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There is no such person as ‘one- armed economist’

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by Jayampathy Molligoda

The Sri Lankan government adopted a relaxed monetary policy coupled with lower taxes to stimulate economic growth since 2020 (beginning) till end of 2021. The objective was to provide relief to people and businesses in order to overcome negative effects due to COVID 19 and Easter Sunday attack in April 2019. However, whether the economy really produced goods and services to the extent that is required is questionable. It is true that during the year 2021 they have been able to convert the negative growth rate of 3.6% in 2020 into a positive growth rate of 3.7% in 2021. Commencing 2022, Central Bank (CBSL) has adopted a policy of tightening the monetary policy by increasing the interest rates and increase income tax and indirect taxes such as VAT and social security contribution levy in order to reduce inflation and inflationary expectations. One can argue that all these contrasting policy measures are in accordance with the accepted macro- economic theories put forward by eminent economists.

This year Nobel Price goes to Economist, Bernanke, Ex-Chief of Central bank, US:

Eminent economist, Ex-Fed reserve, Chief, US, Ben Bernanke, together with two other eminent economists, won the Economics Nobel price this October on the role of banks, particularly during financial crises and how to regulate financial markets. “In his role as Chief of the Central Bank, US, Bernanke was able to put knowledge from research into policy during the financial crisis of 2008-2009” the Nobel Committee said.

Bernanke has been previously credited and hailed for the Fed’s unorthodox response of slashing interest rates and flooding the financial system with liquidity and thus successfully handling the recovery after the 2008 recession, but at the same time, criticised for doing little to avert it, allowing investment bank Lehman Brothers to collapse. The award winners also showed how the financial institutions were vulnerable to so called bank runs. “If a large number of customers (savers) simultaneously run to the bank to withdraw their money, the rumour may become a self-fulfilling prophecy – a bank run occurs and the bank collapses” the Nobel Committee said. The Committee added this dangerous dynamic can be avoided by governments providing credit and giving banks a life-line by becoming a lender of last resort. “In a nutshell, the theory says that banks can be tremendously useful but they are only guaranteed to be stable if they are properly regulated,” Nobel committee chairman added.

Solutions to great depression in the 1930s:

This reminds me ‘Keynesian’ economics, which involves government expenditures while economics believe that government spending causes inflation and therefore need to control the supply of money that flows into the economy. In contrast, Keynesian economists believe that a troubled economy continues in a downward spiral unless a government intervention drives consumers to buy more goods and services. They believe in consumption, government expenditure and to change the state of the economy. In short, governments should balance out the cyclical movement of the economy by spending more in downturns and less in prosperous times (thereby preventing inflation). In fact, Keynes begins his general theory by attacking Say’s law, the view that ‘supply creates its own demand’. Keynes proceeded to turn Say’s law on his head, arguing that aggregate demand determines the supply of output and level of employment. (Post-Keynesian Economics (PKE) is a school of economic thought which builds upon John Maynard Keynes’s argument that effective demand is the key determinant of economic performance.) In the field of monetary theory, ‘post-Keynesian’ economists were among the first to emphasise that money supply responds to the demand for bank credit, so that Central Banks cannot control the quantity of money, but only manage the interest rate by managing the quantity of monetary reserves.

By the way, Bernanke previously received awards for his analysis, conducted in the early 1980s, of the ‘Great Depression’ in the 1930s, the worst economic crisis. For Keynesian economists, the experience of Great Depression provided impressive confirmation of Keynes’s idea which is consistent with Keynes’s argument. A sharp reduction in aggregate demand had gotten the trouble started. A reduction in aggregate demand took the economy from above its potential output to below its potential output, and, as we see in below the recessionary gap created by the change in aggregate demand had persisted for more than a decade, but expansionary fiscal policy had put an end to the worst macroeconomic nightmare.

