18 September, 2018

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Dhammika Perera: An Economist Par Excellence Though Not Trained Formally As An Economist

By W A Wijewardena –

Dr. W.A Wijewardena

Humans who forget that they are wired as economists Dhammika Perera, businessman, entrepreneur, wealth-creator and many more, admits humbly that he has never been formally trained as an economist. But, that is an under-assessment, since there is an economist living in every species.

Nature has wired every species with the core of economic principles, the desire to get the best out of the least. This principle is followed to the letter by every lower level species. For instance, as Dhammika himself says, the lion runs after the slowest running deer, thereby expending the minimum energy to catch its prey. The deer, though Dhammika did not extend his point to cover it, runs just a little faster than the lion so that it can save its energy for a long run to escape. Both of them try to get the best out of the least. Economists call this efficient use of resources.

However, the exception to this behaviour is the Homo sapiens, man the wise. He is also wired with economic principles, but using his ability to talk freely, he voices the opposite. Hence, from time to time, practical people like Dhammika Perera have to take a podium and remind Homo sapiens that they are wrong. This is what he did when he addressed a packed audience hosted by Colombo School of Business and Management in its series on an evening with a corporate leader recently in Colombo. The title of Dhammika’s address was ‘My Entrepreneurship Mind and Leadership Heart’ connoting his business acumen, but it is full of hard-core economics.

The choice between 600 taxis and a ship

This writer recalls an encounter with Dhammika some time back in 2008 when he was at the Central Bank. At that time, Dhammika was holding a public office as the Secretary to the Ministry of Transport. Dhammika narrated to him that the Government in 2002 had offered him the franchise for running a quality taxi service at the Colombo Airport with the promise of a permit to import 600 new wide-bodied cars for that purpose. This was an offer which any other businessman would not have refused.

But Dhammika told this writer that his quick calculations revealed to him that having 600 taxis meant 600 problems for him to solve every day and the income to be earned was not a sufficient compensation for those troubles. Instead, he decided to invest a part of that money in a ship which meant only one problem and, even then, not daily but very rarely.

On that day, he had had that problem when his ship had sunk in the Bay of Bengal having been caught in a storm. His worry was about the safety of the crew but when he learned that they had been safely on the shore, he was a totally a relieved man. He told this writer that the loss of the ship would be taken care of by insurance. Amidst an unexpected disaster, Dhammika showed, this writer still recalls, unusual calmness both within and out.

The need for following scientific approach

Throughout his address, Dhammika has presented to his audience, composed mainly of young corporate leaders, the need for having an inquisitive mind and adopting a scientific approach in coming to conclusions.

That scientific approach requires one to challenge the existing knowledge, probe and criticise it and finally come to conclusions based on evidence. Science also tells us that those conclusions are not the final absolute truth and can be refuted by anyone possessing better evidence. But what is important is not to make choices merely by hearsay or dictated by society’s popular beliefs. For that, one should develop an inquisitive mind and probe to the core until one gets a satisfactory answer.

Also, as the French statesman and philosopher, Frederic Bastiat, told us un 1850 that those analyses should cover not only what is to be seen around us but also what is to be unseen. Using this criterion, he distinguished a good economist from a bad economist: a bad economist sees only what seen, but a good economist will see both what is seen and what is to be foreseen. In laymen’s language, a good economist should have knowledge of the past, present and the future.

Attempt at estimating population of ancient Sri Lanka

Dhammika tells his audience that he applied his curious mind to estimate how many people were there in ancient Sri Lanka, say some 1000 years ago.

In popular belief, there are many exaggerated stories about it. Some have put the number to tens of millions when they say that a cock starting his journey from Anuradhapura could go to the southern tip of the island walking from roof to roof. The implication is that if houses were so numerous, so were the people living in them.

But this is not scientific. Dhammika had tried to estimate Sri Lanka’s population by looking at the estimates of the world population in 1000 CE and its growth till today. Today’s world population is about 7.6 billion and in 1000 CE, it had been about 275 million or 4% of what it is today. Using this fraction and noting that Sri Lanka’s current population is 22.2 million, Dhammika safely concludes that Sri Lanka’s population some 1018 years ago could not have been more than 800,000.

This is a reasonable estimate arrived at by using scientific method. The beauty of it is that another analyst could improve upon it by using the same methodology but by further refining the data. For instance, the world population in around 1800 amounted to 1 billion and by 1927 about 2 billion. It began its exponential growth only after that. Similarly, Sri Lanka’s population that stood at 2.4 million in 1871, began its exponential growth only after around 1930s when the malaria epidemic was successfully eradicated. Thus, the world population in 1000 had been only about 13% of what it had been in 1927; When the same ratio is applied to Sri Lanka’s estimated population of 3 million in 1900, its population in 1000 would not have been more than 400,000.

