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Crabs in a barrel (Part 1)
By Dennis Chung
Sunday Observer, October 04, 2009
If one has ever seen crabs in a barrel you will realise that they all try to come out of the barrel at the same time. So they climb on each other, in futility, as they can never individually come out of the barrel, and end up killing each other.
Soon all the crabs die and none will be successful. If, on the other hand, they all realized their individual deficiency then they would join claws and assist each other in making their way out of the barrel.
This is also the way of the market economy. What a true market economy does, however, is ensure that the strongest and most efficient crabs will always survive by virtue of the invisible hand that guides the market. This doesn't happen in Jamaica though, as through political interference we have managed to substitute the invisible hand of the market with a very visible one that rewards political tribalism over the stronger and more efficient players. The result of this interference over the years has been a very inefficient market structure and the eventual death of all the crabs, rather than ensuring that the strong and efficient ones live to once again grow the population of crabs.
Lack of consumer protection
In Jamaica we haven't learnt the valuable lessons of history. Even the Bible tells us that Noah, and a pair of every known animal, was chosen to be on the Ark so that the human and animal races could survive. If we had Jamaican politicians in charge, of course we would be missing a lot of animals today, as only one "party" would have been chosen to accompany Noah on the Ark. In other words, if you were not supportive of the king of the jungle at the time you might not make the cut. So if Jamaican politicians were running things at that time, we would end up with only human beings and all monkeys, for example, in today's world.
This interference has not only resulted in the inefficiency of the public sector, but has also flowed over into the private sector, as most companies have as their slogan "Jamaica no problem" and added to that is "we can offer poor service at whatever price and Jamaicans will have to take it". So we see the poor service and high prices being offered by places such as the JPS, and until competition by Cable and Wireless (now LIME), and even from some banks. And in all these cases we fail to realise that the only way to effectively deal with this problem is through ensuring that adequate competition exists to alter the inefficient behaviour of these entities.
I guarantee that unless we allow places like the JPS and the financial sector to operate in a more competitive environment, all the regulatory bodies and rules we put in place will only be a long-term waste of resources, as everyone is going to behave like the proverbial crabs in a barrel, including the regulatory agencies, as everyone wants to see first to their own survival and then, after that is assured, they will say "oh, there is a consumer that I need to protect".
One may ask, but how do we protect against the excesses of agencies that can only be monopolies like the police and the RGD? The way to do that is to ensure that they are not monitored by their own and the citizens' complaints can be directed at political representation that is more accountable to the people than to the institution. But that is another conversation that is needed. The fact is that unless the market is allowed to operate efficiently and with the proper accountabilities, then all the crabs in Jamaica will eventually succumb to a slow and painful death.
I have seen this crab-in-a- barrel syndrome being played out by the private sector in recent months, some not understanding that this behaviour will lead to their certain death. For example, in a contracting economy businesses are trying to survive by raising prices, which no doubt will lead to their failure quicker than taking other steps. I have also had two of our banks and one telecommunications provider contacting me about debts that I do not owe to them. In fact, in two of the cases they are companies I have not done business with in years. When I contacted them they all said that it was a systems error, which leads me to wonder how many unsuspecting customers are paying for what they do not owe and how many companies are out there accounting for income that is not real. These incidents I see as nothing more than measures as they try to grapple with declining profits.
Fiscal accounts
We are, of course, seeing the result of that in our fiscal accounts today, which havealways been known to us, but has been so well outlined by the prime minister last Wednesday morning.
To be continued in Friday's Caribbean Business Report
Dennis Chung is the author of Charting Jamaica's Economic and Social Development - A much needed paradigm shift and a founder of www.mindyuhbusiness.com. His blog is dcjottings.blogspot.com
Email: [email protected]
By Dennis Chung
Sunday Observer, October 04, 2009
If one has ever seen crabs in a barrel you will realise that they all try to come out of the barrel at the same time. So they climb on each other, in futility, as they can never individually come out of the barrel, and end up killing each other.
Soon all the crabs die and none will be successful. If, on the other hand, they all realized their individual deficiency then they would join claws and assist each other in making their way out of the barrel.
This is also the way of the market economy. What a true market economy does, however, is ensure that the strongest and most efficient crabs will always survive by virtue of the invisible hand that guides the market. This doesn't happen in Jamaica though, as through political interference we have managed to substitute the invisible hand of the market with a very visible one that rewards political tribalism over the stronger and more efficient players. The result of this interference over the years has been a very inefficient market structure and the eventual death of all the crabs, rather than ensuring that the strong and efficient ones live to once again grow the population of crabs.
Lack of consumer protection
In Jamaica we haven't learnt the valuable lessons of history. Even the Bible tells us that Noah, and a pair of every known animal, was chosen to be on the Ark so that the human and animal races could survive. If we had Jamaican politicians in charge, of course we would be missing a lot of animals today, as only one "party" would have been chosen to accompany Noah on the Ark. In other words, if you were not supportive of the king of the jungle at the time you might not make the cut. So if Jamaican politicians were running things at that time, we would end up with only human beings and all monkeys, for example, in today's world.
This interference has not only resulted in the inefficiency of the public sector, but has also flowed over into the private sector, as most companies have as their slogan "Jamaica no problem" and added to that is "we can offer poor service at whatever price and Jamaicans will have to take it". So we see the poor service and high prices being offered by places such as the JPS, and until competition by Cable and Wireless (now LIME), and even from some banks. And in all these cases we fail to realise that the only way to effectively deal with this problem is through ensuring that adequate competition exists to alter the inefficient behaviour of these entities.
I guarantee that unless we allow places like the JPS and the financial sector to operate in a more competitive environment, all the regulatory bodies and rules we put in place will only be a long-term waste of resources, as everyone is going to behave like the proverbial crabs in a barrel, including the regulatory agencies, as everyone wants to see first to their own survival and then, after that is assured, they will say "oh, there is a consumer that I need to protect".
One may ask, but how do we protect against the excesses of agencies that can only be monopolies like the police and the RGD? The way to do that is to ensure that they are not monitored by their own and the citizens' complaints can be directed at political representation that is more accountable to the people than to the institution. But that is another conversation that is needed. The fact is that unless the market is allowed to operate efficiently and with the proper accountabilities, then all the crabs in Jamaica will eventually succumb to a slow and painful death.
I have seen this crab-in-a- barrel syndrome being played out by the private sector in recent months, some not understanding that this behaviour will lead to their certain death. For example, in a contracting economy businesses are trying to survive by raising prices, which no doubt will lead to their failure quicker than taking other steps. I have also had two of our banks and one telecommunications provider contacting me about debts that I do not owe to them. In fact, in two of the cases they are companies I have not done business with in years. When I contacted them they all said that it was a systems error, which leads me to wonder how many unsuspecting customers are paying for what they do not owe and how many companies are out there accounting for income that is not real. These incidents I see as nothing more than measures as they try to grapple with declining profits.
Fiscal accounts
We are, of course, seeing the result of that in our fiscal accounts today, which havealways been known to us, but has been so well outlined by the prime minister last Wednesday morning.
To be continued in Friday's Caribbean Business Report
Dennis Chung is the author of Charting Jamaica's Economic and Social Development - A much needed paradigm shift and a founder of www.mindyuhbusiness.com. His blog is dcjottings.blogspot.com
Email: [email protected]