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Thursday December 7th, 2023

Sri Lanka constitution making: how democracy does not equal freedom: Bellwether

ECONOMYNEXT – In Sri Lanka when the elected ruling class tries to amend the constitution and amass greater power at the expense of individual freedom and the rule of law, a widely repeated excuse is that the U.S. has amended its constitution 27 times.

“In the great five-star democracy of the U.S the constitution had been amended over 27 times,” a Sri Lanka minister said in 2010. “We have done much less.”

Since then the constitution has changed once more the current administration is attempting a 20th amendment.

The same excuse was trotted out in September 2020 by another minister.

He went further to claim that the constitution must change with the mandate of the people as their desires change with time and is reflected by the majority vote.

Majority Rule

But freedom is not a passing fad or a fashion that can be subjugated by majority rule. Freedom is an enduring and inherent right, and the human struggle over centuries has been a work-in-progress to achieve it.

If people are seduced by such propaganda and liberty is subjugated by majority rule or the popular vote (called democracy here, and fascism or illiberal democracy elsewhere), disaster follows.

The great economic and scientific advances made in Western Europe came from individual freedom, property rights, free thinking and the breakaway from the clutches of the church and the ruling class.

Sri Lanka inherited a European style governing apparatus from the British complete with a standing army and police as well as a law-making parliament without having to struggle greatly or fight a war.

Representative democracy in Sri Lanka started with the Colebrook-Cameron reforms. While Cameron was a liberal jurist Colebrook is said to have drawn from utilitarian thinking.

Sri Lanka achieved universal adult franchise without much of a struggle. Foreign liberals also ended slavery amid requests from natives to extend it by sixty years.

There is no assurance that independence from a foreign yoke (self-determination) will provide freedom. In many cases it had not happened as just rule of law was usurped to levels worse than under foreign rule.

There is no assurance that majority rule will ensure freedom or equality, either in Sri Lanka or elsewhere. Unless the citizenry is careful, the rulers will steal liberties.

“..[I]t should never be forgotten that majorities are no less exposed to error and frustration than kings and dictators,” wrote economist and philosopher Ludwig von Mises, who watched voters turn democracies into fascist nationalist dictatorships, which made many including himself flee to a free country.

“That a fact is deemed true by the majority does not prove its truth. That a policy is deemed expedient by the majority does not prove its expediency. The individuals who form the majority are not gods, and their joint conclusions are not necessarily godlike.”

If a person believes in individual freedom and equality and succeeds in convincing fellow citizens, freedom and happiness and economic prosperity, can be achieved.

If he believes in his superiority over his fellows (chauvinism) due to his religion or language and succeeds in convincing his fellow beings to give them legal effect (nationalism), then hate, minority oppression and war is the result.

The U.S. amendments

The false claims made about the U.S. constitution by Sri Lankan politicians can be easily debunked. In the US the overwhelming majority of constitutional amendments were to enhance freedoms, not to take them away from citizens and give them to the state and rulers.

The first ten enacted in 1789 are called the bill of rights. It protects the freedom of religion, freedom of speech, halts unreasonable search, instituted search warrants, and right to a trial by jury. The 13th abolished slavery; the 15th prohibited the denial of the vote based on race, colour or previous condition of servitude.

When Western liberals set up constitutions they were based on two principles; restrain the state and give absolute guarantees of equality. But Sri Lanka’s 1978 constitution went in the opposite direction.

In the U.S. only a few amendments expanded the state’s controls and reduced freedoms.

One was the federal income tax code (16th) and another on prohibition (18th) which led to smuggling and illicit alcohol. The 21st repealed the 18th. Unfortunately, the income tax code is still there.


The founding fathers of the U.S. went to great lengths to make sure that democracy (popular vote/majoritarianism) did not subjugate the freedoms of the people.

“Most people, including most Americans, would be surprised to learn that the word “democracy” does not appear in the Declaration of Independence (1776) nor in the Constitution of the United States of America (1789),” writes economist Steve Hanke (On Democracy Versus Liberty/2011).

“They would also be shocked to learn the reason for the absence of the word democracy in the founding documents of the U.S.A. Contrary to what propaganda has led the public to believe, America’s Founding Fathers were sceptical and anxious about democracy.

“They were aware of the evils that accompany a tyranny of the majority. The Framers of the Constitution went to great lengths to ensure that the federal government was not based on the will of the majority and was not, therefore, democratic.

“The Constitution was designed to further the cause of liberty, not democracy. To do that, the Constitution protected individuals’ rights from the government, as well as from their fellow citizens.

