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The difference in "economics" between Ranasinghe Premadasa and Mahinda Rajapakse

Jun 20, 2010 11:08:01 PM- transcurrents.com

By Tisaranee Gunasekara

“Surely there is no strength in wall or ship, Where men are lacking and no life breathes within them.”- Sophocles (Oedipus Rex)

Until a few months ago, Greece was a lavish spender with defence expenditure topping its bloated budget. Using its cold war with neighbouring Turkey as justification, Greece spent more of its GDP on defence than any other European nation.

Spending far beyond its means, and borrowing to finance the consequent mountainous deficits, Greece gradually became ensnared in a classic debt trap. ‘Greece borrowed too much’, diagnosed the former Malaysian Prime Minister Mahatir Mohammad, during his recent visit to Sri Lanka. Its economy in tatters, its society in upheaval, Greece is learning that economic laws cannot be flouted with impunity and financial hubris exacts a heavy price.

The Grecian crisis is a timely reminder of the continuing validity of that old equation of guns vs. butter and its applicability beyond national production to national finance. There is a financial possibility curve as well as a production possibility curve. A country cannot increase military expenditure, endlessly, without a corresponding decrease in socio-economic expenditure. A country which seeks to evade this unpalatable trade-off by persistent borrowing will eventually become mired in a debt trap.

The 2010 budget marks a critical turning point for Sri Lanka. As the first post-LTTE, peacetime budget, it should have prioritised developmental spending over defence expenditure. Instead the 2010 budget displays a clear military bias. How else can one explain the massive Rs.24 billion increase in defence expenditure in 2010?

Logically, rationally, defence expenditure should have decreased with the victorious conclusion of the war. This is particularly so in a country which is struggling with a huge debt burden (86% of the GDP in 2009) and an unmanageable budget deficit. Economic rationality demands that such a country divert towards development purposes a substantial portion of the recourses it previously spent on the war. Irrationally, Sri Lanka chose to do the inverse; the 2010 budget makes an unequivocal choice in favour of guns over butter. And by continuing a militarist economic policy in a time of peace, the Rajapakse administration has put paid to the hope of a peace dividend. Southern expectations of immediate economic relief are fated to remain as unfulfilled as Northern expectations of rapid restoration of normalcy.

The economic thinking of Ranasinghe Premadasa can be encapsulated in one sentence: “There is no point in any development that keeps the people in hunger” (Providing Assets to the Assetless – 13.2.1989 ). Seemingly a truism, but a truism which is, all too often, observed in the breach, not just by the international financial institutions but also by many national and nationalistic leaders. In fact, the practice of demanding more and more belt tightening from an already overburdened populace is particularly favoured by leaders of the ‘organic’ variety, leaders who use patriotism and national sovereignty to bestow upon themselves the right of impunity, the untrammelled capacity to exploit and oppress their people.

In Rajapakse Sri Lanka, patriotism has become the ‘state religion’, the creed which provides the ‘unstated framework for thinkable thought’, as Noam Chomsky put it (The Manufacture of Consent). This mental straitjacket is preventing many in the South from even considering the possibility that Rajapakse Rule is inapposite and inimical to post-war Sri Lanka and that the Rajapakse trajectory cannot but end in a financial abyss. The 2010 budget should be warning enough; an administration which is seriously interested in economic development and truly concerned about popular well being is unlikely to prioritise military expenditure over socio-economic expenditure in peacetime or mire the country ever deeper in debt. The Rajapakses are doing both, and yet, they are able to pass off their economic irrationalism as patriotic forethought.

Choosing guns over butter means the de-prioritisation of vitally necessary public services, such as education and health. The allocation for education and higher education is just 18% of defence expenditure while the allocation for health is 25% of defence expenditure. According to the new Education Minister (who was a pioneering tuition-merchant) the Grade 5 scholarship exam, which enables clever students from non-privileged backgrounds to enter prestigious national schools, is unnecessary; students are failing OL and AL exams in droves because the syllabuses are too wide-ranging and questions are too difficult. Thus the solution to the crisis in the education sector is not to improve the quality of teachers and of teaching or to provide facilities to underprivileged schools, all of which cost money; the solution is to abolish the Grade 5 scholarship exam and make both OL and AL exams less difficult. In other words further reduce the quality of our education to achieve an ephemeral quantitative success – an inevitable outcome in a country which opts for guns over butter, even in peacetime.

“We have got used to treating the poor as a set of worthless beings”, observed Ranasinghe Premadasa (Speech on 4.9.1989); his economic strategy was consciously premised on the belief that the poor are a developmental asset rather than an impediment to development. Post-Premadasa, that conceptual advance has been abandoned. This is evident in the low priority accorded to poverty alleviation and employment generation in the post-Premadasa economic strategies. For example, according to media reports, some of the Chinese funded infrastructure projects do not provide even temporary employment opportunities for local people because they employ migrant workers from China. Such projects may bolster growth, but it will be a jobless growth and an iniquitous growth, a growth which causes no improvement in popular living conditions.

