28 October, 2020

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Politics Of Palliatives & Economics Of Cure

By Ameer Ali

Dr. Ameer Ali

The Presidential Election of November 2019 was fought entirely on the issue of security. In a sense, Zahran and his suicide mob presented victory to Gotabaya Rajapaksa on a platter. Was that their genuine intention or were they instrumental in fulfilling the wishes of another party, only history would reveal. Although the national economy at that time was reeling under low growth, punishing debt, rising income disparity, falling productivity, chronic unemployment, rising cost of living and grinding poverty, none of the contestants, except Anura Kumara Dissanayake from NPM, was campaigning seriously on possible solutions to the economic crisis.  GR and his supporters knew very well that security and scare mongering would be the winning wicket to beat the opponents. 

Having achieved victory, PGR’s economic strategy and policies do not show much difference from those adopted by the previous regime. One should not pass judgement hurriedly based on a three month report card. Although he expects “Prosperity with Splendour” to prevail at the end of his term of office, nowhere has he presented yet his pathway to reach that Valhalla.

It is a strange irony that the first foreign visit of PGR, with a small team of delegates, was to India, from where he returned with a promise of $450 million financial assistance for economic development, while his caretaker PM, or second in command, flew to the same destination with a sizeable 39 member delegation to appeal for moratorium on debt repayments. One does not know what specific conditions would be attached if India were to concede PM’s request. However, this request is the first official admission that the country is in dire straits economically, if not bankrupt financially. Once a country reveals publicly its inability to payback its debt no new lender would come forward to lend anew without even more stringent conditions.   

The economic situation was actually worsen by PGR because of his impulsive tax and tariff stimulus, purportedly to assist local producers to increase output and reduce prices to bring down the cost of living. The impact of these measures on public finance however, was totally ignored. The caretaker PM also announced that subsidised food would be provided for the poorest of families, and on the instruction of PGR, applications are now entertained for 100,000 public sector employment with minimum salaries. These measures would no doubt ease at least part of the economic difficulties for tens of thousands of families, but they are only temporary ailments and not permanent cure for the nation’s economic ill-being. There is politics behind these palliatives, and they would no doubt play a key role in attracting votes at the forthcoming General Elections in which PGR expects the PM’s party to emerge with two-third majority, so that the constitution could be re-amended to regain the executive powers lost by the President, because of 19th amendment. However, these palliatives, without counter measures to raise government revenue, will throw public finance into chaos. Given this scenario, one does not need rocket science to predict that there would be serious deterioration in budget deficit. Controlling that run-away deficit would require cutting down public expenditure, raising taxes and reducing transfer payments. It is doubtful whether the pre-election tax reductions would be continued without revision or reversal. Also, will the new government after the election maintain its subsidised food program and retain the 100,000 jobs permanently? Financing these ad hoc measures would pose new head ache to the next government.   

The country could go out and borrow from outside, which the PM has already announced; but the request for a moratorium from India would make future borrowings even more costly. With an open economy wedded to economic liberalism, the future of Sri Lanka’s economic growth looks increasingly precarious, in spite of the Central Bank Governor’s courageous optimism and his readiness to tinker with the liberal economic paradigm, to make it more equitable and just. However, he did not fail to qualify his optimism with realism when he called for some hard political decisions. 

At present however, and in spite of several setbacks, the economy, according to the World Bank, has reached the upper-middle income category. This categorization is entirely based on income per capita, which is only an average, and does not reveal much about the internal dynamics of how that income was earned and by whom. Be that as it may, the challenge facing the economy is how to move forward without being trapped at the middle income level. Higher rate of growth and high income are not automatically guaranteed once an economy reaches middle income status. It is not a virtuous status. As Lee Kwan Yew said once in the context of Singapore, economic growth is like a cyclist riding up hill. It needs more energy and strength as one moves closer and closer to the top. 

What the economy now needs is a massive injection of capital investment and that investment has to go into high-tech industries and infrastructure development. The manufacturing sector has to move forward from labour intensive consumer oriented industries to at least intermediate producer goods industries. This would require a highly skilled labour force, which in turn demands educational reforms.  It also requires a new wage structure to attract talent. In the 1980s, Lee Kwan Yew deliberately increased salaries of public servants not only to make public sector attractive, but more importantly to force the same in the private sector to remain competitive. In the end, what it actually did was to make the relative cost of capital cheaper compared to labour, which induced private sector to employ more capital and better technology.  

