Sri Lanka chooses a new leader

This is an audio transcription of the FT press briefing podcast episode: Sri Lanka chooses a new leader

Marc Filipino
Hello from the Financial Times. Today is Monday, July 18, and it’s your FT News Briefing.

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Sri Lankan lawmakers are beginning to rebuild their government this week. Fintech companies used to be so hot, and now they’re not. Also, offices may have reopened, but many of us are still working remotely. In the United States, this detachment changes the economic geography of the country. I’m Marc Filippino, and here’s the news you need to start your day.

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Sri Lankan lawmakers will vote for a new leader this week. Protesters overthrew the former president who then fled the country. Now Sri Lanka must begin to pull itself out of a political and economic mess. The country’s opposition leader appealed to the International Monetary Fund for help. To find out more, I am joined by Antoni Slodkowski of the FT, which is in the capital of Sri Lanka, Colombo. Hi, Anthony.

Antoni Slodkowski
Hi there.

Marc Filipino
Anthony, before entering politics, you know, how is it in the capital? If I understand correctly, the protests are ongoing. But it’s a, it’s a really different vibe now that President Gotabaya Rajapaksa is gone. You recorded this sound. . .

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Marc Filipino
Can you tell us what is happening?

Antoni Slodkowski
So I went out Saturday night and the students were dancing, partying. This surreal landscape where you have dozens, maybe hundreds of tents pitched by students and various organizations, right in the middle of the most important part of Sri Lanka and the most important part of Colombo, basically, right across of the presidential secretariat. These activists include poets, playwrights, software engineers, monks and clergy. So there is a whole spectrum of Sri Lankan society converging on Colombo and demanding change.

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And basically there’s people pretty late into the night, it was like 9-9:30, still dancing, circling around, talking to each other, saying that, you know, we got the power back, we’re here, this country we belongs. . .

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. . . and we’re not afraid, you know, to tell you what we think.

Marc Filipino
Anthony, these protesters seem so triumphant that they could force so much political change. But, you know, there’s always this horrible economic crisis. How bad is that?

Antoni Slodkowski
I was able to walk around the biggest market, you know, you know, maybe a few miles north of this protest zone. And I’ve talked to people who normally push carts full of textiles or sugar or fruit, you know, between stalls and between vendors. And these people told me that they now use firewood to cook their meals, and the only thing they can afford is bread with a little bit of coconut oil because it doesn’t there is nothing else to eat.

Marc Filipino
And to add to that, there’s no telling when things will get better. Sri Lanka cannot even begin to rebuild its economy until there is political stability. And, you know, as I mentioned, lawmakers plan to elect a new leader on Wednesday. Is this the start of getting things back on track?

Antoni Slodkowski
It all depends on whether the protests turn more violent after Wednesday or whether they or protesters are willing to give the interim president, who is most likely to become the next president, a chance. And he has had experience of dealing with the IMF and discussing, negotiating previous bailouts and is seen as sort of a capable technocrat, even though he is beholden to the Rajapaksas as well. If they’re willing to give it a chance, then over time there might be some kind of, you know, he might have enough leeway to slowly get the economy back on track. But as the Leader of the Opposition told me today, before things get better, it’s more likely to get worse first.

Marc Filipino
Antoni Slodkowski is covering the current crisis in Sri Lanka for the FT. Thanks, Anthony.

Antoni Slodkowski
Thank you for hosting me.

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Marc Filipino
High-flying fintech start-ups are now collapsing. Shares of fintech companies like Klarna, Upstart and Robinhood have soared during the pandemic. But this year, fintech stocks have collectively lost nearly half a trillion dollars in value from their pandemic peak. This is according to data from CB Insights. They are suffering from broader economic concerns that are dragging the entire stock market down, such as inflation and recession fears. But investors are also discouraged by the lack of profits and untested business models of fintech companies.

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OK, I want to introduce you to one of our listeners in the United States. Her name is Gayle Kruger. She’s from Detroit, Michigan, has lived there her whole life, and works for Ford Motors in financial management. When her workplace closed due to the pandemic, Gayle decided to move to South Carolina to be closer to her parents, and it was just more appealing than Detroit.