The dark-shaded area shows real GDP from 1929 to 1942, the upper line shows potential output, and the light-shaded area shows the difference between the two—the recessionary gap. The gap nearly closed in 1941 The chart suggests that the recessionary gap remained very large throughout the 1930s.

Inflation, money printing and unemployment:

Under the Monetary Law Act 1949 as amended, the economic and price stability and financial system stability were made the core objectives of the CBSL. Therefore, it should focus on maintaining stable price levels, means containing inflation and inflationary expectations. In order to attain ‘price stability’, CBSL is required to keep liquidity and money supply of the country at appropriate levels so that the total demand for goods and services known as the ‘aggregate demand’ is more or less equal to the total supply of goods and services called ‘aggregate supply’.

In 1958, economist A W Phillips published an article in the British journal of economica that would make him famous covering a relationship between unemployment and inflation. Phillips curve showed negative correlation between rate of unemployment and the inflation. When inflation is high, the rate of unemployment is low and vice versa. Practically policy makers use this by altering monetary & fiscal policies in influencing ’aggregate demand’ in the short run and achieve trade -off between employment and rate of inflation. The ‘Nobel Price’ winner in 2001, Economist George Akerlof once said “probably the single most important macroeconomic relationship is the Phillips curve.

New Keynesian approach has emerged as the preferred approach:

Steeply rising prices is a bigger threat to businesses than high interest rates which will have to be maintained for a time until inflation start to ease, Central Bank Governor Dr. Nandalal Weerasinghe said recently. He was quoted by the local media as saying. “Sri Lanka was now experiencing the result of past money printing and if rates are cut now, runaway inflation could be the result. Higher interest rates are cost to business, but inflation drives up all costs,” Governor Weerasinghe explained addressing concerns of businesses on high interest rates and raising taxes. However, the Columbia University professor, author of “The Price of Inequality” and “Globalisation and Its Discontents,” Joseph Stiglitz argued that the overwhelming source of inflation is supply-side disruptions leading to higher prices in oil and food. “Will raising interest rates lead to more oil, lower prices of oil, more food, lower prices of food? Answer is clearly not”.

This is in response to recent announcements by Federal Reserve officials in the US indicating that interest rate hikes will continue in order to bring down rising prices — but this may intensify inflationary pressures, according to the Nobel Prize-winning economist. “The real worry in my mind is, will they increase interest rates too high, too fast, too far?” Joseph Stiglitz told CNBC recently at a Forum in Italy. In fact, the real risk is it will make it worse; Why? Because what we need to do is to make investments to relieve some of these supply-side bottlenecks that are causing such havoc on our economy. It’s going to make it more difficult.” Unquote. According to Joseph Stiglitz, raising interest rates in non-competitive markets may lead to even more inflation.

While there is less consensus on macroeconomic policy issues than on issues in the microeconomic and international areas, surveys of economists generally show that the new Keynesian approach has emerged as the preferred approach to macroeconomic analysis. The finding that about 80% of economists agree that governments’ expansionary fiscal measures can deal with recessionary gaps certainly suggests that most economists can be counted in the new Keynesian camp. Neither monetarist nor new classical analysis would support such measures. At the same time, there is considerable discomfort about actually using discretionary fiscal policy, as the same survey shows that about 70% of economists feel that discretionary fiscal policy should be avoided and that the business cycle should be managed by the Fed (Fuller & Geide-Stevenson, 2003). Just as the new Keynesian approach appears to have won support among most economists, it has become dominant in terms of macroeconomic policy.

