Dhananath Fernando 00:19 Hello, hello! Welcome to another episode, and we are discussing about Dr. Rajabatiranas book, and it's a book about Sri Lanka. And if you have been following us, we discussed two chapters, and today we are going to discuss about the third chapter. Dr. Rajabatirana, welcome to our conversation. Thank you very much for your time and taking your time to explain or like give a gist about what is in each chapter. How are you? Dr. Sarath Rajapatirana 00:46 I'm okay, thank you. I'm thank you for inviting me again. Dhananath Fernando 00:50 Thank you, Dr. Today we are going to discuss about the about chapter three. Yes, and you have titled the chapter three as through eminent eyes: a 50-year retrospective as a background to globalisation. Dr. Sarath Rajapatirana 01:04 Yeah, Dhananath Fernando 01:04 just tell us why did you title like this? Like what is what is the what is the indication that gives in the title of this third chapter? Yeah, when you go in detail. Dr. Sarath Rajapatirana 01:18 Yeah, actually, so I want to have a idea about who the people are going to be, who they are. They are eminent people, right? By any chance, they are eminent, and and so the eminent people have a say on what this country will do, and of course, as we see later this thing, one of the people, one of the person who had to say is the Prime Minister of India, Yahaj Lara Nehu, and he was very present. Sorry, Prime Minister was our Prime Minister, Sri Lanka Prime Minister was very close to him as a friend. Dhananath Fernando 01:59 SW Bandar Nakh. W. Dr. Sarath Rajapatirana 02:00 R. D. Bandar Naik was close to him as a friend, and both the actually both are left of centre people, so the recommendation that come from people whom they chose is is a point to be looked looked at. What is the outcome? Dhananath Fernando 02:19 So, Dr. Ajbadhira, so during this time, under under your book, like the policy challenges for globalisation in Sri Lanka, so during President Bandar Nayakar's time, Dr. Sarath Rajapatirana 02:31 yeah, Dhananath Fernando 02:32 so there were about seven eminent Dr. Sarath Rajapatirana 02:36 seven yeah Dhananath Fernando 02:37 economists, Dr. Sarath Rajapatirana 02:38 yeah, Dhananath Fernando 02:39 and they came upon the invitation of our government and also in connection with Prime Minister Nehru. Is it? Yeah, Dr. Sarath Rajapatirana 02:48 Prime Minister Nehru suggests to to Prime Minister. Dhananath Fernando 02:53 Sorry, Prime Minister Bandar Nayakar, not the President Bandar Nagar. Prime Minister Bandaranaike. Dr. Sarath Rajapatirana 02:57 Yeah, Prime Minister Bandar Nayak. Yes, Prime Minister Bandar Nair. Jawaharlal Nehru to ask this type of system to help some people evaluate our work, Dhananath Fernando 03:09 right? Dr. Sarath Rajapatirana 03:09 And actually, he had some experience in India because he was very happy with on taxation. So the person who was came here for taxation is the one who advised Prime Minister Nehru. Dhananath Fernando 03:25 Nehru, that's mr. Nicholas Kaldor. Dr. Sarath Rajapatirana 03:28 Kaldor. Dhananath Fernando 03:29 Kaldor. Dr. Sarath Rajapatirana 03:30 Yeah. Dhananath Fernando 03:30 And then there's another macroeconomist called John Hicks. Dr. Sarath Rajapatirana 03:34 Yes, famous Nobel Prize winner. Dhananath Fernando 03:35 Nobel Prize winner John Hicks. And then there's a sociologist that is Gunnar Dr. Sarath Rajapatirana 03:42 Mirdal, Dhananath Fernando 03:42 Mirdal, Mirdal, and then Dr. Sarath Rajapatirana 03:44 can I say it again? Yes, Gunnar Mirdal. He is Swedish man. Right. Dr. Sarath Rajapatirana 03:49 So that is this name comes from there. Rightal. Dhananath Fernando 03:52 And then also there is an economic theorist called John Robinson. Dr. Sarath Rajapatirana 03:57 Yes. Dhananath Fernando 03:58 Joan. John. How do you pronounce it, John? Dr. Sarath Rajapatirana 04:01 She is a woman. She is a woman. Joan. Dhananath Fernando 04:03 Joan. Dr. Sarath Rajapatirana 04:04 Not John. John. Yeah. Dhananath Fernando 04:06 Joan Robinson. Dr. Sarath Rajapatirana 04:07 Yeah. Dhananath Fernando 04:07 And Oscar Lanch. Langer. Dhananath Fernando 04:10 Oscar Langer. That's a again Dr. Sarath Rajapatirana 04:12 European name. Yeah. Dhananath Fernando 04:14 Market socialist and Kenneth Dr. Sarath Rajapatirana 04:16 Galbraith. Dhananath Fernando 04:17 Kenneth Galbraith. He or