The Country Needs Economists Who Can See the Future – Dr.Wijewardena

By Anjali Caldera | Published: 2:00 AM Oct 24 2020
FT The Country Needs  Economists Who Can See the Future – Dr.Wijewardena

By Anjali Caldera

A good economist observes not only what is seen today but also foresees what is to be, the Former Deputy Governor of the Central Bank of Sri Lanka Dr. W. A Wijewardena commented in this regard in his ‘IDA (Space)’ column of the week, on the YouTube Channel.

Following are extracts of his speech:

Economists are known for providing diverse opinions on related issues. There is nothing wrong in this since in any science, the progress depends on not on consensus but on disagreement. However, if the opinion is expressed without following the required methodology, then, an issue arises regarding acceptability of such opinions.

Acceptability of such opinions became a major issue in recent times, when a group of economists brought out the fact that proper establishment of human rights, democracy, proper administration, legal authority, transparency and moral society are the basic requirements for sustainable development of a country. 

Opposing the above opinion another group of economists said, rapid economic development is the path towards sustainable development of a country; thus, the violation of the above aspects will have no negative impact on sustainable development unless they slow down the economy’s development which leads to sustainable development of a country.

As per Dr. Wijewardena, the example brought out by the latter group to prove their opinion was, during the early stages of Singapore, the men in power followed an authoritative administration yet they were able to grow and develop their country. Thus they question, if Singapore followed that method, why cannot Sri Lanka.

The reason Dr. Wijewardena presents in this regard is, since the beginning Singapore highly adhered to the concepts of ‘authority of law’ and ‘property ownership.’ These concepts had been rooted accurately in their administration from the beginning. Thus, people under authoritative power naturally accustom themselves to the concept of authority of law which led to the sustainable development of Singapore.

A famous Economist, John Robinson, in 1940s from University of Cambridge UK, said in one of his books, Economics Philosophy, “we should study about economy not to gain knowledge to solve existing economic problems but to comprehend right or wrong, opinions bring out by these so called economists and not to get lost in them. As per Robinson, as common men, we have to be vigilant about what these opinions bring out by various economists who present their own opinions without following the correct methodology and process.

A French Economist, Frédéric Bastiat in 1850 says, how to recognise a good economist from a bad economist. Frédéric Bastiat said, a bad economist simply sees what is seen with his naked eyes today; but a good economist sees not only what is seen today but also what is to be foreseen.

Accordingly, the good economist foresees about past, present and the future while the bad economist presents his/her opinion only considering about the present condition without analysing all three. 

Yet, when considering the common man, he is also someone who tries to ‘make hay when sun shines’; considering about what is beneficial to him at present and do not bother to analyse the future consequences.  A good example Dr. Wijewardene presented in this regard was how people selfishly drive on roads today, without thinking about others on the road. Hence, the second type of economists are exactly who make these type of common men happy with his opinions. But we know, it is not acceptable when thinking about sustainable development of a country.

Recently, a Minister questioned why can’t we consume corn which is available in Sri Lanka instead of Mysore Dhal which we import from overseas? It is clear, he referred to the cost Sri Lanka Government would bear to import Dhal; when there is a substitute for it in the country, which would result in revenue remaining in the country itself.

But, he has not considered the overall effect on his statement. In Sri Lanka, 95 per cent of corn goes as animal food, and only 5 per cent is for human consumption. The usual annual consumption requirement of corn in Sri Lanka is 450,000 metric tonnes. But, Sri Lanka only produces 250,000 metric tonnes of corn.

On the other hand, we only import 150,000 metric tonnes of Dhal. If corn used by humans, the quantity of corn will reduce and there will be a scarcity of animal food, hence the corn price will increase which naturally cause prices of meat products like chicken also to increase. Then Sri Lanka will have to import corn again as its usual consumption exceeds, due to its usage, both by humans and animals.

Only good economists can understand the overall picture of a statement like that.

Thus as per Frédéric Bastiat, if an economist presents opinions about a current economic condition by analysing the present situation and also the future consequences, he could be considered a good economist. Similarly, we can also categorise good economic policies and bad economic policies; good economic policies do not concern only the present but also the future. 

By Anjali Caldera | Published: 2:00 AM Oct 24 2020

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