By W A Wijewardena –
Enemies Of Democracy -Part III
Property rights are the corner stone of any economy
Property rights of people are at the foundation of any economic system, whether it is free-market, statist or socialist. People do what they do in an economy if they can enjoy the fruits of their labour – in the parlance of economists, physical and human property they have acquired and called property rights – without the fear of being taken away by someone against their consent. If they consent, it should be done only by paying the appropriate price agreed between them. Thus, destroying the physical property and causing injuries or death to life in mob violence amounts to robbing them of property they have owned or violation of property rights.
It is the responsibility of the modern state – and of the king in olden times – to protect the property rights of people. If the state fails, the loser is not only those who have lost their property but also the state itself. That comes from two consequential developments. First, for society to progress, people should continue to invest in physical and human property. When they realise that their property is not safe, they would think twice before they make a new investment. The casualty is the stumbling economy and consequently, the revenue losing state. Realising this truth, the ancient Indian economics Guru, Kautilya, who lived in the 4th century BCE, advised the King in his treatise on economics – The Arthashastra – that the King should take proactive action to prevent the breakout of internal conflicts that destroy both human and physical wealth. If they breakout, he should use all his powers to eradicate them.
Mob violence or a system ruled by mobs called Mobocracy gives a freehand to a selected few to rob or destroy properties owned by people. This causes mayhem in an economic system and its short and long term repercussions are fatal to the health of an economy.
Plan to usher a knowledge era in the country
One good example is found in the infamous Black July 1983 in Sri Lanka in which properties belonging to minority Tamils and lives of many people were destroyed by freely-roaming mobs. In an article to Daily FT in 2014, this has been narrated by veteran diplomat K Godage who was the Secretary General of the Greater Colombo Economic Commission or GCEC, predecessor to today’s Board of Investment or BOI. At the very first meeting with the then President, J R Jayewardene, the top brass at GCEC had been asked to go to West and acquire new technology from them to usher a new production era in Sri Lanka.
Subsequently, the Chairman of GCEC, Upali Wijewardene, had asked Godage and others to get investments in Information Technology or IT from reputed US firms. The objective was to change the disparaging title that had been given to GCEC by its critics as a ‘Tailoring Zone’ and convert it to an ‘Information Age Zone’. This was the wisdom and foresight of the veteran businessman Upali Wijewardene in those days when IT was relatively unknown and agriculture and industry were considered the lifeline of an economy.
Accordingly, GCEC had persuaded two large IT and electronic product firms in USA, namely, Motorola and Harris Corporation, to establish two factories in Katunayake to supply their products to Asian markets. The work relating to the establishment of these two factories had progressed well and they were to be opened at end-1983. However, this was to be disturbed by the breakout of mob attack on minority Tamils in July 1983.
The sad pullout of Motorola and Harris Corporation from Sri Lanka
In 1982, Godage had left GCEC to take up a position in Sri Lanka’s Embassy in Washington DC. He had explained the subsequent developments in the article under reference as follows: “In September of 1983 the Senior Vice President of Motorola who knew me as I had visited their offices and met him came to the Embassy along with the VP of Harris and another IT company and told me that they were pulling out of Sri Lanka. I was surprised as I knew that both Motorola and Harris had begun construction work on their factories”
“When I inquired as to the reason for this decision, I was told by the SVP of Motorola that their representative who was supervising the construction work on their factories had been killed in July during the pogrom against the Tamils and that, therefore, they had decided to leave, and where did they go? It was to KL, Malaysia where there are no less than 12 chip manufacturing companies each employing hundreds. This is besides the related research companies that have established there. This is only a small part of what we have missed because of July 1983.In 1981 we were about to embark into the ‘knowledge industry’ and information production and dissemination, but we have been left behind. These new technologies have expanded with the proliferation of personal computers, and then surged dramatically with the widespread use of email and the internet”
Motorola Malaysia is a giant today
Motorola Malaysia is now a major site in its operations in the Asia-Pacific region adding to Malaysia’s research and development capability as well as to its high-tech product share in manufacturing exports. According to Sri Lankan born economist Prema-chandra Athulorala, Motorola’s largest research and development facility responsible for developing and manufacturing its two-way communication devices is located in Penang in Malaysia. Harris Corporation in Malaysia has been producing defence, military and airline related electronic products along with its other production units located in different countries in the region.