she? Dr. Sarath Rajapatirana 04:20 He. He Dhananath Fernando 04:20 global development programmes and also Usha Hicks public finance specialist. Usha Dr. Sarath Rajapatirana 04:28 Hicks Hicks is his wife. Dhananath Fernando 04:29 Right. Dr. Sarath Rajapatirana 04:30 Yeah, they came together. They all Dhananath Fernando 04:32 seven came together. Dr. Sarath Rajapatirana 04:33 No, they came separately. Separately. Yeah, because but the Gamini Koreya was given the the task of inviting these names because he knew all of them, Dhananath Fernando 04:45 right? And by then, Dr. mr. Gamini Koreya was the Economic Planning Commission. He was the Dr. Sarath Rajapatirana 04:53 commissioner commission of economic. He's a he was a. Director of the Planning Commission. He's Dhananath Fernando 05:01 the director of the Planning Commission. You're a good friend, right? Dr. Sarath Rajapatirana 05:04 Who? Dhananath Fernando 05:04 Garmini Korea. Dr. Sarath Rajapatirana 05:05 Yeah, and my boss. Dhananath Fernando 05:08 And your boss. Dr. Sarath Rajapatirana 05:08 Yeah, very nice person to work with. Right. Yeah. Dhananath Fernando 05:11 But pretty much not. Is he also globalisation friendly or globalisation unfriendly? Dr. Sarath Rajapatirana 05:16 He's yeah. He's more. He is a great economist, but he's he's little unfriendly, little globalisation unfriendly. Dhananath Fernando 05:29 Generally, the planning guys are globalisation unfriendly. No, just so you understand. So it's interesting. So these seven team of seven members, all top notch people, it seems, came to Sri Lanka, and one thing that you have highlighted is with their arrival, like with their analysis, that they identified the population growth problem earlier. Dr. Sarath Rajapatirana 05:56 Yeah, Dhananath Fernando 05:57 could you kindly elaborate how it is and why it is important? Dr. Sarath Rajapatirana 06:00 It turned out that it was not a problem. Okay, they were very excited about population growth, but actually, automatically, when income rise, the population problem it solves itself. Dhananath Fernando 06:15 Right. Dr. Sarath Rajapatirana 06:15 So, so it was not a big problem. It Dhananath Fernando 06:19 was not a big problem. So, so, Doctor Rajapatina, what do you how can you elaborate? Like when the income picks up, how do you say like the economic problem? I mean, sorry, the population problem will be solved automatically. People upgrade their lifestyles, and then they have lesser number of kids. Is that is it's a natural scenario? Yeah, natural, Dr. Sarath Rajapatirana 06:37 natural. Yeah, automatically happen. That is the all over the world that is what happened, Dhananath Fernando 06:43 right? And this in this case, so did this group of economists actually did they push for a lower population growth? No, Dr. Sarath Rajapatirana 06:52 no, no. They just observed right that that that there could be a population problem. Right, they didn't say there is fun. Right, they could be Dhananath Fernando 07:00 okay. That Dr. Sarath Rajapatirana 07:01 it could be, Dhananath Fernando 07:02 and as you have titled that the 50-year retrospective as background for the published book. So, could you elaborate one by one, like in terms of taxation, because with mr. Nicholas Caldor, like what was the reforms brought in after he came? Anything in particular on the taxation and how it affects the globalisation or like Sri Lanka in a globalisation world? Dr. Sarath Rajapatirana 07:28 Yeah, actually, it was a very good. He is very very famous man. He did a good job. He found how to tax in a way that doesn't hurt the the producers very much or the companies that want to, yeah. So it is a very, very good and secure way of looking at income, income taxes. Dhananath Fernando 07:52 Right. And then what was the contribution by John Hicks? Dr. Sarath Rajapatirana 07:57 Oh, he Hicks is a Hicks. Hicks. Dhananath Fernando 08:00 Yes. Dr. Sarath Rajapatirana 08:00 Yeah, he he he's very famous for being having a very good idea about economics in general, and got the Nobel Prize for it. He got the Nobel Prize for it. Yeah, he got yeah. Dhananath Fernando 08:12 And again, this was so. Do you mean to say the the similarities to an extent with India that Sri Lanka had is also coming from because of the work that these seven group of economists worked on Sri Lanka, or is it? Actually, they Dr. Sarath Rajapatirana 