Homo economicus wins again! The new government just announced its Economic Advisory Council (EAC) — a list of 18 male economists and academics who will together assist the prime minister and his cabinet on economic policy.
We have ex-World Bankers, an ex-State Bank governor, the dean of a business school, an independent economist, leaders of local think tanks, professors of economics and public policy from Pakistan, the US and the UK and yet not one of them is a woman! As divided a field as economics is, we needed representation from heterodox economists to balance out the usual neo-liberal slant of our panels and planners. This is crucially important if economic policy going forward is to be in sync with the prime minister’s poverty eradication agenda.
The obvious question is: does it matter? Surely such a distinguished group of academics and policymakers with global work and policy experience should be able to help the government steer the economy in all the right directions. What does gender have to do with economic policy and even if it does, this educated group of men should be able to figure it out without having to have a woman or two in the room?
To answer this question, we have to go back to economic theory, which at its most basic is about human choice. Modern economic theory rests on the assumption that to understand human choice making behaviour, we need to know and be able to predict the actions of rational economic man or homo economicus. Unfortunately, extensive research by heterodox economists has shown that homo economicus doesn’t always work, in fact it can cause quite a bit of trouble, for rational economic man does not think and act like rational economic woman. Given that half our population is female, this is a serious problem. Men who believe they can benevolently think on behalf of women are fooling themselves as both theory and empirics show.
Classical economics still run on the assumption that each household is a single economic unit. The consumer theory we teach at our universities presumes that purchases made by the head of the household satisfy all members of the household and therefore consumer behaviour is always perfectly rational. It does not account for differences between the male and female buying behaviour, even though development economists have long established that on average women spend most of their money on their children’s nutrition, education and healthcare, while men on average are much more inclined to spend on themselves. Surely, our all-male panel already knows this and doesn’t need a woman in the room to drive home these facts.
The problem is the neoliberal institutions some of our distinguished panelists have been and continue to be associated with, use these conclusions to suit their own needs. The title of the 2012 World Bank’s annual publication, The World Development Report, was ‘Gender Equality and Development’ in which it argued that gender equality was good for the economy. The World Bank coined the term ‘smart economics’ to propose that what was good for women was good for the economy. For instance, giving women more jobs would improve the Human Development Index since women spend proportionately more on education and healthcare than men do.
This seeming win-win though has several hidden implications. One of these is that it promotes the continued feminisation and informalisation of the economy. In Pakistan, the International Labour Organisation estimates that the informal economy constitutes nearly 80 per cent of the non-farm sector. An overwhelming percentage of poor women, living on the fringes of society, support the economy directly through their work as home-based workers and domestic workers, and indirectly through endless hours of unpaid care-work. The more the economy informalises, the more the labour force is feminised. As men lose their permanent jobs, women are hired to replace them, often on piece-rate contracts, without benefits and with much lower pay. Smart economics is smart because it means higher profits for global and local supply chains at the cost of substantially lower labour standards for an increasingly feminised workforce.
Some of the economic advisers in this new team have offered their own solution to rising economic inequality. Microfinance! The magic bullet that solves poverty and gender inequality all at the same time while plugging households at the bottom of the economic pyramid into the circuit of global finance. The premise of microfinance is that poverty is an individual not a structural problem. Microcredit, we were told by Muhammad Yunus, the founder of the Grameen Bank, can solve poverty and empower women so effectively that by 2030 poverty would have become a museum relic. Unfortunately, the opposite happened as microfinance led to over-indebtedness and mass suicides. Neoliberal economists and global institutions like the World Bank and local institutions like the State Bank of Pakistan continue to promote microfinance as a development tool even as rigorous academic studies establish that the impact of microcredit on poverty has been: zero!
So, who are the women that could have been asked to join the EAC? There are several to choose from, but let’s mention just two here. The first is Dr Saba Gul Khattak. She has been the executive director of the Sustainable Development Policy Institute, a member of the National Planning Commission and a policy adviser to the government and international development institutions. She is also a prolific researcher and writer. Dr Khattak’s work on the political economy of development and state theory offers an admirably holistic approach towards engendering development policy. She is known not just for her work on women and public policy, but also for her expertise on labour, governance and political reform.
Then there is Dr Yasmin Zaidi who runs the Centre for Gender and Policy Studies. Her extensive research and writing on gender responsive social and economic policy should win her a place on any advisory panel that claims to represent the interests of all Pakistanis, not just the male half. What distinguishes the rigorous research and writing of policy experts like Dr Khattak and Dr Zaidi is their deep understanding of the intersecting inequalities of gender, ethnicity, caste and class in Pakistan.
Please Mr Prime Minister, if you want an advisory council that represents the interests of the Pakistani people more broadly then consider revising the EAC.
Published in The Express Tribune, September 13th, 2018.