This is only a dispute about the number and not about the methodology. Dhammika has opened the eyes of his young audience to the correct way one should approach it.

Green cars are not that green 

His approach to greenness of the much-hailed green car – the full electric car – is also an eye-opener to even economists. This car is credited to be environmental-friendly when looked at its final use level.

At that level, its greenhouse gas emission level is zero. Dhammika warns that it is a wrong assessment. That is because to supply electricity to this car, one may have to burn fossil fuel elsewhere and there, it emits harmful greenhouse gases to the environment. A businessman should not just look at the greenness of his operations at his business level. It should be the greenness of the entirety of the operations involved, before him as well as after him.

Grow a tree and get the right to cut a tree

He extends this logic to another fallacy, namely, the alleged unfriendliness of cutting trees to the environment. The popular claim by environmentalists is that cutting trees anywhere anytime is environmentally-unfriendly.

But, trees are a resource and they should be harvested at the appropriate time for human use. Then, what should be done, according to Dhammika, is when one tree is cut, another tree should be planted. In this sense, there is no guilt in anyone cutting a tree if he has planted a tree. Those who cry about cutting trees maybe those who have not planted a tree at all in their life.

Dhammika tells the story of how he commanded his hydropower engineers to plant at least 1 million trees within 10 years. The command was given in 2000. However, it was reported to him in 2017 that they had managed to plant only a half of that number. So, it was short of the target.

Anyway, that has been a real achievement. Thus, if they now cut even 100 trees, there is no guilt on their part, since they have added much more than that number to the tree cover of the country.

This is practical economics. Renewable resources should be used by the world in such a way that it should not fall to a critically low level. According to him, business decisions made on this basis are sustainable and do not impede the continuous economic development in the world. Dhammika’s message to his audience is that they should be global citizens instead of being mere native citizens.

Fear of technology

There is a general fear about the advent of technology by many. When the steam engine was invented in the early 19th century, many feared that it would take over their jobs and they would be made jobless.

In the UK, a group of people known as Luddites went to the extent of even destroying machinery operated by steam power, especially in cotton and wool factories, because they would make them jobless.

Since then, anyone who is scared of new technology is known as a Luddite. Dhammika has told his audience that that fear was without grounds.

The same fear was exhibited when electricity was harnessed on a commercial basis in the early 20th century. Today, technology is everywhere operating from all fronts of human life. Its advancement is so quick that, according to the President of Thailand based Asian Institute of Technology or AIT, Worsak Kanok-Nukulchai, it is driving the world to an unknown future. Worsak says that the job of the educators is to prepare the students to enter this unknown future without fear.

It appears that the two minds, that is, the mind of the scientist Worsak and that of the pragmatist Dhammika, are working in tune to each other. The latter told his audience that there is no need for harbouring any fear about the loss of jobs due to the advancement of technology. It did not happen in the past and nor will it happen in the future.

According to Dhammika, there could be occasions where routine jobs would be taken over by intelligent machines. For instance, the maintenance and preparation of accounts will be the job of machines in the future. Then, what would become of accountants? They would simply move into a higher level at which logical and consistent decisions are made by them by using the results produced by machines.

Humans differ from machines due to emotional endowments

Dhammika finds another important role for human beings in a technologically advanced era. Though he would not have known it, it comes from a new branch of economics known as behavioural economics.

Machines cannot have emotions and only human beings. This is true at least at the present stage of technological development in the world. This special endowment should be used by human beings to their full advantage. They should try to remain happy, be sympathetic and emphatic to others, live in solidarity and be ready to come to the help of fellow members if they are destitute. This is the emotional side of human beings which machines lack. Hence, it should be used constructively and not destructively.

The destructive part of the emotions is the division of human beings according to cultures, ethnicities, religions or castes. Dhammika warns that such divisions should be restricted only to the homes and not be transported to work places.

According to him, in the work place, human beings are divided not by these criteria. They are divided by the level of intelligence, ability, commitment and motivation. Sri Lankans today have started to classify themselves into the two groups ‘We’ and ‘They’. Anyone who does not belong to the group ‘We’ is being resisted, suspected and attacked. This is the advice being imparted to even university students by guest lecturers.

