Whoever who will be elected by voters at the forthcoming election, the final outcome would be the election of a group that would be working for the value-accumulation for themselves – Pic by Shehan Gunasekara
Race to capture power in Sri Lanka
Tomorrow Sri Lankans will to go to polls to elect their new political leaders. There are four main contending parties and a large number of minor parties and independent groups that are seeking a mandate from the people.
Of the four main contenders, two have already resolved themselves to make a positive and productive contribution to the country’s governance by being opposition members. Of the other two, one party is having a clear margin over the other to emerge as the winner in the race. In this case too, the loser will be in the opposition.
However, what is lacking is that all political parties, both main and minor, and independent groups are depicting a value-based political culture and not a values-based political culture.
Politicians working for personal value accumulation
A value-based political culture is simply one that promotes the accumulation of value to oneself, just like a company seeking after the generation of value to its shareholders. In this culture, a political party would do anything to promote itself, use tactics which are injurious to the country as well as to its rivals, employ underhand methods to disable their rivals, and search after financial and other gains for the leaders or the party itself.
There are two main questions which those in the respective political parties are asking, as some of the angry social media personalities have put in, when a proposition is made to them. One is MML or ‘Mata Monawada Labenne?’ (What will I get from this?). The other is MMD or ‘Mata Monawada Denne?’ (What will you give me?). Both questions depict pure selfish motives aimed at augmenting the value for themselves.
The pure selfish mindset of political animals
Hence, whoever who will be elected by voters at the forthcoming election, the final outcome would be the election of a group that would be working for the value-accumulation for themselves. This was demonstrated when some of these contenders were interviewed by a popular Vlogger.
When the question of whether they would avail themselves of a duty-free car permit after being elected was posed to them, almost all said that if others also get it, they would not hesitate to use the facility. When the second question as to whether they would sell it for a profit, most of them said that they would not.
One contender was very frank in admitting that he would sell the vehicle permit and use the profits to repay the debt that they have incurred for running a costly election. But none of them thought it fit to say that a duty-free car permit for legislators is not warranted in the present economic crisis in which all have to make the supreme sacrifice to rescue the economy. For them, it was simply a sacrifice to be made by others so that they could enjoy a lucrative benefit.
This is the same selfish mentality which Sri Lanka’s motorists display on the road: they believe that all other motorists on the road should give way for them to pass without obstacles. But in the disorder which they create on the road, all are blocked from moving forward and without noticing it, bear the burden.
Banks have gone for values-based business culture
As against the value-based political culture, the values-based political culture seeks to bring in, through a multitude of values being pursued, common good for people and the country. A similar system of values has been designed for financial institutions that function under the banner of ‘Global Alliance for Banking on Values’.
At a recent webinar hosted by Thailand based AIT’s Banking and Finance arm, one of the members of this Alliance, CEO of Nepal’s NMB Bank, K.C. Sunil, outlined five such values that are presently being pursued by member banks (available at: https://www.facebook.com/BankingandFinanceatAIT/
Values that are being pursued by banks
First, the business model involved in values-based banking is characterised by a ‘triple bottom-line’ seeking to promote 3Ps, namely, people, planet and prosperity. Second, the real economy is to be promoted by coming up with new business models to uplift the communities in which banks are operating.
Third, transparency in values-based banks would be ensured by a system of transparent and inclusive governance enabling all stakeholders to participate in the process. Fourth, banks will develop long term resilience by converting themselves to self-sustaining organisations with a long-term outlook. Fifth, the bank would be client-centred and not shareholder centred.
Accordingly, all these five values will be embedded in the culture of the bank. Thus, by following values-based banking, the financial institutions involved could become long-term profit makers by becoming sustainable institutions, even though in the short-run, they may be operating below the optimal profit levels.