Conflicting theories on macro-economic policies put in to practice:

As can be seen, Sri Lankan policy makers tend to adopt economic policies going into two extreme ends, namely; relaxed monetary policy, coupled with government expenditure through excessive money printing and lower taxes on the one hand, and tight monetary policies coupled with high Income Tax and indirect taxes on the other hand. When interest rates are raised, availability of bank credit reduces and consequently overall economic activities tend to slow down. If they continue to adopt tight monetary policy framework and fiscal (high taxation) policies, it’s likely the aggregate supply will contract and may lead to lower production, which in turn end up in ‘stagflation’ or it could even end up in a recession. The economy is expected to contract this year around 8-9 percent of gross domestic product (GDP) as investment and consumption falls. Nevertheless, at the IMF and World bank annual sessions in Washington this October, the State Finance Minister Shehan Semasinghe was quoted as saying; “Sri Lanka’s ongoing IMF-prescribed reforms to come out of an unprecedented economic crisis will not be reversed in future unlike in the past as there is somewhat consensus among the current lawmakers for such reforms”; Unquote. Already the micro and small and medium enterprises have serious issues, where they cannot afford to borrow any more or repay the debts already taken. As a result, household indebtedness may gradually increase to unprecedented levels. This may intern, increase the instability of the financial and banking system. How the present government is going to address those serious socio/ economic issues is yet to be seen.

We need to reiterate the fact that the Sri Lankan economy can only be re-built in the medium term by successfully addressing the structural weaknesses, increase exports as a % of GDP and thus eliminating the twin deficits, namely government budget deficit and balance of payments with rest of the world. Simultaneously, the above stated vulnerabilities; household indebtedness, banking system stability etc. must be arrested in order to make a sustainable economic recovery possible. However, the challenge is the time it can take for the economy to adjust to these changes and how to manage the cash flows and social unrest during the interim period. USA President Harry S. Truman (33rd President serving from 1945 to 1953) hated what he termed two-armed economists, those who would advise him first “on the one hand” and then “on the other hand.” Give me a one-armed economist, he demanded, an adviser who wouldn’t waffle.



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Features

Polarizing rhetoric greets America on its epochal anniversary

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President Donald Trump addresses the public on the occasion of the US celebrating the 250th anniversary of the US Declaration of Independence from Britain.(BBC)

Democratic and progressive opinion in the US and the world over would likely have been further jolted by the divisive rhetoric blared forth by US President Donald Trump on no less an occasion than the 250th anniversary of the US Declaration of Independence from Britain. The world has been placed on notice that what it would be having in the main is aggravated polarization on multiple fronts during what’s left of the Trump tenure.

If the world was expecting positive moves by the Trump administration to bridge divisions, heal rifts and usher in a more harmonious international political order, this is very unlikely to be. Instead, in all probability we would be left with a far more ‘dangerous place to live in’.

Some of the more thought-provoking recent ‘takes’ from President Trump are : ‘A generation after we fought and won the cold war against the menace of communism, there is now a resurgence of the communist menace in our land, including from newcomers to our country who embrace ideas totally opposed to our way of life and our great success.’ ‘We will send them (immigrants) quickly away, and we will continue to build our country bigger and better than ever before.’ ‘We are going to give our country its identity back.’ ‘You can be loyal to Karl Marx or you can be loyal to America. You can be a communist or you can be a patriot. You cannot be both.’

Accordingly, what the world would have in increasing measure going forward are stepped-up attempts to consolidate a white supremacist administration in the US accompanied by a suppression of ethnic, religious and cultural minorities at home along with renewed attempts to spread and consolidate US hegemonism world wide.

The latter project would mainly translate into US military interventions abroad of the Venezuelan type and a persistence if not a resurgence of identity based conflicts globally. Violent reactions internationally to what are seen as attempts by the US to bring recalcitrant sections in particularly the South under white supremacist control will provide the basis for the steadfast presence and spiking of identity politics globally.

Moreover, the path has been paved for stepped-up ethnic, religious and cultural disharmony within the US. A united state is far from possible, given this backdrop. Put simply, it would be a question of steeper political polarization at home and abroad.

The persistent, widespread support for the hard line Islamic regime in Iran locally and globally should serve as an eye-opener for the political decision-makers of the US. Huge crowds at the funerals of Iran’s political leaders could very well be state-orchestrated but they are a pointer to the fact that political Islam is far from on the decline. To the extent to which this is so, the phenomenon could be a hurdle in the path of a stridently expansionist US.

