Economy anyone?

Our fragmented polity lacks any policy in this regard

The war on terror, explosions, deteriorating law and order situation, sectarian and religious violence, Asghar Khan case, Memo Commission, Abbotabad Commission, Senate elections, by-elections, political-tsunami and other political upheavals of the day, week or month take the limelight in the media as well as in the larger debate in the country. These are important topics but there are other equally important issues that need to be addressed simultaneously. Aur bhee dukh hain zamaney mein…

The reality, for most citizens, is that there is high unemployment, inflation has been stubbornly in double digits for the last many years (means 100 percent inflation every 6-7 years or so), growth has been very slow and in only a few sectors, incomes have been more or less stagnant or declining in real terms for large segments of salaried and fixed income groups, infrastructure services have been declining in standards and there are severe shortages of basic necessities that citizens have had to put up and are still putting up with.

We have gotten used to so much, from not having electricity every second hour to no gas to cook meals and/or get heaters even in the height of the winter, to no jobs and low incomes, but putting up with something does not mean it hurts no more. It does. People are suffering: poverty is rampant, horrendous nutritional outcomes are causing stunting in so many of our children, and education and health indicators are depressing. Why do these concerns not generate the level of debate needed?

Our economy is in a fair bit of trouble and definitely not performing at its potential. This is acknowledged by everyone, whether in opposition or in government. Ministry of Finance and State Bank’s pronouncements and reports have also said as much. But where is the response? Why does the government’s economic team not have an active debate going on, in government circles and in the larger society, on what needs to be done? It is not even clear who the government economic team consists of apart from the leading members in finance and planning ministries, but even then, why is there no focus on the economy?

It also seems there is no one ‘team’ or ‘outlook’ of the government on the economy. On the one hand, PPP government has started Benazir Income Support Programme (BISP), a large intervention to reach to the very poor, which seems to have support from the President and co-chair of the party, while on the other the Planning Commission has an ethos that is all about growth and all about markets. The new growth strategy has a view of government that is significantly at odds with what PPP has traditionally stood for and what most PPP stalwarts talk about, when they talk about the economy.

Of course, a certain degree of diversity in views is always good and welcome as it forces the various participants to challenge each other to, hopefully, deeper and better thinking, but this only happens if there is debate and a unitary structure that forces different people to engage with each other. But what appears to be the case is diversity with fragmentation. Different ministers and ministries work in silos and there is no dialogue across the government. Each person tries to do their own thing and works hard to protect their turf. But this can lead to one and one not even being two instead of being, potentially, eleven.

The case of the opposition is no different. There are no economic debates happening in any of the opposition parties too, almost none of them have people working on various areas/sectors and trying to get a debate going in the society on crucial matters. The recent energy debates, organised by PML(N) and PTI separately, were exceptions but the lack of depth in both of these is a good indication of the lack of thinking and debate that is prevalent.

Once a friend was talking to a political heavyweight, whose party was all set to form the government having just won the election, and asked him what the major economic initiatives were that the party was going to implement. His response was that they had not focused on it as yet because the important thing was to come into power first and that they will develop an economic vision once they form their government. Good policies cannot be hatched out of nothing in a day or a month. They require active debate that involves large segments of the society on a continuous basis and on lots of experimentation and learning from mistakes. Policies thought-out in drawing rooms are not worth taking beyond drawing rooms, but sadly these are the ones that get implemented in Pakistan.

But another funny response that I have gotten over the last few months when I have asked opposition parties about their policies has been: we are keeping them under wraps and will reveal them near or post elections. Opposition parties are afraid their ideas might be stolen by the government in power so they do not want to reveal them! One PTI leader actually said this in public. Would it not be great, for the people, if the current government did indeed start implementing policies that had the support of opposition parties as well and had been discussed in public fora? But this goes back and speaks to the fragmented nature of debates in the country.

This is the last budget of this government and elections are likely to happen within the year. The government is going to give an election budget and this is going to mean that there is even less likelihood that they will opt for saner policies. They will do what they have started to do: release development funds as a way of getting loyalties, and inflate the economy through excessive borrowing and/or printing of money. The opposition too will be in even less of a mood to talk to the government as they will be staking out their anti-government positions. So debate on economic policy is likely to suffer even more. And as the media prefers the sensational, instead of countering the trend, it will further strengthen it. Is there a way of challenging this dominant equilibrium?

The writer is an Associate Professor of Economics at LUMS (currently on leave) and a Senior Advisor at Open Society Foundation (OSF). He can be reached at [email protected]