Town Hall/ White House

Original post from the SAES blog. I’m blogging and tweeting from the South Asian Economic Summit along with a few others, hastag #saes2013.

This morning Pakistani economist Akmal Hussein talked about how mainstream economics/capitalism teaches that inequality is essentially an un-avoidable by product of growth. He said that equity is not only a measure of social justice but can also be a powerful driver of growth. You just have to open the lower and middle classes to opportunities to grow, giving you a much bigger base.

Great sentiments, I agree 100%. But how easy is it to talk about equitable growth while many countries in South East Asia are facing a ‘neoliberalize or die’ situation? And indeed, are enthusiastically jumping in the very same capitalist bandwagon that facilitates this systematic inequality. India for example is notorious for facilitating corporate expansion. It is, in fact, one of the most characteristic features of its growth. I think the tendency is to hope that equity will come after wealth is achieved, but if the West is any example, a semblance of equity within one’s borders is only achievable by impoverishing peoples beyond it.

Earlier still Ahsal Iqbal Chowdhry, Federal Minister For Planning in Pakistan, spoke bold words about the ‘failure’ of the Washington consensus, and even mentioned discarding it for a Colombo consensus, whatever that may mean, hopefully achievable starting today. But seeing as the most powerful economy in the region got its early nineties boost by the very same Washington Consensus, has it really ‘failed’ in that sense? What would India have been if it wasn’t bailed out? If it wasn’t invested in heavily by Western corporations?

I’m not defending the Washington Consensus, far from it. It has indeed created a lot of harm by seemingly creating growth, but it is ironic that it is this very growth that we celebrate, and hope to convert into something that is fundamentally against its nature. The Washington consensus ‘worked’ because it was essentially hegemonistic. It is the patronage of the powerful to the weak, and beggars cannot choose luxuries like equity.

Will Choudhry’s imagined Colombo Consensus incorporate some similar form of hegemony? Assuming it can even shrug of its Western counterpart as easily as he makes it sound. Indeed can South Asia with all its deep running conflicts, ever form a collective without some entity dominating?

Perhaps the fear of outside interference can enlighten the region to the benefits of mutual cooperation. But it has already incorporated many elements of Chowdhry’s ‘Washington Consensus’, perhaps too many to think of turning back without completely destroying and remaking itself. Perhaps in retrospect, it is telling that both speakers were Pakistani?

Apparently there’s a lot of controversy surrounding the recent island wide power cut that happened a few nights ago. I slept on the floor cos it was so hot.

Speculation is rife that electricity board workers executed it on purpose in protest of indications that the government is trying to privatize the CEB.

This itself is surrounded with rumor and speculation with certain quarters of the government denying it and certain others giving the impression of being on the fence. There are accusations that the government is ‘selling’ the CEB to pay off debt. There is also some weird IMF bailout related story going about, the details of which are slightly unclear to me.

The electricity board, like all other government departments, is ridden with corruption. A lot of tax money goes into paying idling workers and others who get employment ‘created’ for them after helping out in election campaigns. There are huge inefficiencies which translate into additional costs to the utility paying public; taxing them on both ends.

Further privatization will clean this up; I’m sure huge profits can be made just by clearing up the corruption and inefficiency in the system alone. But controls need to be put into place to ensure that corporate greed doesn’t manifest in another ugly monopolistic situation later on.

Whats shocking is realizing all over again the complete lack of transparency with which most things happen in Sri Lanka.

The IMF has just approved the long awaited loan and also agreed to release some 300 million of it immediately.

But what of the conditions? Earlier, reports indicated that the IMF was looking for concrete policy reforms in order to release the money. We are all aware of the Government’s apparent dislike of IMF interference or ‘conditions’ but in this case it would seem that they have caved to a certain extent.

Or have they?

The main opposers of the loan were the USA, Britain and France. The concerns raised were mainly the lack of confidence in the Government’s ability to carry out feasible reconstruction and ensure long term growth and also the human rights violation aspect of the post war era.

As for the human rights aspect of it, to my mind, they are fine ones to talk. Repeatedly, there have been atrocious abuses on human rights by these very governments that have been brushed aside as ‘necessary’ to ‘secure democracy’ etc. To me, the whole human rights issue is pure farce. It is merely a sign of power brokering going on behind the scenes. Of who our powerful allies are and of whom those allies are up against. In this respect, Sri Lanka is just a pawn.

As for the doubts in the government’s ability to reconstruct the nation and then assure a robust economy with long term growth prospects, i have to admit i share some of those views as well. The type of structural reforms required for such a measure like the liberation of markets, devolution of power, social reform etc with an intelligent vision with relevance to the future seems out of reach to a government used to bullishly hugging power and having its own way all the time.

But as we wait and see, all we see coming out of the bigwigs in the state in terms of what is going to happen are short term things like repairing the balance of payments etc. These are merely operational changes and will not really improve the chances of our economy to break out of its ‘third world’ or ‘developing’ status. For that to happen, like i’ve been harping on this blog for ages, a vision is needed. It sounds corny when i say ‘vision’ like that i know, but isn’t that how all the more ‘developed’ nations got to where they are today? If we continue to pay scant heed to events further than the next general election we will be stumbling in the dark as a nation forever.

The loan amount approved was $2.6 billion. $600mn more than what we originally asked for. Which is great. There is also the promised aid from China, India and i think Iran that is yet to materialize. Shit, i hope at least some of it will see the light of day in terms of actual benefit to the public.

On the bright side, we can probably expect a stock market rally again today, and this one may last for a while yet. Holders of high beta shares like JKH and others could probably make a good short term killing.

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