In democracies the world over, voters are facing a dilemma. They faithfully elect representatives to their legislatures, by voting for a set of policies the candidates solemnly place before them in the form of a manifesto.
These mostly contain fairytales, pies in the sky, pious hopes, which no national economy can afford to implement. Rarely are the proposals analysed in terms of the effect on the fiscal deficit, interest rates or on inflation or even on fundamental affordability. Myths and unattainable lies are sustained.
Recently a chartered accountant was heard praising the Sri Lanka Budget because it was revenue free! Does that worthy think that governments get funds from the moon to meet expenditure? The Budget is free of revenue proposals simply because the taxes were raised by gazette well before the Budget!
In the same wanton way, voters love to be told that the elected representative will ensure that these unaffordable policies will be implemented and they, their children and grandchildren will be happy ever after being looked after by a nanny government living way beyond its means.
Once elected and after initial euphoria of being in power and the limited goodies and benefits are handed out to family, other relatives and supporters, the truth sinks in. As one leading politician has said: “We campaign in poetry, but when we govern it is back to rigorous prose!”
The voters get none of the benefits which were promised. They await the next set of elections to ‘vote the rascals out’! And so it goes on. Such is the voter’s dilemma in a populist democracy.
More recently in mid stream, between elections, a new phenomenon has emerged. Representatives sitting in opposition to government, elected on a manifesto totally opposite to what the government of the day placed before the people, after elections cross over to the government.
The reasons and justification for this are many, wide and varied. They range from unhappiness with the leadership of the opposition party, to suddenly realising that the government’s policies are the best for the nation and that they supported a different set of policies at the elections by error, that they are not in a position to reward their supporters while being in the opposition, that they will be rewarded with ministerial or similar position with a wide range of perks paid for by the voter/taxpayer, or even for the simple but not very obvious reason that they did not enter politics to sit in opposition but to enjoy the perks of being in government – this ephemeral and impractical quest of power for ever. Sometimes it is very simply bribery or intimidation.
The voters, who placed their faith in the alternative set of policies placed and canvassed for by these representatives at election time, are betrayed. The policies are forgotten and all pledge allegiance to the policies of the government, which they condemned and opposed at elections. This type of cynicism and greed of the political class is difficult to beat.
A recent newspaper editorial captioned ‘68,000 voters are cheated’ went on to say on a recent crossover: “Yet another crossover of an MP took place this week… One man’s decision tramples upon the decision of over 68,000 citizens who voted for his party first and then for him less than two years ago. This is not only something patently unfair by voters, but it also goes to the root of the franchise (the vote) and the sovereignty of the people. Can one individual’s right override those of thousands of other fellow citizens?”
Another newspaper carried a very apt cartoon of the crossover MP, popping out of an elephant’s anus and another politician holding a basket to catch him!
In some jurisdictions there are provisions of a recall, for voters to initiate a process to unseat a representative who betrays their policies. In the mother of Parliaments, the House of Commons in Britain’s Westminster Palace, they are considering a law which would require any member who voluntarily decides to change party to resign and fight a by-election. Conservative party backbencher Chris Skidmore says “if any MP plans to cross the floor, the very least they should do, is to ask their constituents what they think”.
The unfortunate outcome of this is that there is no articulation of an alternative set of policies to what the government of the day proposes and attempts to implement. Everyone becomes a yes man. The bosses become oracles. They do not even think that they could be wrong – they persevere in trying to implement impossible ideas.
Everybody goes along – there is a Sinhala saying ‘shape niyaya,’ roughly translated as ‘succumb, do not stick your neck out by expressing a contrarian view, saying yes is the safest way forward for your own survival’.
This culture of not opposing anything proposed by the leadership, and not merely not opposing – but excessively praising and singing hosannas of even the most foolish initiatives results in disasters on a grand scale. These get exposed only at the interface where the real world interacts with the grand impractical schemes.
Recently we in Sri Lanka have seen some of these. The grand failure of Indian International Film Academy Awards in Colombo which was a non event due to the top stars not turning up, the humongous debts run up by organising the unaffordable and mismanaged international limited over cricket tournament, the 2018 Hambantota Commonwealth Games fiasco at St. Kitts, the recent urgent bill to expropriate, revive and restructure underperforming and underutilised enterprises, the chaos around the non governance in the Securities and Exchange Commission, the unprecedented step of a currency devaluation, essentially a monetary policy issue being implemented in the Budget – a fiscal policy document, the announcement that uncultivated lands on plantations will be redistributed, etc. There are many more.
All these in the final analysis are the result of decisions being taken without any consideration of alternative points of view. For alternatives to be given due consideration, the alternative view has to be responsibly articulated and presented.
The decision makers must also be mature enough to listen to the critical presentation objectively and give the alternative view due consideration – not simply get carried away by sycophants who condemn anyone who has the courage to express a critical and contrary point of view.
When everybody surrounding the decision makers is too busy indicating their agreement, to further their own interests, not on the merit of the proposal, small wonder that grand blunders of international magnitude are made.
The dividing line between populist decisions, which are very safe to take and difficult decisions on principle, which are taken for the national good, can be seen in the decision of the Government of India to open up the multi-brand retail trade for 51% international investment.
This policy change has been under consideration in India for over a decade. There has been fierce opposition to it from some quarters, who fear that the local ‘Kirana’ small grocery stores, which are an essential part of the retail network in rural and urban India, will be adversely affected.
