Sri Lanka is having a textbook currency crisis, triggered by policy mistakes • Hacker News Board

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#51

Post by treeman79 » Wed, Jul 13, 2022, 2:18 AM UTC

duxup wrote: post #12

afterburner wrote: post #7

> But the most boneheaded, bizarre mistake that the Sri Lankan government made was a disastrous plan to shift the entire country to organic agriculture. In April of 2021 the government banned the import and use of pesticides and synthetic fertilizers. This devastated Sri Lankan agriculture, since, as it turns out, fertilizer is really really important. Production of tea — Sri Lanka’s main cash crop — fell by 18% in a…

You would hope that someone wanting to switch to organic agriculture would encourage it … rather than just flip a switch…

A lot of people feel the need to force others to do what they think is right. Regardless of consequences

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#52

Post by romeros » Wed, Jul 13, 2022, 2:18 AM UTC

asciiresort wrote: post #8

> Without imports, many Sri Lankans will quickly find themselves hungry, stranded How did these island nations sustain themselves before ? In other words, what has changed that they can’t live off the land anymore? And by that, I mean the sea. Has Sri Lanka’s fish been pillaged? Is it being exported to wealthier nations that command higher prices, even as there is a domestic food crisis? How much of this is because o…

not 100% sure.. my guess is that they depended upon tourism and it was severely impacted by the pandemic.

For Sri Lanka, the right thing to have been done (in hindsight) is to keep the country open for tourism and disregard covid impact. Kind of like Texas/Florida.

They had to choose between the lesser of the two evils. This is a hard decision to make.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#53

Post by epistasis » Wed, Jul 13, 2022, 2:19 AM UTC

kumarvvr wrote: post #15

The drastic move to organic farming is puzzling. Any level headed person , forget a politician , would want to experiment first, see the results, gauge and then expand selectively. That is common sense . I guess when you are a dictator ish government and you rule the country with an iron first, the institutions of the state stop being anything and simply become rubber stamps. This also underlines the importance of se…

I've been reading a lot of Soviet history lately and it provides a source of a huge number of similar agricultural disasters. Both Russian and Chinese attitudes towards agricultural peasants has been that they are dispensable humans, and it shows in how these countries have had disasters:

* collectivitzation leading to the Holodomor in Ukraine, mass famine in Kazakhstan, and hunger throughout the USSR, killing millions upon millions through starvation. All the act of a single, paranoid, murderous tyrant.

* Kruschev's love affair with corn, that ended up being a crop failure after a few lucky years in smaller trials. This is actually the more level-headed play than Stalin's, but such a large shift, even with a trial, was a gigantic failure.

Lately I've been completely enamored with the book How Asia Works lately, and in detailing the success and failure of many different Asian nations development in the 20th century, it homes in on agricultural independence as a corner stone for further economic development to industrialization. Without a broad base of independent small farmers, that have small farms that they can directly profit from, a large base of a middle class can never develop. Large industrial farms, favored both by capitalists and Marxists concentrate power into too few hands and are also far less productive in total agricultural output, even if they they are more profitable. It doesn't talk much about Sri Lanka, focusing more on north east Asia, but I would be quite curious about how and if Sri Lanka's land reforms from the 70s were effective.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#54

Post by aaron695 » Wed, Jul 13, 2022, 2:22 AM UTC

asciiresort wrote: post #8

> Without imports, many Sri Lankans will quickly find themselves hungry, stranded How did these island nations sustain themselves before ? In other words, what has changed that they can’t live off the land anymore? And by that, I mean the sea. Has Sri Lanka’s fish been pillaged? Is it being exported to wealthier nations that command higher prices, even as there is a domestic food crisis? How much of this is because o…

No post body was provided.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#55

Post by rlt » Wed, Jul 13, 2022, 2:23 AM UTC

Perhaps a dumb question: why does every little country need its own currency? Are they all just addicted to printing money?

Ignoring the volatility and environmental concerns, why shouldn’t all these small to medium-sized countries standardize on a cryptocurrency?

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#56

Post by digianarchist » Wed, Jul 13, 2022, 2:25 AM UTC

rlt wrote: post #55

Perhaps a dumb question: why does every little country need its own currency? Are they all just addicted to printing money? Ignoring the volatility and environmental concerns, why shouldn’t all these small to medium-sized countries standardize on a cryptocurrency?