From Tailoring Zone to Underwear Manufacturing economy
So, Sri Lanka had lost a valuable opportunity to bring the required information age to the country, despite the fact that, with the opening of the economy in 1977, it was the first country in South Asia to introduce computers on a wide scale to its economy. As a result, Sri Lanka continued to get foreign investors to invest in low-tech products like textiles and garments. Investors loved to do so because they could pull out of Sri Lanka at any time at minimum costs if the political situation in the country became unfavourable. In fact, that was done by many Korean companies during the subsequent two decades.
Over the years, Sri Lankan firms took over the apparel industry specialising in manufacturing quality lingerie to the global markets. The critics who had earlier ridiculed GCEC as a Tailoring Zone were quick to attach a new disparaging label to the country’s manufacturing sector. For them, Sri Lanka is an underwear supplier to the rest of the world. Though Sri Lanka has been a master in underwear production, the technology used for it is simple technology which can be easily copied and imitated by its competitors. Thus, the loss of opportunity by Sri Lanka in 1983 has effectively placed a spanner in its growth path. Fettered by low technology, even today, the country’s biggest challenge has been to change its production system from simple technology to high-tech complex technology.
Who was responsible for this economic debacle? It was the government of the day which did not feel the necessity for preventing mobs from attacking economic interests of people. The economic fallout of this debacle is still felt by Sri Lankans. Taking cue from this, the political leadership of the country would have taken prompt action to prevent the recurrence of another Black July in the country today.
Robbing of property rights
The bomb attacks carried out by an extreme Islamic group loyal to the Islamic State or IS on 21 April 2019 in nine locations in Sri Lanka destroyed both physical property and human lives. The attacks on three leading hotels in Colombo have practically paralysed the fast growing tourism industry for the time being. Though its value added or what is remaining within the country after making external payments has been less than 35% of the gross earnings, even that meagre net earnings had been an important source of financing the country’s wide trade gap. If this trend continues for long, Sri Lanka would find its ability dwindling to protect the exchange rate. In that situation, the country has to resort to foreign borrowings, mainly from commercial markets, adding to its existing economic woes.
Apart from the loss of life numbering more than 250 and injuries sustained by more than that number, economy has suffered from a widely held ‘fear psychosis’ by majority of people who have chosen to withdraw from the normal day to day activities. That cost has been more than the direct cost inflicted on the economy by Islamic terrorists. Thus, it gave a powerful signal to government that it should take effective measures to prevent the situation from further deteriorating to a full-scale religious battle.
Caging the anger of the Christians
It is the Christians who largely became victims of the Easter bomb attack. Hence, their anger could have easily been directed toward Muslims thereby generating a secondary round of a religious war in the country. However, the leadership of the Christian community had the foresight to plead with its followers to stay calm, while the security forces would nab the culprits and restore peace. As a result, there was no any incident involving the Muslims and others religious practitioners in the subsequent two weeks.
But, in the meantime, the rumour mill got itself into full action and there were many wild stories about a possible full-scale attack to be carried out by IS supporters on non-Muslims, specifically on the Buddhists, in the country. The government would have taken effective action to neutralise this rumour mill and inculcate confidence among the majority Sinhalese. But, this was not done. The result was the use of government’s inaction by some interested parties to trigger-off of a major attack on Muslims and their economic interests in certain parts of the country.
Death blow to the already ailing economy
This delivered a death blow to the already ailing Sri Lankan economy. In 2018, the country had recorded the lowest economic growth in 20 years at 3.2%. At the beginning of 2019, there was hope that this declining trend could be arrested and the economy could be placed back on its long-term potential growth path. Accordingly, the Central Bank had predicted that the economy will slowly but steadily recover within the next 5 year period accelerating the growth rate to 5% by 2023. Now, with the new man made catastrophe looming over Sri Lanka, this growth forecast appears to be out of date.
Failure to observe the rule of law
The two events that kept the country under shock during the last four weeks demonstrate the government’s failure to protect the property rights. When people realise that their property can be robbed or destroyed by mobs with total impunity, the cost is not only the immediate loss of output. It causes a long term output loss via non-investment or inadequate investment in physical property and human capital by affected individuals. Hence, no responsible government could ignore the need for protecting property rights at all costs. To do so, the essential requirement has been the implementation of law and order and observance of the rule of law. But all the successive governments in the past had failed to adopt these two requirements to a satisfactory level. This is specifically observable in the case of the present government.
Short and long term consequences of mob violence
When people resort to mob violence on a large scale, it overstretches the controlling capacity of security forces. This has been seen even in a country like USA when racial clashes have erupted against unjust or unlawful acts on the part of law enforcement agencies. People who temporarily establish Mobocracies step into streets and destroy every type of physical assets which their eyes would set on. Security forces manage to bring the situation under control after some time, but by that time, the damage has already been done.
