Find a fool who saves

The powers of the Prime Minister, if the news report about announcement of 3 month salary bonus for all federal employees is correct, are absolutely fascinating. Most likely this expenditure was never budgeted-which on a separate note does make the entire annual budget enterprise ab initio look silly- and is perhaps going to add a bit to the fiscal deficit and national debt; albeit government spending does jack up the GDP growth, for no rhyme or reason, which is a plus. So with the proverbial one stroke of pen, a flood of economic ups and downs is unleashed.
Like I said absolutely fascinating! There have been a couple of reports about the opposition deeming this action pre-poll rigging, which just seems to be a matter of sour grapes. Admittedly those who get the bonus should be grateful, but seriously no one stopped the opposition from giving 5 month bonuses in the province where they sit in the driving seat; they just did not think of it! The only downside of this decree is that some taxpayers might feel disgruntled about the government wasting their hard earned money appropriated in the name of taxes, but considering the total numbers of filers in the country, their collective impact on Election Day is next to nothing. So why worry!
Essentially, beyond necessities, which can be broadly summed up to include shelter, nutrition and education, all public works should only be undertaken if the public is willing to pay for it through a toll or a subscription without any subsidy. However, I concede that such fiscal discipline is next to impossible in a democratic setup where fantastic electoral promises have to be fulfilled. Look at now; we are not fully into the election season yet and promises are already being made; more jobs for everyone a chicken in every pot!
Albeit, all this spending has a cost, in our case at least; actually in every case but let's stick to Pakistan for the moment. The one thing that democracy has definitely given the nation is lots and lots of debt. From total debt and liabilities of Rs 6,691 billion in 2008, we currently, at the end of March 2018, stand at Rs 28,297 billion of total debt and liabilities; a more than 4 times increase in less than 10 years. Look at it another way: it took us 60 years to borrow Rs 6,691 billion, and in 10 years of democracy we have borrowed Rs 21,606 billion!
A mean achievement by any standard! The problem with these "Do as you want" values established by those in power is that they are extremely tempting for the entire populace and pretty soon everyone adopts this devil may care attitude. If the wider culture is about spending recklessly than it is extremely difficult to hold on to the words of wisdom from the times of Grandma and beyond, spend within means and save a lot for the future.
And that we as a nation have developed a penchant for spending is simply evidenced by the net trade deficit for the period July to April 2018 of US$ 33,421 billion. This is comparable with shopping madly in the Dubai Mall on a credit card. And the way things stand today, with elections around the corner, we as a nation apparently are not going to stop spending anytime soon; IMF or no IMF.
This brings to mind something that landed in my inbox a few months ago; an interesting view of the world economy. According to the article, Japanese save a lot, they do not spend much, they export way more than they import but their economy is deemed to be weak and in trouble. The Americans on the other hand don't save, spend like crazy on imports and their economy is considered the strongest in the world. To quote from the extracts I received, unfortunately could not trace the article and the author, "The secret lies in the American spending, that they hardly save. In fact they use credit cards to spend their future income...The World is dependent on US consumption for growth...But as the US needs money to finance its consumption, the world provides the money...hence what is the lesson? That is, a nation cannot grow unless the people spend, not save. No just spend, but borrow and spend".
There is a fine print attached to this advice though; in order to borrow and spend, you first have to find a fool who saves and lends to you; like the Americans found the Japanese and then the Chinese. Except, the article in unclear on what to do if the fool suddenly wants to spend his savings and wants his money back; only thing I could come up with was to find another fool.
In view of the above I, as the voter, have decided. Since I cannot, anymore, do without spending on everything the world has to offer- the fast foods, the cars, the flashy mobiles, the new planes to travel in, imported shoes and clothes and whatever else is there in Dubai Mall. And since I need to borrow to pay for all this; this election I will only vote for the party which comes up with a credible plan to find a fool who saves!
(The writer is a chartered accountant based in Islamabad. Email: [email protected])