In a theoretical situation that many college graduates can relate to, we have created “Lydia,” a soon-to-be Point Loma graduate.
Imagine Lydia, who was raised by a single mother who works as a private elementary school teacher. Lydia attended college with help from scholarships and her mother. However, she needed the help of student loans to make her dreams of attending a school like PLNU come true.
This spring, our imaginary character, Lydia, will receive her degree and begin working for the firm she has been interning for with a starting salary of $75,000.
At PLNU, Lydia accumulated $134,867 in student debt with an annual interest rate of 20 percent. After paying taxes and living expenses each month, she has a disposable income of $3,155. However, the interest on the loan is a monthly payment of $2,226. This leaves her with a disposable income of $929. The payment goes toward the interest that is added to her principal amount, having little effect on the $134,867.
How much of her $929 should she spend, save or put toward the debt? What about her dreams of having a house and a family? These are the kinds of questions that our character will face after graduation given the reality of her indebtedness.
This story is similar to the economic realities facing the people of Jamaica and the country’s indebtedness to the International Monetary Fund (IMF). As Chart X demonstrates, Jamaica’s current GDP, which is analogous to Lydia’s starting income, is $14.7 billion, and its total national debt is $26.5 billion—that is, Jamaica’s debt accounts for 180 percent of its GDP.
With globalization, Jamaica was able to remain a sustainable export-based agricultural economy. However, the growing power of multinational corporations (MNC) paired with the liberalization of the market began pushing Jamaica toward an import-based economy, which has proven detrimental.
The export-based banana industry is one of the few ways that Jamaica stays afloat, but the interests of MNCs like Chiquita, Dole and Del Monte have subjected the country and others like it to harmful conditions.
“Banana republics have become so dependent on the banana trade that if all of a sudden, importers stop buying, these countries will immediately face severe economic shock, and the entire country will suffer,” said Rebecca Cohen, writer for the Science Creative Quarterly.
Jamaica’s reliance on MNCs is dangerous because its ability to service debts depends heavily on corporate economic interests.
How does this affect the PLNU community? International debt seems too big for one person to make any real change; however, our individual consuming habits and choices (organizations we support, products we buy, conversations we have) can have a tangible effect, positive or negative, on the people in places like Jamaica.
On the one hand, mindless support of MNCs that exploit the producers in Jamaica traps them within a structure of indebtedness. On the other hand, a conscious decision to educate oneself and others on these effects and the organizations that work to reverse them make a significant difference.
For example, being intentional about where one buys bananas affects the farmer whose family depends on the profits that they earn. While purchasing bananas from the supermarket might seem insignificant, each decision either helps or harms those workers being exploited elsewhere in the world. Consumers have power in determining the practices of the corporations they are purchasing products from.
To learn more about different organizations that are working to effect positive change for Jamaica’s economy and for indebted countries around the world, as well as how you can adjust your own consuming habits, visit our Facebook page: facebook.com/lifeanddebtproject.
Written by PLNU students:
Brian Sausser, Jenna Hurley, Paul Sweet, Saul Hernandez
Grace Gaines