By Harsha Gunasena –
Harsha Gunasena
Many are in the opinion that the economic crisis faced by Sri Lanka is getting eased. Now we do not have 13-hour long power cuts. We do not have to stay days in fuel queues. Staying in collaboration with the fellow citizens at gas queues or using firewood for cooking are no longer necessities. However, there is a possibility that reemergence of this status.
The inflationary trend of the prices of the goods especially the food items cannot be borne by many. The lower middle class is gradually becoming poorer.
There is a common consensus among the mainstream economists other than the economist who directly contributed to the present status like W.D. Lakshman, in order to overcome this problem
It is this. Sri Lanka was forced to inform the debtors abruptly that the country was not able the service the debt. This was due to the undue delay of the authorities concerned. Therefore, there should be negotiations with all the debtors for restructuring of the debt. This is not an easy task since one of the holders of sovereign bonds in USA, Hamilton Reserve Bank filed a court case against Sri Lanka demanding the total payment of the debt. In addition to that, China, a major holder of bilateral loans to Sri Lanka announced that they were not in favour of restructuring the debt. Instead, they were prepared to grant fresh loans to repay the old loans. Sri Lanka should produce the future economic plan along with the debt restructuring report to the International Monetary Fund. If it is approved Sri Lanka will get funds to overcome the current balance of payment crisis. This process is being carried out now. During the interim period Sri Lanka should obtain temporary debt from friendly countries to maintain the economy. Thereafter an economic plan focused on exports and foreign direct investments should be implemented.
The future economic plan to be presented to IMF, mentioned above, should include selling goods and services of government owned entities at the market prices and not at subsidized prices. This happens now. In addition to that all government enterprises including Ceylon Electricity Board and Petroleum Corporation should be restructured. Restructure means either privatization or to introduce joint ownership of government and private sector such as Sri Lanka Telecom or managed independently of the government such as Temasek Holdings of Singapore. The last solution is not possible due to the Sri Lankan political culture. Therefore, first two solutions are to be considered.
Increasing the government revenue is also in the agenda. Those who can pay should be taxed rather than those who cannot pay. This whole process is focused on the state, not on the people. The state is bankrupt and not the people. Therefore, primarily the state should be restored. Then the focus should be on people. There is no existence of the people without the state.
The main reasons for the preset situation of the country are that the long-standing budget deficits of the country, the long standing trade deficit of the country and the idiotic decisions taken by the Gotabaya Rajapaksa government.
It is the responsibility of the government to provide relief to the real people who are affected by the reform process. In the past, people who were not deserved to the benefits of the subsidies were getting subsidies. An example was that the rich also got benefitted by the fuel subsidy. The good news is that the IMF approves the assistance to the vulnerable groups.
Government enterprises degenerated to the current situation since the successive governments have filled the vacancies of these enterprises with their henchmen. Gotabaya Rajapaksa tried to rectify this situation, but he failed. These enterprises have powerful trade unions comprising of those henchmen. In these enterprises it is very rare that employees work efficiently. Even though they work efficiently there are no proper systems to pay them higher salaries. Therefore, employees ae not enthusiastic to work hard. Promotions are mainly based on seniority and hardly on meritocracy.
If Sarath Fonseka appointed his field commanders based on their seniority the country would still be engaged in the war. Setting aside the tradition he appointed the field commanders based on their ability. Shavendra Silva was one of them. There are no trade unions in the army.
There is an exception to the above critique of the trade unions. That is the fact that the working class got their rights against the suppression of the authoritarian governments through the fearless struggles of the trade unions.
When Gotabaya Rajapaksa came into power there was a massive trade union action against the government decision to lease the East Container Terminal of the Colombo Part to Indian Adani Group. Finally, the government had to give in to the trade union demands. According to the prevalent socialist thinking of the country even if the government does not have funds to develop the state properties the government should incur such expenses. Borrowing at high interest rates is not an issue to socialists. The country has fallen due to the socialist thinking of the citizens.
These socialists believe that the state-owned enterprises should continue to be kept under the government even though the management is inefficient. However, they were not concerned about the dangerous trend of rising inequal distribution of income of the country. What they should have demanded from the successive governments, was to reform the tax structure of the country enabling the masses to enjoy the benefits of the development. It was closer to the socialism and allowing the government henchmen to ruin the state enterprises is far away of socialism.
Socialists were pressuring for subsidies to the poor and the successive governments kept on increasing the subsidies in order to get votes. Socialists did not pressurize the governments to not to allow the rich to enjoy the same benefits of the subsidies as the poor. Everybody was happy with the socialist thinking.
This socialist thinking was going in line with the collectivist social behaviour of the Sri Lankans. One of the main characteristics of this behaviour is that to support the members of the in-group against the members of the out-group under any circumstances. (He is our man) Individualistic behaviour of the capitalist societies brings in efficiency, rule of law and meritocracy. This is what we need now.
