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Fri, 14 December 2018 17:12:50
Common sense on the Commonwealth
14 Nov, 2013 13:32:33
By Rohan Samarajiva
Nov 14, 2013 (LBO) - My children made their own decisions on what to study and where. But when I found that my son was about to complete his undergraduate education without taking a single course in economics, I pleaded that he should.

It was not that I wanted him to be an economist, but that I felt some understanding of the basic concepts were needed to function in a modern society.

Some of the reactions to CHOGM illustrate the problem. At this moment, all the costs associated with the event are sunk. There is no possibility of using them for other purposes. There was a moment several years ago before they became sunk costs, when the debate was worth having.

To now whinge and whine about the decision to hold CHOGM in Sri Lanka or about incurring the necessary hosting costs at this time is infantile. It demonstrates the social costs of economic illiteracy, specifically ignorance of the concept of sunk costs. Once a cost has been incurred, economics tells us to move on; nothing more can be done about what has occurred. The dismal science is ruthlessly forward looking.

I saw on Facebook an analogy made to a village wedding, where debts are incurred to put on a grand show.

We could, of course, have debated the decision to hold the wedding when the decision was taken. But now that the guests are arriving, we should follow custom and put on a happy face and welcome them. As with village weddings, there is a possibility that the costs will be covered or that, at least, the losses will be reduced as a result of the “envelopes” that we hope the guests would hand over.

A radio station asked me whether the Commonwealth was relevant and whether there were any chances of economic returns (an “envelopes” question). The answer was an unequivocal yes, from the perspective of Sri Lankan firms exporting goods and services.

I had just written my last column where I had given examples for Sri Lankan firms succeeding in five countries: Bangladesh, Fiji, India, Mauritius and Samoa ( It so happens that they are all members of the Commonwealth, though Fiji is under suspension until the election is held.

This is illustrative of the ease of doing business in countries where English is the language of government and commerce and the British Common Law provides the foundation for the legal infrastructure. I have worked in countries outside the Commonwealth such as Morocco and Bhutan. It’s much more difficult.

So, what is common sense on the Commonwealth?

Guests are visiting.

Let’s put on our best faces. Be nice, or at least be quiet. Let’s do our best to help bring in the envelopes. If they do not come in, it is quite clear who will have to pay the bills.

Rohan Samarajiva heads LirneAsia, a regional think tank. He was also a former telecoms regulator in Sri Lanka. To read previous columns go to LBOs main navigation panel and click on the 'Choices' category.

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6. kawdaboy Nov 15
Dr. bills outweigh envelopes. We or no one else needs forums to develop their respective economies. The state should think of the national economy like a household economy. Don’t live beyond our means!
5. 504 Nov 15
How far the elected ruling class has come in their spending habits can be seen by the cars. For the Non-Aligned we imported Peugeot 504s. Now it is limos.

There are as many heads of states as ministers - 50 odd.

The extravagance of the elected ruling class with people's money is a problem in almost everything they do, not just this.

But yes it is good to have internationalist events.

4. Deiyyo Sakki Nov 15
Ranil Wickramasinghe and a few attention seeking members of UNP in particular are behaving like the uncles who you wish were not part of the wedding party.
3. KDS Nov 14
Agreed, Whatever spent is sunk cost as theory and ROI was not in the cards. But if envelopes come we should be happy.

While it needs to be stressed that we are known for our hospitality all around. So, when visitors come its time to smile leaving the cost and past behind.

2. MinalP Nov 14
No question that it is good to have international events.

While it is true about sunk costs, there were some conspicuous spending that could have been avoided which were plainly done for the betterment of ministers and big wigs. Many buses have been imported. It is crazy that all the vehicles were given separate number plates.

Why go to all that hassle? Nothing comes free.

And why were buses imported? Were they imported?

1. AV_UK Nov 14
Yes Sir I agree with you.