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Sri Lanka's economic nationalism

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Sri Lanka's economic nationalism


on tiles backfires on tea: Bellwether
By Bellwether

Economynext, 9 Feb 2018

Feb 09, 2018 06:34 AM GMT+0530 | 0 Comment(s)

ECONOMYNEXT - Classical liberal economists have long


argued that free trade leads to peace and economic
nationalism and protectionism (which usually also involves
minority oppression and ethno religions fascism) leads to
soured international relations and war.

Russian tactics to block imports Sri Lanka's tea over dubious


allegations of 'beetles' is a case in point.

Pressing Buttons

Soon after President Maithripala Sirisena came to office,


various lobbies began to persuade him to block imports,
institute bans, or intervene in the lives of people through the
coercive powers of the state with various motives.

President Sirisena is
particularly vulnerable to
making well-meaning
interventions due to his
being a former health
minister, which may backfire. This administration's interventions
in sugar and beer, has been questioned.

As a former health minister, who is praised frequently by the


World Health Organization for his interventions, President
Sirisena is vulnerable to various lobby groups on health
grounds.

Most people believe that asbestos was banned on health


grounds, but that was not the whole story.

Tile Nationalism

Even though the asbestos was banned ostensibly out of health


concerns, there was also an underlying force of protectionism
and economic nationalism behind the move.

Officials of Sri Lanka Ceramics and Glass Council, an


archetypical protectionist lobby which built monopolies in
ceramic tiles and sanitary-ware, claimed a big success in
influencing President Sirisena to ban asbestos after it was
made.

Ceramics and Glass Council which had seen its members gain
massive profits from protectionist duties to rob the economic
freedoms of homeless people and force them to use high
priced sanitary ware and tiles, wanted to force people to use
roofing tiles, an industry that was in decline.

In 2015 for example, the then head of the Ceramics and Glass
Council Mahendra Jayasekera "expressed his satisfaction over
the government’s move to ban the use of asbestos roofing
sheets in the country by 2018," Daily News, a state-run
newspaper reported.

"He said the ban will help revive the red clay roof tile
manufacturing industry to a greater level," the report said.
With Donald Trumps and Steve Bannons of this world, with
open tribalist nationalism like in Sri Lanka (based on white
people rather than Sinhalese who believe they own the
country), there is now a greater focus on economic nationalism,
the harm it does to consumers, to innovation and most
importantly the freedom of all people.

Alien Concept

Economic nationalism is not an Asian or Sri Lankan concept


followed by ancient monarchs, but a false doctrine based on
tribalism and dehumanization that emerged in Eastern Europe
with the popular vote and the breakdown of monarchies and
empires.

It has elements of classical Mercantilism but it is much more


damaging to freedoms and human values.

The idea behind the asbestos ban was to use the state and its
law making power and customs (inherited from British rule) to
bring greater profits and market share to clay tile manufacturers
by ending the use of roofing sheets made with imported
asbestos.

Protectionism is the bedrock false economic philosophies such


as the German Historical Economics that led to interventionism
and National Socialism (Nazism).

Economic Nationalism

"It is the aim of nationalism to promote the well-being of the


whole nation or of some groups of its citizens by inflicting harm
on foreigners," Ludwig von Mises, an economic philosopher
who had studied Eastern Europe extensively wrote in his book
Omnipotent Government The Rise of the Total State and Total
War."
"The outstanding method of modern nationalism is
discrimination against foreigners in the economic sphere.

"Foreign goods are excluded from the domestic market or


admitted only after the payment of an import duty. Foreign
labour is barred from competition in the domestic labour
market.

"Foreign capital is liable to confiscation.

"This economic nationalism must result in war whenever those


injured believe that they are strong enough to brush away by
armed violent action the measures detrimental to their own
welfare."

The injured party, Russia, believed it was strong enough to take


retaliatory action, not through military warfare but through
economic warfare on Ceylon Tea.

Russia is hardly a free trading nation, with rule of law. Putin has
his own brand of nationalist-authoritarianism. Its institutions are
not transparent and independent.

Health Concerns

Leaving aside the question of Russia and nationalism, there is


a question of health concerns.

There are strong claims that asbestos causes cancer such as


Mesothelioma and other types in people working with asbestos,
those living near factories or with asbestos workers.

Factory or construction workers who may inhale dust while


producing or cutting asbestos sheets without adequate
protection are at risk. Using grinders to cut asbestos is
particularly dangerous. No education campaign has been
carried out among carpenters and roofing workers to educate
them on using grinders to cut tiles.

Some types of asbestos are already banned in many countries.


In Sri Lanka chrysotile asbestos had been allowed, mainly for
roofing sheets. Some countries like Russia and Canada are big
exporters and users of this material.

Flawed Public Policy

The whole affair shows that there is a deep flaw in policy


formulation in Sri Lanka.

The government did give a few years before the ban came into
effect, which was a good move, but clearly the time period was
not enough.

In the case of asbestos there had been no studies done


domestically to find out or whether asbestos was increasing the
risk of cancer in residents near factories or among workers,
which would have helped strengthen the case to ban asbestos.

There has been no policy process or public consultations, on


asbestos use, before making the decision.

Sri Lanka no longer has evidenced based policy-making


process, involving green papers or white papers, making the
country vulnerable to ad hoc decisions by Presidential decree
such as in the case of the glyphosate ban.

To improve health grounds a broad-ranging study is needed


with solutions. The phase-out period for asbestos can be made
longer.

In the meantime, a study must be done to find whether there is


increase in prevalence of asbestos related cancer near
factories.
Carpenters and workers need to be educated urgently not to
use grinders to cut asbestos sheet.

Manufactures should also produce shorter lengths of sheets (5


feet etc.) so that the need to cut sheets can be reduced or
eliminated.

It will be easier to first phase out asbestos ceiling sheets first,


where economical substitutes are now available.

Free trade can also bring in alternative roofing material. A broad


study can also identify alternative roofing material.

At the moment many materials are subject to excessive taxes


due to import protection.

Taxes on steel beams or Malaysian timber may need to be re-


examined. Tile roofs require more timber than asbestos.

Foreign Policy

Free trade and evidenced based policy will also have other
impacts on foreign policy. When there is free trade, a foreign
producer has to offer the cheapest and best product to win
customers in a foreign country.

The customer alone decides. There is nothing to be won that


cannot be won by a better product, eliminating the need for war
or intervention. This is why free trading nations like Singapore
or Canada, find it easy to have good foreign relations.
It is important to have free trade with India for example. Sri
Lankan nationalism will always lead to Indian interventions.

"A nation’s policy forms an integral whole," explains Mises.


"Foreign policy and domestic policy are closely linked together;
they are but one system; they condition each other.
"Economic nationalism is the corollary of the present-day
domestic policies of government interference with business and
of national planning, as free trade was the complement of
domestic economic freedom."