Sri Lanka’s ruling party for a competitive knowledge based economy: Harsha
ECONOMYNEXT – Sri Lanka’s United National Party will unveil an economic policy that will end cronyism and boost incomes of ordinary people, through a competitive knowledge based economy, Deputy Economic Policy Minister Harsha de Silva said.
"It will create a massive economic revolution, which will improve incomes of the family," de Silva told reporters in Colombo Wednesday.
"Though the Rajapaksa administration criticized so-called neo-liberalism, they expanded the state for the benefit of a few people.
"The followed a policy of crony-capitalism where their friends amassed wealth from public funds.
"But our social market economy will increase the well-being of the family unit."
De Silva claimed that Sri Lanka’s health and education spend was the lowest in the region.
He said what happened to the Sri Lanka Insurance Corporation and the Employees Provident Fund were examples, where money was siphoned out to build hotels, through various holding company structures with inflated costs and to buy stocks which had been pumped up.
De Silva is pushing to create a ‘social market economy’, where there will be a focus on the family unit.
He said during the Rajapaksa regime, Sri Lanka’s export competitiveness had reduced and their policy which would be unveiled by party leader Ranil Wickremesinghe on Thursday, will aim to create a competitive knowledge based economy.
With higher labour productivity, it salaries will be higher in such an economy, he said.
De Silva said during the last administration, real family incomes had only grown only 05 percent a year.
But income disparities had widened with a few newly rich individuals amassing large amounts of wealth through government deals and using state funds to gain control of private companies.
He said the top 20 percent of people enjoyed 55 percent of the wealth after the Rajapaksa administration, up from 50 percent before. But the bottom poorest 20 percent enjoyed 4 percent, unchanged.
"The Gini co-efficient (a measure of income disparities) has worsened so there has been more injustice," de Silva said.
Economic analysts agree that people should get rich from unhampered capitalism, where poor consumers freedom are not curtailed by state support for business, and businessmen are forced to compete with each other to win the poorest customers by cutting prices or raising quality or both.
Economic analysts however voice caution about the use of measures like Gini co-efficient and income disparities which tend to feed on and incite envy and jealous hatred in people, rather than aspirational behaviour based on friendship, hard work and free exchange.
The Gini co-efficient was developed by Corrado Gini, a Mussolini-era Italian statistician, who is well-known among students of European history for his work, The Scientific basis of Fascism.
In 1926 he was appointed head of Mussolini’s statistics office and in the 1930s he also headed the Eugenics society of Italy.
A ‘social market economy’ however was born in Germany after Second World War when fascist nationalism was defeated.