Mon, 25 Oct 2021 Today's Paper

Secret of post-pandemic economic recovery is found in English alphabet

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Thanks to the timely, swift, firm, systematic, coordinated approach and action taken by the government and more thanks to the absence of parliamentarians, the first phase of the COVID-19 pandemic was successfully brought under control in Sri Lanka. 


The Indian Prime Minister went for a countrywide lockdown option to bring the epidemic under control. It reduced the pandemic-caused misery but aggravated the economic misery. The Pakistan Prime Minister was wavering between lockdown or not and weighing the number of deaths caused by the pandemic and starvation. 


Many other countries, both developed and developing, experienced an unprecedented loss of lives, livelihoods and assets during the pandemic. 


Sri Lanka experienced a drastic decline in deaths during the islandwide lockdown period; no road accidents, as motorists were at home; no assassinations, as notorieties were at home. Immediately after lifting the lockdown, the daily papers started getting filled with news of ‘new-normalcy’. 


The daylight murder of the Chairman of the Three Wheeler Association within the earshot of peacekeepers in a police station signalled that the notorieties are back in business. A mother who took the child to a doctor was hit by a motorist. The mother was in good health; the child was sick. Both returned home in a coffin. 


Sorry, I forgot to mention another sign of new normalcy; the return of economists. Print, electronic and social media and webinars are full of their views. I mean their opinions as well as their pictures. They invade the media faster than the COVID-19 pandemic. 


A friend asked me whether the economists were confined to quarantine during the lockdown period. My response was it was not the economists but their economics under quarantine. 
Proposals have been flowing out, overflowing and flooding from economists attached to think tanks, associations, alliances, federations, chambers, foundations and many forms of gatherings on the revival of the economy. The only exception was the universities, which are cautious to break their customary silence on such nationally important issues.    


For some, it is recovery; for another, it is revival; for the rest, it is rebounding. Ignorant ordinary laymen wonder whether Sri Lanka had an economy to recover, revive or rebound. They do not have access to published figures such as GDP per capita declining from 4,081 in 2018 to US $ 3,853 in 2019; Sri Lankan exports, which are still primarily geared towards textiles and garments, are where they were 20 years ago; their share of global exports is at 0.06 percent; consistent deficits on the trade account over the past several decades. But, they feel the impact. 


Their cultivation is uneconomical; they cannot sell what they produce; they do not have paved roads; they do not have a proper shelter; they have no access to clean water, sanitation; their children are starving; they continue to remain poor. However, their children are in universities, thanks to tuition, which occupies a giant share of ‘free education’. 

 


No shapes beyond ‘Z’
Economists and organisations argue and counter-argue about the post-pandemic economic recovery. For some it is ‘V’-shaped; another it is ‘U’-shaped; for others, it takes the ‘W’, ‘X’, ‘Y’, ‘L’, ‘M’, ‘N’, ‘Z’ shape. Unfortunately, there are no shapes beyond ‘Z’. As someone says, the Englishman is wiser. He restricted the number of letters in the alphabet to 26. He knew one day economists would use the alphabet more than the linguists. 


The proposals made by our economists for the revival of the economy have, mostly, been influenced by the neo-liberalistic ideologies. These economists argue that our economy stands on four pillars: tourism, exports, foreign direct investment and remittances of the Middle East workers. COVID-19 disturbed all four sources. They propose to take measures to revive them for the revival of the economy. Revive what? Have we been doing well before the pandemic? 


We had an ailing economy for decades. One Central Bank Governor said that our economy is on a sickbed. Fortunately, he opted to retire before the economy was taken to the mortuary. COVID-19 is quite a cloud; our economists are looking for a silver lining. The blessing in disguise behind the pandemic is the opportunity provided for fresh thinking; not to revive the ailing economy but to lay the foundation to build a strong economy. We need out of the box thinking. 


Take the above four sectors. They add to numbers but not to growth. They are arithmetic but not structural changes. They canvass among foreign nationals but not among the local producers. They conduct promotional campaigns in foreign capitals but not in rural Sri Lanka. They have forward linkages but not backward linkages. Revival and growth of those sectors will earn foreign exchange but not make much impact on the domestic economy.


The BOI knows all about the potential investors but clueless about the potential investment opportunities available in the country. The Tourist Board knows the needs of foreign tourists but is in the dark on tourist attractions available in the countryside. The Export Promotion Board knows the taste of foreign consumers but insensitive to the needs/issues of the export producer. 

