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| Sunday, 5 September 2004 |
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| News Business Features Editorial
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Creation of jobs and stablity by Lloyd F Yapa A suggestion, that stability could create jobs may sound rather strange, asthe best -known strategy of creating jobs is investment in production capacity and infrastructure, (apart from improving productivity). What is this nexus between stability and investment ? People usually develop the confidence to save by curtailing current consumption and invest for future consumption, mostly when stability prevails. Otherwise they tend to take the first bus out of the village or the first boat out of the country. So what exactly is stability? While it could be a situation devoid of crises, several types can be recognized such as stability of the natural environment as well as social, political and economic stability. Out of these the foremost is political stability, without which the other types of stability cannot be obtained. Political Stability The first requirement for political stability in this country is a system, which could enable the people to elect strong governments (with a comfortable majority in parliament) to pass legislation of national significance. The present system of elections laid down in the constitution is notoriously flawed in this respect and tends to produce weak coalition governments with inconsistent agendas. Another serious shortcoming in this regard in this basic law is the non- recognition of the fundamental right of minority ethnic groups to manage local affairs, on their own. A government with a comfortable majority could be as nimble as a lame duck, if it cannot maintain law and order and implement its policies, programmes ie if the public service is inefficient and corrupt. In this country the main reason for this situation is the power given to politicians by the constitution, to lord it over highly qualified officials. Still another weak area is the absence of an institutional mechanism of building consensus on important national issues after consulting with all the stakeholders. Clearly the reason for not making such changes to the constitution is that the people at large do not see the connection between political stability and creation of employment opportunities, without which most persons cannot enjoy a life devoid of want. So the simple question, that arises is why not convince the people of this nexus on a 'first things first' basis? Social Stability With the first sight of continued political stability, people will begin to stir themselves out of their stupor induced by the absence of hope and look for ways and means of getting on with their lives, (as evidenced by the bull market runs in the stock exchange on such occasions). But prospective investors in production capacity are not going to sink their hard earned savings in this land, if there is no social stability as well, ie there is the slightest danger of properties being seized or robbed (or deliberately gutted by fire) and contractual obligations are being treated with disdain by those in charge and so on. Respect for the rights (and opinions) of others is born of the basic ability to discern right from wrong, the responsibility for inculcation of which is mainly in the domain of parents, teachers and the clergy, the guardians of morals/ethics in society. There is so much social unrest in the country lately, because of wrong doing, that one begins to think, that some of these guardians have taken leave from their duties to follow other pursuits ; or they do not know how to carry out their role. Economic Stability The more sophisticated and the bigger investors will begin to take an interest in the country, if the people and the leaders of the country learn how to manage our economy (without any 'yo yo' movements) so that their investments could yield an adequate return over the life of their assets, in addition to the prevalence of socio political stability. Such a situation can exist, only if there is price stability ie inflation is under control ( mainly stemming from avoidance of large government budgetdeficits), in addition to low interest rates , wages being more or less equivalent to the rate of productivity of labour, reasonable land values, stable exchange rates, ( due to more or less open markets in such factors of production) and a sufficient quantum of government expenditure being set apart for maintenance/ development of infrastructure, for provision ofservices such as health and education as well as for the welfare of the poorest of the poor. Why harp on investment and (private) investors so much? Assets in the form of infrastructure facilities/services and farms/factories are required to be built and maintained to produce the goods and services demanded by consumers. Government institutions, especially in Sri Lanka are abysmally inefficient at performing this function, nor can they find the funding for it. If they do so, they ultimately end up becoming 'monsters' gobbling up meagre government funds. The private sector is better at producing goods and services at a profit, while being able to pay taxes, because they tend to be punished with bankruptcy, if they fail to do so. The fear, however, is they might make abnormal profits by jacking up prices. The remedy is to maintain competition and undertake regulation without killing initiative. Stability of the Environment This discussion on the stability of the natural environment was kept to the last, as it is the foundation, on which every other stability is built. We Sri Lankans have been gifted with the best, that nature can offer. We, however, desecrate/destabilize it so wantonly, that there is an acute scarcity of water even for drinking purposes at times and other times there are raging floods.If stability is such a magic ingredient, why not give it priority and make it a responsibility of every citizen or group of citizens to contribute to it every day ? The politicians may not do it, as they tend to thrive on instability. Civic organizations, especially the professionals, the media and the private sector may therefore have to undertake it as a part of their social responsibility. |
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