DRUGS AND MONEY LAUNDERING BUSINESS

I am told by residents that Runaway Bay is like a ghost town and
construction has virtually stopped in Montego Bay.

The size of the drug and money laundering trade in Jamaica is immense. A
source in the financial sector told me that a cambio in a north coast town
which was recently shutdown had an annual turnover of US$4 billion.

I believe that naturally-occurring and mind-altering drugs and narcotics
should be legalised. They ought to be regulated and sold like alcohol.
There is no power on earth that can prevent man wanting to and achieving a
state of altered consciousness by ingesting something or other. The oldest
alcohol known to man was mead (made from honey). Ancient Egyptians got
drunk on it, and there is no evidence to suggest it affected the building
of the pyramids one way or another. Or notably anything else for that matter.

CHEWING FRESH LEAVES

Pre-Colombian Indians in the western hemisphere have been chewing fresh
leaves and smoking dried ones since time immemorial. Today's governments
can find much better ways of spending taxes than fighting a war against
drugs, which they can never win. Nor can they outspend their protagonists.

The amount of money involved in the trade is phenomenal. I couldn't believe
the size of the homes shown on television as belonging to alleged drug
dons. Those weren't homes, they were hotels. Nor could I believe the fleet
of luxury cars, SUVs and pick-ups being driven out of each, to be
impounded. At 200 per cent duty a Cadillac Escalade costs about $18
million. In Jamaica they are now almost as ubiquitous as handcarts. And
bear in mind it costs at least $5,000 a week to fill the tank.

People who have a brand-new Lexus, Escalade, Range Rover and Toyota Land
Cruiser as well as a house that looks like a hotel, make the rest of us
look like we're not even trying. No matter how industrious we are, or how
much we save, these people make us look like wasters. For most of us,
honestly-earned money is much harder to find, and insult is added to injury
when it is made to look like a drop in the bucket.

In the meantime any necessary and continuing interdictions, may well cause
a slowdown in residential construction islandwide as well as a decline in
employment. No more car wash and other privately-owned and managed
crash-work programmes for 'de yute' in the towns.

Rural hardware stores will be hardest hit, and those who are masons and
carpenters. The Realtors' Association reports that over the last few years
there has been an appreciation in real estate values of as much as 30 per
cent. A housing lot in Barbican costs between $8 million and $9 million,
which I'm told is nothing if you intend to build a $40 million house on it.
Indeed $60 million houses are not uncommon, and a friend in construction
said he saw a $150 million one where the retaining walls alone were more
than half the cost of the house.

A three-bedroom townhouse in Manor Park goes for $30-million. Recently a
lot of cash has been chasing upscale homes. But if the crack-down on drug
kingpins continues that money will cease to continue to contribute to the
growth in the economy, and provide well-needed jobs to the construction sector.

Even remittance flows will decline. New drug lords always step in to fill
the shoes of drug lords who are arrested. But there is bound to be a
time-lag. This means that if the Government keeps them out of action, then
there will inevitably be a blip, however temporary, in the country's
remittance flows.

Experts say that as much as 50 per cent of the Jamaican economy is
informal. While we are accustomed to saying "Thank God for the informal
economy, or we would have sunk already", that economy is really a parasite
upon the real one. It pays no duties and taxes, and it rents no offices. It
has no overheads, barring weaponry as a result of the trade being relegated
to the criminal realm. The full brunt of state expenditure is therefore
borne by the legal economy, which is fast shrinking as a percentage of the
whole. Naturally the bigger the informal economy in a country, the weaker
the economy as a whole.

The Economist reports that worldwide those countries with higher rates of
tax and duties have larger informal economies. The one is the primary cause
of the other. Dr. Omar Davies, Finance Minister, has recently been saying
how pleased he is with the performance of the Jamaican economy. He claims
to be paying down the debt that keeps on rising. At the end of January
2004, the country's total debt stood at J$680.6 billion, and five months
later that figure has escalated to J$709.7 billion. Not surprisingly he has
no money for social services. This is incredible, coming from someone who
has "presided over the development" in Jamaica of a bandooloo economy.

All talk of widening the tax base is effectively an attempt to fool the
market vendor into registering for something or other. Then, like the rest
of the real economy she will end up paying painful rates for services that
are largely non-existent. Since most sidewalk vendors and self-employed
persons are smarter than the Minister of Finance thinks, there is unlikely
to be a significant widening of the tax net in Jamaica. Only the Patterson
regime thinks itself in a position to countenance expenditure without
benefit. The rest of the population does not enjoy that egregious luxury.

This Government has depressed the legal economy with extortionate rates of
taxes, and fiscal policies which create abnormal bulges of mega prosperity
with very little benefit to production in them. This is the context in
which they are removing the drug income of illegal breadwinners in
countless families across the country. If this is successful it will have a
devastating impact on the economy in the short term.

Nothing the Government does is ever an unmitigated success. Let us hope
therefore this is not something we need to fret about.