08:31 were to be very frank. It was not a very big commitment on their part, right? But they were good people. But there are many others in the world who were maintenance, also very good, Dhananath Fernando 08:41 right? Dr. Sarath Rajapatirana 08:41 So the choice made by Gamini Correa, also very good man, was not a choice that you and I would make, Dhananath Fernando 08:50 right? Got it. But also I want to understand what was the okay. You you you mentioned what was the taxation contribution by Nicholas Caldo, and again I I beg your pardon if I mispronounce our socialist name, Guna Midral. Dr. Sarath Rajapatirana 09:07 Guna Mirdal. Dhananath Fernando 09:08 Guna Mirdal. What was her recommendation or any particular? Guna Dr. Sarath Rajapatirana 09:12 Midal was a man. Dhananath Fernando 09:13 Sorry, Guna Midra. I I beg your pardon. So Guna Midral, what was his contribution or any particular recommendation for Sri Lanka that pops up. Dr. Sarath Rajapatirana 09:22 His area is Dhananath Fernando 09:25 sociology. Dr. Sarath Rajapatirana 09:25 Sociology, yeah. Actually, he later this is not in the book, but he later devoted a lot of time to understanding poor countries, what is happening in poor country, with respect to good policies and not so good policies. Dhananath Fernando 09:47 Right. Dr. Sarath Rajapatirana 09:48 Yeah. He he was very sorry. Sorry. Dhananath Fernando 09:51 No, go ahead. Dr. Sarath Rajapatirana 09:52 He was very worried about what today we are talking about as people stealing money. Dhananath Fernando 09:58 Right. Dr. Sarath Rajapatirana 09:59 Yeah. Yeah. Right. Yeah, he Dhananath Fernando 10:02 was worried more about that. Dr. Sarath Rajapatirana 10:04 Yeah. Dhananath Fernando 10:04 So, Rob Rajputina, in your like in the conclusion of your last chapter, you have also broadly mentioned the seven members were more globalisation, you know, not so globalisation friendly. Dr. Sarath Rajapatirana 10:18 Correct. True. Dhananath Fernando 10:19 Correct. So, but you have also said like there are people like Milton Friedman, who completely Dr. Sarath Rajapatirana 10:25 changed the whole story. Absolutely. So, Dhananath Fernando 10:27 in in a you know longer history perspective, like how do you see the impact of these seven economies' time? Do you think it was somewhat necessary during that time, or whether basically it completely shifted Sri Lanka's direction until the 77 came up. Or, like, what is the impact that you see with the political economy? Because you speak about the LSSP and the other leftist parties, how they basically incorporated some of those changes. Could you take us through a little bit about the history. Dr. Sarath Rajapatirana 11:01 Yeah, first I would say there was no big change of following them. It was very good for economics to read and understand, and to get an idea where we were at that time in 1958-59. So apart from that, it was good to have these people look at it for the first time in our history, for first time a personal group like this came to evaluate how the economy was going to work, and so they had very good people. These were very well known people, Dhananath Fernando 11:35 and also then you, in your book, you mentioned that I'm quoting your book. So you mentioned Joan Robinson subscribed to the view that financial and commercial institutions, instead of estate sector, should be the ones to be nationalised. Dr. Sarath Rajapatirana 11:54 Yeah, Dhananath Fernando 11:54 she was also clear that estates should not be taken over without compensation. She feared that such a move would discourage foreign direct investment in the country. However, the Marxist party saw FDI as an instrument of exploitation with little or no benefit to the country. On the other hand, large on the other hand, Lange was afraid that FDI Lang was afraid that FDI would create foreign economic enclaves. Dr. Sarath Rajapatirana 12:25 Langer, Dhananath Fernando 12:26 I beg your pardon. Langer was afraid that the FDI would create foreign economic enclaves. So, do you mean to say that even the political authority? So, it seems that John basically realised the need for foreign direct investment, but the political parties pretty much had a different view. So, do you mean to say that they implemented something that beyond recommendations or complete opposite of the recommendation of these seven? Dr. Sarath