Economy needs long-term vision, not slogans 25/10/2022

The words gig economy, innovation, and entrepreneurship are thrown around and discussed almost daily in the media and policy corridors in Jordan. They are also touted as the three musketeers, the saviors of unemployment in Jordan. However, given that there is little on the ground in terms of government support for all three, it may be that there is a sinister motive for using such slogans.

The gig economy describes a labor market that relies heavily on temporary and part-time jobs that are filled by independent workers/freelancers rather than permanent, full-time employees. Gig workers have the flexibility and while some workers may prefer this mode of employment, they have little to no job security. Examples of gig workers include rideshare drivers, food delivery drivers, self-employed consultants, and craftspeople.

Innovation, on the other hand, is the practical implementation of ideas that lead to the introduction of new products (goods or services) or improvement(s) in offering goods or services. While related to the invention, innovation and invention are not the same. Innovation is about implementation and may not require an invention. Furthermore, innovations may require significant support from (policy, funding, procedures, etc.) and interventions (such as publicly funded research and projects) by the state, especially in nascent economic systems.

Entrepreneurship refers to an entrepreneur, who is typically the owner of a business enterprise who gathers the economic resources to create an enterprise, assumes all risks and uncertainties and his payment is profit. The concept of entrepreneurship goes back to the works of Richard Cantillon and Adam Smith, in the late 17th and early 18th centuries, and later to  Jean-Baptiste Say, in the 19th century, who provided the definition. Works on entrepreneurship were further elaborated on in the 20th century by Joseph Schumpeter, Carl Menger, Ludwig von Mises, and Friedrich von Hayek, among others.

So, according to the definition of entrepreneurship, a small shop or fruit stand is an enterprise, and its owner/manager is an entrepreneur. Anyone can become an entrepreneur and they may succeed or fail. In fact, the failure rate is quite high, which is why most people (especially those that are risk-averse) opt to work for others.

So where is the sinister move that I alluded to?  Let us go back to the mid-1990s when another catchphrase was invented: “culture of shame”. According to the culture of shame principle, Jordanians are too proud to work in menial jobs and prefer cushy office jobs, preferably, public sector employment, where they are endowed with authority, job security, few work hours, health insurance, and social security coverage. But then who would not prefer that?

Jordanians, I had argued at the time, are no different or better genetically than any other people in the world; all people would prefer the same when offered the opportunity. The result, however, was that a good ready-made, and easily at-hand excuse became available to policymakers to justify the rising unemployment rates and the futility of policies in addressing such an embarrassing policy failure. All they needed to be done was to blame the victim: even though jobs are available, Jordanians are too proud to work.

In the mid-1990s, the term entrepreneurship emerged in Jordan and started to gain prominence. But while it is important to have enterprises and entrepreneurs in society, the concept should not be used to explain high unemployment rates and the failure to produce a job-creating economy.

In a way, the term is being used to say that Jordanians want to be employees, rather than employers; that they lack the initiative to start their own ventures. Hence, the government is not at fault for the high unemployment rates, people are.

Innovation started appearing in the common lingo and dialogue in the new century. It is underpinned by a primary claim that Jordanians are not innovative; that they are traditional, and do not seek new ways to do things.

Again, this is a case of blaming the victim. Where is the role of the government in innovation? In all the countries that have been innovative and shown great success, government support had plenty to do with the success. On the other hand, in Jordan, would-be innovators have little to no access to capital, a dearth of legal protection when it comes to intellectual property rights, and an unstable legislative environment where laws and by-laws are changed frequently and whimsically.

The current arguments claim that Jordanians are at fault, and not a government that relegates such an important task to aid programs and projects, which last for a few years and are then uprooted.

Sadly, one has yet to see one aid-funded project with focus on innovation that has lasted beyond its initially stipulated lifetime because the government adopted it and decided to fund its permanence.

Back to the gig economy, which is gaining in popularity, with youths encouraged to engage in it as a solution to their 50 percent unemployment rate.

Is it a solution? Does not a country need a core workforce that gains and builds skill and specialization over decades of work? Does not a country need institutions that hire graduates and workers on a full-time basis so they can move from youth to adulthood? Is the solution for all of us to work part-time, have no proper medical insurance, and have no job stability?

Of course not, but this is what is being espoused by the thought leaders with the blessings of policymakers as the solution to the economic downturn and the rising unemployment.

Slogans come and go, but they will not whittle down the unemployment rate. They are, simply, easy to use when one is buying time to conclude his or her term in office.

The country does not need to change capitalism; it needs to become a capitalist.

Published in Jordan News:

https://www.jordannews.jo/Section-36/Opinion/Economy-needs-long-term-vision-not-slogans-23610