Economic policies: Think short term, stay happy
Weak governments cannot make strong policies. We saw an example of this when Prime Minister Yousaf Raza Gilani gave in to political pressure and reversed the decision to increase petroleum prices - despite the fact that oil prices are soaring in the international market.
The move received praise from both, political and business leaders. The Muttahida Qaumi Movement (MQM) rejoined the government while the Pakistan Muslim League-Nawaz (PML-N) also supported the decision – all without any consideration for the long term economic implications of the move.
During the episode leaders made a volley of statements that I have done my best to keep track of:
Prime Minister Gilani, speaking at the National Assembly session, said:
“On the demand of the people and the political leadership of the country, I announce the restoration of POL prices as of December 31, 2010. The decision is taken with the consensus of all the parliamentary parties. It would have been impossible if there was no consensus.”
Great! At least the democratic system seems to working in Pakistan now!
Qamar Mansoor, MQM’s spokesperson in London said:
“MQM would return to the government if it reversed the gasoline hike.”
Really? Do you expect us to believe the MQM based its decision to be part of the government on an issue like petrol prices alone?
Chaudhry Nisar Ali Khan of PML-N said:
“It was a demand of the people of Pakistan and today the Prime Minister has bowed in submission of the people which is a good tradition.”
All of a sudden the government’s most fierce opponent applauding its move. I would too if my enemy were to shoot himself in the foot.
US Secretary of State Hillary Clinton said:
“Pakistan must stick with its economic reforms and not reverse progress. We have made it clear, as I did in a meeting with their ambassador, that we think it is a mistake to reverse the progress that was being made to provide a stronger economic base for Pakistan, and we will continue to express that opinion."
Shocking? Not really. The United States is giving us massive military and economic aid. They have every right to set the course of our future.
It had to happen
The coalition government, both in the center and in the provinces, has been in trouble since the beginning. It has been a marriage of convenience that has faced numerous threats of an early divorce right from the first day.
However, Maulana Fazlur Rehman’s departure from the treasury benches, followed by two major setbacks, the assassination of Governor Salmaan Taseer and MQM’s decision to leave the coalition, all forced an action that various economic analysts suggest will make life very difficult for our economic managers.
Like politicians like businessmen
I was most shocked by the statements made by our business leaders. The Lahore Chamber of Commerce and Industry (LCCI) termed the move to reverse the price hike as a “marvelous decision” while the vice president of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) said:
“Any increase in oil prices has multiple impact on prices of other goods. Now the decision will help stabilise prices of other goods as well.”
How unfortunate it is that our political and business leaders have such a short term view.
I wonder when they formulate the 2020 or 2030 visions, if they actually understand what it means to have a vision! From what I can see, our policymakers seem content with throwing our economy into the abyss in the long term, just to make some people happy in the short term.