Say no to change!
A common question heard across Pakistan is why are we still in the same place economically as we were 20 years ago?
Well, it’s a very valid question that not only raises a great point but also shows the overall frustration people feel about the state of our economy, where everything somehow takes a full turn and ends up being worse than before.
A simple example of this would be the interest rates. Back in 1994, interest was hovering close to 18 percent. Now, 16 years later, it is close to the same level. This is not because Pakistan is stuck in a time loop (although that would make a lot of sense in describing why keep getting back to the same place again and again). It is simply because there is a phenomenon of political intervention and messing with the economic policies of the country.
A lack of consistency
The first thing any new government does after coming into power is to halt all the economic policies pursued by the previous government and start out with a fresh slate of their own economic policies. What this does is it takes away continuity, the single most important factor in implementing economic programs.
Take for example, a government that comes into power and spends two years coming up with a half decent five-year plan for development. By the time they actually start implementing it, they get driven out of power. In simple terms, the two years they spent working on a five-year plan has gone to waste, as the next person in charge is going to start out new. Simple common sense tells us that this is just wrong and stupid. And yet, this is exactly what has been happening for the last 20 odd years in Pakistan.
Abusing public funds
Rather than getting rid of loss-making public companies, every government that does come into power tends to carry on spending public money on such companies in the name of safeguarding jobs. I do accept that jobs are crucial and should be protected, but at what cost? The government gives out subsidies worth billions to state run organizations from which it can’t even collect taxes.
How is that sensible?
Instead of making privatization a political issue, if our successive governments had chosen to let economic policies continue, we wouldn’t be paying for public money black holes such as Pakistan Steel, PIA and Pakistan Railways. As Pakistanis, wouldn’t we much rather have successful enterprises providing us with excellent service and products, rather than average firms funded by public money providing barely-average service? Simply put, had our governments just followed consistent economic policies at least on privatization we would have ended up with professionally run half decent organizations that not only paid taxes (which would improve governments financial situation) but also provided a higher level of services simply due to competition in the market place.
Professional setups are a must
If the government did choose not to privatize large public organizations that are making losses for years now, they could have at least made the effort of running them through professional setups rather than political appointments. India and China have large, multinational, state-owned enterprises that have professional management set ups. This has not only helped them take a lead on the international scene, it has also helped them achieve profitability that has gone towards contributing government funding used for public programs. This is not rocket science, this is simple economics, something economists like Dr Ishrat Hussein and Dr Kaiser Bengali have been saying for years now. Yet, none of it has been taken seriously enough to be implemented.
The reasons we keep ending up with a messy economy are more or less what I have pointed out. There are other reasons that stem out of these core reasons but nothing concrete has actually been done about them. And even though now we are on an IMF program where we had to actually agree to over 37 conditions for a few billion, we are going to end up in the same mess as soon as the program is over if the economic management is not improved.
This is the time when political parties need to sit down and agree that at least they will not mess around with economic policies that work. We need economic discipline to get out of the terrible situation we keep getting into, and that is not possible unless politics agrees to stay out of economics as a matter of principle.