Be Lankan, Buy Lankan but don’t Be Stupid

The editorial of last week’s Sunday Times, was probably the worst socio-economic analysis I’ve read in a long time. The editor seems to be highly taken up by a JVP-inspired campaign which encourages Sri Lankans to buy locally manufactured goods over foreign ones via ‘awareness campaigns for students where they will be taught the importance of eating nutritious home-grown food’

Clearly a campaign only a JVPer, or an equally retarded Leftist could have come up with.

First the writer claims that we should learn from India, one of the biggest and fastest-growing economies. I’d agree, only if he didn’t say ‘Gandhian’ self-sufficiency principles and ‘buy Indian’ campaigns that laid the foundations for India’s growth.

Nothing can be further from the ‘truth’.

The roots of economic success in India’s lies not in any ‘Gandhian’ or even Nehruvian principle but rather in the economic reforms in the early 90’s which saw India’s middle class nearly quadruple and 1 percent of its poor cross the poverty line every year, given the speed at which the Indian economy is growing it would soon surpass Japan and become the third-largest economy in the world.

Sri Lanka was luckier than India, and came into it's senses much earlier and opened its economy as far back as the late 70’s which put us on a path towards prosperity. Ever since we have managed to do reasonably well, and even now Sri Lanka is ahead of India in almost all economic and social indicators, quite an achievement for a country which had to endure a chronic civil war throughout the reform period. What SL would have become without this war can only be left up to the imagination.

In any case, core argument of the article and the ‘buy lankan’ campaign seems to be that Sri Lankans tend to think foreign produce is better than local produce as a matter of principle. I don’t think that’s necessarily true.

Let’s take the insurance for example. Sri Lanka does have quite a reasonably open insurance sector, which allows for 100 percent foreign ownership of insurance companies, yet the leading players in the sector are two Sri Lankan companies. It’s similar in banking. The likes of Asian Alliance and HSBC haven’t been able to just swallow the domestic market because Sri Lankans are not infatuated with foreign goods or companies, they, like consumers all over the world like good products at competitive prices.

Some 3 million Sri Lankans use Dialog as their mobile service provider, not because it’s foreign, but because it provides a decent service, best coverage and good packages. If Tigo provided the same, perhaps people would shift there, as some did when Mobitel offered tempting deals.

The best thing Sri Lankan producers can do to make people ‘buy lankan’ is to make good products and sell them well, consumers would follow. Surely if someone can’t sell their produce without invoking the patriotic card, it must be a pretty awful product. Having said that, I’m fine with this so long they restrict their ‘campaign’ to advertising and ‘awareness raising’; but if they seek legal protection from the state, then that's a slippery slope to hell.

After all the basic premise of tariffs and import controls are quite illogical from a consumer’s point of view, the government (and possibly even the ST Editor!) would consider the consumers as completely rational beings so long as they buy local produce, but if they buy foreign goods, then some authority must step into advise them and say :

“Look here son, you have made an unwise choice here, haven’t you been watching JVP Buy Lanka Commercials? Don’t you read the Sunday times? So now that you have made this mistake we are going to help you to make the right decision by increasing tariffs and taxes, because you obviously don’t have the ability to make these kinds of important decisions.”

I’d say that’s rubbish.

The editorial is well intended, but they say even the Nazis meant well, and that the road to hell is paved in good intentions. If anybody really wants to make a strong Sri Lankan industry which produces competitive products which can compete against global companies then the real things to do are not these superficial campaigns, but to bring in real economic reforms which have been stalled for a while. Slash the red-tape, which makes an entrepreneur wait for 50 days to set up a business in Sri Lanka, bring in labor reform, slash taxes, downsize the enormous state-sector and provide for a good business and an investment climate.

When it comes to economics there are no competing ‘ideologies’. That was last century. The reality is based on market-economics and capitalism. The rest is just fantasy.