 


The Foreign Employment Board knows the lifestyle of the Middle East Sheikhs but ignorant of the lifestyle of the poor migrant workers.  They go out to canvass and conduct roadshows, promotional campaigns, fairs on foreign land. They go into the countryside for fresh air. They recite tales to woo the foreigners; they don’t hear the tales of woes of locals. This is the economy that our economists wish to revive.


COVID-19 has taught us isolation and distancing. It covers physical, social, emotional aspects. Those who went to the pub take a drink at home alone. Those who went for meetings resort to Zoom and webinars. Those who went out for social gatherings are meditating. Wives are wondering about their husbands’ changed behaviour to be so caring and loving. 


The economists, who are under self-isolation, are frightened to isolate the economy. They want it to be kept tied to the global external economy. They argue that the Sri Lankan market with a population of little over 20 million is small. We should, therefore, go out. Of course yes. But, with what? Do we produce goods that are in demand, with quality, exclusivity, cost-effectiveness, exceptionality, regularity and quantity?

 


Lose sight of  home market
Our binoculars worn economists see the market outside but lose sight of the home market. The four most populous countries in the world, China, India, Europe and the United States, find a market in Sri Lanka. Australia does not find a market and therefore, sells education in Sri Lanka. Others who cannot find a market dump junk food, drugs, prostitutes, factory rejects and lately the waste and garbage in Sri Lanka. 


Imports have been on the rise while exports declined to experience a trade deficit for decades. You go to an international food chain to taste ‘hela bojun’ and go to Apegama in the vicinity of Parliament to see bullock cart, mortar and pestle. This is the economy we inherited from globalisation. 


Neo-liberalism is associated with means (policies of privatisation, deregulation, globalisation, free trade and austerity) and ends (reductions in government spending in order to increase the role of the private sector in the economy). Unfortunately, eyes of economists are wide open to means but tightly closed to the ends.


Liberalisation in 1978 has left our economy debt-ridden with rising deficits in the budget, balance of trade, balance of payments. This was mainly because we were interested in forward linkages at the expense of backward linkages of our production sectors. Freelance book critic George Scialabba, who was awarded the first Nona Balakian Excellence in Reviewing by the National Book Critics Circle, described neo-liberalism as “the extension of market dominance to all spheres of social life, fostered and enforced by the state”.


The proposals came from economists were dreams, hallucinations, ludicrous, imaginations, run of the mills, theory-laden, possibilities and potentials. Some say it should be people centric. It is stating the obvious. Some proposals are for the continuation of dichotomy. One for the macroeconomy; the other for the microeconomy. World-leading automobile Toyota is not a production of few hands inside the factory. It is a collection of a large number of products from nut and bolts to the engine. 


Similarly, macroeconomy is the aggregation of micro economies. Economic development should embrace both. Some suggest attracting elderly American, Chinese and European tourists to visit and stay in Sri Lanka for periods of around 100 days during the next winter season 2020/21 by carrying out a global promotion campaign for this purpose. Do I need to say more about proposals?

 


Alvin Roth, who won the Nobel Memorial Prize in Economic Sciences jointly with Lloyd Shapley in 2012, wrote: “In the long term, the real test of our success will be not merely how well we understand the general principles, which govern economic interactions but how well we can bring this knowledge to bear on practical questions of microeconomic engineering”.


We look at the symptoms but not the causes. We look for arithmetic solutions, not strategic solutions. Reduction of direct taxes provided a topic for economists to argue forth and back and write columns; they have ignored that direct taxes contribute only 18 percent of the total tax revenue. No suggestions were made to increase the tax base. It is strategic and not found in their books. They analyse the events but never the trends. Slight improvement in exports during a month will occupy pages to discuss the silver line in the cloud.


The reputation of globalisation took a knock with COVID-19. Economists in developed countries, who preach globalisation as panacea, are busy in looking for alternatives. Our economists are busy in holding globalisation. Other countries address the issue connected to COVID-19 with pragmatic approaches. 


But ours are carrying the theory taught by professors. The mere mentioning of the domestic economy sends shrills through them. It is inward-looking and import substitution but not lessening import dependency, enhancing food security, resilience, dynamism and value addition.


The need of the hour is a mix of macro and micro economic, structural, pro-poor and climate-friendly economic policies to build a post-COVID-19 Sri Lankan economy.


(Chandrasena Maliyadde has served as  Secretary to three ministries before his retirement. He is currently Vice President of the Sri Lanka Economic Association and a University Council Member. He can be reached via chandra.maliyadde@gmail.com)

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See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.