Tuesday, November 26, 2013

Food prices and the budget for 2014

The satirical LBO piece, A Dress to Kill Budget, apart from being very entertaining is quite seriously, best summary of the main thrust of this years budget. They could have added that defined professionals (including accountants, lawyers, accountants, engineers and some academics) were given a tax reduction (to a maximum of 16% compared to the current 24%) and, even better, if they were in practice could be expected to be taxed between 12%-16%.

Truly a budget where benefits were doled out to the richer sections of society. Taxes on food, a staple for this regime went up, the tables below will be of interest to anyone who wants to know by how much these changed. (Source: CT Smith Stockbrokers)

Wednesday, November 13, 2013

A CHOGM Post: Did Britain grow rich by exploiting its colonies?

When we were is school we told that the British (and the Portuguese and Dutch before them) invaded the country and exploited its resources and grew rich in the process. This was said as if it were accepted wisdom, simple statements but with no analysis. No one thought this was very important, since it was old history anyway and no one bothered to question this. 

They were rich, we were poor; they colonised us, ergo this must be true. This claim and variants of it is now in the media.

The question that I have been pondering is, if the British were growing rich on the country's resources, why did the country fail to prosper after independence? The easy answer to give is that although the country received political independence, trade and business remained in the hands of the British. A neo-colonial instrument of control that continued after independence.

Some of our leaders believed this and a  wave of nationalisation and land reform saw the end of almost all foreign owned businesses by the 1960's and early 1970's.

Yet we did not prosper.

Indeed the country's fortunes declined further. At independence the country's economy was primarily agricultural, the most important produce being tea, rubber and coconut.  By the 1970's these were all controlled by the local population, either directly or indirectly through the state.

Sri Lanka was not alone in this experience. All over Africa and Asia the European powers retreated from their colonies but their exit did not result in a sudden increase in wealth. Many African nations, despite enormous wealth in natural resources; Nigeria, the Congo, Angola to name just three, are now poorer than they were at independence.

Meanwhile, the nations of Western Europe rebuilt from the ruins of the second world war are, despite all the problems they face now, much richer than they were at the end of the 19th Century. Countries like the United States, Australia and New Zealand, which started off as colonies prospered despite a lack of significant colonial expansion.

The answer to the question of as to how colonial powers grew rich seems a bit more complex than the simple statement that we were taught.

I believe the enormous wealth that was created in Britain between the 17th and the end of the 19th century was due to two factors: the industrial revolution and free trade.

In Britain's case  the colonies did assist trade by creating new markets in which British companies and products had preferred access. Thus British business had an advantage over other European and American companies (and any local businesses that were around) which helped them prosper. This helped but I don't think it was the key determinant of success, ultimately it was trade that created wealth.

The countries that have prospered over the last fifty years did so through increased trade, Japan and East Asia being spectacular successes. In the early 1950's the bet was that it was the African continent, with its abundant resources that would succeed, but it was not to be. Countries that looked inwards, from India until the 1990's to China until 1978, remained stagnant. Once China started to trade its fortunes improved.

At first China started trading internally. Instead of only being allowed to work on the collective farms farmers were allowed to cultivate a part of the land and sell the excess. Food production increased rapidly and soon the private produce exceeded that of the collective farms. This experiment was extended gradually to other areas of the economy and now it is the largest trading nation in the world.

If we close up to the world, try to trade only internally, a popular suggestion these days, we will be doomed. It was tried in the 1960's and 1970's it did not work; it will not work any better now.

Wednesday, November 06, 2013

Scenes from my childhood

I had to pay a visit to one of the company's sites today in Embilipitya. I had not realised quite how far this was, somewhere off Ratnapura and the site itself yet further into the interior.

It was pretty much off the main tourist track, the only thing of any note being an abandoned paper mill.

I enjoyed the ride on deserted, slightly bumpy rural roads, hedged on either side by a sort of semi-dry zone forest. I could not make up mind as to whether it was wet or dry zone, it was in the region of Uda Walawe so it may have been a bit of both. It took me back to my childhood memories of travel, seeing roads lined with trees, not necessarily forest, but trees, trees and trees. Lots of coconut trees, but also plaintain trees, jak trees and all sorts of wild greenery.

Buildings in rural areas were wattle and daub, thatched with coconut. Bricks and tiles were mostly in towns and for bigger buildings. Now the scenery seems dominated by signboards and glitzy glass-fronted shops.

On the way back we passed by some stalls selling curd. When I expressed an interest in buying some, my colleague who is a regular visitor to the site (it was my first visit) told me of a stall run by a family who produce it from their own herd. We stopped there and I bought a couple of pots, which turned out to be very good. Not as thick as some varieties, but with a rich creamy flavour. I was told that I needed to finish them fast, since they done use any additives. We sighted a herd of buffalo on the paddy fields as we drove past.

It struck me that the buffalo is now largely extinct, as a beast of burden. When I was little the farmers would be working their fields with buffalos, now they have been replaced almost completely by the hand tractor, just as the outrigger canoe (or catamaran) has been displaced by the motorised boat at sea.

The triangular sails of the catamarans used to dot the horizon when looking out from the seashore. Now they are only found as decorations in hotel lobbies or beach side restaurants.

I have a very good memory and I even remember seeing bullock carts and even the odd rickshaw, which used to take children to school.

That these have disappeared is a sign of progress, people are better off now and they using modern equipment, which is a good thing. A part of me however remains an incurable romantic and sight of some of these older scenes leaves wallowing in a nice, warm,  nostalgia.

There are a few nice pictures on an album on Flickr

Also picked up a few pictures from the web, for the benefit of anyone who never saw these. Hope you like them, does anyone have any colour pictures of similar scenes?

Monday, November 04, 2013

A question for all the marketing people out there on Anything.lk

Anything.lk is a daily deals website. They sell discount 'vouchers' (in electronic form) for various products and services. The Company negotiates various deals with manufacturers or service providers and offers them to their customers, less a margin.

The question is, what does Anything.lk offer that cannot be done more effectively by a bulk sms offering a discount direct to users? Or, a direct discount on a credit card offer?

In effect it's about sending a discount offer to a set base of customers. In the case of a credit card offer there is the certainty that the customer exists. There is also other information on spending patterns, which cannot (and should not be) shared at the individual level but may be used for macro level profiling.

Anything.lk only has website hits, Facebook 'likes' and records of past purchases to offer- a far more dubious proposition in my view.

I have no idea of relative costs between the two, can anyone volunteer any information?  I suspect Anything.lk's charges to be a lot higher than that a credit card provider and its customer base to be transient.