Sri Lanka PM slams protectionists, economic nationalists as traitors
Feb 21, 2016 21:03 PM GMT+0530 | 5 Comment(s)
ECONOMYNEXT - Sri Lanka's Prime Minister Ranil Wickremesinghe slammed protectionist businessmen and trade unions who are opposing free trade for the poor as 'traitors', taking a leaf from the book of economic nationalists who had long called their critics 'unpatriotic'.
"It is traitors who are opposing a trade agreement with India which can create large numbers of jobs," Prime Minister told after inspecting, Hambantota, where infrastructure build with Chinese finance are under-utilized.
"We want to sign free trade agreements with India, the US, Singapore and Japan and get back GSP+ (access to European markets).
"Investors will then come to Sri Lanka to export to India and Europe."
He said Sri Lanka had to compete against, states like Andra Pradesh in India.
He said China had asked for a 1,000 acres from Hambantota to set up an industrial zone. But without access to export markets, investors will not come, he said.
Wickremesinghe said an Economic and Technology Cooperative Agreement (ETCA) with India will involve goods and technology and not other services.
"We will not be distanced from this goal," he said. "Who are opposing this? They are saying they do not want goods from India. The GMOA (Government Medical Officers Association) and some professionals. We have already said that professions would not be affected."
The Prime Minister claimed that the GMOA wanted to block free trade agreements which did not even affect them, to stop new jobs and create instability in the country.
"I want to say one thing. We will take this agreement forward," he said. "I am asking ordinary members of the GMOA not to give into to these people. They are behaving like politicians. So we are asking to take action against it."
He alleged that some businesses were funding protests against free trade, like the Chamber of Young Lankan Entrepreneurs (COYLE), a business association that pushes for protectionism.
Wickremesinghe also took a swipe at the media who are giving a voice to critics or toeing a nationalist line, issuing a veiled threat on the use of a television frequency.
Liberal philosophers say true freedom cannot be imposed by force but dissent should be met by reason and logic.
Liberal philosophers say this is why gaining freedom and prosperity through liberal means is difficult and imposing nationalism and Marxism by silencing critics through force, is easier. But there is no other choice than reason, if lasting prosperity and peace is the goal.
"Every doctrine that has recourse to the police power or to other methods of violence or threat for its protection reveals its inner weakness," economist Ludwig von Mises explained in 1944 as nationalism led to minority oppression, Nazism, fascism and war in Europe.
"Doctrines which can stand the trial of logic and reason can do without persecuting skeptics."
Protectionists try to earn large profits by tying the hands of poor consumers by collaborating with the rulers to use the coercive powers of the state like import duties and non-tariff barriers and lately anti-dumping laws.
Free enterprises (true capitalists) on the other hand compete with other businesses and kneel before the consumer to please them, making consumers rather than business owners sovereign.
Protectionist firms and professional associations trying to maintain privileges are earning extra profits (rents) in the same way as Imperial Mercantilist entities like the Dutch and British East India Companies and artisan guilds in Europe did before free trade broke their grip on markets and the poor.
Analysts say liberalism, nationalism and Marxism were the three key post-feudal philosophies that emerged in Europe, after liberals broke monarchical rule and established Parliaments and the popular vote.
Economic philosophers say it has long been the practice of economic nationalists to take refuge behind patriotism, stifle competition and sell high-priced goods and services to exploit the poor.
The general public who do not clearly understand international division of labour, or concepts like comparative advantage or absolute advantage and lately global production sharing, easily fall prey to the ideas propgagated by profiteering rent-seeking economic nationalists.
In Europe as in Sri Lanka in the recent past, it was the practice of nationalists to label free traders and liberals as traitors, counting on the ignorance of the masses to prey on them.
Free traders and liberals do not usually accuse nationalists of being traitors and instead try to reason with them.
While they succeeded in Western Europe and in several parts of the former British Empire, in Eastern and Central Europe, nationalists and Marxists defeated ideas of freedom and expanded the state and nationalism leading to ethnic war and economic ruin.
In Sri Lanka there was hardly anyone to challenge nationalist ideas as free trade was reversed after independence from British rule when a central bank established in 1951 started printing money and destroying the currency generating 'foreign exchange shortages'.
The process was also helped businessmen who donned a mantle of 'patriotism' and others who claimed to 'save foreign exchange'.
"Patriotism is the zeal for one's own nation's welfare, flowering, and freedom," explained Mises. "Nationalism is one of the various methods proposed for the attainment of these ends.
"But the liberals contend that the means recommended by nationalism are inappropriate, and that their application would not only not realize the ends sought but on the contrary must result in disaster for the nation.
"The liberals too are patriots, but their opinions with regard to the right ways toward national prosperity and greatness radically differ from those of the nationalists.
"They recommend free trade, international division of labor, good will, and peace among the nations, not for the sake of foreigners but for the promotion of the happiness of their own nation."
Economic analysts say Sri Lanka's kings traded extensively with the rest of the world for centuries.
They engaged in a highly profitable long distance trade with the Mediterranean, Persia, (later Arabia), China and East Asia and coastal trade with what is now called India, allowing the country to prosper beyond its size and resources, like Singapore and Hong Kong are doing now.
There were no work permits or visas - key nationalist appendages of the European nation-state - to stop workers from India coming to tap toddy, process cinnamon or even work the land.
Ideas and the means to strictly enforce trade controls on the poor (customs laws, revenue cutters and jails) to benefit businessmen with political clout, came with European rule and Western ideas of 'infant industry'.
"It is the aim of nationalism to promote the well-being of the whole nation or of some groups of its citizens by inflicting harm on foreigners," says Mises. "The outstanding method of modern nationalism is discrimination against foreigners in the economic sphere.
"Foreign goods are excluded from the domestic market or admitted only on the payment of an import duty. Foreign labor is barred from competition in the domestic labor market. Foreign capital is liable to confiscation."
Economists say it is the less affluent, especially the working classes who will benefit most from free trade and are also hurt most from protectionism.
People usually do not stop to think that they themselves make the decision to buy an Indian drug or car, a can of Thai tinned fish to make the best use of their hard earned money. Therefor they fall prey to the arguments of protectionist businesses.
Adam Smith, who developed modern economics in a treatise against Mercantilism says the ordinary public or 'country gentleman' is not stupid but businessman who make plans daily are better at devising plans and putting them into action.
This make businessmen better equipped than ordinary people in lobbying the state and public opinion itself for controls on the public.
"Their superiority over the country gentleman is not so much in their knowledge of the public interest, as in their having a better knowledge of their own interest than he has of his," wrote Smith in Wealth of the Nations.
"It is by this superior knowledge of their own interest that they have frequently imposed upon his generosity, and persuaded him to give up both his own interest and that of the public, from a very simple but honest conviction that their interest, and not his, was the interest of the public."
"The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public.
"To widen the market and to narrow the competition, is always the interest of the dealers.
"To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens."
"People favor discrimination and privileges because they do not realize that they themselves are consumers and as such must foot the bill," adds Mises.
"In the case of protectionism, for example, they believe that only the foreigners against whom the import duties discriminate are hurt.
"It is true the foreigners are hurt, but not they alone: the consumers who must pay higher prices suffer with them." (Colombo/Feb21/2016)