Our country, our economy, the environment and our society is being trapped by the economic parasites since 1978. They are using the free market ideology, if not neoliberalism as their propaganda machine. As at today most sectors has been captured or in the process of being captured by them, namely finance, health, education, energy, media, agriculture and land to name a few. By now it is clearly visible that the entire state is in their back pocket. As a result, very few individuals are making decisions to make more profit for themselves disregarding the entire country, economy, environment and the society. Rest of the population gradually being enslaved by this super-rich.
They work as parasites, getting in to the host animal (economy) and extracting unearned income in various forms such as interest, rent, charges, fees, commission and paralyzing the economy. The rules and regulations are being made in a rapid manner helping the rich to siphon out money, wealth, land and other economic centers of the economy. They are looting not only public wealth but also the private wealth of the people. This grand theft has been legalized and even applauded as an achievement. As a result, the entire country is on debt bondage to foreign bond holders. Locally, majority of the private sector is on debt bondage to local bond holders. Inequality has risen sharply, number of beggars are sky rocketing, over 40% of the population is in poverty and the middle class is disappearing by the day.
We find the following issues as pressing issues for our sovereignty:
We think the government organic fertilizer issue is nothing but a scam to grab the farm lands from individual farmers and transfer the ownership to the super-rich. During the process the country will lose the state land as well.
We are fearful of our food security, since the super-rich have a strangle hold on Agri supply, food production, distribution and pricing. It appears to be the small time farmers are losing the battle.
Health sector is controlled by the notorious politically sponsored mafia. We fear the availability, pricing, quality and sustainability of the free medication system.
We are fearful of the energy security of our country, since there are numerous attempts to privatize the energy production, which is a vital part of the economy.
Public property and other economically important public assets are in the process of being privatized such as ports, roads, sea routes and arms supply. During the process national security and sovereignty has been compromised.
Free education has been suffocating for decades now. Teachers strike indicates the level we have fallen back in this sector. These parasites are working tirelessly to dismantle the free education in order to profit and to control the masses through educating free market ideology.
We fear private debt is a ticking bomb in Sri Lanka. Due to this, we are about to witness the wealth transfer of the century from masses of people to few wealthy bankers. Valuable assets of the people will get extracted to banks at depressed prices leaving balance liability on the shoulders of borrowers.
One of the key and largely overlooked reasons for expected decline in our economy is the burden of private debt, which is the combination of business debt and household debt. Even though government debt grabs all the headlines, private debt is larger than government debt, and has a greater impact on economic outcomes. Simply because the government is able to achieve deficit spending, and private businesses and households are unable to the same. Massive amounts of earnings goes to debt servicing, leaving the people very little to consume or to invest.
Unfortunately, Covid – 19 has struck our country at a time where private debt has grown disproportionately to private income levels.
This will create a future of escalating expenses with very less income or no income for households and private businesses. All these coordinated efforts increase indebtedness of masses of people pushing them further in to high debt. Private debt will rise at an alarming rate causing the consumption to decline.
Most pundits expect businesses to resume their operations automatically at pre-covid levels. However, due to enforced lockdowns, businesses and households have lost most of their liquidity and without liquidity there is no turnaround.
Most businesses and households are under loan stress now since it is only a couple of months away from resuming loan repayments, including differed payments. This is a vicious cycle, with every cycle, indebtedness of the society increases, debt servicing cost rises, income levels drops, consumption declines and demand declines. Government seems to favor parasites over the causality of the economic downturn. Because the current policies will increase favoring the parasites, enabling massive wealth extraction from one class (the masses) to another (wealthy), creating massive income inequality levels in the society.
Saving the Nation from Economic Parasites
Money is created to finance the production process and was consistent with monetary theory of production (production begins with money to produce commodities to sell for more money) adopted by the three great fathers of various strands of heterodoxy: Marx, Veblen and Keynes. Both of these approaches the rejected the textbook deposit multiplier story and intermediary story (lending out savings), insisting money is created out of thin air by the banking system. Central Bank providing reserves used by banks for clearing purpose.
Unfortunately, socialist parties in Sri Lanka believe in textbook story. This myth is created by monetarist neoliberal regimes over the last four decades. Even though socialists despise liberalism, there are also under the belief system of neoliberalism. Even though right wing parties cleverly use neoliberal policies to its advantage and have brought the country to its knees, socialist parties believe the monetarism has only brought them to brink of extinction. History suggests neither country nor socialists has benefited through these policies.
Sovereign governments are not like households or businesses when it comes to money. While we are told all the time prudent governments balance their budgets, just like households and businesses do, the analogy is false. Government is the currency issuers, not the currency user. If the government acts like households and businesses and then try to balance their budget, the economy would suffer, especially at this point of time. With counter-cyclical spending and pro- cyclical taxes, the budget of the government acts as a powerful automatic stabilizer. Power of our monitory sovereignty is the only way out for our country and our people.
We discourage the use of foreign funds. In contrary, we encourage the use of local funds to develop the nation state and rescue the people from debt bondage. Because that is the only way to reduce imports and reduce the dependency on foreign and local bond holders. Again, fake knowledge has blindfolded the critics. By denying the monetary sovereignty of a nation state, it will only increase dependency on foreign and local bond holders.
By
Gayantha Dehiwatte Entrepreneur and Socialist Advocate