IN 1964, Singapore's founder, Lee Kuan Yew, said he hoped that his country would one day be like Sri Lanka. Mr Lee's little island has since far outstripped the Indian Ocean one in wealth, but the qualities he admired are still there. Sri Lanka has developed-country levels of literacy and life expectancy, and little abject poverty. Its dedication to equality has a long history. Sri Lanka's first general election under universal suffrage took place in 1931, just two years after the first British one. After independence, the government provided free education and health care to boys and girls alike, and subsidised consumption by the poor.
The festering civil war aside, Sri Lankans grumble that all is not well with South Asia's model. Parents have to pay teachers, who are supposed to educate their children for nothing. The health system lacks money and good management. Unemployment has dropped, from over 15% in 1990 to around 8.5% now, but remains inordinately high for educated youth. Discontent among such people sparked a fierce insurgency in the south during the late 1980s in which thousands died. Economic growth this year is expected to be its lowest in more than a decade.
Sri Lanka has recently done many things right. It has, for example, liberalised trade and privatised telecoms and other state-owned activities. That is part of the reason why unemployment overall has dropped and growth has averaged a respectable 5% over the past 20 years.
But the country is also doing things wrong. A pair of recent World Bank reports notes a number of deficiencies that could drain the sources of Mr Lee's esteem. There are the usual problems: the state spends too much money on itself and thwarts the private sector in various ways. Its bureaucracy is among the most pervasive in Asia; partly as a result, the budget deficit is expected to be at least 8% of GDP this year. The government compounds this, notes the Bank, first by paying its lower-level employees wages well over the odds, which discourages people from seeking work in the private sector, and second by making it almost impossible to sack people, which makes employers reluctant to offer jobs.
The vaunted education system is rigidly controlled by government. Its teaching methods and curriculums are outdated, says the World Bank. Just 2% of student-age youths go on to university. In health, by contrast, the private sector has jumped in. But private doctors and hospitals are poorly regulated; they have found ways to cut costs to the detriment of patients and to shunt expensive cases on to the public-sector system. Sri Lanka has a history of providing good social services cheaply, but now it may be spending too little.
Some of its problems arise from success. Good health and a relatively low birth rate have made Sri Lanka the country with the third-oldest population in Asia after Japan and Singapore. That will put more strain on a health system that is unprepared for it. But at least it will help solve the problem of youth unemployment.