The latest Global Hunger Index (a composite of child malnutrition and child mortality rates and the proportion of people who are calorie deficient) labels Sri Lanka’s condition as ‘serious’. According to a nutrition and food security survey conducted jointly by the Health Ministry, the UNESCO and the WFP, Lankan households spend 37.9% of their monthly income on food and nearly a third of the households borrow money for their purchases. The monthly income of 39.1% of the households is less than Rs. 9,000 while 32% of the households ‘did not have enough food’ at least once during the previous 12 month period. The ‘Build Baby, Build’ approach to development has not only devastated the environment and increased exponentially, the possibility and the potency of certain natural disasters; it has also failed to improve the living standards of the majority of people, except marginally and incidentally.

Hambantota is a metaphor for Rajapakse economics. Hambantota has been the family bastion of the Rajapakses for decades; after Mahinda Rajapakse assumed Presidency, the district was inundated with massive infrastructure projects, including a harbour, an airport, an international cricket stadium and a mega convention centre. Hambantota is said to be busier than an anthill. And yet, Hambantota has a very high rate of child malnutrition. This anomaly is a logical outcome of Rajapakse economics, which in reality runs counter to that truism Ranasinghe Premadasa never forgot – development is not development if it keeps people in hunger.

As a grade 11 student participant of an island-wide essay competition (organised by the Premadasa Centre) to commemorate the 80th birth anniversary of the late President said, “If the ‘development’ of a country goes hand in hand with the worsening of the living conditions of the people, for whom or for what is that development? A developed country for a malnourished people – is this not an insanity? Must the people of the country gaze at highways like a child looking yearningly at an empty ice cream cup? Should the people eat stone or tar, when development fails to eradicate hunger?” (quoted in ‘Ran Piyawara’ – a publication of the Premadasa Centre).

Budgets are omens; they indicate the nature of a country’s trajectory and the direction in which it is headed. The clear military bias of the 2010 budget is an ominous indicator of the character of post-war Sri Lanka. A country which spends fare more on defence than on education and health combined, and slashes the import duties of luxury vehicles while increasing the import duties of essential food items is a country which favours the interests of the rich and the powerful over the poor and the powerless. The wages of this counterproductive and anti-developmental prioritisation of guns over butter is being paid by the ordinary people in the form of high costs of living, deteriorating living standards and poor services. And patriotism is used to obtain the consent of the Sinhala majority for this anti-popular economic strategy.

And, yet, there is a method in the madness that is Rajapakse economics. The irrational lopsidedness of budgetary allocations fits in with the goal of a national security state. The Defence Ministry is increasingly encroaching on civilian territory; the acquisition of the Urban Development Authority has been followed by the acquisition of the NGO Secretariat. Government propagandists openly talk about the need to win the developmental war the same way the war against the Tigers were won. For instance, the controversial acquisition of the UDA by the Defence Ministry was explained as a step taken to expedite development. This acquisition was followed by the forcible eviction of several low income groups from their dwellings in prime locations in Colombo. Many of these people were long standing residents and quite a few of them legal owners of their properties. For instance, many of the evicted residents of Mews Street had been granted legal ownership of their houses by the Premadasa administration. When the householders resisted the eviction, the military was deployed in full force and the South witnessed scenes which would have been long familiar to people of the North and the East – armed military manhandling unarmed women, old men and children, who were trying to protect their right to a roof over their heads, a basic measure and object of development.

Ranasinghe Premadasa once asked, rhetorically, “If as the result of the modern inventions of he scientist, the fertility of the soil dwindles, and herbs, fruit and vegetation in general are poisoned, wouldn’t that scientist amount to a murderer? If as a result of the technologist people are thrown out of employment, wouldn’t that technologist be an enemy of the people and not a friend?” (Speech at the Anamaaduwa Gam Udawa – 3.7.1988). Such rethinking has gained an unprecedented immediacy and validity, in the aftermath of catastrophic BP oil spill (and Sri Lanka’s own recent experience with floods). Similarly, the time has come to question the patriotic credentials of leaders who spend more on defence than on education and health in peacetime and drive the country towards an avoidable debt-trap with their gross financial mismanagement.

If Sri Lanka is to avoid the fate of Greece, she must rethink her choice of guns over butter and her current economic strategy which ‘scarcely touches the devastating plight of the poor and the ill-sheltered’. Would it not make sense, even from a national security point of view, to spend some of the bloated defence budget on Premadasa-style housing and poverty alleviation programmes in the North? Economic and developmental crises cause political upheavals; a country in the throes of such turmoil is not strong, even if it is armed to the teeth. In post-war Sri Lanka, real national security depends on equitable and humane development, rather than on arms. The time to make the shift from guns to butter is now, before bloated defence spending becomes the national sacred cow.