The hostility of the opposition BJP is especially galling, as they when in power supported economic liberalisation of even the retail sector, but were too cowardly to do it. The Cabinet of Ministers of the Government of India has taken the decision to open up multi-brand retail to international investment subject to certain conditions such as the size of the cities in which the hyper markets can open up, the size of the initial financial investment, the stipulation that the hyper markets should source directly from small farmers and develop supply chains including a cold room chain and freezer truck facility to reduce waste and thus reduce the cost to the ultimate consumer.
It is estimated that around a third of agricultural primary products rot on the roadside on the way to the consumer. Food prices could be lowered by cutting out this waste by more efficient supply chains and direct sourcing, cutting out the many intermediaries that add on cost.
These hyper markets will be limited to cities of one million people or more, foreign firms could own 51% of multi brand retailers (up from zero) and 100% of single brand chains (up from 51%).
The Deputy Chairman of India’s Planning Commission, economist Dr. Montek Ahluwalia has gone on record saying that “there is no economic reason” for not opening up the multi-brand retail sector to the Walmarts, Tescos and Carrefours of this world. The difference in the bold decision making in India is in stark contrast to our ‘shape niyaya’ culture.
If the Indian nonprofessional politician economist Prime Minister Manmohan Singh wanted to do populist things and play safe to appease the oppositionists, he would have ducked this decision. But bold politicians like himself , Sonia Gandhi, Chairperson of the Congress Party, Home Minister Palaniappa Chiddambaram, Finance Minister Pranab Mukherjee and Trade Minister Anand Sharma, principled politicians, well know that the only way to reduce the cost of primary agriculture and fishery products for the consumer is to exploit the expertise of world super market chains like Walmart, Tesco and Carrefour, to go to the farm gate pay the small subsistence farmer a better price, which would be made possible by the reduction in post harvest waste and by developing and using cold chain delivery systems, thereby reducing the price to the ultimate consumer.
Change is the only constant
Of course there will be some churn in the economy as a result. Uncompetitive ‘Kirana’ merchants who cannot compete to hold on to their neighbourhood customers to stop them commuting to the hyper markets will have to close down. But this is an inevitable collateral result of the process of economic development.
It cannot be avoided. It can only be avoided by protecting age-old, traditional, outdated retail systems, which exist to the detriment of the farmer, the distribution network and the consumer.
Change is the only constant and is inevitable and unavoidable – as articulated by South Asia’s greatest son, Gautama the Buddha. The boldness of the Indian rulers to move forward with tough decisions is to be commended.
India is on the cusp of a humongous breakthrough in opening up its economy. The opportunistic opposition of the BJP is a classic case of politics sans policies and principles. There is a build of opposition demanding a rollback of the policy, others claim there has been a hold back until a consensus is built on the change. It will be interesting to see how India’s democratic process deals with the reform proposal.
The public dissatisfaction with the inability of the political class to take the tough decisions required and constantly playing up to the baser instincts of the voters, thereby brining nations to economic crisis and collapse, is well reflected in the people of Italy and Greece, kicking out the incompetent political class whole sale and handing over the country to a team of technocrats.
The Occupy Wall Street movement and its replication in over 200 cities worldwide, the revolt of the 99%, is also a manifestation of this phenomenon. Even in Communist China, the politburo is dominated not by politicians but by professionally qualified engineers.
In the United States the Democrats and Republicans are in a political paralysis unable to find a way to reduce the fiscal deficit which has reached astronomical and unaffordable proportions. The Democrats will not cut entitlements and the Republicans will not increase taxes – the result, fiscal gridlock.
A bipartisan fiscal panel co-chaired by Democrat Ernskine Bowles, a former Clinton aide, and Alan Simpson, a Republican, failed to arrive at an acceptable solution. A super bipartisan committee on Congressmen was set up which also failed. Automatic drastic budget cuts across the board are scheduled to kick in soon.
In desperation Ernskine Bowles has appealed to CEOs of leading US firms to join a new ‘CEO Fiscal Reform Council’ to discuss how to America’s debt and avoid the fate of Greece and Italy. Bowles’ intention is to bring the business community into the process to break the political fiscal deadlock and reduce the risk of America heading into the most predictable financial crisis in history.
Businessmen like Shultz of Starbucks have set up job creation programmes of their own and sworn not to fund any politicians in future, in frustration with the puerile antics of the professional politicians, unprincipled opposition for mere opposition’s sake.
This is a reflection of the worldwide frustration with the failure of the professional political class, as seen in the 99% occupying Wall Street and the events in Italy and Greece. What is considered the normal democratic process has failed. So has the traitorous self-centred political class.
Other players the business community, civil society have to intervene. Recently the Harvard Business School organised a high level meeting of business leaders, trade union officials and academics to find a solution to the fiscal crisis. The discussions indicated strong support for Bowles’ idea.
The analogy with Greece and Italy, the Indian political technocrats taking bold decisions in the national interest, the engineers dominating the politburo of China’s Communist Party is irresistible.
Some say that Presidential aspirant, millionaire businessmen Michael Bloomberg, Mayor of New York, the very antithesis of the traditional US professional politician, may benefit from the anti-politician backlash. This may be a good thing; the US political class will have to face reality and the voters will have a solution!
(The writer is a lawyer, who has over 30 years experience as a CEO in both government and private sectors. He retired from the office of Secretary, Ministry of Finance and currently is the Managing Director of the Sri Lanka Business Development Centre.)