Former LSE Student Picks Stable, Low Inflation to Raise Output and Productivity

Joe Issa, a former Student of the London School of Economics and Political Science (LSE), where he founded his first charity to assist underprivileged Jamaican children, has said in an interview, that stable, low inflation best suit small island states like Jamaica with less resilience to economic shocks, stating it is the preferred choice for raising output and productivity.

Joey Issa

“You don’t want to go back to the period in our history when inflation was very high and consumers were getting much less for their money, year over year, especially in the absence of a rigid prices and incomes policy that fully maintains purchasing power as inflation rises,” says Issa who, while studying at LSE, famously established the “Educate the Children Fund”, which raised £3,000 to buy books for underprivileged Jamaican children.

Noting that the high 26-per cent inflation recorded by Jamaica in 2008, may be considered to be moderate, especially for countries coming from three-digit inflation figures, Issa says “double digit inflation it too high for us.”

“The ideal for us is low inflation; and when bench marked with the wider world it translates to single digit inflation, which we have been posting in recent times. I am pleased it has been hitting lower lows more recently,” says Issa in the interview.

He was commenting on a Jamaica Observer article which reported that inflation had reached a low of 1.7 per cent at the end of December last year, and that it was the lowest in more than 45 years.

It also said that “the inflation rate in Jamaica has averaged 9.79 per cent from 2002 until 2016, reaching an all-time high of 26.49 per cent in August 2008 and a record low of 1.60 per cent in November 2016.”

In commending the progress of the government in keeping inflation on a downward trajectory, Issa says more Jamaicans will fare better, particularly since most of the weighting in the consumer price index is given to food and drinks on which low income earners tend to spend most of their income.

Acknowledging that different levels of inflations have different effects, Issa cites three scenarios for any country; Jamaica included.

“At very high levels, inflation is bad for us as the majority of the population come under pressure to buy the goods and services they were once able to acquire; at the same time, businesses cut output and send workers home.

“However, at low and stable levels of inflation the opposite occurs. Producers tend to increase their workforce so that they can increase production, which could lead to better wages for workers,” Issa says.

He adds, “Inflation rate below zero, or deflation as it is called, is also not good for any economy as it keeps prices low, which can reduce job opportunities and put more load on consumers.

“But, with low and stable inflation, as we have now, we can expect production and productivity to rise and create job opportunities.”

Joe Issa Supports Teaching Money Management to Kids

Founder of one of the nation’s largest retail conglomerate Joe Issa, who is a member of “The Ultimate Professional Directory of International Who’s Who”, has said that he supports the teaching of money management across the school system, stating it will make for a more frugal populace.

“I am of the view that if we teach money management to kids, it will make them more thrifty later on in life,” says Issa, adding, “It could break the back of the phenomenon of living from pay cheque to pay cheque and make for a less turbulent credit environment, such as what we experienced in the late 1990s when both consumers and financial institutions went belly up.”

Issa’s comments come as the present administration moves to introduce an entrepreneurship curriculum in primary, secondary and tertiary institutions to foster innovation among school leavers and generate economic growth.

But now Issa, who supported the idea of early entrepreneurship training, is pushing the envelope to include money management, which he argues is a critical skill for managing spending and credit in adult life, whether for personal purposes or as managers of institutions.

And Issa is not alone. In a survey in the United States, 87 per cent of respondents believe that teaching kids about money management in schools will lower the population of people with credit issues in the future, according to the website Debate.org.

Joseph John Issa

“Yes we do not know whether they will use the financial education learnt early in life to better their futures, but what we do know is that if we do not expose them to it early, they are less likely to have the money management knowledge necessary to produce good spending habits later in life,” says Issa, whose business strategy is to spend as little as possible and earn as much as possible.

A former commercial bank director and Nominee for the Business Observer Business Leader of the Year 2004, Issa says too many consumers fall into the trap of buying on credit without the ability to manage the payments, stating that by not paying their credit card bills in full and on time, they run deeper into trouble.

“More people must understand the cost of not paying cash and the benefits of saving for the future…They must learn early not to be influenced by the Joneses   and spend unnecessarily.

“They need to create a budget and stick to it…In that budget there must be something set aside for saving for future consumption, such as the children’s education, unforeseen circumstances and paying their taxes when due. This means they must be able to track their expenses and manage their income,” says Issa, Executive Chairman of Cool Group of Companies.

He says more people need to think like Warren Buffett, referencing one of the richest men in the world, who has warned would-be investors to hold on to his ideology of frugality, which involves making every financial transaction worth the expense.

Buffett’s well-regarded techniques, which are said to be investment-boosting and portfolio-multiplying, include avoiding expenses which appeal to vanity or snobbery, going for the most cost-effective alternative, favouring expenditures on interest bearing items over all others, and establishing the expected benefits of all desirable expenses using the rule, “plus/minus/nil” to “standard of living value system”.

According to Wikipedia, “Money management is the process of managing money which includes expense tracking, investment, budgeting, banking and taxes. It is also called investment management.”

However, Issa suggests a step-by-step approach beginning with setting goals and creating a budget, which he says, “provide a critical guide for how to proceed,” adding that “it is also important to be able to track spending through bank reconciliation and save some money.”

NEW SCHOLARSHIP FUND OPENED FOR JAMAICAN STUDENTS

A Holy Cross/Jamaica scholarship is to be offered once every four years to a less privileged Jamaican student attending one of the Jesuit High Schools, St. Georges’ College or Campion College.

The primary intent in the establishment of the scholarship is to “cement the links between Holy Cross, the New England Jesuits, and Jamaica,” a news release says.

According to the statement from the organisers of the scholarship, Jamaica is one of the most indebted countries in the world. It has an acute shortage of foreign exchange, and progress is being hindered by a high illiteracy rate estimated at about 50 percent. The island suffers from “a lost generation of talented and educated citizens.”

As a result of political and economic instability in the past, “many good people emigrated. Now, those who remain and have an education enjoy a tremendous advantage, and their beliefs and principles, whether good or bad, influence their method of managing. It is hoped that the educational advantage of the recipient — a Holy Cross graduate – would be used to further not only individual goals, but community goals in Jamaica as well.

The scholarship is to be structured so that the beneficiary feels compelled to give something back to the Jamaica community and the schools which made the scholarship possible.

The Scholarship Committee as the Jamaica end, will consist of the Principal of St. George’s College (Father Hughs), the principal of Campion College (Mr. McKay, a vocational guidance counselor, a member from the board of one of these schools (preferably a person who presently sits on both boards), and a member from the private sector whose resources have not been significantly tapped in the regard (he/she would most likely chair the committee).

The Scholarship will be open to graduates of Campion College and St. George’s College (both in Kingston), and will be awarded every four years to a graduate of one of these schools.

The candidate must meet the following requirements:

*was born in Jamaica and if not, of parents who have been domiciled in Jamaica either at the time of his/her birth or during the whole of the five (5) years immediately preceding his/her date of graduation;

*is a person of good character, possesses leadership qualities and is no older than nineteen (19) at date of application;

*satisfies the requirements for admission to Holy Cross College.

Successful candidates must return to Jamaica for a period of four (4) years immediately following completion of his/her course of study.

Failing this, the student would be expected to repay the whole or an appropriate proportion (as decided by the scholarship committee) of the Jamaican supported share of the scholarship funds, plus interest. The funds would be used to help other winners of the scholarship.

Source: The Jamaica Record