Rajapatirana 12:55 No, I think they were in the ballpark. Okay, because actually it was a very small group, so on, and also most of these things were not understood about Sri Lanka. They were here very short period, you know, less than a week type line. Okay, yeah, they are not people who are thinking. But the interesting point is that that Joan later became a Marxist and was a great admirer of China. Dhananath Fernando 13:27 Right. Yeah. Dr. Sarath Rajapatirana 13:28 But here, at this point, she she helped us do the plan. Dhananath Fernando 13:33 Right. Dr. Sarath Rajapatirana 13:34 Which she of course supported the plan like that. Right. Dhananath Fernando 13:38 But what what I gathered was actually at the initial stages, she said not to nationalise the state sector and foreign direct investment. But actually, what we did was completely opposite. After some time, and also, and what is I mean, what is surprising is then in the book again you mentioned that the Joan Robinson had advocated the nationalisation of banks and insurance firms. Dr. Sarath Rajapatirana 14:04 Yeah, she's she's she's she's way outside of you know she she she's became a very strong Marxist Dhananath Fernando 14:14 afterwards. Yeah. Dhananath Fernando 14:15 So interesting. And was this the same recipe that India followed, Dr. Ajava Tiruna, because of their advice during Nehru's time, Dr. Sarath Rajapatirana 14:23 partly I guess, yeah, yeah, yeah. But Nehru was such a such a powerful party. He didn't accept any of these things. Right. He had his own way of making those decisions. Dhananath Fernando 14:35 Right. Dr. Sarath Rajapatirana 14:36 Yeah. Dhananath Fernando 14:36 Right. Dr. Sarath Rajapatirana 14:36 But he thought it was very good to get the tax person. Dhananath Fernando 14:39 Right. Dr. Sarath Rajapatirana 14:40 He had tried that in India, and it worked. Dhananath Fernando 14:42 Right. Dr. Sarath Rajapatirana 14:43 Yeah. Dhananath Fernando 14:43 And then also in your book, it mentioned the high rate of population growth combined with low productivity was identified as a fundamental problem that had to be addressed, and the name was. Oscar Langer was identified as the lead leading expert on planning in this group. He emphasised the need to coordinate different development components of the plan in terms of two dimensions, namely to provide balanced growth of the different sectors of the national economy with respect to outputs, raw materials, and immediate inputs to achieve intertemporal balance, such as the development of different sectors, would be synchronised. So, could you elaborate a little bit more here? Like, what sectors that is was there an identification of sectors, and how are they going to basically? Because I'm a little curious now because they have been here for seven days, or I mean not, I mean less than a month. I would say certainly less than less than less than a month. So how do you do sort of a deeper understanding of the economy and to prescribe something in a period of like seven to let's say 14 days, and what sectors is there an indication on sectors? Have you come across? No, there was Dr. Sarath Rajapatirana 16:07 no such one-to-one thing. So we invited these eminent economists, and we listened to them. Some we followed, others we didn't follow, but it became politics in Sri Lanka also, no. mrs. Bandaranaike was shot in 1959, and so nobody. His wife did not pursue this line, Dhananath Fernando 16:33 right? Dr. Sarath Rajapatirana 16:33 But they appreciated that there was such a document, Dhananath Fernando 16:38 right, Dr. Sarath Rajapatirana 16:38 that looked at the economy, and that was a good, good review. Dhananath Fernando 16:44 So you mean that mrs. Bandar Nayak basically closed down the economy completely? Also, this ideology, the seven-member group, what they have basically recommended was taken as like as the doctrine for completely closing down the economy. Dr. Sarath Rajapatirana 17:00 No, whatever this may be very unfair, but I am going to say it. Right, is that mrs. mrs. Bandarankar? She she depended on a lot of the her her approach to economics from the leftists, Dhananath Fernando 17:22 right. Dr. Sarath Rajapatirana 17:22 So mrs. Bandaranker was. They used mr. Bandarankar to get get the ideas of ownership and which goes with the Samsung Aja Party. So so so mrs. Bandaranaike was not a free agent