Some politicians who are not economists do not agree to the restructure of the state-owned enterprises. Vasudeva Nanayakkara is one of them. They were responsible of spreading this backward thinking among the people.
The Country is at a crossroads now. All should come to an agreement that how should we face this economic crisis. If any group oppose the common idea presented by the economists which is to seek the support of IMF and find out solutions to the problem of budget deficits of the country as explained, they should present their alternative solutions now since the stove is getting heated and we are in the pan.
This alternative solution was experimented by the Central Bank Governors W.D.Lakshman and Ajith Nivard Cabraal advised by P.B. Jayasundara during the Gotabaya Rajapaksa government. The country is in this situation because of that experiment.
The country moved backwards over decades due to the policies we have adopted which were not sustainable. Therefore, if any group oppose to change these policies, changes cannot be done under a democracy where all the democratic rights are granted.
The minimum requirement would be to abide by the constitution. it is a considerable condition in a country where the president, the parliament and the judiciary betrayed the constitution.
Under the five star democracy when the trade unions agitate the government should withdraw the plans of privatization of government institutions. When the civil society opposes the government should withdraw the declaration of emergency.
Trade Unions and some politicians would not like to swallow this bitter pill. If all the people do not like it we can have a common consensus that we all will continue to stay in this filthy pit. If only few of them disagree to the proposals, it should be continued even with the imposition of the emergency law.
The reason is that the state and the continuity of it is most important and not the people or democracy. People are secondary and democracy is tertiary. Five-star democracy comes thereafter. This is not promoting dictatorship but demoting sabotage.
By this time many civil society activists and academics have expressed their disappointment against the imposition of emergency. Not only that. International human rights organizations and international community also were against it. The President said that he will withdraw the law of emergency, but I guess that it will be needed to implement the proposed economic reforms.
The ideal method of coming out of this situation is to form an all-party government. Such a government would be in a better position to handle this. The politicians of this country and the people worked against the country. All of them worked for their own short-term benefits rather than the long-term benefits of the country. Therefore, it would be difficult for a new government coming after a general election to implement these long outstanding painful economic reforms.
This is the time to do it. On the other hand, we have no time to waste till the next election. If the political parties are not willing to join an all-party government, the president will have to work alone since he has taken the responsibility.
At that time law of emergency would be reimposed against the persons who would oppose the economic reforms.
Change of political culture demanded by the Aragalaya youth and the people should have been done thereafter. Not only the political culture but also the culture of the people should be changed since the political culture is a subset of the culture of the people. Drastic changes should be done one after the other and not simultaneously.
Therefore, in this critical time priority should be given to the economic reforms which could not be implemented for a long time. I believe that all segments of the society should understand this.
(Published in Colombo Telegraph on August 20, 2022)
https://www.colombotelegraph.com/index.php/country-has-fallen-due-to-the-socialist-thinking/
Comments
/ August 20, 2022
3
1A declaration of sort, caught my eye.
“There is no existence of the people without the state”.
I am not that bright. I was always thinking that there is no existence of a State without the people. How silly, of me!
/ August 21, 2022
4 0Nathan, You are correct. People create the state not the other way around. But in collapsing if the state collapses first then the orders collapses, and it would be extremely difficult for people to exist. In a war that is why people sacrifice their lives to safeguard the state. In this situation people are secondary to the state. Economic collapse is also similar. I wanted to emphasize that point.
/ August 21, 2022
0 0Harsha Gunasena,
Kindly accept my sincere thanks for responding to my comment.
I am no writer; I judge what I read.
What you happened to write was odd. True to my judgement, I pointed it out, not to pick holes, but to put it in perspective.
The state of our Economy is abysmal. Rectifying the situation should be a priority. However, in governance no single element is independent of the other.
Look at the Title itself:
Country Has Fallen Due To The Socialist Thinking
Apparently. It has fallen due to many others.
Let me take your criteria of ability. This is vital. Not just in the military, but in civil administration as well.
What happened to our economy is simple. When merit was discarded for political reasons, the independence of the Central Bank was lost./ August 22, 2022
0 0Nathan- You are welcome. Yes, there are many reasons. There are no one to one cause and effect relationships in social sciences. This is a prominent reason. Please read the article and grab the essence of it.
/ August 21, 2022
4 3Dear Nathan,
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Harsha Gunasena is a very honest man. I’m glad that you realise that you’re not bright. However, in this instance the thinking that you brought with you into your reading is more sound than Harsha’s statement that you quote.
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Thereafter, Harsha makes many reasonable observations, but I don’t think that major economic changes should be made now. I’m happy that petrol (and milk powder, at a price that mothers cant afford!) is available, BUT this window of peace and quiet must be used to prepare for the earliest possible elections. That is what I want.
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I don’t want a National Government. Harsha has said this: “If the political parties are not willing ……….. the president will have to work alone”. What? Ranil Wickremasinghe who receive no mandate? No way!
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This rejected man cannot grab “responsibility”! He is only the legal-President, but not legitimate.