Only rich countries can afford to peg their currencies.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#57

Post by rramadass » Wed, Jul 13, 2022, 2:25 AM UTC

Must read on the Sri Lankan Economic crisis: https://en.wikipedia.org/wiki/2019%E2%80%93present_Sri_Lanka...

It was a series of events, all mistakes done and compounded by the Rajapaksa clan over decades in power. All their assets need to be seized/frozen, Everyone of them need to be brought back to the country, made to stand trial and put in jail for ruining the country.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#58

Post by socialdemocrat » Wed, Jul 13, 2022, 2:25 AM UTC

asciiresort wrote: post #8

> Without imports, many Sri Lankans will quickly find themselves hungry, stranded How did these island nations sustain themselves before ? In other words, what has changed that they can’t live off the land anymore? And by that, I mean the sea. Has Sri Lanka’s fish been pillaged? Is it being exported to wealthier nations that command higher prices, even as there is a domestic food crisis? How much of this is because o…

Not producing enough food is pretty normal. In my native Norway we have not been self sufficient in hundreds of years. Only 2.5% of the land is arable. Any time there was a serious war and shipping lanes got blocked like in Napoleonic wars we got into deep trouble. Plenty of people died. Same deal in the Netherlands. They were not self sufficient in their Golden age. The Soviet Union was not self-sufficient. It was a big reason why it collapsed. It got import problems just like Sri-Lanka causing political turmoil and eventual collapse.

Funny what being unable to import can do to a country. The US cannot have this problem since it controls the world reserve-currency. It can in principle print itself out of any problem.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#59

Post by andrewmutz » Wed, Jul 13, 2022, 2:25 AM UTC

ktaylora wrote: post #39

kumarvvr wrote: post #15

The drastic move to organic farming is puzzling. Any level headed person , forget a politician , would want to experiment first, see the results, gauge and then expand selectively. That is common sense . I guess when you are a dictator ish government and you rule the country with an iron first, the institutions of the state stop being anything and simply become rubber stamps. This also underlines the importance of se…

There's a premium that can be exacted from switching to organic agriculture that isn't be discussed in this article. Sri Lanka has a limited land mass available for food production and they mostly export commodities to other countries. We're talking ~25,000 sq-mi. For context, the US state of Kansas is ~82,000 sq-mi. If you cannot physically expand the footprint of agriculture in Sri Lanka to boost revenues, the thin…

If you are short on land, organic is not a good approach. It takes 40% more land compared to traditional farming.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#60

Post by UkrainianJew » Wed, Jul 13, 2022, 2:27 AM UTC

afterburner wrote: post #7

> But the most boneheaded, bizarre mistake that the Sri Lankan government made was a disastrous plan to shift the entire country to organic agriculture. In April of 2021 the government banned the import and use of pesticides and synthetic fertilizers. This devastated Sri Lankan agriculture, since, as it turns out, fertilizer is really really important. Production of tea — Sri Lanka’s main cash crop — fell by 18% in a…

>You don't get anything "for free", and cutting supports like this will inevitably doom a sputtering economy, when the actual solution was almost certainly more government spending, not less.

Government spending isn't free magic money either. You increase the amount of money in circulation, hoping that people will produce more goods. Instead, you increase the size of the bullshit economy - low-effort activities that only exist under the abundance of money. So more and more stuff gets imported from China because nobody in the right mind will take a $1/hour factory job if you can be a wellness youtuber for a multiple of that. The amount of useless bureaucracy grows, the number of people willing to take responsibility dwindles, but everyone is happy because, well, Mother Government takes care of us all.

Occasionally you notice that the wages don't grow and the housing is unaffordable because the workers don't really have any leverage anymore, but you brush off those thoughts because there are far too many distractions anyway.

Then BOOM, that fragile supply line involving slave labor in China and natural resources from Putin's friends gets broken, and suddenly, we have a shortage of everything, can't manufacture our own stuff, and that freshly minted dollar can buy you many shitcoins, but won't get you any baby formula.

I think, we are about to find out that excessive spending was nothing more than borrowing from our future prosperity, and the time for that debt to mature is coming fast.