Ramshackle policies and compromises
 By  DR ZAFAR ALTAF

Why is Pakistan under siege? If this siege is to be done away with what is likely to be the outcome for the population.

Has the political system any role in mystifying economic systems? Should the neo liberalism rule the waves of this country? What vanguard and what rearguard policies should be followed? The global reach is now towards neo liberalism or the Washington Consensus.

This is the dominant ideas these days and it was due to his desire to find a viable alternative and the art of the possible to remove the stagnation in any economy developed or less developed.

Its form needs to be examined for there is a considerable amount of confusion in the institutions of the country. Tongue wagers have increased this confusion.

Neo-colonialism is committed to orthodox macroeconomic stabilisation, especially through fiscal balance, achieved more by containment of public spending than by increases in tax take. Federal Bureau of Revenue [FBR] has been reorganised to do just the opposite.

The FBR has to escalate its take and meet an ever growing revenue requirement of the government. To integrate with world trade even if there is no iota of comparative advantage. The case with India is different. Indian farmers enjoy subsidies on water, energy and chemical Fertilizers. WTO was also a part of the same globalisation theme.

Whether that was beneficial or not to the weaker economy was different matter. The integration that we have been able to achieve in what we consider ourselves to have some degree of comparative advantage is to do with agriculture and agro-based industry. In horticultural we have gone from 0.03 percent to 0.09 percent of world trade.

If that is good performance I will have to shoot myself in the foot. Words and verbal garbage abound in making statement that our mango has no equivalent and that our citrus [Kinnoo] is world class. Well the go and sell.

Our textiles have been a major export earner but that is also with massive help by the government[s]. Every new government succumbs to their demands. Their demands are notorious and are dysfunctional in nature. The WTO's established rules are not even available in the country. 

There is no need for we like to be told by international agencies what is good for us. Privatisation is sound principle of neo-liberal polices. Pakistan has taken upon itself to privatise without consideration as to consequences.

In any case the order is not to encourage concentration of industry and economy in a few hands but to have dispersal of entrepreneurs. It requires the government to remove itself from production and commercial activity but not as dogma and a doctrinaire.

The public domain of economics in Pakistan is studded with what should never be done. Recruitment is to be based on merit. Merit determination is not by a set of procedures but by the integrity of the selection process. Scouting is very much a part of that selection process.

The only problem that we as Pakistanis have that we choose to pick our near and dear ones for the job. When labour becomes surplus there is need for social safety nets. The labour is not to blame for their recruitment.

The inequalities remain as the social safety nets are not compensatory enough. In any case the unemployable skills remain with the poverty levels that we have.

The society at large has a number of other planks that give rise to inequality and hence poverty. The imagination for effective compensatory policies is just not there; morons roaming around in the corridors of power.

There are normally two themes that are always in contention-the theme of adherence to market-based arrangements [though what these are and how these are to be implemented are not known to the majority of the policy makers.

The second is through a redistributive correction of tax and transfer as the social activities of the government in power. Tax regime is not only with the FBR but with such actions as will make life for the poor more difficult. Thus each traffic warden has a target for fining the cars on frivolous grounds and he must deliver this to the institution every day.

The other example that comes to mind is the enhancement of bus adda which has gone up by three hundred percent from Rs 35000 per month to Rs one lac per month. Other poor taxations are available cash and in kind.

There is financial repression that is going on for the pet ego projects of the powerful politicians. The language of market efficiency joins the language of social conscience. Are we then not expecting too much from our politicians.

Three tenets form a part of the operative version of the neo-liberalism policies. For savings being low the government has to rely on Foreign Direct Investment. Given our war on terror we have failed to attract investment.

Given Pakistan's low saving rate we now have to garnish our saving rate by an interest rate that may well be astronomical; a result of low interest rate in the past. Financial repression can be of many kinds. And in the case of Pakistan these repressive policies will keep on emerging as hydras.

In one case the government managed to stifle a rural economy that was generating 43 billion rupees per day and that too because there is no respect for private property. The textile city in which the poor farmers land will be taken at token price hit the headline recently.

The second tenet is renunciation by the state of any affirmative strategy of national development. We still hold onto the Planning commission of the 1960s.

And I can go on. No agriculture market can be developed by the private sector and the closed shop of the middleman still exists. Only an arhti's son can be an arhti; primogeniture at its best.

The third tenet has to do with monetary stabilisation with very high interest rate and anchored on exchange rate system.

The issue really is that can we disable the government from its egoistic spending? Can the policies by themselves create a sense of sensitive action? Or are they isolated within their own country? I have not spoken off intangibles and the outcomes when the intangibles of honesty and truth are not fulfilled.

Think a while at the many times that you and I have taken the cheat route to save our skins. Courage and conviction are lacking.

Shall the poor only inherit the kingdom of heaven while the liars and the rich inherit all the comforts? There is something wrong in us and we have not x-rayed ourselves to determine what we have done wrong for the last six decades.

March, 2014

Source:  Business Recorder