“To that end, the Constitution laid down clear, unequivocal and enforceable rules to protect individuals’ rights. In consequence, the government’s scope and scale were strictly limited. Economic liberty, which is a precondition for growth and prosperity, was enshrined in the Constitution.”

The U.S. Congress has two houses. A Senate was set up as a separate independent house, not an upper house. Each State has two members in it regardless of the population.

The House of Representatives is majoritarian based on population. But it cannot pass laws by itself.

A bill also has to pass in the Senate. Ministers are also not elected. Sometimes experts from the opposite camp are appointed as ministers. The President is also elected by an Electoral College.

The Electoral College was supposed to vote for the most reasonable candidate in case an illiberal loose cannon like Donald Trump was elected in the heat of electioneering.

Unpledged electors were supposed to make a reasoned judgment. But in the intervening years, many states brought laws to compel the electors to pledge their votes and block so-called faithless electors.

There were attempts to get electors to break ranks to stop Donald Trump, a nationalist, but it failed to get ground. Nor are judges elected. The President cannot appoint the judges unchecked either.

United Kingdom

The United Kingdom, essentially a Federal State composed of England, Scotland and Northern Ireland, does not have a (codified) constitution. It survives because the U.K., along with France, was a country where liberal thinking originated and the ideology has not been effectively defeated by nationalists or socialists.

The UK has true parliamentary supremacy. Basically, any law can be passed with a simple majority.

A constitution on the other hand seeks to make the individual supreme or sovereign. The reason two thirds (or higher majority) is usually required is to stop passing fads or the popular vote from taking away enshrined freedoms.

However, any elected leader is susceptible to fascist nationalism. And England had not been an exception. Oliver Cromwell, who defeated the King’s Army and created the concept of a Parliament’s army, made England a Republic. But it did not bring freedom to all. All that came much later. C

Cromwell persecuted Catholics. A group of constitutionalists were executed. After his death, however, Cromwell was exhumed and beheaded.

Eventually, due to the work of liberals, religious emancipation, free trade was established. There has also been a resurgence of nationalism in the Brexit era.

Central and Eastern Europe

When Western liberal thought ended monarchic rule, broke up empires bloodlessly and republics emerged with universal franchise, it was not expected that elected dictatorships which treated people worse than the old feudal rulers ever did, would emerge.

But it was the unfortunate consequence in countries where the popular vote was imported and transplanted.

It happened in Asia and Africa as the popular vote came to multi-religious, multi-ethnic newly created nation-states in the 20th century.

But it first happened in Europe in the 19th century. The popular vote backfired terribly in Central and Eastern Europe, where new nation-states were set up after the break-up of the Austro-Hungarian Empire.

The worst authoritarian dictatorship emerged in Germany after the socialist policies and currency depreciation led to a severe economic collapse during the period of the Weimar Republic and people called for a strong decisive leader.

It is said that Cromwell carried out ethnic cleansing against Irish Catholics. But Hitler did it on a vast scale not seen in the history of humankind with an organized state apparatus.

However, in many countries in the region, liberal philosophy was weak and nationalist hate and ethno-religious fascism triumphed. It was no accident that the armies of Hungary and Romania fought alongside that of Hitler.

State Intervention and Undermining of Rule of Law

Economist and philosopher Frederick von Hayek who also saw fascism rising during lifetime points out that the roots of post-monarchical totalitarianism and attacks on individual freedom and liberty in Europe lay with socialist planning, which undermined rule of law and equality.

“It is significant that this abandonment of liberalism, whether expressed as socialism in its more radical form or merely as ‘organization’ or ‘planning’, was perfected in Germany,” von Hayek wrote in Road to Serfdom.

“The Germans, long before the Nazis, were attacking liberalism and democracy, capitalism and individualism. Long before the Nazis, too, the German and Italian socialists were using techniques of which the Nazis and fascists later made effective use.”

Planning forces governments to make decisions favouring one group of individuals or companies and discriminate the rest.

“When the government has to decide how many pigs are to be raised or how many buses are to run, which coal-mines are to operate, or at what prices shoes are to be sold, these decisions cannot be settled for long periods in advance,” Hayek says.

“They depend inevitably on the circumstances of the moment, and in making such decisions it will always be necessary to balance, one against the other, the interests of various persons and groups. In the end, somebody’s views will have to decide whose interests are more important, and these views must become part of the law of the land. Hence the familiar fact that the more the state ‘plans’, the more difficult planning becomes for the individual. The difference between the two kinds of rulership is important. It is the same as that between providing signposts and commanding people which road to take.”