Looking back, it was the consolidation of the Islamic regime in Iran in the late seventies of the last century that, besides proving a major challenge to the unfettered global power expansion of the US and its Western allies, provided the motive force as it were for the proliferation of Islam-based identity politics in particularly the South. This continues to be so.

Going forward, the US would need to figure out how best it could manage the persistent presence of Islamic fundamentalism world wide, and for that matter other forms of identity politics, without drastically losing its global power and influence.

The recent successful challenge by Iran to the US’ efforts to exercise its diktat in West Asia should prove an ‘eye-opener’. In these confrontations both sides were bloodied but Iran proved that it could successfully take on the US militarily. The inference for the US ought to be that projecting its military might in the Middle East in a no-holds-barred fashion would not prove easy.

Arising from the foregoing a foremost policy challenge for the US would be to curb Iranian military power while avoiding another major military confrontation with the Islamic state that would cost the US and the world dearly in particularly economic and material terms. The US would have no choice but to persist with the often flagging West Asian peace effort and to render it fully workable.

Ukraine presents the US with another formidable challenge. As is known, Ukraine is proving no easy ‘push-over’ for Russia, but it is badly in need of more sophisticated Western arms, particularly effective air defense systems, to fully neutralize the Russian invasion. What would the US choose to do; go to Ukraine’s assistance fully or opt not to ruffle and antagonize the Putin regime, with which it is on some cordial terms?

A negotiated solution is best in Ukraine and the Trump administration would do well not to lose sight of this ideal but Russia too should see the need for a diplomatic solution if it is to salvage itself from its military stalemate in Ukraine. The US needs to try being a peace mediator in the latter theatre but if the Russian political leadership fails to opt for peace the US would have no choice but to join the rest of NATO and Europe in continuing to arm Ukraine.

The US would need to take the latter course if the ‘world’s mightiest democracy’ is to remain committed to its founding ideals. If President Trump fails to meet this challenge he would prove that he is nothing more than an ‘empty rhetorician’.

However, it should not come as a surprise to the world if Trump chooses not to strongly back the rest of the West on Ukraine. Domestic and foreign policy are closely intertwined. Since the Trump administration is committed to building a white supremacist state at home, democratic development worldwide has been of the least importance to it.

The Trump administration’s strong affinities to white jingoism would increasingly compel it to opt for a policy of international isolationism. As a result Ukraine could prove unimportant for the US going forward.

Consequently, US-Western Europe friction in particular is only likely to intensify in the days ahead. Coupled with the contentious issues growing out of the persistence of identity politics, the Trump administration’s far-sightedness in managing foreign policy issues would be tested to the fullest. Whether the world would have comparative peace or continued blood-letting would depend crucially on such judiciousness.

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Beyond concrete: Sunela Jayewardene urges Sri Lanka to rediscover an ancient wisdom for a planet in peril

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Sunela / Rishan / Spencer

It was more than a lecture on architecture. It was a challenge to rethink civilisation itself.

Standing before a packed audience at Dilmah by Genesis in Maligawatte, internationally acclaimed environmental architect, author and conservationist Sunela Jayewardene delivered a keynote that transcended blueprints, buildings and urban planning.

Instead, she invited her listeners on an intellectual journey into Sri Lanka’s ancient past, arguing that the answers to some of the world’s gravest environmental crises may already exist within the island’s forgotten ecological wisdom.

Her address, titled “Beyond Concrete: Architecture for the Coexistence of Species,” was at once philosophical, historical and deeply practical. It questioned humanity’s obsession with dominating nature and called for a return to a design ethic rooted in respect, restraint and coexistence.

“The road is actually very simple,” Jayewardene said. “We have simply forgotten it.”

That observation became the defining thread of an afternoon that challenged conventional thinking about architecture and development.

