About a decade or more ago, during a square table discussion, a comment was made that the economic success of the dictatorial government could only be attributed to luck; the almost immediate retort was short and simple - that being the case is it not stupid to get rid of the lucky.
That discussion and I distinctly remember that the table was square, did bring to fore the logical construct, that if a nation got lucky enough to select or elect a leader blessed with economic luck, should it then rock the boat?
And it is not as if we have not relied on luck, as far as the economy goes. And probably in general too!
It is wondrous that a country which has struggled with balancing the annual budget for as far as most of us can remember, is part of the elite nuclear club; it's not as if you can get nuclear doing experiments in your backyard, and whilst not my subject, pretty sure it cost a pretty penny.
Take the tenure of the previous government and read the economic analysis from that period, each and every one includes cheap oil as a key success factor - and we had nothing to do with cheap oil - was it not sheer luck!
And let's call a spade a spade, our GDP growth has much to do with population growth, and more people consuming more, and because of the government spending more, rather than by increasing productivity; and productivity is the only thing which absolutely in entirety is dependent on good policy. Don't get me wrong, I am not saying that we should focus on making more babies; what I am saying is that making babies got us where we are, coupled with a lot of luck, or fate if you may. So it was probably a good thing that we never listened to the family planning guys!
And as far as government spending is concerned, we never ever focused on earning what we spent, by way of balancing the budget, we simply borrowed money, or more like printed money. And since we can print more money, why not pay all our rupee debts by printing even more money and stop worrying? The economists who live and test their theories in a fictional world, whereas I have repeatedly pointed out all else can be held constant and proof of concept is a waste of time, will tell you that this will result in hyperinflation - and will probably give the example of Zimbabwe. Interesting fact: The central bank of Zimbabwe actually issued $100,000,000,000,000 notes during the last days of hyperinflation in 2009, and they barely paid for a loaf of bread!
But we got lucky again! There is a group of economists, from another fictional world, who have come up with an economic theory which goes by the moniker, MMT. They argue that inflation can only occur if there is a lot of money out there buying stuff which is scarce; since we are in a recession and there is a lot more to do and purchase, inflation is hardly a risk - especially when you throw into the equation the fact that we are inherently lucky.
So what if the government paid of all its debt to banks by printing money, what would then be the consequences? This is an interesting "What if" scenario which cannot be discounted by simply calling it absurd; but needs a lot more ratiocination, so will revert to this topic, and MMT, in a separate write-up.
As far as luck goes, if we all agree that billions of dollars of illegal money was extracted from our economy and sent abroad, then you can only agree with the theory of the lucky economy. How else could we have survived?!
If you look back at our economic history, every time we were in an economic crisis, and we have the capacity to get ourselves into economic problems again and again deliberately, the world went into some crisis, which was good for us economically, in the form of aid or trade. Not that one should subscribe to the policy of making money on others' miseries; and we did pay a very heavy price at times. But economically we have survived against all odds, and doomsday economic analysis, on the back of sheer luck.
Take today, there is a view that our exports have grown because of economic slowdown in China as a consequence of the coronavirus. And oil prices have definitely collapsed because of the virus, which is good for us. But here is the problem, the full economic global implications of the coronavirus tragedy are yet to manifest themselves; and luck is a fickle friend, ours could run out!
Like the seat belt argument generally invoked during a luck or policy debate. Only if you are unlucky, do you get into an accident, but if you do, it's best that you were using the seat belt. On the other hand, there are times when even seat belts fail to save the unlucky ones. But, nonetheless, history is no basis; if you have been lucky till now does not mean lucky forever.
However, if you do go with the lucky forever view, then there is hardly any reason to worry about policy or get into any economic analysis, just get a lucky guy on the top, which too is luck, and sit back and wait for luck to work.
In my case, I study economics because of the love for the subject, and I write for the fun of it, and will continue to do so. But over time, essentially I have become a believer of the lucky economy!
(The writer is a chartered accountant based in Islamabad. Email: [email protected]. The views expressed in this article are personal. The views are not necessarily those of the newspaper)
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