e-Con e-News

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‘Before you study the economics, study the economists!’

e-Con e-News 01-07 September 2024

Elon Musk’s Starlink, just like the IMF, wants to wait & see how our elections go, before they divulge their mysterious plans for Sri Lanka. Thus, their groupies & fanboys & fangirls breathlessly tell us: ‘Authorities are planning for a Zoom meeting with Starlink.’ However, the world is not wholly made up of such disoriented sycophants.

     Zimbabwe has had to face severe sanctions, as imposed by the USA. The recent decision by Zimbabwe to give the go-ahead to Elon Musk’s Starlink, however, is being viewed as a failure by Zimbabwe’s ‘indigenous cellular networks to invest adequately’. Indigenization in Zim Telco failed because of ‘self-centered indigenous entrepreneurs who only enriched themselves without R&D and developing Telco. (see ee Quotes)

     As the critics of Starlink in Zimbabwe show, unlike our craven merchants, there are still independent people in this world who don’t salivate while stargazing at celebrities. They don’t believe in fairytales of superstars & entrepreneurs. They know such ‘prodigies’ are a product of a larger machinery that invents inventors & manufactures manufacturers, and makes machines that make machines. The Hollywood media glorification of the Jobses & Gateses, Musks & Zuckerbergers are pure squalid puffery, like some slime-ridden Fortune 500 listing. Behind these individualized superstars are large armies of workers, including the weaponized divisions of the largest imperialists in the world.

     Sri Lanka’s import-export colonial plantation oligarchy – so addicted to the North Atlantic (where they stash their wealth & relatives) – are reluctantly waking up to the blockages put up by NATO’s wars in East Africa & West Asia, in East Asia & right here in the ocean around us, which remains a colonial lake. This week’s targeting of Swedish instructors training operators to conduct deadly attacks on Russia, made us also think about the role Scandinavian countries like Sweden have played in the old slavery & colonial game. Sweden’s Nobel, it may be recalled, was one of the main instigators of the slide into Europe’s World War 1… (see ee Focus)

• The last few ees have shown how ‘the colonial project created an international division of labour to ensure that the colonized would never achieve modern industrialization’, placing tailor-made fetters on Sri Lanka’s fiscal & monetary sovereignty to perpetuate such underdevelopment. Also noting how Bangladesh’s IMF agreement has furthered economic disaster, and will accelerate long-term chaos. It turns out that the IMF seeks to block the state’s ‘capacity to intervene’ so that it cannot ‘promote domestic industrialization’. This ee looks at the agents in these acts of sabotaging industrialization.

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University of Colombo professor Sirimal Abeyratne is Chair

of the Central Bank’s Stakeholder Engagement Committee

of Sri Lanka, which he does not declare in his weekly

column on ‘Down-to-Earth Economics’ in The Sunday Times

– see ee Focus, Imperialist Seduction of Central Bank Officials,

Economists, Professors & Newspaper Columnists

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England’s government is still busy, ‘worried’ about us, from still so far way, worried about the conduct of capitalist elections (they’ve sent spies here dressed up as ‘Commonwealth’ experts to monitor them, see ee Random Notes). Their English ruling class has shown us how to put on expensive farces, like their recent election which replaced as Prime Minister an Indo-African moneylender who claimed to be an Englishman with a knighted Scotsman disguised as a Labourite – who upholds the same imperialist policies as his Conservative predecessor. The English government has also published a book to tell us how we should run the economy: Sri Lanka: from Debt Default to Transformative Growth, An Essay Series, edited by Ganeshan Wignaraja & Dirk Willem te Velde:

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‘Launched on August 22 by ODI global affairs think tank,

ahead of the polls, this collection of essays features contributions

from renowned Sri Lankan & international experts delivering

27 concrete proposals on how to steer the country from

debt distress to a path of lasting economic prosperity’

Ooops! What on earth is ODI? Is it cricket? No, it is a department of the English state! England’s Department for International Development (DFID)’s Overseas Development Institute (ODI). And what the book inadvertently offers (midst a cataract of innocuous-sounding acronyms like ODI, DFID, etc) is a glimpse into the (we won’t call it corrupt, even if it smells & sounds, & feels like it; let’s call it for what it is: capitalist) nexus of imperialist governments & public officials in Sri Lanka: diplomats, those ‘independent’ Central Bank officials, universities, and independent ‘think tanks’, etc.

     Even FT columnist Charith Gunawardena writes on ‘ODI’s ‘From debt default to transformative growth?’: ‘While pragmatic on the surface, [the book] fails to address the root causes of Sri Lanka’s economic challenges and overlook the importance of prioritising the wellbeing of its people & the environment.’

     So, here’s yet another expensive English lesson about Sri Lanka’s current despond, and the chemistries being injected to revive the old import-export colonial plantation system. There is absolutely no mention in the book, of the need for a policy of modern machine-making industrialization and the path we must take to achieve this. But why should the English, home of the first Industrial Revolution, tell us? Don’t do as they say. Do as they do. The only machines referred to in the book are when one ‘Professor’ speaks of the Sri Lankan ‘rich who drive cars that consume high levels of petrol and who are able to use air conditioners & washing machines in their homes’ (Devarajan).

