“Give me a one-handed economist”, an American president demanded many decades ago, expressing his frustration over how economists always say ‘on the one hand this and that, and on the other that and this’. Perhaps he didn’t understand that economic choices are about tradeoffs. Or perhaps all he wanted was a bold economist who could pick a choice direction, and sell a story to stick with it.
Pakistan’s economy is also not exempt from the trade offs. If the country gives too many incentives to Chinese investors, and lesser incentives to the Anglo-Saxon ones, then it’s clearly making a tradeoff between the two. If it’s keep household gas tariffs low then it’s either sending a higher bill to industrial or power consumers or otherwise failing to raise enough revenues to reinvest in gas exploration. Similarly, there are pros and cons to devaluation of the exchange rate, interests of labour and corporate interest, and so and so forth. In each of these economic choices or policy direction, there are some winners and some losers. And, as is in life, it may be true that people or the polity makes choices, it is equally true that choices made yesterday also make the polity. At the risk of painting a broad brush, neither the Pakistani state nor the society seems to understand the importance of trade off, and the fact that it isn’t just that man makes choices but choices also make man.
Pakistan, for example, has a cocktail of policies; a cocktail that only results in a bad hangover. Some industries are liberalized, some aren’t. Some are protected; others aren’t. In some there is price control; in other there isn’t. What lacks in the country’s economic governance - inter alia - is a clear coherent plan, developed after open and transparent round of debate and discussions; and an ensuring communication strategy aimed explaining the tradeoffs and how the state plans to redistribute from the winners (after the choice) to the losers. Or why there will not be any redistribution.
Surely it is not as if that a perfectly rationale economic choice based on empirical data will always be made; decision making isn’t only about costs and benefits; nor is it all black and white. There will always be shades of grey – the unknown; whereas political interests will always nibble if not gobble economic rationale, which is okay because as long as the matter is made transparent, voters will eventually have a better idea of the preferred winners various parties want to chose.
The country’s task for economic managers is to lay open the choice set as much as possible for public debate. And if they aren’t doing their job due to their political interests, then it is up to economic commentators and think tanks to make public that choice set. Again, at the risk of generalization, even when both the government and the non-government economic stakeholders are happy spelling out the ‘shoulds’ and ‘should-nots’ while discussing policy, they never spell out the consequences of each of those ‘shoulds’ and ‘should-nots’. Or, how those consequences would shape polity in the ensuing decades?
Short of a miracle, the government cannot be expected to change their ways overnight. The push has to come from the society. It is time for economic commentators, including this column, and think tanks to lay open the choice set.
Mere prescriptions won’t cut it anymore; that model has been tried and tested. The people need to be told what choices are available and what the possible consequences of each choice are. Perhaps that would result in an economic awakening.
Comments
Comments are closed.