Dhammika Perera: An economist par excellence though not trained formally as an economist

Business leader Dhammika Perera addresses the Colombo School of Business and Management in its series on an evening with a corporate leader recently at the Shangri-La Hotel, Colombo - Pic by Upul Abayasekara

Humans who forget that they are wired as economists Dhammika Perera, businessman, entrepreneur, wealth-creator and many more, admits humbly that he has never been formally trained as an economist. But, that is an under-assessment, since there is an economist living in every species. 

Nature has wired every species with the core of economic principles, the desire to get the best out of the least. This principle is followed to the letter by every lower level species. For instance, as Dhammika himself says, the lion runs after the slowest running deer, thereby expending the minimum energy to catch its prey. The deer, though Dhammika did not extend his point to cover it, runs just a little faster than the lion so that it can save its energy for a long run to escape. Both of them try to get the best out of the least. Economists call this efficient use of resources. 

However, the exception to this behaviour is the Homo sapiens, man the wise. He is also wired with economic principles, but using his ability to talk freely, he voices the opposite. Hence, from time to time, practical people like Dhammika Perera have to take a podium and remind Homo sapiens that they are wrong. This is what he did when he addressed a packed audience hosted by Colombo School of Business and Management in its series on an evening with a corporate leader recently in Colombo. The title of Dhammika’s address was ‘My Entrepreneurship Mind and Leadership Heart’ connoting his business acumen, but it is full of hard-core economics. 

The choice between 600 taxis and a ship

This writer recalls an encounter with Dhammika some time back in 2008 when he was at the Central Bank. At that time, Dhammika was holding a public office as the Secretary to the Ministry of Transport. Dhammika narrated to him that the Government in 2002 had offered him the franchise for running a quality taxi service at the Colombo Airport with the promise of a permit to import 600 new wide-bodied cars for that purpose. This was an offer which any other businessman would not have refused. 

But Dhammika told this writer that his quick calculations revealed to him that having 600 taxis meant 600 problems for him to solve every day and the income to be earned was not a sufficient compensation for those troubles. Instead, he decided to invest a part of that money in a ship which meant only one problem and, even then, not daily but very rarely. 

On that day, he had had that problem when his ship had sunk in the Bay of Bengal having been caught in a storm. His worry was about the safety of the crew but when he learned that they had been safely on the shore, he was a totally a relieved man. He told this writer that the loss of the ship would be taken care of by insurance. Amidst an unexpected disaster, Dhammika showed, this writer still recalls, unusual calmness both within and out. 

The need for following scientific approach

Throughout his address, Dhammika has presented to his audience, composed mainly of young corporate leaders, the need for having an inquisitive mind and adopting a scientific approach in coming to conclusions. 

That scientific approach requires one to challenge the existing knowledge, probe and criticise it and finally come to conclusions based on evidence. Science also tells us that those conclusions are not the final absolute truth and can be refuted by anyone possessing better evidence. But what is important is not to make choices merely by hearsay or dictated by society’s popular beliefs. For that, one should develop an inquisitive mind and probe to the core until one gets a satisfactory answer. 

Also, as the French statesman and philosopher, Frederic Bastiat, told us un 1850 that those analyses should cover not only what is to be seen around us but also what is to be unseen. Using this criterion, he distinguished a good economist from a bad economist: a bad economist sees only what seen, but a good economist will see both what is seen and what is to be foreseen (See: https://mises.org/library/which-seen-and-which-not-seen). In laymen’s language, a good economist should have knowledge of the past, present and the future. 

Attempt at estimating population of ancient Sri Lanka

Dhammika tells his audience that he applied his curious mind to estimate how many people were there in ancient Sri Lanka, say some 1000 years ago. 

In popular belief, there are many exaggerated stories about it. Some have put the number to tens of millions when they say that a cock starting his journey from Anuradhapura could go to the southern tip of the island walking from roof to roof. The implication is that if houses were so numerous, so were the people living in them. 

But this is not scientific. Dhammika had tried to estimate Sri Lanka’s population by looking at the estimates of the world population in 1000 CE and its growth till today. Today’s world population is about 7.6 billion and in 1000 CE, it had been about 275 million or 4% of what it is today. Using this fraction and noting that Sri Lanka’s current population is 22.2 million, Dhammika safely concludes that Sri Lanka’s population some 1018 years ago could not have been more than 800,000. 

This is a reasonable estimate arrived at by using scientific method. The beauty of it is that another analyst could improve upon it by using the same methodology but by further refining the data. For instance, the world population in around 1800 amounted to 1 billion and by 1927 about 2 billion. It began its exponential growth only after that. Similarly, Sri Lanka’s population that stood at 2.4 million in 1871, began its exponential growth only after around 1930s when the malaria epidemic was successfully eradicated. Thus, the world population in 1000 had been only about 13% of what it had been in 1927; When the same ratio is applied to Sri Lanka’s estimated population of 3 million in 1900, its population in 1000 would not have been more than 400,000. 

This is only a dispute about the number and not about the methodology. Dhammika has opened the eyes of his young audience to the correct way one should approach it. 