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If Ranil acts like that, I shall oppose him, non-violently./ August 21, 2022
2 0Sinhala Man, Thanks for your comment. I think you are still referring to that Hoole’s article. I received the email address of him you sent. Thanks.
At least, if you are demanding fresh elections demand that the present laws should be changed prior to the elections. There should be transparency and limits in election expenditure. Election Department is of the view that there should be so many years activities prior to register a political party. That requirement should be abolished. For instance, Aragalaya youth cannot register a political party under this rule. That is why SJB had to go after Diana Gamage’s registered party. All these things must be rectified prior to an election.
But I believe that the task at hand is not democracy or good governance. It is getting out of this economic mess as soon as possible. That is the point I have emphasized. I am for democracy and good governance. Our house is burning and get out of it first to talk about democracy.
SJ / August 21, 2022
“Socialists were pressuring for subsidies to the poor and the successive governments kept on increasing the subsidies in order to get votes.”
Dudley Senanayake must be a father of the “summa socialism”. He started the free rice scheme.
Which socialist gathered votes with subsidies?
Was not free education was a UNP minister’s idea? Poor man could not survive in politics.
It is good to do some homework before making sweeping statements.
Harsha Gunasena / August 21, 2022
SJ- Do not make sweeping statements without reading the article carefully. I have mentioned in the article “socialist thinking”. Sri Lankan socialist thinking is working less and getting more salaries, and believing that majority of the economic activities should be carried out by the government.
To promote socialist thinking one does not have to govern the country. In 1953 Hartal was started by the left when JRJ then Minister of Finance tried to introduce economic reforms. As a result, Dudley the PM resigned. Thereafter they did not want to do that type of reforms in order to be in power.
“Socialists were pressuring for subsidies to the poor and the successive governments kept on increasing the subsidies in order to get votes.” This statement is correct. Dudley had to give in to satisfy the socialist thinking.
(to be continued)
Harsha Gunasena / August 21, 2022
SJ- (continuation)
In 2002 Ranil W as the PM suspended all recruitments to the government knowing that it was detrimental to the political life of UNP as per the prevalent thinking of the country. Socialists defeated him and in 2015 he did not try to do the same reforms in order to secure power. Instead he increased the salaries of public servants to win the election. Popular thinking of the country is socialist thinking. Now the government will have to take the bull by its horns.
Free education was brought in By CWWK prior to the independence. At that time English education was charged not the Sinhala or Tamil education. Affluent class of the country was limited and there was no such large middle class. Therefore freeing the English education was an investment. Bandaranaike came in and converted English education to Sinhala and Tamil.
I prefer if you can grab the basic idea of the article and then argue which will enrich the understanding of all of us.
SJ / August 22, 2022
I am selective about what I read seriously.
You give a misleading title. My comment concerned it and touched on some sweeping statements.
Dudley offered rice at a heavily subsidized 25 cents per measure after he formed a minority government 1960 March, in anticipation of an early election. Shame that you cannot figure out that he did it to fetch votes.
He could not let it go. The SLFP had to bear the consequences for 4 years.
Then came his free rice gundu in 1966.
*
According to Lenin, “He who does not work shall not eat” is a necessary principle under socialism. (The State and Revolution, 1917).
Sri Lankan socialists were not in power then to offer the freebies that you talk about.
Harsha Gunasena / August 22, 2022
SJ- Please read my comment and then answer. I knew and stated in the article and the comment that Dudley did it for votes.
When you read an article you have the grab the essence of it rather than taking bits and pieces and comment. Do not just go by the headline.
I know that people cannot just be paid without work under socialism, but the Sri Lankan socialism is just about that. Please reread the part of the article where I talk about socialism in Sri Lanka with examples.
Harsha Gunasena / August 24, 2022
Mallaiyuran- You have written 1318 word response to my 1680 word article and it is not an effectively focused response but I thought responding to it since it seems to be that you are having certain misconceptions.
I am not a racist. You can refer to number of articles I have written to CT and to Daily Ft (All articles are on the internet) and find out my stance of the ethnic issue of Sri Lanka. The example I have given, Sarath Fonseka and the war should be considered in that context- meritocracy over seniority. It does not mean that I approve everything SL Army did. At the same time, I understand your sentiments.
The ground to start the war was created by the Sri Lankan government and it was not ended with a political solution previously due to the stance taken by Prabhakaran against the thinking of Anton B. In the run SL Army killed many civilians and LTTE reciprocated it. (to be continued)
Harsha Gunasena / August 24, 2022
Mallaiyuran- (Continued) You have referred to my previous article as well and unfortunately, I could not respond to the comments. There also two commentators said that CT authors do not put adequate weight to the ethnic issue and purposely ignore its weight. I have noticed that some of the commentators bring in the ethnic problem in response to whatever the issue the author discusses. Authors cannot behave in the same manner. They write on different topics.
Vietnam and China are having communist rule, but the economy increasingly run by the private sector. I have nothing to add in respect of your responses to the essence of my article. Please refer to my responses to other commentors. Thanks.