According to Jayewardene, modern society has inherited a worldview shaped largely by colonial values that placed human needs above those of every other living organism.

“Our value system was turned on its head,” she observed. “We accepted a Western way of looking at nature without questioning it. Today we can clearly see the consequences. The world is in crisis. Species are in crisis. Our lifestyles are in crisis.”

She was careful not to romanticise the past, nor was she dismissive of modern science. Instead, she argued that Sri Lanka’s pre-colonial civilisation possessed a sophisticated environmental philosophy that modern planners and architects have largely ignored.

For Jayewardene, environmental architecture is not about fashionable sustainability slogans or cosmetic landscaping.

It begins with humility.

It begins by recognising that humans are only one species among millions sharing the same landscape.

“The built environment should not exist in opposition to nature,” she said. “It should become part of nature.”

One of the most captivating moments of her presentation came when she introduced her own research into the island’s ancient sacred geography.

Using digital mapping and satellite imagery, Jayewardene demonstrated the remarkable alignment of Sri Lanka’s four original Saman Devalayas, whose axes converge on Sri Pada, historically known as Samanthakuta.

The extraordinary precision of these alignments, she argued, raises profound questions about the scientific and surveying capabilities of ancient Sri Lankan civilisation.

“What kind of technology enabled them to achieve this?” she asked the audience.

Her purpose was not to offer speculative answers but to challenge deeply ingrained assumptions that ancient societies lacked scientific sophistication.

“We often underestimate what our ancestors knew,” she said. “Yet the evidence around us tells a very different story.”

That forgotten knowledge, she argued, extended well beyond engineering.

It shaped an entire philosophy of living with the landscape rather than imposing human will upon it.

Displaying photographs from archaeological sites including Ritigala, ancient monasteries and rock pavilions hidden within Sri Lanka’s forests, Jayewardene illustrated how builders carved steps around natural boulders, integrated structures into existing rock formations and preserved the contours of the land.

Modern construction, she suggested, would almost certainly have bulldozed those landscapes into submission.

“Our ancestors honoured the land,” she said. “They accepted the landscape instead of trying to conquer it.”

For Jayewardene, that principle remains the foundation of every project she undertakes.

She described environmental architecture as an exercise in listening rather than commanding.

Every site, she explained, possesses its own identity, ecological history and natural rhythm.

The responsibility of the architect is to understand that identity before attempting to intervene.

“The land tells you what it wants to become,” she said.

Throughout the presentation, one word repeatedly surfaced—context.

Without understanding context, she argued, architecture becomes little more than sculpture.

Good design cannot be copied indiscriminately from one country to another or even from one district to another.

Climate differs.

Rainfall differs.

Vegetation differs.

Wildlife differs.

Culture differs.

Even the stories associated with landscapes differ.

All of these, Jayewardene insisted, must shape architecture.

“When I speak about inhabitants, I don’t mean only human beings,” she explained.

“The birds, insects, reptiles, mammals, trees and every living organism already occupying that land must become part of the design equation.”

This broader understanding forms the basis of what she describes as non-human-centred design—an approach that rejects the notion that cities exist exclusively for people.

Instead, landscapes should provide refuge for biodiversity while simultaneously serving human communities.

It is an idea that resonates strongly at a time when rapid urbanisation continues to erode habitats across Sri Lanka.

Jayewardene also challenged prevailing attitudes towards development itself.

Too often, she argued, “development” has become synonymous with replacing natural systems by concrete infrastructure.

She questioned whether flattening hillsides, redirecting streams and clearing vegetation can genuinely be described as progress.

In her view, genuine development should first ask what ecological value already exists before deciding what should be built.

One of the simplest yet most profound examples she offered concerned water.

“I always say it is acceptable to interrupt water,” she remarked. “But never disrupt it.”

That distinction reflects an ecological understanding often absent from conventional engineering.

Natural drainage systems, she warned, perform countless functions that remain invisible until they are damaged.

