Gota’s Viyathmaga and a Government at standstill
Posted on May 27th, 2018

By Dr Nalaka Godahewa Courtesy The Island

American economist and social theorist Thomas Sowell once said,  “The big divide in this country is not between Democrats and Republicans, or men and women, but between talkers and doers ”

When a powerful minister of the government gets into a panic and issues a press statement criticizing a speech made by an ordinary citizen at a non political event there is some thing bizarre about it. That is exactly what minister Malik Samarawickrama did a few days ago.  When we see his statement challenging the economic views expressed by Gotabhaya Rajapaksa in his capacity as the chairman of Viyathmaga at the recently concluded Annual Convention 2018, invariably the above quote by Thomas Sowell comes to our mind. Minister Samarawickrama represents a government, which has only been talking for more than three years whilst miserably failing in delivery. On the other hand Mr Rajapaksa comes with a proven track record of delivering results whenever he was entrusted with responsibility. So here is a clear divide between a talker and a doer.

It is no secret that the economy of this country is sliding down hill. During the last three years of the previous government, the average growth rate of the economy was closer to 7%.  In 2015 under the new government it dropped to 5%. In 2016 it was down to 4.5%. By 2017 it had further slipped to 3.1%. Though the current government came to power promising 1 million new jobs, the reality is that the 8.4 million jobs that were available in 2014 had come down to 8.2 million by the end of 2017. The stock market has lost Rs 215 billion in market capitalization over the last 3 years. Since January 2015, the rupee has depreciated by about 19% and the foreign debts commitments have increased by rupees 886 billion as result. The unsettled national debt has gone up from Rs 7,391 billion to Rs 10,400 billion by 2017, a 40% increase in just 3 years. Meanwhile the tax burden had gone up by 60% compared to 2014. In 2017 the government collected rupees 620 billion more taxes than in 2014. In 2018 government is expected collect one trillion more taxes than 2014, which will be a 100% increase. Despite these huge tax increases, the benefits to people have not increased. No new roads, no new hospitals, no new schools have come up. Though there was a promise to allocate 6% of GDP for education 3% for health during election times, the real allocations still remain at 1.9% and 1.5% respectively.

Whilst the economy is struggling, the current government has presented nine different economic policy statements during its first thirty-six months in office and apparently the tenth is also on the way. Accordingly no one knows which policy document they intend to implement if and when they wake up from the deep slumber they seem to be in currently.

In a press statement where he has taken great pain to scrutinize the speech delivered by the chairman of Viyathmaga, the minister claims that Gotabhaya Rajapaksa had borrowed the idea of a ’ social market economy’ from the UNP’s election manifestos. The minister should consult a doctor as early as possible because he could be suffering from serious hearing problem. On the other hand it could also be his genuine lack of understanding of modern economic theories. Gotabhaya Rajapaksa never spoke of a ‘social market economy’ at the Viyathmaga convention. He was referring to an economic model called ‘ the socialist market economy’. This is an economic system and model of economic development employed in China since 1980s. It is a well-estab

lished and widely researched economic model that any economist would understand. The term “socialist market economy” was first used during the 14th national congress of the communist party of China in 1992 to describe the new economic reforms. It is not some thing that economic advisers of the UNP have invented. More significantly, the UNP manifesto of 2015 uses the term ‘social’ and not ‘socialist’. There is a big difference in the meanings of these two words.

Currently, China is the second largest economic power in the world, the first exporter and has the highest foreign exchange reserves.  For several years, China experienced an average GDP growth of close to 10% per year until 2014, raising per capita GDP almost 49-fold, from 155 current US Dollars (1978) to 7,590 US Dollars in 2014, lifting 800 million people out of poverty, an unparalleled achievement. In urban centers in China, poverty has been virtually eliminated. By 2030 China is expected to be the world’s largest economy. There is no harm drawing attention to the  proven economic model of China at a forum, which was intended to provoke an intellectual discussion on the need for a clear economic vision and a policy framework for Sri Lanka. Incidentally, the theme of Viyathmaga convention 2018 was ‘An intellectually Inspired Sri Lanka’.

What Mr Rajapaksa proposed in his speech was that Sri Lanka should look for an economic model on the lines of ” social market economy’ whilst protecting our countries sovereignty and social values. He proposed that one should look at other successful Asian models also and learn from them. Except those countries that got rich exploiting some other countries during colonial times, all other countries that achieved true development in the past have used their own economic models. Dr Mahathir Mohamad in Malaysia, Lee Kuan Yew in Singapore, General Park Chung-Hee of Korea and Deng Xiaoping of China found indigenous economic models to bring prosperity to their respective countries.

There are some commonalities in the approaches adopted by these countries in developing strong economies. For example, strong emphasis on developing exports markets, investment into high quality infrastructure, foreign relations tide to commerce, emphasis on human capital development, skilled and motivated workforces, less red tape, driving innovation and entrepreneurship and heavy investment into technology transfer are some of these.  Despite the adoption of open economic policies almost all these countries have a strong state sector involvement in their respective economies. They also provided necessary protections for their local industries while grooming them to be competitive in the global markets.

The economic pundits of the current government may have mentioned some of these concepts in their numerous economic policy write-ups. But none of them are their original thoughts. The core issue here is the inability of the government to execute any of these plans. That’s why the people are waiting for the first opportunity to see the back of the most incompetent government to rule Sri Lanka since independence.

As Gotabaya Rajapaksa pointed out in his speech, the objective of Viyathmaga  is to mobilize the expertise and knowledge of its  members to deliberate, innovate and develop strategies and policies which would influence the top level decision making for the greater good of the society. In that regard our foremost priority at this stage should be the economic development of Sri Lanka and its people.

We live in a world, which is constantly evolving. Solutions that worked at a particular time may not be that appropriate at a different time.  Mr Rajapaksa’s message in his keynote speech was that we should be flexible in our thinking and develop our own people centric economic model where the ultimate goal should be the sustained prosperity and the well being of all people living in the country.

His concluding remarks given below summarize his thinking on the economy.

“The economic growth of a country depends not only on the government policies but also on those who implement those policies.  Growth of the economy depends not only on the inflow of capital but also on those who execute and manage those capital investments.  An economy does not grow simply based on the theories put forward by economic pundits but it is driven by the people who empower it, Finally, If you want to understand the real economy of the country look at the lives of ordinary men and women; the workers who travels daily by bus to work and the farmers who toil in the field”

That is why Viyathmaga is deliberating a people centric economic model for the country.

One Response to “Gota’s Viyathmaga and a Government at standstill”

  1. Dilrook Says:

    GDP growth rates given are selective and misleading.

    The drop in GDP growth rate is happening since 2012. It didn’t start in 2015. In local parlance this is called “bahina kalawa”.

    GDR growth rates

    2012 – 9.1%
    2013 – 3.4%
    2014 – 5%
    2015 – 5%
    2016 – 4.5%
    2017 – 3.1%
    2018 – 4%

    The problem is structural.

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