What is the JVP’s Economic Policy?

Hats off to the JVP lady who promised that when the JVP/NPP comes to power, it will legalize prostitution! If Sri Lanka is to undergo the next phase of social revolution, which the JVP promises, the archaic and discriminatory laws should be discarded to build a system where every citizen, irrespective of race, religion, income, gender or sexual orientation, could exercise the full scope of liberties. But there is a glitch that the JVP’s ideologues and their busloads of supporters fail to admit - or they simply don’t comprehend: social liberalism cannot be achieved, nor could it be sustained in the long run, without economic liberalism.

A cursory look at international politics would reveal that where this was attempted at the exclusion of the latter - from Cuba in the past to Venezuela as recently as a decade ago - it ended up being a monumental disaster. Therefore, everyone who believes in the JVP promise to usher in a ‘system change’ should ask the JVP leadership to reveal their economic strategy. People conned by Gotabaya Rajapaksa, who promised many things that the JVP/NPP offers now, though in a pungent ultra-nationalist flavour, should take extra precautions when they hear promises that are too good to be true.
Unfortunately, the JVP shows no inclination to offer any tangible economic policy agenda. That’s a grave oversight, considering Sri Lanka’s economic priorities – and a simple promise of a ‘system change’ could not wish away the country’s grave economic problems.

It has continuously opposed the IMF programme of economic stabilization. Yet, it offers no alternative. Instead, some of its stalwarts have hinted at the prospect of not paying up to the creditors of international sovereign bonds, as if there would be no consequences – that would be the easiest route to unravel the painstakingly achieved economic recovery so far.  
The JVP thrives on public discontent with the government and its predecessors, to come to power through a protest vote. That is a dangerous gamble: You can come to power through slogans but not govern a country. You need an element of substance for that. Since the JVP had not provided a detailed economic policy, let’s use some of the often-talked-about snippets on the JVP stage to deduce an idea about a generalized JVP economic policy.

Corruption Busting as a Panacea 

The JVP leaders have repeatedly said they would ‘eradicate’ corruption as if growth would flow like water in a gutted pipe when the rod is removed. But that is a dangerous oversimplification of the drivers of economic growth. Firstly, Sri Lanka has an enhanced sense of corruption perception rather than real corruption. That results from the long-term function of how opinion makers, politicians and NGO captains frame the discourse. 

Secondly, high-level corruption in the country is born out of bureaucratic red tape, permits restrictive legal regimes and monopolies of state-owned enterprises. When excessive state control and interference hinder economic activity, as some economists argue, corruption serves as efficient grease that cuts down transactional costs for the investors – though that could also dissuade many others from investing. That is the case in Sri Lanka.

Sri Lanka can clamp down on corruption by dismantling this bureaucratic red tape, liberalizing investment laws, ending monopolies and reforming SOEs. But, one would doubt whether this is something the JVP would want to do – even if it has the best intention of clamping down on corruption – because its trade unions and its socialist ideology demand the continuation of this status quo of the overwhelming state control in the economy.

(Last but not least, if Sri Lanka is to rebrand itself, it might also need pro-active liable laws similar to Singapore to combat unsubstantiated, politically motivated allegations, which is not a question of free speech)
However, ending corruption, assuming it is materialized, would not necessarily generate economic growth. Interestingly, many successful East Asian economies, such as South Korea, Japan, Taiwan, and even Malaysia under Mahathir, were extremely corrupt during high growth decades. 
Economic growth is facilitated by many drivers: investment-friendly policies, low trade barriers, reforms in land, labour and capital laws, a stable monetary regime and investment in human capital. 

Export-Driven Economy: Making Vietnam from Doing Nothing

The JVP says it will turn the country into an export-driven economy. Everyone else says the same. Since that would not happen by a miracle – but only through government policy and investment fostering entrepreneurship and foreign investments – in the absence of a detailed policy plan, one should ask how? 

Firstly, let’s take the recent remarks by Anura Kumara Dissanayake to export Graphene. Though some make fun of his mix-up of words, Mr Dissanayake is alluding to a policy of promoting downstream industries, instead of exporting raw materials. However, Sri Lanka is not necessarily a country with substantial raw materials that can stimulate economic growth. Rather, worryingly, Dissanayake is implying a flawed policy in the past of indigenization and then, to protect those underperforming local industries, raise a wall around the country. That is what Gotabaya Rajapaksa did through an export ban on building materials, tiles and bathroom fittings, which saw local wheeler-dealers making a killing. 
Secondly, there is a misconception that it could pull off an economic miracle like Vietnam without doing anything. Vietnam has two distinctive advantages: it’s authoritarian, which, just like China, exercises almost absolute control over the public, and it has five times the Sri Lankan population. 

Thirdly, though economic liberalization is mandatory for the long-term economic survival of the country, one should question whether Sri Lanka has long-term prospects by trying to jump into the missed train three to four decades after it left the station. Low-end industrialization would have provided a long-term path to prosperity if J.R. Jayawardene succeeded in the 80s. But it does not seem to work, nor does it create decent-paying jobs. A few years back, the local garment industry struggled to fill in 50,000 vacancies and lobbied to import workers from Bangladesh, while the local lasses enmasse went to the Middle East to work as housemaids. Instead of bottom-feeding industrialization, Sri Lanka should try to jump into the middle.

Human Capital: Cannibalizing it in the name of Free Education

Sri Lanka’s greatest asset is its youth; nearly two-thirds of the cohort that sits for the GCE Advanced Level Examination now qualifies to enter university. That is 167,000 out of 262,000 total applicants. Instead of creating graduate and professional level education opportunities for them, the Sri Lanka education policy is actively geared towards depriving their rightful chance. The annual intake of around 40,000 graduates into public universities, paid by public funds, comes at the expense of the rest of eligible peers. The JVP-affiliated student unions are the most vocal in their opposition to privately funded higher education. Medical students have forced private medical schools to be shut down. If Sri Lanka is to have a real shot at prosperity, it should provide higher education opportunities for all its children. 
The government alone cannot do that – in fact, most state-run universities are the epitome of mediocracy. Instead, the government should proactively promote private-public partnership in education, provide generous subsidies to attract world-class universities to open campuses in the country, and encourage the local private sector to open higher education and vocational training institutes. 
Can the JVP do that? Its ideological bed fellows would rather burn down the state than do this.

The Myth of Social Revolution in an Economic Straight Jacket

Many students of international politics and policymakers believe that long-term economic growth gradually forces the states to dismantle oversized control. The richer the country, they become, freer and more democratic. (Though some question the logic of this premise in relation to China under Xi Jinping; China at present is a lot more socially liberal than it had been twenty years back). A better example would be Taiwan, which was under the grip of authoritarianism until the mid-90s, which were also its high-growth decades that transformed it into a technological power house. Today, Taiwan is an oasis of political pluralism and the first Asian country to legalize same-sex marriages. Whereas system change without economic prosperity, first peels off, and then crumbles. 

Finally, leaving aside all the economic arguments, are the JVPers worthy enough agents of social liberalism? It is a party in which carders are banned from drinking alcohol. Most of JVP’s student activists in the universities double as moral policies. 
Those who bet on the JVP would be into a nasty surprise; Sirimavo’s disastrous economic exercise in 1970-77 would look like child’s play.  

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