Will the new Constitution hurt or help the economy?

Tuesday, 23 February 2016 00:00 -     - {{hitsCtrl.values.hits}}

Untitled-2Despite all exhortations, not much attention is being paid to Constitution making by the man and woman on the street. Their hands are full with getting the children to school, putting food on the table and other exigencies of life.

What about business people, those who are said to be the powering the engine of economic growth? They too tend to think little about the Constitution, leaving it to lawyers and political scientists. But they should pay attention and engage. A Constitution defines the conditions for investment and the conduct of business.

Government spending on infrastructure has driven economic growth in the post-war years, but for the transformative growth we need, private investments are essential. For private investment, foreign as well as domestic, the central concern is reduction of uncertainty. If uncertainty is not reduced, investments may still be made, but they may be skewed toward the short-term or high returns and will be less than is required.

Be inclusive

A Constitution is the supreme law of the land. It should create the conditions for peace. If it fails to create the conditions and groups see reason to step out of the political process and take up arms against the state, investors will experience a lot of uncertainty. Therefore, it is in everyone’s economic interest that the Constitution is inclusive.

Ensure governability

The framers of the 1978 Constitution were innovators in terms of electoral systems. Unlike most Commonwealth countries, Sri Lanka replaced the first-past-the-post (FPP) system with proportional representation (PR) which is much fairer to small parties. But they knew that PR does not yield stable governments, as has been well demonstrated in Europe. Therefore, they balanced the legislature elected through PR with a strong executive presidency. 

Now that it has been decided to dispense with the executive presidency and revert to a Parliamentary system, care must be taken to ensure governability. Since it is unlikely that we will revert to a FPP system, which would alienate the minority parties, it is necessary to ensure that the PR or mixed-member system that is adopted is designed in a way that would mostly produce governments with simple majorities. There is value in looking at Italy, where chronic instability led to a Constitutional amendment that give a bonus to the leading party/coalition that gains more than 40% of the vote. No developing country can afford to have unstable governments and frequent elections.

Keep it short and clear

A Constitution that produces a climate of certainty conducive to investment will be well drafted and unambiguously lay out the key elements of how we are to be governed, such as the relations between the different branches and levels of government and protections for the citizens against the power of the state. Such a Constitution will be written to stand the test of time and will not require frequent amendment.

That means that it should be short and include only the most important principles like the US Constitution which is the shortest in the world. It has been amended only 18 times in its 200 plus years. Our existing Constitution is too long. In most countries, the procedures pertaining to the conduct of elections are laid out in ordinary statutes so they can be changed as necessary. In Sri Lanka all the details are in the Constitution. This should change. 

The quality of Constitutional drafting has deteriorated over time, with the 19th Amendment adopted in 2015 being an inelegant, long-winded mess. The opportunity afforded by the new Constitution should be used to improve the quality of drafting. Verbosity and bad drafting lead to ambiguity and the need for judicial interpretation. The end result is uncertainty. Therefore, those who care about the economy should press for a well-drafted, short document.

Careful with fundamental rights

A charter of fundamental rights is an important component of a modern Constitution, providing protection for citizens against a powerful state. There are some who would argue for the inclusion of a right to property. There is no dispute that actions like expropriation and retrospective legislation are extremely bad. But one cannot ignore the fact that some expropriations are unavoidable, for example in building roads and mass transit systems, needed for the public good. Therefore, there is merit in finding flexible safeguards for private property, short of a fundamental right. 

There is no much value in non-justiciable principles, but if a way can be found to compel the Constitutional Court to base its decisions on such principles, there is value in including general principles against retrospective legislation and arbitrary expropriation.

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