Green cars are not that green 

His approach to greenness of the much-hailed green car – the full electric car – is also an eye-opener to even economists. This car is credited to be environmental-friendly when looked at its final use level. 

At that level, its greenhouse gas emission level is zero. Dhammika warns that it is a wrong assessment. That is because to supply electricity to this car, one may have to burn fossil fuel elsewhere and there, it emits harmful greenhouse gases to the environment. A businessman should not just look at the greenness of his operations at his business level. It should be the greenness of the entirety of the operations involved, before him as well as after him. 

Grow a tree and get the right to cut a tree

He extends this logic to another fallacy, namely, the alleged unfriendliness of cutting trees to the environment. The popular claim by environmentalists is that cutting trees anywhere anytime is environmentally-unfriendly. 

But, trees are a resource and they should be harvested at the appropriate time for human use. Then, what should be done, according to Dhammika, is when one tree is cut, another tree should be planted. In this sense, there is no guilt in anyone cutting a tree if he has planted a tree. Those who cry about cutting trees maybe those who have not planted a tree at all in their life. 

Dhammika tells the story of how he commanded his hydropower engineers to plant at least 1 million trees within 10 years. The command was given in 2000. However, it was reported to him in 2017 that they had managed to plant only a half of that number. So, it was short of the target.

Anyway, that has been a real achievement. Thus, if they now cut even 100 trees, there is no guilt on their part, since they have added much more than that number to the tree cover of the country. 

This is practical economics. Renewable resources should be used by the world in such a way that it should not fall to a critically low level. According to him, business decisions made on this basis are sustainable and do not impede the continuous economic development in the world. Dhammika’s message to his audience is that they should be global citizens instead of being mere native citizens.

Fear of technology

There is a general fear about the advent of technology by many. When the steam engine was invented in the early 19th century, many feared that it would take over their jobs and they would be made jobless. 

In the UK, a group of people known as Luddites went to the extent of even destroying machinery operated by steam power, especially in cotton and wool factories, because they would make them jobless. 

Since then, anyone who is scared of new technology is known as a Luddite. Dhammika has told his audience that that fear was without grounds. 

The same fear was exhibited when electricity was harnessed on a commercial basis in the early 20th century. Today, technology is everywhere operating from all fronts of human life. Its advancement is so quick that, according to the President of Thailand based Asian Institute of Technology or AIT, Worsak Kanok-Nukulchai, it is driving the world to an unknown future. Worsak says that the job of the educators is to prepare the students to enter this unknown future without fear (available at: http://www.ft.lk/w-a-wijewardena-columns/How-to-groom-intellectuals-for-the-future--Two-contrasting-views-from-Thailand-and-Sri-Lanka--Part-1/885-648278 ). 

It appears that the two minds, that is, the mind of the scientist Worsak and that of the pragmatist Dhammika, are working in tune to each other. The latter told his audience that there is no need for harbouring any fear about the loss of jobs due to the advancement of technology. It did not happen in the past and nor will it happen in the future. 

According to Dhammika, there could be occasions where routine jobs would be taken over by intelligent machines. For instance, the maintenance and preparation of accounts will be the job of machines in the future. Then, what would become of accountants? They would simply move into a higher level at which logical and consistent decisions are made by them by using the results produced by machines. 

Humans differ from machines due to emotional endowments

Dhammika finds another important role for human beings in a technologically advanced era. Though he would not have known it, it comes from a new branch of economics known as behavioural economics. 

Machines cannot have emotions and only human beings. This is true at least at the present stage of technological development in the world. This special endowment should be used by human beings to their full advantage. They should try to remain happy, be sympathetic and emphatic to others, live in solidarity and be ready to come to the help of fellow members if they are destitute. This is the emotional side of human beings which machines lack. Hence, it should be used constructively and not destructively. 

The destructive part of the emotions is the division of human beings according to cultures, ethnicities, religions or castes. Dhammika warns that such divisions should be restricted only to the homes and not be transported to work places. 

According to him, in the work place, human beings are divided not by these criteria. They are divided by the level of intelligence, ability, commitment and motivation. Sri Lankans today have started to classify themselves into the two groups ‘We’ and ‘They’. Anyone who does not belong to the group ‘We’ is being resisted, suspected and attacked. This is the advice being imparted to even university students by guest lecturers (available at: http://www.ft.lk/columns/Chapa-factor-and-USJ-s-move-to-groom-its-students/4-648723 ).

When this ‘We’ concept is practised at any level – it does not matter whether it is at family, business or national level – it is destructive and does not augur well for the sustained development of the nation. Though Dhammika did not say it explicitly, this was what he implied by it.

Best economists are found in the market

This writer has always maintained that the best economists are not those who have received economics training formally but those who have practised it in the market. When he was at the Central Bank, he was immensely enriched by consultations he made with those traders in the Pettach wholesale market. Dhammika has proved this point once again. 

Naturally, it is enlightening to listen to him and think over what he says in his discourses for further wisdom.

W A Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at [email protected]