The immediate cost to the citizens on all those occasions has been the need for setting aside the required funds for compensating the victims by sacrificing other worthwhile expenditure programmes. The long term cost has been the non-investment or inadequate investment in physical and human properties thereby stunting the long term economic growth. The government will also lose, as Kautilya had advised the King, due to the shrinking of the tax base.
Prevention is the best cure
Hence, it is of utmost importance to prevent the occurrence of such mob violence at all costs. If it has already occurred, the government should apply the rule of law strictly and forcefully to every culprit concerned. The record maintained by Sri Lanka government in the past as well as in the present on this count is much to be desired.
Lesson from the British Transport Police
Last week, as social media had widely reported, an Asian woman had been racially abused in filthy language by a white supremacist on a train to Newcastle. When this was brought to the notice of the British Transport Police, according to an official Twitter message issued by that agency, the abuser involved had promptly been arrested ‘on suspicion of racially aggravated public order’. The Police had also asked the witnesses to come forward to give evidence in the case. Sri Lankan government has to learn a lot from this because there have been recent reports about Buddhist monks walking into Muslim owned shops and chasing the customers away or members of security forces remaining inactive when mobs were setting fire to business premises. Surely, mob violence is an enemy of democracy. But the failure of a democratic government to protect the property rights by observing the rule of law to the letter is a far worse enemy than that.
Thus, allowing Mobocracy to rule the country will entail violation of property rights. Hence, any government which is desirous of establishing a democratic rule should not ignore the necessity for taming this enemy of democracy.
*W A Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at firstname.lastname@example.org
Enemies Of Democracy – Part II
Enemies Of Democracy – Part III
Lankan 9 / May 21, 2019
These thugs are stupid people not 99% of Sinhalese..
Dr. Gnana Sankaralingam / May 21, 2019
Biggest mobs that have robbed properties of Tamils are the armed forces, who despite the end of war ten years ago, are refusing to vacate giving lame excuses.
Jadon / May 21, 2019
Dr. Wije: the big picture is that Sri Lanka has been played by external interests ever since independence in 1948.
P3 or the US-UK-France has been sabotaging development, with Fake development experts; looting and de-stabilizing country periodically to keep it under-developed. Look at what they did in the Chagos Island’s south of the Maldives to set up the US military base Diego Garcia they forcibly evicted the entire population of the archipelago.
Sri Lanka’s marine resources are a good example of how foreign aid and fake experts de-develops countries: despite years of (fake) development projects from Japan, Korea, UK, Norway, USAID, ADB, and France to the Fisheries sector and the wealth of Lanka’s marine resources, the Western Indian Ocean is over-fished and environmentally degraded by France, Spain EU and distant water fishing fleets. Fisheries only contributes 1 percent to Sri Lanka’s GDP when it should be 25% percent given the extent of Sri Lanka;s marine resources and Exclusive Economic Zone under UNCLOS.
CIA was behind the assassination of SWRD Bandaranaiyake during the Cold War and UK did the cover up because they did not want socialism in Sri Lanka and the same game is being played today by the CIA owned, funded and operated IS terrorists to sabotage the Lankan economy which is already heavily currency manipulated by the Washington Concensus with Bondscam Ranil and his financially illiterate finance Minister – the gay butterfly mafia that has ruined post-war Lanka with their (neo) Liberal Gay Fog!
Thiru / May 26, 2019
W A Wijewardena ,
You are a wise man who understands the importance of the rule of law and law and order in a country for its prosperity.
Let’s go back in history of Sri Lanka since independence:
1st mob violence against Tamils during D. S. Senanayake’s rule.
This set the precedent for mob violence against Tamils in 1958, 1961, 1977 and 1983.
There have been several mob violence against Muslims too.
So you can see with the word go from independence the rulers of both major parties allowed, if instigated at times, Sinhalese mob violence against minorities: This is true even today.
Do politicians, marauding monks, and the conniving security forces understand the detrimental effect of mobocracy of the majority Sinhalese are digging their economic graves? One million or more Tamils escaped this mob-rule in Sri Lanka and are prospering abroad; some even became world class entrepreneurs.
Sri Lanka will not change and the only they can survive is by sending their women abroad as maids while the Sinhalese men behave as thugs attacking the minorities!
