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| Sunday, 26 September 2004 |
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Solemn thoughts : A. S. Jayewardena to Tilvin Silva comradely? by Wendell W. Solomons Comrade Tilvin Silva of the People's Liberation Front (JVP) claimed that the dollar rose to Rs. 100 to hit prices as a foundation for the UNP bid for power in 2001. His claim came in a statement of August 23, 2004, 'UNP plot to devalue rupee'. The statement added that the depreciation of the rupee returned when the Alliance came to power in 2004 because of "a conspiracy by pro-UNP higher-ups in the Central Bank..." The JVP claim of conspiracy may be based on a suggestion of collusion between top staffers of the Central Bank and the IMF officials on exchange rates. Silva reminded me of Adam Smith's warning - "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public." As for statistics to analyse Silva's claim, they are easily found in books and on the Web at the following US Federal Reserve sites. A series from 1973 to 2004 is not without chance variation. I saw that some months ago when I placed the 30-year data in a spreadsheet. However, an interesting line emerged when I drew a graph. We can take three figures from the series. (a) Rs. 6.71 The Sri Lanka rupee was quoted against the US dollar in New York at this rate on January 2, 1973. The SLFP was in power (as the major constituent of the ULF.) (b) Rs. 8.62 Soon after the UNP took over office in 1977, the rate hovered in that same vicinity. The rate for September 28, 1977 in NY was Rs. 8.62. (c) Rs. 102.95 Much water has flown since the entry to Sri Lanka of neoconservative economic surgery. After the catastrophe of July 1983, not to be discounted is exchange-rate pressure refusing J.R. Jayewardene a third-term Presidency. The latter had then brought forward R. Premadasa. That move ushered in more unforeseen changes. Now, with the SLFP (in power as a constituent of the Freedom Alliance), the rate has fallen to the low of Rs. 102.95 to the dollar as recorded for September 10, 2004. * * * Does Tilvin Silva have reasons to comment on the devaluation against the dollar? The drastic drop represented by the depreciation from Rs. 6.71 to Rs 102.95 during years 1973-2004 has already affected the incomes of a population of 19 million people, mostly derived in rupees. Salaries of breadwinners may have been imperceptibly trimmed for years. To express that in another way, imported items (and imported inputs such as the diesel used for carrying vegetables) changed in price and devastated family budgets. Meanwhile, during the last two months, the Central Bank has been inserting advertisements about the 'Gold Quest' operation so as to protect the population. Therefore we are in for a surprise here. The August statement of the JVP's Tilvin Silva has not received a direct word of clarification from the Central Bank. A daily of September 14, 2004, transcripts from ex-Central Bank Governor A.S. Jayewardena. He appeared on the Lanka Monthly Digest (LMD Benchmark) program, telecast on the previous day - "I have great confidence in the economy... We have gone through terrible times, but we have survived and come out well. Many people have told me that Sri Lanka is one of those countries that goes to the brink - and then comes out stronger. On a personal note he added, "I am not one of those Cassandras who keeps scaring everybody saying that something terrible is going to happen tomorrow..." "There is something in the Sri Lankan economy that is not evident in other countries; an underlying strength..." Betrand Russell warned, "Be wary of opinions that flatter your self-esteem. We are all, whatever part of the world we come from, persuaded that our nation is superior to others." The policy with which A.S. Jayewardena aligned was that of the IMF and World Bank. That post-1976 neo-conservative policy had earned names such as Zombie Economics or Thatcherism at the hands of its careful journalists (neo-liberalism or monetarism has been preferred by its advertisers). Behind neo-conservatism is social philosopher Ayn Rand whose words recorded last before her death in 1982 were, "It is the world that is dying - not I." 1. With his vanity trap dictum "an underlying strength," Jayewardena diverts us from the economic growth of India and Singapore. The growth of these neighbours of Sri Lanka's did not require 20 years of economic holocaust. 2. When Jayewardena glosses stoically over the catastrophe evoked in Sri Lanka by neoconservative social surgery begun in 1977, he becomes a local reflection of Ayn Rand. "It is Sri Lanka that is dying - not I." A.S. Jayewardena also alluded to a finding that 60 per cent of the subsidies 'go to people who did not deserve them... poor people's money goes to subsidise the rich!' "Neocon demagogue Milton Friedman used similar populist appeal on TV in August 1998- "We speak about the IMF bailing out ... Thailand; the IMF isn't bailing out Thailand. It isn't bailing out the poor people in Thailand now suffering from the recession they're in. It's bailing out the bankers in New York and in London, and Berlin who made loans to Thailand." A.S. Jayewardena appears here as a pale articulator of Rand's and Friedman's spin. Best economist in the world speaks Friedman, a number-crunching statistician (right in his CV,) trained to use economic terms as stage patter - money supply, currency stability, subsidies as market distortions, and balanced budgets. Much of the content is available in economics schoolbooks. The real thrust of Friedman is to make a country self-incinerate so that it would need loans to make up for disused and damaged domestic resources. Unfortunately for Dr Milton Friedman, his above TV blurb can be continued onwards to depict his life's real role as a salesman for banks such as the Warburg mammoths or J.P. Morgan. In January 2001, a debt salesman handpicked by Milton Friedman, Dr Jeffrey Sachs, was introduced by none other than A S Jayewardena acting as chairman at the Central Bank auditorium. Dr Sachs is the man who in 'monetaristically stabilising' the Russian Rouble devalued it more than 200 times. Jayewardena introduced Dr Sachs to the audience as "probably the best economist in the world." Yet, Dr Sachs' talk to Central bankers was historic. He did not use stage patter but suggested focus on particular projects that would earn revenue for Sri Lanka. I did a report on the historic speech and it was printed in the Sunday Observer (June 27, 2004, page 11.) 'Best economist in the world speaks' has also been available on the Net to a Google search. The report is at this URL - Let us conclude the record of evidence on professional quackery this way: The moving finger having written, moves on. Dereliction of duty Under the recent UNF government, for Tilvin Silva the sudden drop of interest rate in Sri Lanka might have served as an example of a minor local sub-plot. After the bank rate drop, JPMorgan Chase Bank was trying in May last year to broker investment in Sri Lanka by calling it a forthcoming 'Asian Tiger' economy. The sales pitch ran - "...A pick-up in investment spending will be slower, but eventually come through as lower interest rates, higher consumer and business confidence boost demand prospects." Yet, the co-authors of the interest rate drop were so dull on ground realities that they succeeded not in attracting or developing manufacturing industry but rather in attracting capital to the stock market to redistribute the stock of existing, well-known Sri Lankan companies. This suggests that the authors of the sub-plot ended up with vampire speculators using the chance to re-route locally extracted money to familiar local companies. Meanwhile, the sudden drop of interest rate took unawares and halved the incomes of widows, orphans and the retired in whose names cash was deposited in financial institutions. These persons may jointly file a plaint in Court. There are also existing organisations such as the National Resources and Human Rights Protection Front, which could submit a plaint to Court. Among recent examples are the plaint supported by the CPA where the Supreme Court ruled against a bill that allowed pharmaceutical behemoths to patent herbal formulas of Sri Lanka's traditional pharmacopoeia. Other inquiries, including those of the state, may also come up. All in all, wouldn't it save domestic resources if the Central Bank with its several hundred staffers explains in the public domain why the JVP surmise is incorrect? Perhaps top officials of the Central Bank have not participated in a scheme against the nation many times the size of that alleged to Gold Quest? Response invited at [email protected] |
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