When this ‘We’ concept is practised at any level – it does not matter whether it is at family, business or national level – it is destructive and does not augur well for the sustained development of the nation. Though Dhammika did not say it explicitly, this was what he implied by it.

Best economists are found in the market

This writer has always maintained that the best economists are not those who have received economics training formally but those who have practised it in the market. When he was at the Central Bank, he was immensely enriched by consultations he made with those traders in the Pettach wholesale market. Dhammika has proved this point once again.

Naturally, it is enlightening to listen to him and think over what he says in his discourses for further wisdom.

*W A Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at waw1949@gmail.com

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Latest comments

  • 12
    5

    Dhammika Perera’s name surfaced during the Rajapaksa regime as someone who financed politicians and gained a lot from deals with the government. For you to speak of him in such superlative terms, you will need to show he was free of corruption that allows some South Asian businessmen to become billionaires.

    Indeed, I would argue that capitalism was meant to encourage entrepreneurship and hard work, which can perhaps to wider prosperity, with some people becoming millionaires; it wasn’t meant to result in concentration of wealth in a few billionaires. That it happens has to do with excessive profiteering, corruption, sweet-heart deals, swindling the treasury, etc.

    Forbes Asia is said to have published that Mahinda Rajapaksa’s wealth is $18 b, which obviously came by robbing the country. Mr. Perera, unlike MR, had some legitimate businesses, but deep corruption is surely part of it. Why dignify it?

    • 2
      0

      It should read:
      “…which can perhaps lead to wider prosperity,….”

    • 2
      0

      Please share the link where Forbes Asia is said to have published that MR wealth is app. 18 b.

      • 0
        0

        I don’t have a direct link to Forbes Asia, but see Asian Tribune, which has been pro-Rajapaksa:

    • 2
      0

      Dr. Wijewardena,
      Clever people get rich. But really great people share their wealth freely.

  • 8
    1

    Dr. Wijewardena,

    Thank you for your article, although I must say I disagree with your reasoning behind the lavish praise you bestow upon Mr. Perera. The pertinent question to ask, with regard to the airport taxi contract, is not his capacity for economic reasoning about the viability of the project (about which I will have more to say below) but the ways in which he was selected for the contract. Was there a competitive and transparent procedure in place to select a supplier, or was Mr. P selected based on his affinity to the regime, and informed by the relations of power he had cultivated within it?

    I would argue that his wealth stems from such relationships and not from any particularly innate economic acumen, although I am willing to concede that he would have a stronger grasp of economics than most. Take the taxi service, for instance. Problems with 600 cars are easily resolved by hiring competent managers. Surely he would not have to be involved in the day to day running of such a service? The issue, perhaps, was a lack of passengers for such a service, and the risk of political changes resulting in the license being revoked and such.

    • 2
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      If 600 cars were to give 600 problems to Dhammika, imagine what Uber must be going through.

      So much for Wijewardena’s über bull.

      • 3
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        If 600 cars were to give 600 problems? how any employees are working for him? Won’t they give different problems at different times? . Unlike machines humans are emotional they may react in different ways not excluding strikes. Machines are usually similar in their ‘make up’ and the can be tackled when they strike by changing the parts. But humans?

  • 3
    0

    I heard Dr. wijewardane’s choice was the Ministry Secretary for Transport. So, he did not have any capital problems for his business. Besides, he was good with Mahinda Rajapakse. Now, it is only the growth rate when there are so amny avaIlable business ventures to tske over ot to stsrt. You did not discuss his family background etc., Are you related ?

  • 0
    0

    See how a budding trillionaire businessman Arjun Laoesius was stopped because of Dumb Ranil. Mahinda Rajapakse was very intelligent. How about Dubai Marriott. I heard thilanga Sumathipala thinking about the Ranaviru Aramudala. when Some one bought the Cambrige place it was too late, it was bankrupt real estate. PRobably, it changed hands of a few. Did Ranil get caught inthat too ?

  • 9
    0

    Dammika Perera as a big businessman was appointed Secretary of transport by President Rajapakse ! He was already in many businesses including to do with transport and now say offered the airport taxi service too.

    Is this not a big conflict of interest ? What if Lalith Weeratunga and Gamini Senaratne also ran big business ? In the morning go to government side meetings and meet Governor of the Central bank to discuss government policy and strategy and in the night do your own private business ! In the night make proposals to benefit your business and in the morning as a government official approve those proposals !

    This is a guy who started his business doing Casinos and bribing everybody . Can you say he is a honest businessman ?

  • 4
    0

    To Succeed in Business in Sri Lanka, is Not WHAT you Know, but WHO you Know, and Kow Tow to!