Gayle Kruger
It was like, OK, it’s really cold outside, like all the restaurants are closed, like I was at home all alone hearing the unhappiness and sadness on the news and I couldn’t see my family. And until the offices are open, why would I spend another winter in Michigan sitting alone in my house?

Marc Filipino
Gayle’s office in Michigan reopened, but she decided to stay in South Carolina for good to be near her family. As for her colleagues, she said her company was so big. . .

Gayle Kruger
. . . we’d all be sitting on Webex calls anyway.

Marc Filipino
His decision is part of a larger shift that is altering the economic geography of the United States. To find out more about what that means, I’m joined by the FT’s US national editor and columnist Ed Luce, as well as our global business columnist Rana Foroohar. They write our Swamp Notes newsletter twice a week. Thanks for joining me, guys.

Rana Foroohar
Thank you for receiving us.

Edward Luce
Glad to be here.

Marc Filipino
So what are the big trends when it comes to where people are coming from and going to? And what do you think this change means?

Edward Luce
I mean, it’s a very important question. Obviously, most of these changes that we’ve seen in the last two years, kind of accelerated by the pandemic, have gone from high-tax states to low-tax states, and they’ve gone from blue to, for the most part, red states. So Florida, Texas, North Carolina, places like that have really benefited. And places like San Francisco and New York continue to lose taxpayers. I think it’s more than just a tax base issue. I think a lot of people were reacting to the fact that their kids were having a lot more remote learning in the blue states than in the red states. Parents pretty much want their kids to learn in person. I am now more and more convinced that this is a serious trend and will have political implications.

Rana Foroohar
Yes, I agree 100%. And I think actually it’s interesting that some Supreme Court decisions amplify that in the sense that we now have a court that’s basically trying to dismantle the administrative state at the federal level and give more power to the individual states . Well, all of a sudden, if you have a stream of money going from one state to another, and that state has a lot more power over how to use it, it becomes very interesting politically and economically.

Marc Filipino
You bring up a very good point because I was going to ask about the political implications of, you know, maybe you have more people from New York who are blue moving to Florida. But you talk about the Supreme Court and states’ rights. More liberal people who would be attracted to a place with a low tax base might not go there if their, if rights that are important to them, like access to abortion, you know, restrictions on guns , they are not there.

Rana Foroohar
Absolutely. And add the fact that, you know, it’s also a destabilized business. I mean, business is in the crosshairs of all of this because suddenly what can you do across borders? I mean, in a way, I’m starting to take more seriously something that, you know, some of our British colleagues have been talking about, which is are we going to see the United States in pieces, you know, of our lifetime or is secession a possibility? And I used to reject those kinds of thoughts. I don’t reject them as much anymore.

Edward Luce
I take them quite seriously. I mean, the fact that these conversations, you know, now serious, supercharged by various gun rights decisions and Roe vs. Wade, of course, and the possibility that all the other socially liberating decisions of the last generation are disputed, something Clarence Thomas said is now logically the following, it will crystallize the growing differences between these states.

Marc Filipino
I guess what strikes me is that we’ve seen, maybe not to this extent, but we’ve seen migrations before. Suffice to say that this is the one that radically changes the functioning of our countries and our states?

Rana Foroohar
Well, first off, the jury is still out. I mean, I watch the housing market very carefully. And I think this real estate boom that we saw after Covid is different from, say, the subprime boom and bust or previous boom-bust cycles. Broadband has now fundamentally changed with the pandemic and the ability to work from home. I mean, I will never go back there.

Edward Luce
And I think, I really hope, that in cities like New York and San Francisco, this tax exodus will encourage us to strongly revisit what makes cities attractive. And so cities will have to reinvent themselves. And I hope that in this sense the market works.

Marc Filipino
Ed Luce is our national US editor and columnist. Rana Foroohar is the FT’s global business columnist. You can subscribe to their Swamp Notes newsletter twice a week at FT.com/newsletters. We will also have this link in the show notes. Thanks for your time, guys.

Edward Luce
Thanks.

Rana Foroohar
Thanks.

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Marc Filipino
You can read more about all these stories on FT.com. This has been your daily press briefing on FT. Be sure to check back tomorrow for the latest trade news.

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