at that point, you were listening to an emperor. You know, great people too, but a different approach to economics. You know, Dhananath Fernando 17:48 and what was your good friend's role by then? Was was he also involved, mr. Gamini Koreya, your former boss in Madame Bandaranaike's? Dr. Sarath Rajapatirana 18:01 Gamini Kora is a very stable, decent man, very good economist, and he did the best he could. But my point is that later in the book, I show that if he had a different set of people, he would have different outcome. Correct. Yeah, and the outcome would be would have grown faster. Dhananath Fernando 18:22 Yeah, and in actually in your in your note that you have also mentioned that okay, while this was happening in Sri Lanka, the the south the East Asian economies were basically Dr. Sarath Rajapatirana 18:32 took off because they didn't listen to all of these things. They were not counselled by people who believed in right this type of a control of the economy. Dhananath Fernando 18:41 Right, and it was so. What I mean, were there any cases that they were listening to someone else, or how did they get open for fairly globalization-friendly policies? Where it came from, if I Dr. Sarath Rajapatirana 18:57 they meaning the Dhananath Fernando 18:58 East Asian countries. Ah, Dr. Sarath Rajapatirana 19:00 East Asian countries went on their own. They were helped by United States, lot of other countries, but not in the way that the the Samsung party and Communist Party in Sri Lanka wanted it to be. So they they in other words they didn't have to follow left leftist party. They did. they they they they are one thing. Got Dhananath Fernando 19:25 it. So, Dr. Ajay, from what I understood from this chapter is that the 1970 to 77, that completely shutting down of the economy. Yeah. Actually, that political economy and the contribution by this seven member group. has been to an extent quite influential, though they were here for about seven days. But having that, you know, research sort of background work has pretty much influenced the political side to basically close down the economy by. 7275, 77 during that. Dr. Sarath Rajapatirana 20:03 I I won't go there because I then really don't. I really don't know. Dhananath Fernando 20:06 Okay, Dr. Sarath Rajapatirana 20:07 but I think because those people are very intelligent people, you know, they I'm sure they read the reports and they wanted to see how they could work with it, and they did not have strong objection to it because they were these people were not very market friendly. Actually, they didn't even use the word market. Dhananath Fernando 20:35 And also, you in chapter three you speak about a 10 year plan. Dr. Sarath Rajapatirana 20:41 Yeah, yeah. Planning commission had to do 10-year plan. That I had to comment on, because we followed India. Dhananath Fernando 20:47 Right. Dr. Sarath Rajapatirana 20:48 India was always on a plan. Dhananath Fernando 20:50 Right. Dr. Sarath Rajapatirana 20:50 Five-year plans. Dhananath Fernando 20:51 Right. Dr. Sarath Rajapatirana 20:52 And the I'm sure the the Indian Prime Minister would have also counselled Sri Lankan Prime Minister to plan. So we followed the plan from them. Dhananath Fernando 21:08 Right, right. So do you mean your other good friend from India, Dr. Montek Singh Aluwalia? He was also a chairman of the Planning Commission. Dr. Sarath Rajapatirana 21:16 Yeah. Dhananath Fernando 21:17 So they were still. I mean, but he basically pretty much was also. I mean, at the in his book backstage, as he explained, he was behind to reform India, but he was also in the planning commission. So, what is this? That Dr. Sarath Rajapatirana 21:31 planning commission is a very light planning commission. They get together the best people down there to help people like Monte Carlo, yeah, very good people. Right. So they they did not they were not diehard control people. Dhananath Fernando 21:48 They planned. Can we say they while they were in the planning commission they were more looking at a market friendly approach rather than like a planned Dr. Sarath Rajapatirana 21:58 economy. Speaker 1 22:00 Is it fair to say that Dr. Sarath Rajapatirana 22:01 to some extent, but you can't really, you know, the the certainly Jawaharlal Nehru Jawaharlal Nehru was not for any market friendly stuff. That is not yeah. Dhananath Fernando 22:18 