By Hema Senanayake –

Hema Senanayake

It is true that capitalistic system of economy has been relatively successful than any system of economy so far. It has uplifted the living standards of millions and millions of people around the globe even though it cannot resolve all the economic issues faced by the human race. Milton Friedman once intimated that an average woman living today commands many labour hours for her consumption than was commanded by possibly a Queen in the middle ages of our civilization.

The foundation of capitalism is the acceptance of free enterprise system and competition. Both these characters are vital for the efficient allocation of social resources among various production processes and to establish a very efficient price mechanism. Monopolies distort these two efficient mechanisms of the economy and hence the world of free enterprises out rightly rejects private monopolies – And the SAITM is a monopoly.

The Minister of Health Dr. Rajitha Senaratne being a former socialist has come to the realization that free enterprise system is a worldwide phenomenon now including China and Vietnam. It seems that he has learned it by observation. It is good but since he is a new convert to capitalism, I may suggest to him to learn it by theory mentioned above. If he did, he would not have missed the monopolistic nature of the SAITM.

The lack of understanding of any subject may lead to make wrongful decisions. This lack of understanding in regard to the private medical education is quiet clear in the thinking of the government as a whole. This thinking was revealed to the parliament by a recent speech made by the Minister of Health Dr. Rajitha Senaratne. Especially this revelation was quite clear from the purported solutions that are being considered by the government as told by Dr. Senaratne.

First solution is that the government is considering to take over the teaching hospital of SAITM and functioning of the medical college would continue as it is. This is an outright fraud. This would further strengthen the monopolistic nature of this business. According to Dr. Senaratne the teaching hospital of the SAITM has been constructed with having all the necessary medical equipment, amenities and laboratories. Yet, according to him, there is a problem. This problem is significant. That problem is that this hospital has no enough patients for clinical practices of the medical students. It is clear that no good medical doctor would be produced without proper clinical practices. So, the solution is fraudulently simple. Nationalize the hospital, so there will be enough patients for SATM students – And leave the medical school intact. The profit center of the monopoly will remain as it is. The nation should reject this fraudulent solution. 

The second solution is to run SAITM as non-profit educational organization. Before, we consider this proposal we must first look into the ultimate proposal put forward by the GMOA. They want to nationalize the Malambe Medical School. This too is not a reasonable proposal because economically the nationalization would reduce total national proceeds and reduce capital accumulation in this sector of the economy. If we left this to happen, the country will only be able to talk about the past relative glory of our public medical education not about the future glory. Hence, I think, GMOA must be open to dialogue in this subject and must do their homework with the support of a few talented economists before they issue an ultimate solution to the government.

It is true that even under capitalism the common interests must be produced by the government. But at the same time a greater prudent effort must be made to increase the national proceeds from which most of the capital and consumption money are allocated. Tax money which is the core income of the government that used to produce common interests is also a part of the consumption money allocated by enterprises. Without enterprises there will be no production of common interests by the government under capitalism.      

However, medical education is not a common interest that should be produced completely by the government. GMOA has accepted this. Even without SAITM, in the broader sense the medical education will continue as a partial common interest produced by the government. That is why Sri Lanka Medical Council (SLMC) and the GMOA accept the registration of foreign educated medical students subject to certain parameters. Since, I do not think that GMOA should be against for the increase of national proceeds and local capital accumulation of this vital sector. If social justice is a concern in private medical education then there are numerous market based solutions with a few macroeconomic adjustments to resolve such problems. .

Now, you may understand that the solution to run SAITM as a non-profit organization is no solution. It will deprive the creativity and the capital accumulation and reinvestment. This solution is worse than the nationalization.

The third solution is to run the SAITM as a joint private and public enterprise listed in the stock market. No monopoly will become a free and competitive enterprise by having sold a certain amount of equity to the government and by listing it in the stock market. Broad based share owning does not change the monopolistic nature of any enterprise.

If the government is honest in finding a true viable solution, the best thing is to uphold the principle of free enterprise mechanism in the partial production of medical education so as to ensure the efficiency of resource allocation and to ensure having efficient price mechanism to protect consumers. If you look at the financial statements of SAITM, you may easily understand that consumer rights had been violated so drastically by this monopoly. However, until the government establishes a suitable framework to put in place to have free enterprise mechanism in private medical education, the government should in collaboration with the GMOA and SLMC, establishes a suitable regulatory framework to regulate SAITM to protect the consumer rights, social justice and educational standards.