Donald Trump’s executive orders today by-passing the Congress of the founding fathers, that have triggered widespread turmoil and court battles stems from a piece of legislation passed by the New Deal semi-socialist interventionists in the Franklin Roosevelt administration.

“In 1937 and 1938 Roosevelt’s attempt to reorganize the executive branch of government seemed to many of his opponents still another attempt on the part of a would-be dictator “to subvert democratic institutions” by “importing European totalitarianism into the United States,” explains economist Robert Higgs (Regime Uncertainty Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War).

“After the House of Representatives defeated the president’s reorganization bill in 1938, FDR introduced a watered-down replacement in 1939, which gained quick enactment.”

The regime uncertainty (policy shifts and interventions that disturbs investment planning) that followed then delayed the recovery from the Great Depression.

Sri Lanka’s flawed constitution was also enacted following the 1970s closed economy and exchange and trade controls, which came from a bad central bank as well as the U.S. Fed’s money printing that led to the collapse of the Bretton Woods system of soft-pegs in 1971.

All modern currency crises are state failures. Sri Lanka’s current administration is also pointing to the economic slowdown from two currency crises from 2015 to 2019 as a reason for needing a powerful presidency.

A ruling class will hoodwink the public by pushing concepts such as state sovereignty and parliamentary supremacy or the general worship of the state (or ‘statolatry’) as opposed to the concept of supremacy or the sovereignty of the individual.

They will not admit to state failure, which is what the Great Depression, Great Recession and the 1970s economic closure is. The state failure then leads to an expansion of state agencies and interventions.

Threat of Violence

States and criminal gangs operate on the same principle: the threat and use of violence. As a result, the danger of any modern state turning into a fascist dictatorship is high.

“The state is, if properly administered, the foundation of society, of human cooperation and civilization,” explains Mises.

“It is the most beneficial and most useful instrument in the endeavours of man to promote human happiness and welfare. But it is a tool and a means only, not the ultimate goal. It is not God. It is simply compulsion and coercion; it is the police power.

“It has been necessary to dwell upon these truisms because the mythologies and metaphysics of etatism have succeeded in wrapping them in mystery. The state is a human institution, not a superhuman being. He who says ‘state’ means coercion and compulsion.

“He who says: There should be a law concerning this matter, means: The armed men of the government should force people to do what they do not want to do, or not to do what they like. He who says: This law should be better enforced, means: The police should force people to obey this law. He who says: Thee state is God, deifies arms and prisons. The worship of the state is the worship of force.

“There is no more dangerous menace to civilization than a government of incompetent, corrupt, or vile men. The worst evils which mankind ever had to endure were inflicted by bad governments. The state can be and has often been in the course of history the main source of mischief and disaster.

The apparatus of compulsion and coercion is always operated by mortal men. It has happened time and again that rulers have excelled their contemporaries and fellow citizens both in competence and in fairness.”

To complete the state to work for the benefit of the citizens instead of the supreme rulers or the ruling class, effective constitutional restraint is needed.

In Western Europe and North America, citizens got freedom despite having a heavily armed state, through the belief in key values and full awareness of the danger and nature of a European style nation-state.

“These virtues were independence and self-reliance, individual initiative and local responsibility, the successful reliance on voluntary activity, non-interference with one’s neighbour and tolerance of the different, and a healthy suspicion of power and authority,” Hayek says.

Freedom comes from the rule of law.

The independence of the judiciary and the general underlying rules of natural justice in lawmaking in the parliament and constitutional restraint in not giving power to one person or the state overall is the key to freedom.

Many parliaments however make unjust laws that violate the principles of natural justice and equality, which are discriminatory regulations.

“By giving the government unlimited powers the most arbitrary rule can be made legal, and in this way, a democracy may set up the most complete despotism imaginable,” Hayek says.

“The Rule of Law was consciously evolved only during the liberal age and is one of its greatest achievements. It is the legal embodiment of freedom.

This column is based on ‘The Price Signal by Bellwetherpublished in the July 2020 issue of the Echelon Magazine. To read Bellwether columns as soon as they are published, subscribe to Echelon Magazine at this link. The i-tunes app can be downloaded from here

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COP28 sees new era for climate action with $57 bln pledge; Sri Lanka’s proposals need approval

ECONOMYNEXT – The 2023 United Nations Climate Change Conference (COP28) has witnessed governments, businesses, investors, and philanthropies announcing support of over $57 billion across the climate agenda in just the first four days of the global event with eight pledges and declarations receiving historic support.