In short, there is an absolute need for a comprehensive economic plan with time specified sectoral targets. Unfortunately, PGR does not seem to work on that basis, but issues edicts at random to be implemented practically on everything. It is, like his tax and tariff stimulus, a spasmodic, haphazard, and impulsive approach to systematic economic development. The concept and philosophy of economic planning has fallen into disrepute and disuse after the collapse of the command economies in 1980s. Free market economics does not entertain any vestiges of that economic strategy. However, to middle income economies open to global shocks, there is a need for coordinated sectoral strategies to achieve higher rate of growth. It does not matter whether one calls it a plan or macro coordination. Economics of cure demands coordinated or planned strategy.           

Above all, and in the context of Sri Lanka, economics of cure also demands speedy solution to the vexatious issue of power sharing. This author has laboured on this point more than once, but it deserves reiteration, given PGR’s intention to exclude the minorities politically while including them economically. Some are calling it a pragmatic approach. On the contrary, it is an approach pebbled with arrogance and anger pouring out of an ultra-nationalistic and supremacist ideology, and it can be carried out only with a mixture of force and penalties. This may be the reason why PGR has already dispatched the armed forces to all districts under the pretext of engaging them in developmental work. Any development strategy not based on spontaneous effort and co-operation from the people to be effected, but on police and military push, is destined to recreate, even if that strategy succeeds, the very issues that that strategy wanted to avoid originally. 

Alternatively, power sharing or devolution is a solvable and manageable problem without endangering the territorial integrity of this country, provided there is willingness to consult and compromise by all parties. The stumbling block to this rational approach are the ultra-nationalists, who from the very beginning tried to frustrate any attempt for a solution. The one leader who realised this fact and wanted to move away from them was assassinated. Today, these ultra-nationalists turned supremacists have ensnared PGR and his government into a suffocating political net.   

One cannot dismiss this political issue as irrelevant and concentrate entirely on economic growth and development. Men and women do not live by bread alone Mr. President. A number of pressures that Sri Lanka is currently facing internationally stem from this issue. By tackling it head on with courage and determination, and with level headedness, political leaders can at least remove one excuse for foreign interference in our domestic affairs. Let us learn the lessons from history and escape from its revenge.   

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Latest comments

  • 4
    4

    Mr Ameer
    Don’t keep on parroting the word ‘ power sharing ‘ – propose your power sharing model which can satisfy at least 90% of the minorities in the island.
    You will invariably come to the conclusion that physical relocation of people is necessary for the purpose.

    Soma

    • 4
      2

      Dear Soma, Good evening

      “…,propose your power sharing model which can satisfy at least 90% of the minorities in the island.”
      Surprise surprise, like food prices; “Must satisfy level” shot up by 10% from 80 to 90 within one month. Can you remember this Soma, by the way. are you a man or a woman Soma?

      • 0
        4

        Ahmed N
        My name is like a burqa. You want me to raise the skirt or remove the face cover?

        Soma

        • 1
          0

          Hi Soma,

          None, I know male names like Somawangsa, Somasuderam and female name like Somawathy, Somabalani etc. Many use shorten form of SOMA. Now only I know there is Burqa wearing Soma among us. People careful.

    • 1
      1

      Dr. Ameer Ali,

      “In a sense, Zahran and his suicide mob presented victory to Gotabaya Rajapaksa on a platter. Was that their genuine intention or were they instrumental in fulfilling the wishes of another party, only history would reveal. “

      Thanks for your article.

      Zahran and his suicide mob are idiotic clones of Wahhabism, and it’s numerous offshoots, who follow the Devil, Satan per prescient Hadith of Najd. Those brainwashed idiots have no strategic sense, only brainwashed idiocy.

      They are blinded by scripture, confused by scripture and the Wahhabi teachings, and they tried to destroy Buddha statues.

      Their IQs are quite low, as low as those of many Sinhala Buddhists, mean IQ 79, who prostrate to monks and statues.

      Besides, the Saudi Arabs IQs drooped after they became Wahhabis. Just check the Mean GMAT scores of Saudi Arabia, the lowest in the world, 330, to the other countries.

  • 4
    6

    Usual bullshit.

    Ameer Ali writes ” …Zahran and his suicide mob presented victory to Gotabaya Rajapaksa on a platter.”

    Another attempt at claiming Muslim contribution to Sri Lanka
    s progress?

    Give up!

    • 0
      0

      Noname Academic, sounds like one out of 6.9 in fear of popping up new stake holders?

  • 3
    0

    30/1 removal and all war or economic crimes and decisions are that of Rajapakshe families and not that of Citizens. They should be held responsible.