Short-sighted thinking of past politicians: Dudley Senanayake
When it comes to politics, the choice is the same. Political parties can have losses in the short-run but could gain in the long-run by following a set of policies which are not palatable at the moment but will ensure long-term development. However, the tactic used by Sri Lanka’s political parties has always been in the opposite. Knowing that they are working for their own value accumulation, they seek to bribe the voters with a host of free goodies. This has been the case in Sri Lanka at every General Election.
In 1965, the then UNP led by Dudley Senanayake bribed the rural paddy farming community that once elected to power, it would be making Ceylon, as the country was called at that time, prosperous by making it a rice-exporting country. Paddy farmers were exhilarated because they were to gain from such a policy goal. To show that the Government was working for that goal, lots of value was ere afforded to party-men in the form of vehicle permits for travelling to farming areas and allocating hitherto unused state lands for opening up new paddy farms. However, the results attained at the ground level were far from the goal of a rice exporting country.
During this period, India too concentrated in developing grain production by employing new technology and was able to become a net grain exporter within a decade. In Sri Lanka’s case, the problem was the continuation of the same farming practices without helping farmers to increase productivity and yield levels through advanced farming techniques.
Short-sighted thinking of past politicians: Sirimavo Bandaranaike
In 1970, the United Front led by Sirimavo Bandaranaike promised Sri Lanka’s voters that it would fully restore the rice ration which had been curtailed by the previous Dudley Senanayake Government by bringing rice even from the moon.
However, after the election, the global conditions were such that the Government had to curtail rice consumption to a few days in the week as a solution to the acute shortage of rice in the world markets.
Short-sighted thinking of past politicians: J.R. Jayewardene
Taking advantage of the shortage of food items, J.R. Jayewardene who led UNP to power in 1977 gave yet another irresistible promise to voters. He said that his government would ensure that each citizen of the country would get eight kg of grain per month.
The expectation of the voters was that it would be done under the existing rice ration system. But the ground realities were such that his Government had to do away with the rice ration system altogether for lack of budgetary funding. Instead, grain imports were partly liberalised flooding the markets with grains which were not hitherto available. As a result, people could buy any amount of grains from the market provided they had the financial means to do so.
Short-sighted thinking of past politicians: Chandrika Bandaranaike Kumaratunga
In 1994, in desperation to gain power, Chandrika Bandaranaike Kumaratunga bribed the paddy farmers with an unsustainable promise. She promised to write-off all cultivation loans, both performing or non-performing. But after coming to power, what was delivered was a truncated cultivation loan write-off system. Performing cultivation loans were kept intact, while in the case of non-performing loans, farmers were given the opportunity to repay these loans over a longer period by rescheduling them.
In the present General Election too, lots of such promises are being made by political leaders. Voters would be coaxed to accept these promises though the country’s financial position is not conducive for making them a reality. Hence, the usual modus operandi of political parties has been as follows: bribe voters with undeliverable promises, capture power, work for personal value accumulation and leave the country’s long-term prosperity totally unattended. The result has been making Sri Lanka a laggard, poor, dependent on foreign aid and a country of destitution.
Wisdom of the old guard of Singapore
A comparable example for a values-based political culture comes from neighbouring Singapore. Its leadership, nicknamed old guards, right from the very beginning, did not want to shower the people with short-term goodies. As its first Minister of Finance, Goh Keng Swee, revealed in 1992 in an article to the Silver Jubilee Commemoration Volume of the Board of Currency of Singapore, the old guard did not believe that money created by the Central Bank could bring prosperity to people.
“The way to a better life,” he said, was “through hard work, first in schools, then in universities and polytechnics and then on the job in the work place. Diligence, education and skills will create wealth, not Central Bank credit”. He further asserted that no one can spend his way to prosperity through central bank printed money. If the citizens wanted more and better services, they “must pay for these through taxes and fees. There is no free lunch here”.
