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Thursday September 21st, 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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Sri Lanka’s 2022 EPF returns falls to lowest, single digit in near two decades – CB data

ECONOMYNEXT – The 2022 annual average return on Sri Lanka’s largest contributory pension scheme, the Employees’ Provident Fund (EPF), has fallen to its lowest in nearly two decades, Central Bank data showed.

The annual average return in the last year fell to 9.52 percent from the previous year’s 11.40 percent, a central bank response to a Right to Information (RTI) request showed.

Returns on EPF has raised concerns among contributors after the government decided to include EPF investments in the government treasury bonds under the domestic debt optimization (DDO) process.

Last year’s lower return has been recorded despite market interest rates being more than 30 percent towards the end of the year. In contrast, the fund has given a double digit return in 2020 when the market interest rates hovered in single digits.

Analysts have predicted the returns to be further low with the central bank opting for the government’s DDO option.

A central bank analysis on DDO showed the return on EPF could fall to as low as 6.79 percent if the DDO option was not chosen within the next 12 years as against 8.02 percent if opted for DDO.

Trade unions and some politically motivated fractions opposed the government move to include the EPF investments under the DDO. However, parliament approved the move early this month.

According to the data made available from 2005, the central bank, which is the custodian of the EPF, has given the highest return of 16.03 percent in 2009.

The island nation’s largest pension fund has almost 21-million member accounts including 18.3 million non-contributing accounts due to some members having multiple number of accounts.

The 3.38 trillion-rupee ($10.6 billion) worth fund as of end 2022 is managed by the central bank, including its investment decisions.

As of end 2022, the central bank has invested 3.23 trillion rupees or 95.7 percent of the total EPF in government securities, while 84.1 billion rupees has been invested in listed companies in the Colombo Stock Exchange, the central bank said quoting the EPF audited financial statement. (Colombo/September 21/2023)

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Malaysia to support Sri Lanka’s bid to join RCEP

ECONOMYNEXT – Malaysia has agreed to support Sri Lanka’s application to become a member of the Regional Comprehensive Economic Partnership (RCEP), a major regional trade agreement.

The RCEP is a free trade agreement among the Asia-Pacific nations of Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.

President Ranil Wickremesinghe met the Malaysian Prime Minister Anwar Ibrahim during bilateral discussions on the sidelines of the United Nations General Assembly in New York yesterday (20).

During the meeting, the Malaysian Prime Minister expressed a strong desire to bolster economic ties between the two nations, according to a president’s media division statement.

He emphasized Malaysia’s eagerness to facilitate increased investments from Malaysian companies in Sri Lanka.

Ibrahim also expressed positivity towards Sri Lanka’s request to commence negotiations for a free trade agreement (FTA) between the two countries, which could potentially open up new avenues for trade and economic cooperation.

Wickremesinghe is in a drive to bolster international ties and integrate the country with the global economy.

So far this week he met with the leaders of Bangladesh, Nepal, Malaysia, Iran, South Korea, as well as representatives from global bodies such as the World Bank, International Monetary Fund, USAID, Meta, the Commonwealth, and attended other forums.

Sri Lanka aims to expand its economic reach first within South Asia and then extend further.
Data shows that Sri Lanka has been able to boost exports with FTAs.

Over the past two decades Sri Lanka’s exports have not grown as much as competitors.

Economists involved in trade have pointed out that Sri Lanka should make joining the RCEP a priority instead of trying to negotiate multiple smaller deals for which it does not have the bandwidth in government, or the technical resources to do multiple trade agreements. (Colombo/Sep21/2023)

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Is Tibet Prepared for a Post-Dalai Lama Era?

ECONOMYNEXT – Tibetans have shaped and sustained their lives for more than 60 years under the leadership of the 14th Dalai Lama. The spiritual leader turned 88 in July, and as his longevity is discussed amongst his followers, there is also concern about Tibet’s future without his physical presence.

In 2011, the Dalai Lama divested himself of all political authority, yet, as the architect of democratic governance, he continues to remain a larger-than-life figure for Tibetans.

Along with that come other challenges; safeguarding the democratic system he initiated, engaging younger generations in the cause for Tibet’s freedom, protecting the country’s environment, the influence of external forces and the possible geopolitical fallout of India’s continued support of the Tibetan cause.
Ever since the Lhasa uprising of 1959, and the setting up of a government in exile in Dharamsala, India, the first Tibetan Constitution introduced by the Dalai Lama in 1963 has undergone many changes.

In 1991 the Supreme Justice Commission was added to the other two pillars of democracy, the Legislature and the Executive. Along with that, an Independent Audit Commission, an Independent Public Service Commission and an Independent Election Commission were set up, and women were assigned two seats in the Legislature. The current operational body of the Tibetan government in exile is known as the Central Tibetan Administration (CTA).

The debate on Tibet’s sovereignty, which fell under the control of the Chinese in 1951, is ongoing, with the Chinese government terming it the “Peaceful Liberation of Tibet’ and the CTA and Tibetan diaspora referring to it as the “Chinese invasion of Tibet.”