  • 2
    1

    This man under discussion here is a private individual and what he does is his business. Why should he be discussed here and subject to vilification, conjecture and unfair criticism.? He does not play any public role and should not be dragged in here.

    • 5
      1

      there is wide speculation that he has invested rajapakse monies, that amounts to money laundering, with the wealth of this Country. Dirty politics, dirty money. He can be dragged wherever.

    • 0
      0

      Probably he is a role model, friend or relative of Dr. W.A Wijewardena, who can clarify this.

  • 1
    3

    What I was expecting you wrote, thanks Mr. W. A. Wijewardena. Indeed he is the person in middle age with all requirements. My idea is being inviting him to engage in active politics for our well being. we need his help. Now we are in between two era.

  • 3
    0

    Mr. Perera is not really a case of Rags to Riches and I am certainly NOT a fan Casinos and his connections to the MR regime, BUT what impresses me about Mr. Dhammika Perera is how he began. He dropped out of University of Moratuwa NDT program and started reparing and building Slot Machines. He went from building Slot Machines to who he is today. So the lesson for the for the youth today is under a capitalists system if you work really hard, you can achieve incredible wealth. Just look at how “Victor Hettigoda” (Siddhalepa) started. There were rumors that he had to sleep in a temple due to financial difficulties. Look at Otara gunewardene (Odel). She started by selling selling clothes from the back her car. So don’t give-up on your dreams. This does mean in countries like SL you need to suck up to politicans and require political influence but in a true free market economy that is not needed. Life throws endless hurdles but if you persever you can win. Or you can be a lazy lump like me and be a keyboard or armchair expert typing stuff to invisible strangers on the interent. Yes I know I am stupid. But, hey at least I know I am stupid.

    • 5
      0

      Thanos,
      Yes, what you say about Dhammika P is quite true. But it is interesting to compare him with the richest Ceylonese of the 19th century: (Wikipedia)
      “De Soysa initiated measures to reduce the infant mortality rate by creating a supply of trained Sinhalese midwives.[9] He gifted a maternity hospital; the De Soysa Lying-In-Home at Borella, which was once his childhood residence.[11][47][48] The original buildings of the Ceylon Medical College gifted by him and his uncle Mudliyar Susew de Soysa were also declared open on the same day by the Governor Sir James Robert Longden on 9 December 1879.[4][49]

      The Lunawa Hospital Moratuwa, the Panadura hospital, Marawila hospital, Hanguranketa dispensary, the Ingiriya hospital and the Bacteriological Institute (Medical Research Institute) headed by the erudite Dr Aldo Castellani were also gifted by the de Soysa family.[50][51][52][53][54] The Victoria Memorial Eye Hospital, the Lady Ridgeway Hospital for Children and the Ophthalmology Departments of the Kandy and Galle hospitals also benefited from the de Soysa generosity.[29][55][56] On a visit to Great Britain in 1886, De Soysa gave liberally to 20 major hospitals including the Guys Hospital London, Great Ormond Street Children’s Hospital, Seamen’s Hospital and the Royal Free Hospital.[57] He also maintained a convalescent home at the Alfred House premises for the Buddhist clergy.[32]:”

      I don’t think Dhammika has come even close, considering that CH lived only 54 years. It is OK to get rich. But truly great people share it.

    • 0
      0

      SL has the potential to produce many entrepreneurs, but the Govt needs to go for fearless privatizations, cut-down state sector jobs and benefits; saving two birds…

  • 4
    0

    Mr W A Wijewardena,

    Dhammika Perera is no saint – neither is Harry Jayawardena – but both of them have good business acumen. …….

    Dhammika sucked up to the Rajapakses and Harry to CBK………….

    But it’s quite commendable where Dhammika has reached from where he started with his ability to grasp “corporate smarts.”

    I was listening to Prof Michael Hudson https://www.youtube.com/watch?v=Gfg4yv7fnww and he said something very interesting…………. that the rich people now rarely produce anything ……………most of the people in the Forbes top 100 list are political insiders – all around the world – who have just stolen their loot……………

    Wonder who fits the bill in SL…………

  • 6
    0

    Sir, if you had asked Mr. Bill Gates the same, he would have been more honest in accepting the facts behind his success and definitely start with “I was in the right place, at the right time”. I guess in Mr. Perera’s case also it is true up to a certain extent but from a different angle..

    If one has to understand how (financially) successful people made it there, never ask or trust what they have to say. Watch and analyze what made them successful. It is not that they lie or hide something, rather most of them still have no idea what really made them there.

