By Michael Spence
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| Michael Spence |
Seventy-five vehicles auctioned by one lending institution in a single week. That should tell us something. Lending institutions in Jamaica are not investing in real productivity. They prefer what I call the unproductive Motorized Pyramid Scheme Economic Model (MPSEM): lend for a car, insure a car, repair a car, fuel a car, auction a car, repeat.
No exports. No productivity. Just debt on wheels. Look at the numbers:
In 2015 there were about 190,000 motor vehicles on our roads.
In 2026 there are about 800,000 registered vehicles.
You haven't seen anything yet. As the economy contracts, thousands more vehicles will be on the auction block. Families cannot afford the loan, the insurance, the gas, and the service — all at once. The traditional used-car market has already been decimated by the new car market and easy credit.
And now watch the next wave: Chinese cars are coming at less than half the price of your favourite Break-My-Wallet cars. How about the Bring-You-Discount (BYD) vehicles from China? MPSEM on the move.
Soon Jamaica will have to seek markets to export its excess vehicle inventory. But where? We have no market to export 800,000 cars to. You ain't see nothing yet.
When banks prefer to finance a depreciating motor car that loses 50% value in 4 years instead of financing a farm, a factory, a fishing boat, or a small manufacturer that can create real jobs and foreign exchange, we are financing our own economic traffic jam.
We need a policy shift: Incentivize productive lending. Tax unproductive consumption. Invest in public transport so a man does not need to buy a car to go to work.
Otherwise, the auctioneer's hammer will keep falling.
Michael Spence
Michael Spence is a graduate of Cornwall College and the University of the West Indies. He is a trained teacher, a sociologist, and a writer for Bark Di Trute.
Micspen2@hotmail.com
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I have always said that our bankers do not understand financial or economic projections. They're not the most intelligent people in our country. They don't seem to understand that if the society is prosperous then they will be prosperous as well. Our banking system is nade up of get-rich-quick, greedy people. Inspired by the lingering effects of an economy buoyed by high interest rate government paper that characterized the Omar Davies era, these bankers try to find every which way to hang on to those glory days. That's why we now have high banking fees. They want to continue earning billions of dollars, even within the context of a low-production economy. They don't seem to mind cruising in a boat of wealth on a sea of filth. But, what they fail to understand is that one day, the watery filth will overwhelm them and their ship will sink. If people around you can't get a chance to be prosperous like you, then who are you going to lend to and those to whom you lend, will they be able to repay? We are a selfish society that can't seem to appreciate the fact that I am better off when my neighbour is better off.
ReplyDeleteIt’s a grand ponzi scheme.
DeleteWhy don't I see my comments when I post them?
ReplyDeleteComments are being moderated.
DeleteWhat is the end of life plan for these vehicles? I get the impression that the policy is import as many vehicles we can so people can say I bought a car and vote accordingly. Of course taxes are also being raked in, the banks are lending and raking in interest so the people at the top are happy now. No need to think of the future
ReplyDeleteNo manufacturing,minimal.exports,high F/E expenditure,maximum imports,fallen agriculture a great prescription for boosting a lucrative crime industry both legitimate and illegitimate sectors side by side.
ReplyDeleteJumayka naah go noweh unnuh nuh see dat man and man in govament allegedly a hassle haaad Missa B.
ReplyDeleteSing.di sonng fi Jumayka
"RESCUE DI PERISHIN CARE FOR THE DYING"