Despite the reforms and the Dalai Lama divesting himself of all political power the spiritual leader exerts considerable influence and therefore there is still, a heavy dependence on him, notes MP Youdon Aukatsang. Speaking at a webinar titled “Tibetan Democracy in Exile’ organised by the Friedrich Naumann Foundation for Freedom, South Asia, on September 15, Ms Aukatsang pointed to a recent constitutional crisis which was finally resolved following the Dalai Lama’s intervention. “Tibetans must take full responsibility for political matters as envisaged by His Holiness the Dalai Lama,” she said.

There is also the challenge of dealing with the internal dissent amongst Tibetans, which she claimed is spearheaded by China.

The webinar moderated by Ms Tenzin Peldon, the Director and Editor-in-Chief of Voice of Tibet, included Ven Geshe Lhakdor, Director, Tibetan Library and Archives and honorary Professor, University of British Columbia, Gondo Dhondup, President of the Tibetan Youth Congress and Sujeet Kumar, an Indian parliamentarian and the Convenor of the All Party Indian Parliamentary Forum for Tibet.

The current Sikyong, Tibet’s political leader Penpa Tsering and Dr Jurgen Murtens, a member of the German Bundestag also addressed the webinar.

The democratic model, Aukatsang states is successful, yet it is a work in progress. The current make up of the Tibetan Parliament in Exile (TPiE) has 45 members representing the three provinces of U-Tsang, Do-med and Do-tod, the four schools of Tibetan Buddhism as well as the traditional Bon faith, Europe, North America and Australasia. It is headed by the Speaker and the Deputy Speaker.

Aukatsang would like to see a modification in the composition with more representation from the diaspora, and less from the provinces to better reflect the changing demography. She also proposes an increase in the number of members of the Standing Committee from 11 to 15 and calls for the establishment of a dispute resolution mechanism rather than the direct impeachment process, which is the current practice.

Though the 1991 reforms made way for women’s representation in the TPiE, (currently 10 ministers and the Deputy Speaker are women), Aukatsang is hopeful there would be “more meaningful engagement of women in leadership roles,” for, as she points out, they are the custodians of Tibetan culture and language. Women have also distinguished themselves as founders of several non-governmental organisations and in the field of education.

Her sentiments were reflected by the Sikyong, Penpa Tsering when he said that unless the administration is ready to adapt to demographic and social realities, its relevancy will be challenged.

When the Buddha was on his deathbed, and his followers were fearful of being on their own, the Buddha had advised that the focus should be on his teachings and not his physical presence. Likewise, says Ven Geshe Lhakdor, Tibetans must continue to abide by the teachings of the Dalai Lama, and not worry about his absence. When Tibetans were prohibited from displaying photos of the Dalai Lama, they hung up empty picture frames, he said, aware that the Dalai Lama remains within them.

Ven Geshe Lhakdor also advocates a separation of Church and State, pointing out that clergy must involve themselves in the spiritual upliftment of society, rather than in politics. The idea of the religious ruling a country is outdated, he points out, adding that once clergy get into a “political mindset” they are unable to send out good signals to the people. He adds that their responsibility is to safeguard culture and harmony and be role models.

The principles of democracy are a reflection of Buddhist teaching the Venerable noted, pointing out its time to extricate oneself from a tribal mentality. The focus must be on a long-term, robust vision, rather than quick fixes. He also believes that Tibetans must safeguard themselves from internal fragmentation, even more than external threats.

One unique feature of the administration is that it is free of corruption, the Venerable notes, despite being surrounded by corrupt systems.

Even though Jawaharlal Nehru, the first Prime Minister of independent India, sought and had the cooperation of all Chief Ministers to offer refuge to Tibetans in 1959, MP Sujeet Kumar is of the opinion that the current Indian Parliament is rather diffident in openly rooting for Tibet against China.

While acknowledging that Indian parliamentarians have huge constituencies and are busy, he is hopeful his colleagues would take more interest in Tibet and her issues.

Tibetans alone have the right to decide on the Dalai Lama’s successor, says Kumar, and India must back that. India should also rally the support of other nations to help Tibet charter her own course in a post-Dalai Lama scenario.

Kumar would like to see more Tibetan youth become part of India’s trillion-dollar digital industry.
He is concerned, however, at the lack of enthusiasm amongst the youth to use social media to fight disinformation being circulated about Tibet.

Acknowledging that youth could be more engaged in social media to fight disinformation, Gondo Dhondup says all Tibetans are “born to be activists” and to the cause, even though it is difficult to envisage a freedom movement without the Dalai Lama.

Youth are the agents of change, and Tibet’s future citizens, therefore they must stay informed. The TYC organises leadership training, and Tibetans, even those scattered around the globe must take advantage of the programmes, Dhondup says.

While calling on India to introduce a national policy on Tibet, Dhondup cautions that India’s waterways that originate in Tibet are under threat. The rivers are either “diverted or polluted” affecting downstream villagers, and India must ensure her water security, Dhondup explains.

The recently concluded G20 summit was themed “One Earth, One Family, One Future”, and that gives India an opportunity to be more vocal about the environment, he says.

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