Economic achievements come at a price

Jordanian economists and activists are outspoken in suggesting objectives that the Jordanian economy should achieve in 10 years, till 2025, within the framework of the 10-year vision for the economy now under consideration.

Setting ambitious objectives is of course easy. Good objectives are well known and do not raise objections.

The problem lies in the ways and means to get there, taking into account the very limited resources available.

Everyone would like to see a dynamic, efficient and competitive economy, a high economic growth rate, a low inflation rate, a higher standard of living, a comfortable level of foreign exchange reserve at the Central Bank, reduction of public debt, getting rid of the chronic deficits in the budget, the trade balance and the current account of the balance of payments etc.

It goes without saying that everyone would like an improved standard of living and quality of life, to see the creation of plenty of job opportunities to alleviate unemployment and poverty, a solution to the energy and water shortages, developing the governorates, a fair distribution of income, and other similar desirable economic and social objectives that enjoy consensus.

The problem is that there is another side of the coin that must be taken into account in trying to fulfil those desirable objectives.

It takes action, cost, sacrifice and financial resources to make a difference. Officials do not like to mention, let alone deal with, such hurdles in order not to provoke the public opinion.

Identifying objectives and good targets does not, in itself, achieve them.

Take, for example, fighting unemployment as a desirable objective. Jordan’s practical experience revealed that the creation of one job may, on average, cost JD30,000 of new capital investment.

Thus, the creation of 200,000 jobs, needed to end unemployment, would necessitate new investments, the cost of which would be not less than JD6 billion.

To get rid of the budget deficit, in order to reduce or eliminate the need to borrow, there would be need to hike fees and taxes, abolish subsidies and reduce the government size, all very difficult to achieve.

Reducing public debt is, of course, a great objective, but it needs to achieve a surplus in the budget to be used to repay the debt.

Jordan is not in need of theorists to define desirable objectives. Such objectives are well known.

What is needed are creative ideas, active policies and a new policy orientation that make the objectives achievable within the scarce means, and despite the economic and social limitations.

It remains to be pointed out that some desirable objectives contradict others.

To reform the budget and trim public expenditures, for example, would hurt economic growth. Likewise, reducing the size of the government will worsen the problem of unemployment.

Increasing budget revenue through more or higher taxes would reduce the standard of living, and so on.

Decision makers have to be aware of the trade off among competing objectives, as well as of the unintended side effects of any new policy or decision.

The government badly needs people who can come up with options that are practical and implementable to achieve objectives that are measurable, within the available resources.

It is not important to have very ambitious objectives; better to have reasonable and realistic objectives in order to avoid disappointment and failure.