Our Collective Economic Problem

These are epoch changing times not only in Britain, but for many island nations and their leaders around the world, understandably due to COVID-19.

It is becoming apparent that massive government spending is the only way out of the current crisis. From the current global economic meltdown supply side economics has outlived its purpose and it is now time to go for a new way of growth that revolves around making everyone wealthy instead of a select few.   

Prime Minister, Boris Johnson, is a man who is the envy of many, not because Boris is Boris, but because of his courage with all the pile of worries, which he has had to hurdle over this year. He manages to bounce back, with every episode, which lesser mortals would have succumbed.

There have been Cummings and goings recently. With Brexit still unresolved and the nation jittery, anyone else would have not have the nerve to self-isolate and work from home with video conferencing Parliamentary PMQ’s and attend to other matters of State.  He has had accusations of being too hard on the Scots, too soft on Northern Ireland and ungrudgingly mean with sticking points in Brexit negotiations – fishing rights and State Aid and the governance of any Brexit deal for a path to an agreement with the EU over Trade.

 He has a lot of unhappy Tory MPs at the moment each of them disgruntled about a combination of problems. He has had the Labour Opposition throwing gauntlets, with nothing sticking, as to how he will manage the lockdown at Christmas. He has promised the majority of new MP’s of Northern England of his huge spending plans of infrastructure development. Add to all this, we read of today’s announcement about military spending. He has announced a £16.5 billion, four-year defence modernisation programme.

For years, defence spending has been a running sore in the Tory party, with his  backbenches endlessly fearful that failure to boost the budget have led to Britain declining as a world power and the armed forces feeling increasingly forgotten.

He stated today “I have decided that the era of cutting our defence budget must end, and it ends now”.

Everyone in the United Kingdom is aghast at how he is going to find the funding for all his promises given to the electorate at the last General Election, let alone COVID support.

Boris has a will, and he has a way?

When he was Mayor of London, he wanted a Sky Walk Bridge over the Thames and though it was utopian in the extreme, he got it done.

He wanted United Kingdom to leave European Union and on 31 January 2020 he got the necessary mandate at the General Election, to move forward to reclaim and take back control of “our money, our laws and our borders” to begin a new chapter in UK history.

Today, the only -quite big - problem is that the higher the defence spend, the greater the challenge facing the Tories, who always were known as the party cutting government debt as its priority.

The modernisation package includes money for a “shipbuilding renaissance”, a new cyber force, a RAF Space Command launching satellites and a Centre of Artificial Intelligence – a very ambitious programme of infrastructure development among other things. 

What have we in Sri Lanka as far as our Budget 2021?

We in Sri Lanka want to solve our problems in a matter of four years of President Gotabaya Rajapaksa first term of office in 2024. Many commentators, including W.A.Wijewardena, a former Deputy Governor of our Central Bank writes in the Daily FT that “we have to work harder, two or three times harder than before, to take our country out of the present economic malaise. That is the only source of progress. Without that, the Budget 2021 will only be another document with no practical relevance.”

Regaining what has been lost over decades cannot be magically redeemed in a matter of years. Of course, we Sri Lankans do not have a penchant for austerity, for savings, or as stated, “for tightening the belt”, as if there is no other solution available now?   

It does seem economic problems as the writer states, are macroeconomic. With all good in the world, we cannot “flog a dead horse”. We cannot ask our people to suffer for the misgivings of the past. The man in the street has borne our follies of the past with dignity and patience. Can we blame ordinary people for the corruption? Can you lay the blame on our farmers for poor harvests? Can you blame our working class for our position in the world today and our accumulated burden?

The acute foreign debt problem

This was caused not by the people who were living a hand to mouth existence. The poor management of our debt by officials and advisors of previous governments is perhaps, one cause for our plight today.

It is foolhardy to think of solutions to our problems today, without looking at our present predicament on our lack of initiative, our lack of prior capital investment and our wanting and waiting for solutions to our problem within time frames which are unrealistic.

“When the going gets tough, the tough get going”. Let us think of our finances as many countries in the world plan theirs. Let us think of our financial woes of our country today not as burdens, but as challenges to be overcome. Let us think of what we have gained by the accumulated debt and salvage it by planning over a 30-year period.

It is like preparation as a sport, or as a competition. Start tackling what we must do as if it is just another part of the game, with an ultimate goal line further down the road. No prizes for expecting miracles. Planning, more planning and more creative planning is the answer that has made achievement possible for other nations and we too can benefit.

Victor Cherubim