Dictatorships are Bad - Sri Lanka and China

 

While the world, and especially India is pre-occupied with the onset of the third wave of the corona pandemic, a piece of news from the neighborhood has not got the attention it deserves.

It is about the crisis in Sri Lanka. It is a classic example of how political concentration of power really throws a well-run economic system into chaos. This has happened in the twenty first century. Dictatorships were popular in the nineteenth and especially early twentieth century. Dictators really do not learn from their mistakes.

By and large dictatorships are a thing of the past, though some are still going strong. The CCP in China, Kim Jong Un in North Korea, and recently Gotabaya Rajapaksa Sri Lanka. The Singaporean dictatorship will have to be excused from this list as it is not your run of the mill system. Lee took decisions which benefitted Singapore. One more benevolent dictator is the Sheikh of Dubai. There could be more such examples. However, as a rule dictatorships have been disastrous for their country.

From the nineties after the end of the civil war, Sri Lanka was one of the fastest growing economies in Asia. It has a small population, about 2 crore, and had a booming tourism industry. It was the largest producer and exporter of Cinnamon in the world. It had robust exports of tea and cardamom as well.

When Gotabaya Rajapaksa came to power in November 2019 Sri Lanka was doing fine on the economic front. It had one of the best health care systems in Asia. Tourism was the main source of foreign exchange with agriculture exports to back it up.

But President Rajapaksa is almost like a dictator in Sri Lanka today; (He was a Lieutenant Colonel in the Sri Lankan army). Though he is an elected member of the parliament, his election is suspect. In the best of times elections in Sri Lanka. especially the presidential ones are dicey to say the least.

This President made a disastrous decision some time back of only allowing organic farming. All pesticides and chemical fertilizers were banned. As a result crops began to fail. Lack of chemical fertilizers reduced crop resistance to disease and were ruined by insects and pests. As pesticides were banned, crops were destroyed by pests. Being a small economy this quickly affected the entire country.

Typical of a dictatorship, instead of mitigating the crisis, fuel was added to the fire. A disastrous solution was proposed by the agricultural ministry, that of supplying organic compost. If there is no animal feed, where is the compost going to come from?

The Rajapaksa family is heavily backed up by the CCP. The Sri Lankan leadership was so biased against India, that Sri Lanka did not even appoint an ambassador to India. Sri Lanka imported fertilizer from China for use in its agriculture. Certain harmful bacteria were found in the consignment. Sri Lanka then asked India to supply the fertilizer which India promptly did. Thus, now Sri Lanka's relations with China have come under a strain as Sri Lanka stopped payment for the fertilizer and in retaliation China blacklisted one of Sri Lanka's banks.

So Sri Lanka stands on the threshold of a massive food crisis. A smoothly running economy was punctured and taken to the brink by the whims of a dictator. Rajapaksa is propped up by the Chinese. He comes from the Hambantota area.  The port by the same name had to be leased to the Chinese for 99 years to offset massive development loans.

China has also shown how dictatorships can ruin a country. For decades Chinese economy grew at almost 10% per year. After the pandemic, some fault lines are becoming clear. It seems, there is only one avenue for the common man to invest in China. Real Estate. Almost 30% of the Chinese savings are in real estate. The common man in China does not trust the money market as it is considered too erratic and subject to sudden changes in government regulations. Real Estate companies took huge loans when the economy was booming during the last twenty years to expand business. Now that the economy has slowed down, these companies are saddled with huge debt.  

Also the Chinese government promoted high-speed railways to showcase Chinese technological prowess. The railway projects were implemented with total disregard for economic viability. Bonds were floated to raise the  money to fund the projects. Today China may have one of the best high-speed railway networks after Japan, but is again saddled with a huge debt. Most of the railway routes have become unviable. The single party dictatorship is responsible for the above fiascos. 

Mao had ruined Chinese agriculture by nationalizing all private farming. The communal farm system was a disaster. When private incentive was taken away, output plummeted.  The farmers stopped working when they were made to work on their own farms for a pittance paid by the government.

Dictatorships are bad as their political structure favours concentration of power.  Concentration of power means there is little or no opposition to the leadership. No one questions the decisions of the ruling elite for fear of reprisals. The result is, more often than not, wrong decisions are taken and implemented. If the economy is doing well, the dictator will be a powerful leader. However, if the people face economic hardships, the dictator quickly looses power as there is no alternative of electing another leader, as in a democracy. In bad times, the fall of a dictator is almost assured with the resulting political instability. 

China's covid vaccine efficacy is also under question as according to recent news reports China is witnessing a spike in covid cases in spite of most of its population being vaccinated. The CCP wanted China to be the first country to produce the covid vaccine and hence relaxed quality control and comprehensive testing. Not buying Australian coal to punish Australia was another short sighted decision of the CCP. China is facing a big power crunch as a result. 

History is replete with examples where dictators have forced disastrous decisions on their people and ruined the economies and social systems in their country. Sri Lanka and China are prime examples of how dictatorships are inherently bad political systems.