The costly generous tax cut in Sri Lanka
This has to be compared with Sri Lanka’s recent generous tax cuts leading to the loss of some Rs. 600 billion by way of tax revenue and compelling the Government to borrow from the banking system to pay the bills. From January to June 2020, the Government has borrowed from the banking system on a net basis some staggering Rs. 1.22 trillion to fill the hole created in the revenue side by the Government. Of this, Rs. 194 billion had been direct borrowing from the Central Bank which common man attributes as printing of new money.
The danger of offering a better life, while lowering taxes
The values that have to be inculcated among political parties have been presented by Goh as follows: “Democratically elected governments the world over are exposed to the temptation of winning votes through promising better and cheaper services and at the same time, lower taxes. This has happened not only in rich countries but also in poor developing countries. Rich countries have resources to get by for a few years by borrowing on the international markets, but in poor countries, punishment comes quickly in a cruel way – high rates of inflation, economic decline and political instability. These three factors reinforce each other in a way which makes escape from misery difficult.”
Sri Lanka has been a victim of all these three ailments. But its political leaders behave as if they could bring prosperity to people just by borrowing and spending.
The contrasting movement of two currencies: SL Rupee and Singapore Dollar
This is the secret of success of Singapore and cause of the failure of Sri Lanka. Sri Lanka’s political parties, without proper values embedded to the mindset of their leaders, have been freely bribing the voters to catch their votes and then go on accumulating value for themselves. There are no values created for society at large. This is depicted by the sad destiny of the Sri Lanka Rupee which had come under attack for a free-fall due to high inflation within the economy compared to its trading partners.
In the case of Singapore, it consciously maintained low inflation rates compared to its competitors. Thus, its dollar has appreciated over the years, whereas Sri Lanka rupee has seen its one-way journey to depreciation. This is shown by Figure 1 for Sri Lanka and Figure 2 for Singapore.
Politicians blame the previous Government for this one-way journey of the rupee. One thing they forget is that at the next General Election, they too stand to be blamed by their political rivals in the same way. They can play this blame game, but the people of Sri Lanka will remain poor, uncontended and desperate.
Constitutional safeguards to prevent vote catching expenditure in Singapore
Though Singapore’s old guard had been able to inculcate good values in to their political culture and they have paid dividends to Singaporeans by way of a better life over the years, they have foreseen the possibility of irresponsible political leaders in the future becoming susceptible to the temptation of ‘spending their way to prosperity’.
To thwart it, Singapore’s Constitution has been amended giving power to the President of the Republic to block such dangerous methods of vote catching. Yet, Goh warns that such constitutional safeguards may also be abolished in the future by personal value seeking politicians.
A good example in Sri Lanka is the growing hostility to the 19th Amendment of the Constitutions which introduced some safeguards against personal value seeking behaviour of politicians. If this happens in Singapore, Goh has warned as follows: “If the electorate misled by soft-headed opinion makers, persisting in wanting the good life without working for it, constitutional safeguard cannot stop foolish behaviour for all times. What will happen if the electorate chooses this option is that after a brief period of high living, Singapore will spiral downwards and eventually become another miserable developing country.”
Fortunately, Singapore’s leaders so far have not deviated from this values-based political culture and driven that country to misery.
Why is Sri Lanka perpetually a poor country?
In the case of Sri Lanka which is still a developing country, the next step is spiralling downward to greater misery. The country’s political leaders, oblivious of this danger, are happily engaged in playing political games: going for short-term palliatives, while harassing their political rivals. Once elected to power, they will go for creating value for themselves and not values for the people at large.
Recently, an editor of a leading Sri Lanka’s newspaper lamented with me about the sad irony of Sri Lanka. He said that during the time of his grandfather, Sri Lanka was a poor country; during his father’s time too, it was a poor country; during his time, it is a poor country. During his son’s and grandson’s times, it will still be a poor country. “Doesn’t Sri Lanka have an escape?” he lamented. Now he will know the cause for this sad state and why it is perpetuated generation after generation.
To escape it, there is only one way: reject the present value-based political culture and go for values-based political culture in the country.
(The writer, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at [email protected])