Tropical storms, public policy and Sri Lanka's development path

BY PROF. S. T. HETTIGE, University of Colombo

JEREMY Rifkin, a world famous environmental scientist, in an article published in the 'Guardian' (London), (as quoted in 'Times Sunday' on September 25, 2005.) has pointed out that the devastating storms that struck the US Gulf coast are linked to rising temperatures in the Atlantic Ocean, the result of global warming that most people have heard about.

He also points out that the US population accounting for just 5% of the world population consumes 25% of the global supply of fossil fuel. Increasing and unsustainable use of petroleum products to run an immense fleet of private transport vehicles in the United States has exerted enormous pressure on supplies of fossil fuel in the world market.

Rapidly rising demand for oil in China and India that together account for 2.5 billion people threatens to disrupt the demand -supply balance further, thereby pushing up the price of oil higher.

The countries that will be adversely affected by any further increase in the price of oil are poorer countries like Sri Lanka that are totally depended on imported oil. It is reported in the media that the profits of the Sri Lankan Airlines has been already wiped out by the increasing cost of jet fuel.

The impact can have a ripple effect across different sectors of the economy leading severe consequences.

In order to face the impending crisis, the country needs to adopt rational policies, in order to reduce our dependence on imported oil. Such policies should be inter-sectoral in scope, encompassing such areas as transport, industrial production, domestic consumption, and rural agriculture.

The necessary policy interventions are complex and a range of experts from different fields should work together to evolve an appropriate policy mix. It is not as simple as either adopting an open economic policy, lock-stock-and barrel or naively advocating a "national economy".

Unfortunately, the two main Presidential contenders do not seem to have the capacity or the motivation to grasp the complexities involved. Both seem to think that the only way to meet the challenge is to achieve a higher rate of economic growth.

They do not seem to realize that a higher rate of economic growth will not lead to sustainable development unless the liberal, market-driven model is tempered by sustainable transport policies and appropriate social sector policies.

Declining social standards

On the other hand, concerned Sri Lankan citizens have begun to wonder whether the continually declining standards in society are indicative of an irreversible trend.

Even though much of the changes we witness in the country are by and large the result of social and economic policies adopted as part of the broadly neo-liberal development strategy followed by successive governments since the late 1970s, the intervening variables connected with the unresolved ethnic conflict have allowed the proponents of the liberal development model to turn back and argue that it is lack of economic growth and the half-hearted implementation of economic reforms due to political pressure that have prevented the country from addressing issues of poverty, unemployment and poor socio-economic infrastructure.

In other words, if we did not have the war and, if we had implemented economic reforms, the country's economy would have grown at a much faster rate, leading to the creation of wealth and employment.

They point to Asian tigers as illustrative examples. The point they make is that political stability allowed these countries to concentrate on the management of the economy. They ignore the critical role that the State played there, in disciplining society, combating corruption, etc.

It is true that the war has been a critical factor over the last two decades. But, many people forget that we had five full years before the war broke out, following the ethnic riots in 1983. Developments during the period had nothing to do with the war.

They were very much the result of economic and social policies as well as the governance practices of the regime in power at the time. The issues that we are confronted with today had already begun to surface and that they got worse thereafter, to reach the dismal situation that we find ourselves in today.

The only variable that has been constant over the last two decades has been bad governance with its diverse manifestations. In other words, bad governance had been the underlying factor, far more critical than the war itself.

Bad governance

As already mentioned, negative outcomes of bad governance and unmitigated open economic policies were already evident within a few years after the adoption of open economic policies in 1977.

Corruption, widening gap between the rich and the poor, deterioration of public services, suppression of civil liberties, manipulation of the electoral process in favour of the ruling party (i.e. 1982 referendum), spread of poverty in all parts of the country, collapse of rural industries, etc. were cases in point.

The creation of a large number of ministerial positions, politicization of public institutions, heaping of undue privileges on politicians at public expense, etc. at a time when the vast majority of people in the country were struggling to meet the basic needs frustrated the ordinary masses, in particular youth. These trends continued unabated in the years that followed.

The Late Professor Ediriweera Sarathchandra, in his book with the intriguing title "Dharmista Samajaya" (lit. "righteous society"), engaged in a critical analysis of the post- 1977 developments and faced intimidation and physical harassment at the hands of ruling party activists.

He and many other critics pointed out, that unmitigated liberal economic policies contributed to a process of dehumanization of society, whereby long cherished humanistic values had given way to naked material interests.

Widespread poverty, inequality, corruption, abuse of power, misuse of public resources, undue privileges of politicians, crime and violence, spread of alcoholism, drug abuse, deterioration of public services, ad hoc decision making, cronyism, nepotism, etc. continue to be the order of the day. This is in spite of change of governments several times over the last two decades.

Social regulation

Why have we failed to arrest the trends outlined above? As mentioned above, two factors have been critical, though there are no doubt others. They are: (a) bad governance and (b) socially unregulated liberal economy.

Bad governance is the result of arbitrary rule by and unenlightened and arrogant political elite, guided by a coterie of cronies. Under such conditions there is little room for rational policy making.

In the absence of serious policy analysis, and rational decision -making, the market led liberal economy has remained socially unregulated, giving rise to all forms of distortions. For instance, distribution of wealth has been guided by the market forces, leading to a highly skewed distribution.

On the other hand, public investments have been guided by narrow political considerations, rather than social demand. For instance, public education system has lagged far behind the liberal economy and the products of the system of education remain almost totally alienated from the labour market.

Even after twenty eight years since the introduction of liberal economic policies, and twenty two years since the major ethnic riots in the country, authorities have failed miserably to provide schoolchildren with the necessary language skills.

We know that a young child can learn a second language in a few years. Similar failures are evident in many other areas such as transport, health, social security, and environmental sanitation. Pathetic conditions in these areas are well-known.

It is unfortunate that the current Presidential election campaign has not taken the form of a rigorous policy debate. If we leave aside the ethnic conflict, the two main parties have not articulated their economic and social policies in any detail.

While the UNP seems to uncritically follow the neo-liberal model, the SLFP talks about a national economy without spelling out what it means. Both talks about a high rate of economic growth, but do not say how they are going to achieve it.

If the UNP intends to leave it to the market, without making necessary interventions to address socially harmful market distortions, the negative trends mentioned earlier will be further reinforced leading to disastrous consequences.

The situation can be worse if they allow the same bad governance practices to continue. Crime, violence, unrest, and instability will be the outcome, impeding economic growth itself.

If we look at the issue of employment creation, it would be virtually impossible to give employment to thousands of youth, unless the economy expands very rapidly, a remote possibility. If such promises are not kept, unrest is bound to follow, undermining the prospects of economic growth.

Good governance

Those who intend to take the reins of power in the near future have a duty to make a public statement whether they are going to promote good governance in the country or not. Today, almost all the ruling party MPs are holding ministerial appointments.

If Ranil Wickramasinghe keeps his promise to accommodate some of the PA leaders as well, the country may end up having even more ministers and deputy ministers, all in the name of economic growth and prosperity for all.

Such a development would be disastrous for the country, as it can only lead to corruption, abuse of power and waste of public resources.

A senior Malaysian social scientist who addressed a seminar on corruption in Colombo last week pointed out that one of the secrets of rapid economic development in Singapore was zero tolerance for corruption and indiscipline there. It is unfortunate that our leaders who talk about development do not want to learn from other countries.