and all the other tech pioneers from Silicon Valley has got the politicians thinking big, and thinking globally. I have to admit, Jamaica does have some of the most creative minds though, so maybe they might be going somewhere with this one.

Tech entrepreneurship is a Billion dollar game that only the most innovative can play, so it’s good that we’ve seen the light and are now making strides to getting our best inventors up there. But what does that mean for the other ideas? the ones that aren’t as innovative, or sustainable but still have a chance of feeding a village and creating substantial tax for the government? Do they get overlooked? Abandoned? Will the Ministry of Industry, Investment and Commerce take them as serious as they would the guy that invented a device that controls weather (hypothetically speaking)? Food for thought I guess.

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Education in Jamaica isn’t the most perfect, but I do have some recommendations on how it can be made better. My problem really is with the tertiary curriculum. I think the Universities in Jamaica need to consider revising their “practical” degrees to actually have a practical element to them (with the exception of Medicine and Law to an extent). A degree in Economics or Management Studies for example, that carries with it so much qualitative work should be accompanied by mandatory apprenticeships that give its students the opportunity to put what they have learnt to do into practice. It makes no sense producing graduates every year to contend for jobs that ask for “..a minimum of 3 years experience” when most of these students probably have a year of work experience at most, as a result of their cumulative summer work experiences.

To avoid the cost of training a graduate from level zero borne by the employers, they should try working with the universities to train them while they study. I don’t think it’s too expensive to do either , because most of us students not asking for a hefty salary, or even a stipend for that matter. Some real work experience in the field that we’re actually studying is invaluable to us. Sometimes the problem is not the lack of jobs for “qualified” graduates, but rather the lack of work experience to validate the qualifications of those graduates.

Another thing, they should bring back Civics to the our high schools. I wasn’t born in the era when it was taught in schools, but from what I’ve read in old civics text books, I’m confused as to why this isn’t a mandatory course in our schools. Why would they want to stop teaching our young people the importance of participating in the political process? The elements and intricacies of politics in Jamaica? The history behind the deficiencies in our politics? How else are they suppose to come up with the solutions needed to fix our nation and ways in which they can contribute wholesomely? From leisure reading? (chuckles)

Part of the reason so much of them are fascinated with the US is not just the opportunities for work and/or higher purchasing power of their dollar, but it’s really the culture of the Americans. Americans for the most part are proud to be a part of their American citizenry, and are very much assertive about who they want to lead their 50 states. They’re a functional, organized democracy and they maintain the kind of society that humans naturally will want to be a part of; the kind of society that wears the perception as the caregivers of the people (even if they don’t always live up to their name).

Sincerely,

 

-G.B

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