In an article published in this newspaper titled “The Shifting Battleground” (May 10, 2015), Dr Asad Zaman, the vice-chancellor of the Pakistan Institute of Development Economics, describes the malaise afflicting international economics. Even if one accepts his prognosis, the question that arises pertains to the finding of practicable solutions. It is not entirely evident what conclusions he wishes to draw from the trends he mentions. If there is stark inequality, what should be done about it? And who would do it? Would that bring about better results? What specifically should those solutions be? If Bill Gates earns billions, should this be curbed? If so, in what manner is that to be done? And who is to do that? Should it be the state? What effect and ramifications would that have?
It is clear that there is a lot wrong in the world. The question is what are the alternatives? Who are the persons who would bring about such alternatives? Would the outcome be at all better? There are so many imponderables involved that drastic upheavals might result in worse situations than before.
Dr Zaman rightly maintains that speculative movements of money across the globe cause turmoil (“Speculative financial attacks”, The Express Tribune, June 7, 2015). But is it possible to curb them? The analogy of a huge tidal wave at sea is relevant. Though one cannot stop it, it seems preferable to take steps towards adaptation and avoidance. If big banks make large earnings and create money in the process, that also has a positive side. The relevant question concerns the uses to which such created money is put. If it results in sensible investments, it is desirable. If it leads to bad loans, then naturally it is not a good thing. Condemnation is easy but finding practical solutions is quite difficult.
Dr Zaman advocates the Icelandic solution to economic policymaking. In this, a few experts alone chalk out policy. This may work in Iceland which is a small homogeneous country. But in a large, troubled country such as Pakistan, beset as it is by internal strife and enormous difficulties, such a cabal of economists would not work. In complex situations, impersonal economic forces need to have sway. State policy should be moulded to adapt to them. In other words, there should be incentives rather than diktat. The overall considerations must, of necessity, be political. Major national issues must not be left to economists alone. They usually are a fractious lot, prone to bickering. In this respect, the efforts of the present government in macroeconomic management have, on the whole, been sensible. We need to bear in mind the difficulties faced by it — the ongoing war, the prolonged political protests, tremendous international tensions, unmitigated terror, uncertainty and a host of other adverse factors.
Overriding all that has been said so cursorily above, there is the all-important social and cultural element in the economic progress of nations. Salutary cultural values are vital for economic success. Countries of the Confucian heritage — China, Japan and Korea — have the inherent values and the mental outlook that leads to economic growth. In sharp contrast, if the bitter truth be told, the culture in this part of the world leaves a lot to be desired in societal terms and the mental outlook of the populace. In our case this is further compounded by an insistence on creeds that require a modern interpretation and evaluation. Complex modern economic phenomena are not to be dealt with in terms of a medieval straitjacket.
Published in The Express Tribune, June 29th, 2015.
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