Friday, September 19, 2014

Building an Egalitarian Economy in Myanmar

By RAMESH SHRESTHA On Tuesday, September 16, 2014
As Myanmar embraces democratic governance, people are aspiring to equal opportunities in all aspects of the country’s political economy, which at the moment remains dominated by a small group of elites. Myanmar’s long-term stability depends on how effectively the government is able to translate its reform program into far-reaching economic benefits. Well into the fourth year of the country’s reforms, a major question looms over the next four years and beyond: Can Myanmar develop its economy on an egalitarian basis and fend off predatory international pressure and practices wherein the privatization of national assets has become the norm?

Income inequality is already severe in Myanmar and could get worse if national economic policies are dictated solely by a private sector whose interests are largely based on exploitation of natural resources and cheap labor. Myanmar is often referred to as a latecomer to the development arena. While the country’s long isolation certainly has brought many negative effects, being a latecomer also provides a good opportunity to learn from countries that have already traveled the turbulent path to democracy. There are also lessons to be learned from failed economies in middle- and high-income countries. An inclusive national economic policy that benefits all citizens is key to resolving Myanmar’s political problems, and the country’s notable progress toward national reconciliation will be complemented by sound economic management.

Myanmar geographically links South Asia, Southeast Asia and China, giving it geopolitical sway in the realms of trade, tourism and regional economic cooperation. Because the country is at the crossroads of a market of 3 billion consumers, a well-planned economic policy with a long-term perspective could yield unprecedented benefits for Myanmar, but could also increase its vulnerability. There are many policy advisors representing diverse interest groups who see Myanmar through a purely geopolitical lens, with no consideration for the development aspirations of its people. Myanmar’s leaders must weigh all offers of assistance against the risks that they bring.

Myanmar is under pressure to deregulate, cut red tape and open up for businesses. It is indeed necessary to simplify its labyrinthine bureaucracy but at the same time steps must be taken to strengthen public institutions to protect Myanmar’s citizens, the majority of whom will not benefit from an unshackled private sector, at least in the immediate future. The government must ensure that the right investments are being made and that the returns from such investments are beneficial to the people and the country, not just to the few who are partnering with foreign and local investors.

Free trade is en vogue among a majority of today’s economists because it provides choices. But for countries and people who are just getting out of poverty, guaranteeing basic necessities should be prioritized ahead of having a choice.
Moreover, free trade does not work between a strong partner and a weak partner. Free trade encourages choice, promotes wastage and further widens social divisions. Modern day free trade encourages developing countries to sell their resources to affluent nations and expects them to then import fancy products from these countries to improve living standards. It is not a free trade—it is a way of creating dependency.

This is why strong regulatory mechanisms are still necessary to protect developing countries’ economies. Even in fully developed economies, the private sector often employs strong lobbies to help shape the regulatory environment, resulting in a variety of abuses that was perhaps most spectacularly manifested in the 2008 collapse of the US financial system.
As Myanmar develops economic policies it must realize that trade should be free but mindful of the predatory actions of multinational investors pushing consumption to no end.

The world continues to witness but not fully accept the fact that growth by any means is based on greed of the few and is responsible for economic inequality everywhere. There are many examples of newly democratized countries where free market-driven economic policies have gone very wrong, with markets controlling societies and not societies controlling the market.
Myanmar’s economic policies and regional interactions must be based on a shared political vision and mutual benefit. It should not be lured by promises of bilateral aid tied to hidden agendas. It would be a catastrophic mistake to be driven by the immediate benefits of a myopic focus on extractive industries. Many an environment has been ravaged by a rush for quick profit.

Opponents of an egalitarian economic approach might argue that it is at odds with notions of democracy and freedom, but in fact it is about creating an equality of opportunity for all. There is ample space for a discussion about how best to go about this, and an exchange of ideas and criticism is a healthy democratic process, as long as the government makes decisions based on transparency and takes accountability for its actions. Though there is a strong desire for results now, people must be made to understand that it takes generations to develop a stable egalitarian economy that will benefit all.