  • 1
    1

    Let us not mix up a good businessman with an economist. Dhammika Perera deserves our respect and appreciation as an entrepreneur in a country where such persons are scarce. It is easier to produce economists but hard to produce an entrepreneur. Let us honor him as an entrepreneur- an outstanding one at that. and who partly constituye the subject matter of the study of Economics
    RMB Senanayake

  • 1
    3

    Donky Agnos Donkeys like you think that all are rogues. At lease be happy that Dammika Perera is a Sri lankan and not Singaporean or an Indian.

    • 2
      1

      Dear bovine Kasun,
      In which way is a Sri Lankan rogue/ casino operator better than a foreign one?

    • 0
      0

      Maybe the search for wealth has kept you from learning to spell. Good luck with robbing the country.

  • 1
    0

    See Colombo University Economics Dept. Non of the Professors have right qualifications to be Professor in any International University. Sometime back it is a family dept and still run by grandfather Emeritus. Current Head has second lower pass and taking money for anything and finally we found he is a fake B. monk. How B. Monk be a head in business dept.? Need full inquiry about this dept and sack all members. Most are dis-robed monks in this Lecture panel and others are outdoor connected recruitment such as sons, sons friends, Uncles and finally henchmen of criminal Emeritus.

  • 0
    0

    Mr. Wijewardena

    It is my understanding that Dammika Perera made his initial fortune laundering black money through his casinos. The American Mafia did the same by running Las Vegas casinos in the 60s & 70s after being kicked out of Havana by Castro. Talking about Las Vegas casinos, I am curious if Perera has the franchise for Bellagio, Ballys & MGM, which I believe are the names of his Casinos in SL because I would be surprised if these high end, world famous casinos would lend their name to some potty money laundering operation in a third world country (however ostentatious they maybe in the eyes of the SL public). If it’s blatant abuse of trademarks, as I think it is, only an opportunistic entrepreneur, & a dodgy one at that, who would conduct his business in this manner.

    It has been established that to make enormous amounts of money (not inherited), one must have a competitive edge which others don’t. Bill Gates, Ealon Musk & all those successful Internet entrepreneurs had that but so did apparently Perera with the help of godfathers.

  • 0
    0

    I am happy about the success of men like Dhammika Perera and yet cannot resist the ringing words of Mario Puso – the man who created the Godfather series. Puso was a good student of the human mind and psyche and his striking comment “behind every fortune there is a crime” applies universally. Dhammika, Harry J and others could not have made their fortunes if not for political patronage at their times. Ethics, morality and altruism were not tools they employed daily for the accumulation of their billions. But they created jobs, opportunities and economic wealth. That is what, to a large extent, that counts. These men did not hesitate to sink low to remain high, when the need so demanded. They danced with the devils when occasion demanded in line with their calculations.

    Dhammika’s elevation as Ministry Secretary was a tasteless move – from the angle of good governance, He simply did not possess the intellectual or administrative
    wherewithal for that lofty post. Political patronage – he did have and that is what mattered that day. Let us not ruin the good traditions the British gifted us with.

    Kettikaran

  • 0
    0

    If my memory serves me right, his bigger successes began when a notorious Minister, well known crook and fence-jumper from the Hills, surreptitiously diverted Samurdhi funds. These were invested in the shares of a rising bank. That was a big windfall for all the players in that particular enterprise – though totally unethical and illegal. But then, most huge financial successes all over the world have some element of bad taste in them- Bill Gates et al perhaps being the rare exceptions.

    ADJP

  • 0
    0

    Writer is blinded by riches and spews forth lavish praise

  • 1
    0

    Mr wijewardene, what s glowing tribute to dammika. What you have failed to state is that dammika and the other so called big time business guys in sl have made their money by getting government contracts by bribing politicos, cheating on the foreign investors who trusted them, not paying any taxes, getting customs duty exemptions and concessions by bribing, sitting on boards of listed companies and engaging in massive insider trading and cheating the shareholders by breaches of conflict of interest and dealings with related companies, manipulating the stock market, using political clout to obtain large credit from state owned banks at low interest rates, exploiting minority shareholders, exploiting their board positions by robbing company funds payong themselves exhorbitant remuneration, appointing unqualified family members to senior executive positions. To summarise success has been achieved by robbing public funds. Perhaps wijewardene should publish some data on how much income tax this guy has paid over the last ten years, how much state owned land has been given to him, the government backed monopolies that he controls and the proxies held for corrupt politicos. What a suck!

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