Thus, allowing Mobocracy to rule the country
JD / May 21, 2019
Wijewardane: You write like that Sinhala people are Barbarians who did not know or have any culture. Do you remember before all these about 60 years ago, how sinhala people live. I think Tamils were the same. Muslims became sinhala like as Muslims traders got married to Sinhala and tamil women. I do not know further. All these double standards are recent. I know the west had gated communities and I heard now, Sri lanka also has such communities.
With respect to these riots, similar things happened during the Mahinda Rajapske times and SLFP politicians and supporters involved. Now the same thing happened Ranil-supporters and UNP politicians involved. How come ? The Govt is scared to the handler of AL Bagdadi.
taraki / May 21, 2019
Odd that the riots start a full three weeks after the bombing, and in the Opposition Leader’s own constituency, Kurunagala. Are the UNP behind these riots? The Bond scam report was about to be released. When there is a problem organise a riot, as they did in 1983.
Stangstar SL / May 21, 2019
Well said. But unfortunately there will be no action. Not only government but the entire parliament. Other than Minister Mangala, there has been no one brave enough to speak to Sri Lankans about being a Sri Lankan first.
To be frank, I’m a Sri Lankan working abroad. Other than for my family, I’ll not come back.
Sri Lanka has no hope left. Why would anyone invest when a drunken mob can destroy everything just because they don’t like the owners religion. The pasta factory is the perfect example. This was a local company doing business. Now its no more.
I’m ashamed to say, if anyone asks me I will say, “Don’t invest, after any election, you will loose money.“
FYI, to the interested parties, who will try to shame me and spit on me for this comment, I’m a Muslim. Just a normally average Muslim who has bad luck to be born a Sri Lankan.
Namal Rajafucksha / May 21, 2019
Stangster SL – “……….bad luck to be born a Sri Lankan.” Why do you have to say this? Are you out of your mind? My father is a politician, I am a politician and so are my uncles and the list goes on and on. My father is well-known as “Tsunami Hora” and I am a “lowyer” of the lowest calibre and we are working undercover to come back for the upliftment of our people!
Kugathas Ramathas / May 21, 2019
In March 1984. After spending USD 20 million Intel pulled out of Sri Lanka. DMS was negotiating for software system for the plant operation
On July 10th 1983. Taj India and TELCO India agreed to set up joint venture in Sri Lanka to develop software for Taj and Export respectibely
Taj was to sign an MOU during last week of July.
Thanks to Cyril Mathew and JRJ it also went up on the smoke
concerned citizen / May 21, 2019
Why don’t we spread these messages through the social media and mainstream media, instead of the hatred and destruction of fellow citizens which is the order of the day nowadays and how its harming the country short term and long term mainly for the majority country.
People are reacting the way they have been directed by vested interested parties, hence sensible people like you and like minded should lead the way, show the gullible masses that what they are doing is like spitting in the air.
Paramanathan K / May 21, 2019
Dr.Wijewardena, you are absolutely correct with regard to US giant Motorola and Haris had an full page advertorial inviting prospective candidates with electronics background during the 80s. Many of us with anticipation applied for jobs. Later we heard that those two companies withdrew from Sri Lanka. People gave a mandate to UNP to rule diligently to develop the country to prosperity. But UNP ruined the country in style by resorting to corruption, disturbed racial harmony and gave employment to political goons without qualification.
Raj-UK / May 21, 2019
The loss of far thinking visionaries like Upali W, Lalith A, Gamini D, were a tragedy to SL. Instead of educated, capable leaders with integrity, we had gutter mouth Premadasa, with his short sighted flawed vision, DB Wijethunga, a waste of space, much hyped CBK who did nothing for the country, MR who blatantly robbed the country & finally, the cream of the crop, MS, a yob, totally out of his depth with the sole objective of trying to outdo MR when it comes to acquiring wealth. SL never had a chance with this lot. Probably the stars are not in the right place in SL’s horoscope.
taraki / May 21, 2019
Well said Raj your analysis is faultless.
Shantha / May 22, 2019
These were as usual organized thugs, who came in trucks and riding motorcycles.
Many of them were not from the area. This shows an evil entity behind these organized mobs, if the investigators bothered to arrest and interrogate these scoundrels, perhaps they can get to the bottom of this. We have had a history of these terrorist mobs going berserk, attacking homes, businesses, looting, burning, and even killing innocent people because they were of a different ethnicity. We should be ashamed that to date we have not learned a lesson, and reformed these jobless criminals, and changed our mindset. We have been deliberately made to turn against the other by politicians, saffron robed terrorists, who may be doing the bidding of outside forces. The anti Muslim comments you see on social media, is all part of the plan. They are trying to turn this into another Myanmar, for evil purposes.