Sri Lanka: State control or self-control?

In this weekly column on The Sunday Morning Business titled “The Coordination Problem”, the scholars and fellows associated with Advocata attempt to explore issues around economics, public policy, the institutions that govern them and their impact on our lives and society.

Originally appeared on The Morning

By Dhananath Fernando

We Sri Lankans love when the State controls almost everything in life. It almost seems genetically coded for us to expect the State to control our education, jobs, electricity, prices of staple goods, prices of vehicles, religion, and whatnot. Our politicians take advantage of this inherent thinking and pretend they have the ability and competency to control everything. That is why every election has become a heavyweight competition on the free giveaway of jobs and commodities. From the day Sri Lankans are born, till the day they die, a bigger part of our lives is controlled by the State, and there is very little the individuals have to say about it.

As a result, Sri Lankans do not have any decision-making power in their lives and they really do not have a say in their own lives. Life as we know it is a series of making decisions. Decisions we’ve made in the past are the reason why we are who we are and where we are today. Decisions we make today will determine our tomorrow. The only way to navigate your life the way you want it is to take control of the decisions you make. In other words, this is the act of controlling one’s self and the factors one has a say in – “self-control”.

Mahatma Gandhi eloquently once said: “Be the change that you wish to see in the world.”

Even though we’re all very aware of this, our actions speak otherwise. Since the beginning of time, Sri Lankan society has constantly demanded for more “state control” as opposed to “self-control”. People’s expectations are such that the government must take care of their employment, provide for their children’s education, their healthcare, and needs, operate hotels, run airlines, telco companies, and media stations, and should be the sole provider of infrastructure development. Did you know that 77% of our university graduates are employed in the public sector? This is funny because a graduate employed in the private sector would earn 60% more than a graduate employed in the government sector.

Sadly, what people don’t see is the cost they have to pay for their demand of state control. The state salary bill itself is very expensive for a country like Sri Lanka where the state salary per annum per citizen is about Rs. 29,809. If we consider the state salary per household per annum, it is as high as Rs. 119,238.

Further complicating the state of affairs from what it is already, state control has reached its peak in Sri Lanka where even the prices of day-to-day goods and services are dictated by the government. Advocata’s report titled “Price Controls in Sri Lanka” and the accompanying documentary highlight how price ceilings on the sale of certain goods result in market shortages, and the sale of lower quality products resulting from producers having to cut down on the cost of production of these goods.

A recent price control on pharmaceutical products has created market shortages on 11 essential pharma products. The Government recently had price controls on masks due to the coronavirus outbreak as well as more price controls on vegetables and staple food, but nothing really worked on bringing the prices down. Instead, it was reported that some medical products were not on the shelves.

It is said that when you try to control one thing, you lose control of everything. And that’s exactly what’s taking place in Sri Lanka. If you recall, we had a price control on hoppers just after the previous Government came into power. The list was so long that even tea prices at small tea shops were controlled, and later they extended the list on imposing price controls on bottles of water too. These control measures are absolutely impractical to monitor and impose. Throughout history, it is evident that government price controls have not brought about any positive results and have only worsened the situation.

As a result of the controlling mentality, consecutive governments lost control of the things they should have focused on. Our judiciary system, which needs serious reforms, has not even been touched for decades. Someone who has a land case would understand how long and painful the process is. Rather than setting up systems for efficiency and having a level playing field, the governments have spent time on trying to control things that aren’t controlled and has micromanaged macro issues.

“The man who chases two rabbits catches neither” is a good reminder to all governments that try to control too many things instead of promoting and developing the culture of self-control.

The extreme ill-effects of “state control” are visible in our export sector. In the last 10 years, Sri Lanka has only had seven new Harmonised System (HS) Code additions to our export basket. During the same period, countries like China have added 76 codes to their basket, while Thailand added 70 and Vietnam added 48. The more we compromise on self-control for state control, the more we distance ourselves from prosperity.

The solution to all this is simple: Hard work and free exchange. Hard work, on the one hand, is a characteristic of self-control. Free exchange, on the other hand, helps foster a competitive business environment that encourages a nation and its citizens to strive for prosperity. If we can’t control how we work and strive for development, we’d be kidding ourselves to assume that a state could do it for us.

Like Pythagoras once put it, “no man is free who cannot command himself”.