     Shantayanan Devarajan is a well-domesticated yankified student of Princeton & Berkeley, a World Bank hack, who taught at Harvard Kennedy School, and has now been rewarded as a Professor of the Practice of International Development at Georgetown University’s School of Foreign Service. Devarajan’s concern is taxes. He blames regressive tax policies that subsidize such lifestyles of the ‘rich’. Yet he acts unaware of the policies that only promoted the old policies of the spendthrift white non-settler colonial white man. And ultimately, his attack is on any attempt by Sri Lanka to industrialize. Devarajan is a big fan of the import-export mafia & their fake industry:

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‘One case [where there] was rapid economic growth & poverty reduction. That

was in the late 1970s, when the country decided to remove import barriers. At that time,

there was great concern that import-substituting firms, & therefore the manufacturing sector,

would collapse. The small garment sector that catered to the domestic market feared that it

would not survive the influx of cheap imports. Instead, when trade was liberalised,

the economy boomed. Per capita GDP growth accelerated. The unemployment rate fell

to 4%. Rather than collapsing, the garment sector took off, thanks to cheap

imported inputs & foreign investment. In per capita terms, Sri Lanka’s garment

exports to the US far exceeded those of Bangladesh, China & India.’

Shantayanan Devarajan, Accountability:

The Key to Sustained & Inclusive Growth in Sri Lanka

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The fraud of the so-called ‘garment industry’ is exposed here in an excerpt from the parliamentary Hansard, in SBD de Silva’s The Political Economy of Underdevelopment:

‘Hon R de Mel [Minister of Finance]:

In other words, up to date the only attraction in Sri Lanka is to collar the quotas

which are still available to Sri Lanka. Korea has exhausted her quota. Hong Kong

has exhausted, Singapore is exhausting; so the only thing [foreign investors]

find attractive in Sri Lanka is to collar Sri Lanka’s quota. Do you agree?

Mr AY Gnanam [a leading Sri Lankan industrialist]: I agree.

Hon de Mel: Could Sri Lankan industrialists not have got this quota

and done this industry without any foreign help?

Mr Gnanam: If you had announced your offer of a 5-year tax holiday

to industrialists in your last but one Budget, then all the garment industries

would have done very much better than anyone else, because Sri Lanka has

got the best garment industries… If they were allowed to export [with a tax

holiday] they would have done without the Free Trade Zone.

de Me1: In other words, the FTZ has only deprived the Sri Lankan industrialists.’

(‘Parliamentary Series No17 of the 1^st Parliament

of the Democratic Socialist Republic of Sri Lanka,’

2^nd Report, 22 Feb 1980, p27l)

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•‘Sri Lankan market too small for entrepreneurs, industrialists to survive: AKD,’ headlines the Daily Mirror. Adding: ‘An NPP government will establish trade embassies in the African region to find emerging markets there… Only 3.8 million people out of the 22mn population come to the market for commercial purposes on a day, whereas some 400mn people come to the market in India.’ While it is possible the JVP leader is being misquoted, as some of the more intelligent responses in the Comments Section point out: ‘This comment seems off. No market is too small for entrepreneurs; markets should always be viewed in proportion. Many European countries have much smaller populations than Sri Lanka but are highly entrepreneurial & industrialized.’ Also: ‘Singapore has a small population with a small market… Switzerland has a small population & small market.’ The arguments against industrialization come at us fast and furious from all directions….Left and Right, South, North, East and West.

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• The Asian Progress Forum is launching The Political Economy of Sri Lanka’s Debt Crisis on Tuesday, 10 September, at 4pm at the Russian Centre, 10 Independence Avenue, Colombo 07. This made us recall how there is a lot of hasty talk about ‘political economy’ these days. But are Sri Lanka’s economic challenges only about debt and balance-of-payments? What are the missing notes, in this daily recited mantra about how lazy & entitled we act… Is everybody living beyond their means, or is it a particular class? And what about happiness? How do we build this path to happiness? Do we import the materials & skills?, or don’t we also have to build the builders & the materials with our own resources? Do we keep importing a happiness that adds to more misery – importing a happiness of fleeting conspicuous consumption that multiplies debt only paid in part by exporting our wealth or workers & resources? An imported happiness that puts off our most needed priorities, a strategy for modern industrialization?

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• Sri Lanka finds itself being tagged to the latest headline news. The latest is the recent arrest by France of billionaire Telegram founder Pavel Durov, who is also a citizen of St Kitts & Nevis, through its Citizenship by Investment Program. St Kitts & Nevis is also a tax hideout to the Hamilton Reserve Bank, which has taken Sri Lanka to courts in New York asking for full repayment of $250million plus interest in arrears. The Hamilton case is seen as a diversion to put more pressure on the country. Sri Lanka’s finance ministry proudly announced an agreement with the ad hoc group of International Sovereign Bond (ISB) holders who hold ~50% of the total debt liability. Yet there is still no final agreement – it has to be endorsed by all of the ISB holders, especially Hamilton Reserve Bank, miscellaneous creditors, & the IMF! Meanwhile, there is little sunlight about the bond holders, including ‘some of the world’s largest financial institutions’ seeking to intervene in the Hamilton Bank case against the Government.

     Elon Musk & Wall Street’s ISB sharks who are fronted by the IMF will just have to keep up their act of waiting…

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Contents:

Fake Free Trade Zones & Naked Garments: Caging Sri Lanka’s Industrialists