After a historic deal to operationalize a fund for climate impact response on the first day, announcements have poured in across the entire climate agenda, including on finance, health, food, nature, and energy.

On climate finance, the COP28 host United Arab Emirates launched a $30 billion catalytic fund, ALTÉRRA, with an emphasis on unlocking private finance across the Global South.

The host nation also has announced $200 million for SDRs and $150 million for water scarcity.

The World Bank has announced an increase of $9 billion annually to finance climate-related projects, while the first two days of COP28 saw $725 million in pledges after a historic response to loss and damage was operationalized.

Eight new declarations have been announced which are expected to help transform every major system of the global economy.

These include the first ever declarations on food systems transformation and health, plus declarations on renewable energy and efficiency, as well as initiatives to decarbonize heavy emitting industries.

The eight declarations are:

  • The Global Renewables and Energy Efficiency Pledge has been endorsed by 119 countries.
  • The COP28 UAE Declaration on Agriculture, Food, & Climate has received endorsements from 137 countries.
  • The COP28 UAE Declaration on Climate and Health has been endorsed by 125 countries.
  • The COP28 UAE Declaration on Climate Relief, Recovery & Peace has been endorsed by 74 countries and 40 organizations.
  • The COP28 UAE Declaration on Climate Finance has been endorsed by 12 countries.
  • The Coalition for High Ambition Multilevel Partnerships (Champ) Pledge has been endorsed by 64 countries.
  • The Oil and Gas Decarbonization Charter has been endorsed by 51 companies, representing 40 percent of global oil production.
  • The Industrial Transition Accelerator has been endorsed by 35 companies and six industry associations, including World Steel Association, International Aluminium Institute, Global Renewable Alliance, Global Cement and Concrete Association, Oil and Gas Climate Initiative, International Air Transport Association.

Three additional declarations will be announced in the coming days on hydrogen, cooling, and gender. The number of countries supporting these declarations and pledges is growing and demonstrates an unprecedented level of inclusivity at this COP.

Sri Lanka President Ranil Wickremesinghe announced three new proposals: Climate Justice Forum (CJF), Tropical Belt Initiative (TBI), and International Climate Change University in Sri Lanka.

However, the proposals are yet to get approval from the general UN body though the island nation’s authorities expect wide support for the moves.

“What we have done is to talk to countries about the initiatives and launch them. Next step is for them to be formally recognized by the main body,” Ruwan Wijewardena, the Senior Advisor to President Wickremesinghe on Climate change, told Economy Next.

Breakdown of financial pledges and contributions so far:

  • Loss and Damage: $725 million
  • Green Climate Fund: $3.5 billion (increasing second replenishment to $12.8 billion)
  • Renewable Energy: $2.5 billion
  • Technology: $568 million
  • Methane: $1.2 billion
  • Climate Finance: Over $30 billion from UAE (plus $200 million in Special Drawing Rights and an increase of $9 billion annually from the World Bank)
  • Food: $2.6 Billion
  • Nature: $2.6 Billion
  • Health: $2.7 billion
  • Water: $150 million
  • Relief, Recovery and Peace: $1.2 billion
  • Local Climate Action: $467 million (Dubai/Dec 6/2023)
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Sri Lanka to start international tourism branding campaign

ECONOMYNEXT – Sri Lanka will soon start a tourism international marketing campaign under the theme ‘You will come back for more,” Tourism Minister Harin Fernando said.

“We have not had a branding campaign for 15 years,” Fernando told parliament. “A campaign has been developed by Ogilvy.

“It will help us reach the target of 2.3 million tourists next year.”

This year Sri Lanka is expecting a 1.5 million tourists with close to 1.3 million reached by November.

About 6,000 tourists are now coming each day, at the moment he said.

On December 10, three cruise ships are due. (Colombo/Nov06/2023)

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Sri Lanka 3-month Treasuries yields fall

ECONOMYNEXT – Sri Lanka’s Treasury bill yields eased across maturities with the tree month yield falling 19 basis points to 14.67 percent, data from the state debt office showed.

A total of 185 billion rupees in bills were sold, with sharply lower than offered volumes in 12-months sold.

The debt office offered 55 billion rupees of 3 -month bills and sold 87 billion.

92 billion rupees of 6-month bills were sold after offering 60 billion at 14.38 percent down 14 basis points.

Only 5.2 billion rupees of 12-month bills were sold after offering 70 billion rupees, at 12.88 percent, down 01 basis point. (Colombo/Dec06/2023)

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