The right model

With successive govts have been heard vowing to emulate China’s economic “miracle”

In the 1990s, successive governments in Pakistan used to vow to turn Pakistan into an economic tiger like the ones that had sprouted all over East Asia during the 1980s. Since around 2000 and lately, successive governments in Pakistan have been heard vowing to emulate China’s economic “miracle”. And occasionally we also express our determination to outpace India on the economic front.

That we could neither become an economic tiger nor emulate the economic successes achieved by China and India reflected the bright daylight that has continued to exist between our desire for the moon and our capacity to reach it. More than the capacity it was our policy of handing over the commanding heights of our economy to the private sector which as a class has continued to evade taxes, pilfer utilities and deny legitimate contractual rights to its employees.

The Asian Tigers could not have become the export powerhouses they are without extensive government interventions during the two decades since the 1980s. The Chinese “miracle” wouldn’t be possible without the nation as a whole sacrificing to its bones — from cradle to grave — to create assets worth trillions of dollars. All this took place behind the so-called bamboo curtain, hidden from global glare, over three long decades since 1947.

We knew India went the import substitution way from day one using mixed economy with a predominant public sector and vast amounts of savings. Still, we continued on the dole path making fun of India’s Ambassador car (as we raced around in gleaming Japanese cars exported to us in lieu of war reparations) and what is called the Indian rate of growth (2-3%). In a nutshell, all three economies before opening up to their respective private sectors were being underpinned by extensive public sectors.

Governments in poor countries, especially those which are energy and capital deficient with very poor access to technology need to be business-minded to be able to rationalise the dependence and reduce the burden on the import bill by being experts of the market as are the international oil sharks who rake in millions on price fluctuations of as little as a minimal most fraction of a cent.

Donor-driven poor countries need business-savvy governments even more because if not well versed in what is happening in international trade, then you’ll likely end up returning almost the entire aid back to the donor country in import bills.

Also, it is only a business-minded government, which can make a distinction between an enterprise that yields profits of immense social value and those that yield purely financial profits.

The problem to understand in short is that not everything that is financially profitable is of social value and not everything of social value is profitable. Reality TV, fashion, sports and gambling casinos are all of questionable social value, but each is quite profitable and exists in the private sector. On the other hand, few would argue that the armed forces, coast guard, police, fire department, libraries, parks, public schools and government hospitals are of no social value yet couldn’t exist if they were required to be financially profitable. To reiterate, the key issue is this: not everything profitable is of social value and not everything of social value is profitable. The proper role of government is the latter.

A government has no business doing business. Sounds logical. But a government devoid of the necessary instincts of a businessman would find it almost impossible to frame socio-economic policies ensuring progress with equity. Such governments either end up widening the gap between the rich and poor, or failing them both miserably.

A government without business know-how would hardly be able to maximise social benefits of a public-sector entity at a minimal monetary cost. Also, their burden on the budget could be significantly eased if the government were to collect taxes from all citizens who earn taxable incomes. Only a business-minded government would know the importance of enforcing tax laws strictly across the board without exception and exemption.

Published in The Express Tribune, October 19^th, 2019.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.