Right, got it. And then in your conclusion, you mentioned their commentary and analysis helped to postpone a few years at least the country's movement towards highly controlled and restrictive policy regime. Yes, correct. What do you mean by that? Dr. Sarath Rajapatirana 22:34 Correct. That for the first period, some group of people have come and looked at the economy, and they know they are good people. They they have reputation as good economists. So they they really want turn the clock back by not taking on this to controlling the economy as they had wanted to under Samsung and Ram. Dhananath Fernando 23:04 leftist party. Dr. Sarath Rajapatirana 23:05 Yeah, no, and I was called the Communist Party. Dhananath Fernando 23:09 Right. Dr. Sarath Rajapatirana 23:09 The strongest leftist were the Samsung Wadja Party by number one, and followed by Dhananath Fernando 23:16 the Communist Party. Dr. Sarath Rajapatirana 23:17 Yeah, they are very interesting. They are very Dhananath Fernando 23:19 intelligent people, very Dr. Sarath Rajapatirana 23:20 intelligent, smart people, but they had the wrong economics. Dhananath Fernando 23:24 And also, you also mentioned here their approach to the import substitution-led industrialization. Dr. Sarath Rajapatirana 23:33 Yeah, they were. They they were in fact in that I say they they they did not go for the liberalising the economy or anything like that, but in that sense they were not globalisation friendly. But I don't want to hack this word on globalisation friendly. But they didn't think in those terms. Actually, also the the area in which this had not been discussed by people till these people, these the visiting people were there. Dhananath Fernando 24:08 And another interesting that you have mentioned is, given the state of knowledge at that time, economists did not consider the political economy aspects of the recommendations they made. Dr. Sarath Rajapatirana 24:20 Yeah, Dhananath Fernando 24:21 what do you mean by that? You mean because of the ruling by the leftist parties that they really did not consider that political economy, or am I missing something else? Dr. Sarath Rajapatirana 24:31 Political economy taking out how the politics will play out. Play Dhananath Fernando 24:34 out. Dr. Sarath Rajapatirana 24:35 Yeah. So. Dhananath Fernando 24:37 So why do you say that they did not consider that? Dr. Sarath Rajapatirana 24:40 There's no evidence that that they consider. Dhananath Fernando 24:45 Got it. So, Dr. Ajay, on a longer term horizon, we are coming to the last part of this chapter number three conversation. How do you see this seven economies? Committee or their team, you mean on the when you look at the history, they pretty much advocated for a globalisation unfriendly era. Dr. Sarath Rajapatirana 25:12 I won't go there. You won't go there. Yeah, I won't go there. I think they are very sensible people. Dhananath Fernando 25:17 Right. Dr. Sarath Rajapatirana 25:17 What their their their one contribution I think that I should say is that because of the way they looked at the economy, a very good way, they did not follow. They didn't take on the left of centre the approach, the Communist Party or some Saudi Party approach. It delayed it from basically. But later they Dhananath Fernando 25:41 Right. Dr. Sarath Rajapatirana 25:41 Later, they they they actually stall these people from going forward. Dhananath Fernando 25:50 All right. Thank you very much, Dr. Ajava Tirana, for explaining chapter three and giving a gist of what is in chapter three. So we invite all of you to read the book. Of course, it was as you know, this is not about promoting the book, but it's an academic book. It's a book about Sri Lanka, and we highly recommend you to check our video so at least you can get a gist of it and you can follow the conversation. Also, don't forget to become an Advocata Insider. We can we can bring these type of conversations because mainly of Advocata Insiders, and you will get an analysis of exchange rate, vehicle market, and many other very unique analyses by team at Vokata on the economy that will help to improve your businesses. Dr. Ajavatira, thank you very much again. We will see you with Chapter Four. Dr. Sarath Rajapatirana 26:37 Yeah. Okay. I look forward to it. Dhananath Fernando 26:39 Thank you. Dr. Sarath Rajapatirana 26:40 Yeah. Transcribed by https://otter.ai