There is general consensus that the IMF programme is disruptive but necessary. Also, now that we are in it we should see it through. We need to fix our fiscal and external accounts before we can go for sustained growth. Growth driven by the politically expedient overheated economy is not a viable option.
There is also consensus, somewhat grudging, that elitism is the bane of the system. It is what defies responsible and responsive governance. The badly needed root-and-branch reform of the policy apparatus will remain illusory if elite capture persists.
Then there is the strong consensus on quality and adequacy of Human Capital. Poor human capital has been the major propellant in our race to the bottom of competitiveness. In all likelihood it will get worse with the demographic 'bulge'.
Where does inequality come into this consensio?
The fear is inequality will get perpetuated if we pursue our economic growth, pluralism, and human development objectives the way we have traditionally done.
Let's take human capital. There is convincing evidence that early childhood experiences - birth weight, nutrition, parenting, the overall environment - play a key role in later outcomes. Typically, we have approached human development by throwing money at the problem; picking the low hanging fruit without addressing the issues of disparity.
What prospects of advancement or social mobility would that child of illiterate parents in a far flung village of Kharan district have when pitched against the Gulberg kid with private school education and professional parents?
Higher education can do with dollops of public funding but how would the Kharan kid access it? Chances are even primary education will pass him by. Our human resource development plans are stacked against the less privileged. The gap is widening and shall continue to do so absent a paradigm shift in our approach to development.
With luck, the IMF formula will give us macroeconomic stability. With greater luck, and over time, it will give us respectable GDP growth numbers. But there is little in the programme to address inequalities. Most likely, the better off will benefit leaving the poor to 'take the hindmost'.
Literature is quite unequivocal: the rising tide does not lift all boats. Economic growth pays differentiated dividends. If the pie gets bigger the powerful will get an even larger slice. The equality gap will widen.
It is universally accepted that inequality impedes economic development at the individual and aggregate levels. There is also sufficient evidence that rising inequality is accompanied by slower GDP growth. The enigmatic question is which way the causation goes: low growth exacerbates inequality, or inequality stymies growth?
Guess the answer depends on the extent and persistence of inequality. Where it is widespread and growing it will almost certainly become a dragon growth. Of course, measuring income and wealth inequality is 'fiendishly complicated', as the flurry of new research questioning the methodology and findings of Piketty, Saez, Zucman - the flag bearers of rising inequalities - demonstrates. Data-driven discoveries, however, are unnecessary when inequality stares you in the face.
As long as you have inequalities - in our case these are deeply entrenched and go back several millennia - you cannot put elitism to sword. Change can come only through the political process -but the elite have the wherewithal to distort and control it! The grip on social and political power that economic power gives you tilts economic outcomes in your favour.
Tax policy is an obvious example. Wealthy interests use their heft to secure concessions - agricultural income tax, capital gains on stocks and real estate, final tax regimes - that denude the tax base and force a shift to excessive indirect taxation.
The uncritical embrace of free market, the IMF prescription that by definition promotes inordinate market power, is now being vigorously challenged. The issues of inequality are rearing their head. Heather Boushey's recent book, Unbound: How Inequality Constricts our Economy, is representative of the genre questioning mainstream (neoclassical) economics.
Take Skidelsky who reflects on how Central Banks have been frantically printing money (since 2008) to create inflation without succeeding. The data tends to shatter the religiously-held premise that printing money creates inflation. He poses the question: does money supply drive prices or prices drive money supply?
Prof Graeber's concern that Economics is beginning "to look like a science designed to solve problems that no longer exist" resonates with the Academia.
Now "The typical course in microeconomics spends more time on market failures....than the magic of competitive markets ....The typical macroeconomic course focuses on how governments can solve the problems of unemployment, inflation, and instability... At research level, distributional considerations are making a comeback" note three eminent Professors of Economics (Naidu, Rodrik, and Zucman) in a recent article.
Quite clearly, contemporary economic thought is experiencing tectonic shifts, bringing to the fore the old issues of inequality and redistribution. How au courant are our Economists with what is reshaping their discipline?
It will be safe to surmise our economists, the ones we lend our ears to, got their PhD some forty years ago. Those were the days when Keynesianism was getting overtaken by monetarism; when the magic of free market was becoming the gospel and trickle-down theory the riposte to the travails of the poor.
Most of them also drew their inspiration from the conventional wisdom of the Bank and the Fund that even today reeks of Thatcherism, despite some bold new thinking in the Staff reports that 'fling the stone that puts the stars to flight'.
When the PM says his first priority is to redress inequalities it is music to some 200 million deprived ears. The problem is he has so many priorities that one is lost trying to figure out which priority takes precedence over the other priority. And we will not grimace at the implementation capacity he commands!
Isn't it ironic that the executive 'taunts' the judiciary to do for the weak what it is itself obligated to do under the Constitution?
We admit reducing inequalities is not an easy task. Equally, it is going to take the rest of the government's term, assuming the PM really means what he says, for results to start flickering.
But do it we must - if we want to set our politics right, have inclusive growth, and are serious about the state of Medina. Another taskforce?
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