Call for proper free market system:

To bridge income disparity

The need for Sri Lanka to open its economy with a proper free market system to ensure economic growth in the country was highlighted at a seminar in Colombo. Sri Lanka should have a proper free market economy if it is to bridge the income disparity and stimulate growth, political scientist Dr. Tom Palmer told a seminar in Colombo last week.

The seminar on ‘The Morality of Capitalism’ was organised by the Bastiate Society.

Vice President for International Programs at Atlas Network and author, Dr. Palmer said that an open market is vital to create an entrepreneurship culture which will help eliminate poverty and bring prosperity to the country.

The absence of an effective free market system is a prime reason for the widening income inequality in the country as vividly seen in the rapid urbanisation which is a growing global phenomena. Urbanisation in Sri Lanka has increased sharply over the years with the desire for better income which would provide access to good education and healthcare.

Colonisation and absence of the right to property have pushed people into poverty.

“People with no right to property remain slaves to the wealthy.

The right to property which could be liquidated will enable them to move to urban areas for better income generation.

If Sri Lanka wants its people to remain in the country it has to make it a good place to work. People migrate for employment because there is no proper free market in the country,” Dr. Palmer said.

Around 1.7 million Sri Lankans are employed abroad which is nearly 17 percent of the working population of the country. Earnings from foreign remittances is around US$ 7 billion. He said that Sri Lanka needs to create jobs with high wages which would make people stay back and be content with their jobs.

People in Germany, USA or Canada are not working in the Middle East as domestic workers as there are jobs with high wages in their own country. Sri Lankans do not have to slave in another country if high wage jobs are created in the country.

Pathfinder Executive Director and Economist Dr. Luxman Siriwardena said that we need to learn from Singapore which has been transformed into a dynamic State today. Sri Lanka was looked upon in the past as a model by Singapore.

“Sri Lanka is averse to capitalism which is considered a dirty word. The notion that capitalism is bad evolved from the pre independence era. The super gains tax is an example to illustrate this fact.

The country was against capitalism in the1970s which was marked as era of nationalisation. We were against multinationals who were looked at as exploiters. Sri Lanka is what is today because of capitalism. If not we would still be in the stone age,” he said.Political parties playing double games by their stance on the economy.

The party that opposed nationalisation of the Buhari Hotel has today fixed Rs. 10 as the maximum retail price for a hopper, Prof. of Economics, Faculty of Finance and Management, University of Colombo, H.D Karunaratne said.

Dr. Palmer said that politicians are keen only about the next election and make short-term decisions. They are not bothered about long-term consequences. He said that an open market promotes a vibrant import- export sector.

If imports are taxed it affects exports. If imports are restricted it restricts exports as well. An open ended economy is vital as it creates open trade. Many countries in Asia have developed by opening for trade. Sri Lanka has to improve on the rule of law and standards in domestic institutions.

“Capitalism is misunderstood as a system that promotes selfishness rather than self-interest. A buyer and the merchant could negotiate and have a win-win situation," Dr. Palmer said.

- LF