  • 3
    6

    Sinhala people are considered an undefeated proud nation. They gave their lives so many times to chase out Indians and other Invaders. I do not think, Sinhala people now should act like defeated, failed, weak and feeble. If we do that, that is not democracy, I think against UN principals.

    • 0
      0

      Dear JD!

      “…,I do not think, Sinhala people now should act like defeated, failed, weak and feeble…,”

      No one is suggesting you should or Sinhalese should. Dr. AA’s advice is to consider once again your new mantra “Econmically in & Politically out” policy. Simple’s that.

  • 1
    3

    “Men and women do not live by bread alone Mr. President.”

    ‘Para’ Malabar Wellala Demala elite politicians and some Muslim extremist politicians cannot live with bread alone. They want something more; separate State, Federal System, maximum devolution of power, Muslim enclaves. What bloody right these ‘Para’ people who are in this country because Native Sinhalayo gave citizenship have to dictate native people how to rule their country?

  • 1
    2

    I think Zaharan was helping the then govt passing information muslim subversive activities in case Muslims entangled with LTTE. Some one watching that and used them Sri Lanka. It is part of their ploy to mix Zaharan’s group with politicians. Politicians were getting information that they are a group if subversives and would blow up on this day and these would be the selected places. Who wants to act on that when Zaharans were their good members. But, that last argument also fails, some of them avoided Colombo and attending church on that. They simply did not care the public. So, you can say stupid or very self-centered UNP made way for the new govt.

  • 1
    2

    The Rajakses defeated the LTTE AFTER BRIBING THEM to prevent the voters casting their ballot at the Presidential Election of 2005; Tiran Alles the owner of the newspaper Ceylon Today knows the details. The Jaffna boycott saw MaRa on our horizon.

    Was Zahran and his suicide mob similarly lured?
    This no doubt helped GoRa to be President.
    This is a Million dollar question which only History could unravel!

  • 4
    1

    “In a sense, Zahran and his suicide mob presented victory to Gotabaya Rajapaksa on a platter.” Zaharan’s contribution was secondary and not the primary. Gota’s victory was mainly due to him being Mahinda’s lap dog (more so his bitch than brother). Our Mahanayake PIMPIYA’s and their brigade of whores did the needful by demanding or even intimating the majority rural Sinhala Buddhist to vote for the “pohottuwa”, and a vote against it would be a treacherous vote against Buddhism. This was the main “palliative” of the neanderthal saffron robed cunts. The Zaharan mobsters carnage was secondary. Last but not least, we all know who sponsored, nurtured and fed the Zahara clan with plenty of amenities that was logistically provided by the Madamulane “Halal” stamp of approval. GR, the Matara gamaya could not muster even 80% of the votes if not for Mahinda and Basil. Even though Basil to considered a crook of the highest order, kudos to Basil for playing the role as did two other political geniuses that i can recall from Karl Rove or Steve Bannon in marketing equally visceral sinners and a satan to power in a different political stage far from our shores.

  • 1
    2

    Only way out is change the way Leaders do politics. Leaders are very autocratic and very corrupt. They all are for power and use corruptions to keep MPs in place under control. Leaders are too corrupt. That was happening for 43 years and it was worsening. 2009-2019 were the worse as there were no excuses to escape. New Leaders would do the trick.

  • 0
    0

    Indian Are dominant to exporting food stuff Green Revolution through middle east and world, it is cheaper to import all the products from india than growing in sri lanka this scenerio india is very familier and to pay the depts the 39 members would have made agreement to pay the depths by ordering more agri products and in inda most of the forest are coverded to agir farms by giving people a small land for growing. like the tea estate which was coverted from forest to factores,
    Farming is the best occupation for a man

  • 6
    0

    Ameer

    Sri Lanka is terminally ill and is about to be admitted to a Hospice . All the carers themselves are terminally ill Gotha , Shavendra , Mahintha , Roshitha ( The metal Plate man) , , the Daughter In law of MR., Basil and so on . What chance has Sri Lanka got.

  • 0
    0

    Ameer Ali

    “…………………………. forthcoming General Elections in which PGR expects the PM’s party to emerge with two-third majority, so that the constitution could be re-amended to regain the executive powers lost by the President, because of 19th amendment. “

    Whatever may be GR’s thinking, do you seriously believe that MR, the PM, will meekly surrender his powers as PM to the President, GR, just because GR wants those powers? With a 2/3rd majority, it will be MR who will be ruling the roost and the 19A will just stay put.. GR will have to just shut up and do whatever MR allows him to do just like as Defence Secretary before 2015. Wait and see Ole fella.

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