Floods, soil erosion, biodiversity decline and even changes in local climate frequently follow.

“We disrupt far more than water,” she said. “We disrupt entire ecological relationships.”

Equally significant was her distinction between degraded brownfield sites and relatively untouched greenfield landscapes.

Brownfield sites require ecological restoration, rehabilitation and renewal.

Greenfield sites demand restraint.

Minimal intervention, she argued, is often the highest form of environmental design.

The keynote found an appropriate setting within Dilmah Conservation’s own efforts to restore degraded urban landscapes.

Earlier in the programme, Rishan Sampath of Dilmah Conservation outlined the organisation’s transformation of an abandoned industrial property in Moratuwa into a flourishing urban forest containing over 300 tree species and more than 1,000 individual plants.

Scientific studies conducted within the restored forest have already demonstrated improvements in air quality compared with adjoining urban roads, providing measurable evidence that biodiversity restoration can improve city life.

For Jayewardene, such initiatives represent far more than beautification projects.

They demonstrate that ecological restoration can become a guiding philosophy for future urban planning.

Her address ultimately became a call to rethink humanity’s place within nature.

Architecture, she argued, should no longer celebrate domination over landscapes.

It should celebrate coexistence.

Every building should strengthen biodiversity.

Every development should restore ecological balance.

Every designer should ask not merely how a project serves people, but how it serves life itself.

As the audience left the hall, they carried with them more than architectural ideas.

They carried a challenge

To question inherited assumptions.

To rediscover indigenous ecological wisdom.

And to recognise that Sri Lanka’s greatest contribution to global sustainability may not lie in importing new environmental models, but in rediscovering the timeless principles embedded within its own civilisation.

For Sunela Jayewardene, the future will not be secured by building more impressive skylines.

It will be secured when humanity learns once again to build gently, intelligently and respectfully—allowing architecture to become not an act of conquest, but an expression of coexistence.

By Ifham Nizam

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Colombia’s “back-to-back queen”

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Beyond modelling, Colombia’s Katherine Castaño, who captured the crown at the Top Model of the World 2026, in Egypt, is also a TV host, entrepreneur and social media influencer.

She’s based in Miami, Florida right now — a hub for fashion and influencer work — a city she calls home base, while representing Colombia on the world stage.

Her Miami base gives her access to fashion, entertainment, and business networks, while her title keeps Colombia front and centre in the global modelling conversation.

Off the runway, she says she enjoys singing, playing the piano, and tennis.

Katherine didn’t make the trip to Egypt as a newcomer. She’s built a strong international portfolio before winning the crown.

In fact, her résumé reads like a fashion passport: Colombia Moda, New York Fashion Week, Miami Swim Week, Miami Fashion Week, Nicaragua Diseña, IXEL Moda, and Mercedes-Benz San José.

On June 8, 2026, Katherine Castaño was crowned by outgoing winner Natalia Garizabal Vera, also of Colombia. That gave Colombia a historic back-to-back victory — the first time any country has done it in the competition’s history, and Colombia’s 4th win overall.

As Top Model of the World 2026, Katherine’s reign is centred on elevating her profile as a model, influencer, and entrepreneur.

She’s built a personal brand around beauty, ambition, style, and professionalism, with strong reach across fashion, social media, and business.

As titleholder, she’s now the face of the pageant’s international fashion platform, representing Colombia globally, while based out of Miami.

Ahead of the competition she was clear about the stakes: “This is bigger than me. This is for my country. This is for the story I’m here to write… And I’m not going quietly… we’re going for that back to back.”

As the reigning titleholder, Katherine Castaño’s role extends far beyond the sash. She’s using the platform to grow her brand as a model, influencer, and entrepreneur rooted in “beauty, ambition, style, and professionalism”.

She will also be doing runway shows, photoshoots, brand appearances, and fashion events.

Sri Lanka’s representative at this pageant was NetalieWithanage.

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