Country Has Fallen Due To The Socialist Thinking   

By Harsha Gunasena –

Many are in the opinion that the economic crisis faced by Sri Lanka is getting eased. Now we do not have 13-hour long power cuts. We do not have to stay days in fuel queues. Staying in collaboration with the fellow citizens at gas queues or using firewood for cooking are no longer necessities. However, there is a possibility that reemergence of this status.

The inflationary trend of the prices of the goods especially the food items cannot be borne by many. The lower middle class is gradually becoming poorer.

There is a common consensus among the mainstream economists other than the economist who directly contributed to the present status like W.D. Lakshman, in order to overcome this problem

It is this. Sri Lanka was forced to inform the debtors abruptly that the country was not able the service the debt. This was due to the undue delay of the authorities concerned. Therefore, there should be negotiations with all the debtors for restructuring of the debt. This is not an easy task since one of the holders of sovereign bonds in USA, Hamilton Reserve Bank filed a court case against Sri Lanka demanding the total payment of the debt. In addition to that, China, a major holder of bilateral loans to Sri Lanka announced that they were not in favour of restructuring the debt. Instead, they were prepared to grant fresh loans to repay the old loans.  Sri Lanka should produce the future economic plan along with the debt restructuring report to the International Monetary Fund. If it is approved Sri Lanka will get funds to overcome the current balance of payment crisis. This process is being carried out now. During the interim period Sri Lanka should obtain temporary debt from friendly countries to maintain the economy. Thereafter an economic plan focused on exports and foreign direct investments should be implemented. 

The future economic plan to be presented to IMF, mentioned above, should include selling goods and services of government owned entities at the market prices and not at subsidized prices. This happens now. In addition to that all government enterprises including Ceylon Electricity Board and Petroleum Corporation should be restructured. Restructure means either privatization or to introduce joint ownership of government and private sector such as Sri Lanka Telecom or managed independently of the government such as Temasek Holdings of Singapore. The last solution is not possible due to the Sri Lankan political culture. Therefore, first two solutions are to be considered.

Increasing the government revenue is also in the agenda. Those who can pay should be taxed rather than those who cannot pay. This whole process is focused on the state, not on the people. The state is bankrupt and not the people. Therefore, primarily the state should be restored. Then the focus should be on people. There is no existence of the people without the state.

The main reasons for the preset situation of the country are that the long-standing budget deficits of the country, the long standing trade deficit of the country and the idiotic decisions taken by the Gotabaya Rajapaksa government.

It is the responsibility of the government to provide relief to the real people who are affected by the reform process. In the past, people who were not deserved to the benefits of the subsidies were getting subsidies. An example was that the rich also got benefitted by the fuel subsidy.  The good news is that the IMF approves the assistance to the vulnerable groups.

Government enterprises degenerated to the current situation since the successive governments have filled the vacancies of these enterprises with their henchmen. Gotabaya Rajapaksa tried to rectify this situation, but he failed. These enterprises have powerful trade unions comprising of those henchmen. In these enterprises it is very rare that employees work efficiently. Even though they work efficiently there are no proper systems to pay them higher salaries. Therefore, employees ae not enthusiastic to work hard. Promotions are mainly based on seniority and hardly on meritocracy. 

If Sarath Fonseka appointed his field commanders based on their seniority the country would still be engaged in the war. Setting aside the tradition he appointed the field commanders based on their ability. Shavendra Silva was one of them. There are no trade unions in the army. 

There is an exception to the above critique of the trade unions. That is the fact that the working class got their rights against the suppression of the authoritarian governments through the fearless struggles of the trade unions.

When Gotabaya Rajapaksa came into power there was a massive trade union action against the government decision to lease the East Container Terminal of the Colombo Part to Indian Adani Group. Finally, the government had to give in to the trade union demands. According to the prevalent socialist thinking of the country even if the government does not have funds to develop the state properties the government should incur such expenses. Borrowing at high interest rates is not an issue to socialists. The country has fallen  due to the socialist thinking of the citizens.

These socialists believe that the state-owned enterprises should continue to be kept under the government even though the management is inefficient. However, they were not concerned about the dangerous trend of rising inequal distribution of income of the country. What they should have demanded from the successive governments, was to reform the tax structure of the country enabling the masses to enjoy the benefits of the development. It was closer to the socialism and allowing the government henchmen to ruin the state enterprises is far away of socialism.  

Socialists were pressuring for subsidies to the poor and the successive governments kept on increasing the subsidies in order to get votes. Socialists did not pressurize the governments to not to allow the rich to enjoy the same benefits of the subsidies as the poor. Everybody was happy with the socialist thinking.

This socialist thinking was going in line with the collectivist social behaviour of the Sri Lankans. One of the main characteristics of this behaviour is that to support the members of the in-group against the members of the out-group under any circumstances. (He is our man) Individualistic behaviour of the capitalist societies brings in efficiency, rule of law and meritocracy. This is what we need now.

Some politicians who are not economists do not agree to the restructure of the state-owned enterprises.  Vasudeva Nanayakkara is one of them. They were responsible of spreading this backward thinking among the people.

The Country is at a crossroads now. All should come to an agreement that how should we face this economic crisis. If any group oppose the common idea presented by the economists which is to seek the support of IMF and find out solutions to the problem of budget deficits of the country as explained, they should present their alternative solutions now since the stove is getting heated and we are in the pan.  

This alternative solution was experimented by the Central Bank Governors W.D.Lakshman and Ajith Nivard Cabraal advised by P.B. Jayasundara during the Gotabaya Rajapaksa government. The country is in this situation because of that experiment.

The country moved backwards over decades due to the policies we have adopted which were not sustainable. Therefore, if any group oppose to change these policies, changes cannot be done under a democracy where all the democratic rights are granted.  

The minimum requirement would be to abide by the constitution. it is a considerable condition in a country where the president, the parliament and the judiciary betrayed the constitution. 

Under the five star democracy when the trade unions agitate the government should withdraw the plans of privatization of government institutions. When the civil society opposes the government should withdraw the declaration of emergency.

Trade Unions and some politicians would not like to swallow this bitter pill. If all the people do not like it we can have a common consensus that we all will continue to stay in this filthy pit. If only few of them disagree to the proposals, it should be continued even with the imposition of the emergency law.

The reason is that the state and the continuity of it is most important and not the people or democracy. People are secondary and democracy is tertiary. Five-star democracy comes thereafter. This is not promoting dictatorship but demoting sabotage.

By this time many civil society activists and academics have expressed their disappointment against the imposition of emergency. Not only that. International human rights organizations and international community also were against it. The President said that he will withdraw the law of emergency, but I guess that it will be needed to implement the proposed economic reforms.

The ideal method of coming out of this situation is to form an all-party government. Such a government would be in a better position to handle this. The politicians of this country and the people worked against the country. All of them worked for their own short-term benefits rather than the long-term benefits of the country. Therefore, it would be difficult for a new government coming after a general election to implement these long outstanding painful economic reforms. 

This is the time to do it. On the other hand, we have no time to waste till the next election. If the political parties are not willing to join an all-party government, the president will have to work alone since he has taken the responsibility.

At that time law of emergency would be reimposed against the persons who would oppose the economic reforms.

Change of political culture demanded by the Aragalaya youth and the people should have been done thereafter. Not only the political culture but also the culture of the people should be changed since the political culture is a subset of the culture of the people. Drastic changes should be done one after the other and not simultaneously. 

Therefore, in this critical time priority should be given to the economic reforms which could not  be implemented for a long time. I believe that all segments of the society should understand this.

 

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