Policies Dictate Outcomes

Mir Adnan Aziz
The Frontier Post
November 2,2008

Author and economist John Kenneth Galbraith writes in his book 'A Journey through Economic Time': "Ignorance and stupidity in the great affairs of state is not something that is commonly cited. A certain political and historical correctness requires us to assign some measure of purpose of rationality even where, all too obviously, it does not exist."

The success and effectiveness of a nation depends on the leaders who make public policy and thus critically determine the outcome. Like all other decisions, economic policies chosen pave the way for a nation's prosperity or its bondage otherwise. Unfortunately our 'leaders' (both military and political), past and present, have consistently made choices that have had and are having a disastrous effect on the lives of an impoverished nation.

This also lends support to the claim that the people deserve the government they get. Until the people change, there is no possibility of a change of leadership, and the consequent change in the woeful circumstances shadowing us like demons since the birth of Pakistan.

President Zardari has asked, presumably in 'innocent' naivety, the international community to cough up no less than $100 billion in grant to stave off the dual threats which undermine the very survival of our country. 'I need your help, if we fall, if we can't do it, you can't do it,' he repeatedly said in an interview with Wall Street Journal's columnist Brent Stephens. This was the same interview in which he dug up the 'no threat from India' and 'those fighting in Kashmir are terrorists' pearls of wisdom from his repertoire.

Our state has remained in state for these last sixty one years. It is ironical that we are, yet again, looking for hand-outs to ensure our survival. Former chief economist at the World Bank and 2001 winner of the Nobel Prize for Economics, Joseph Stiglitz illustrates the politics of the international economic system in his explosive book, 'Globalization and its discontents'. He is unsparing of the IMF and the World Bank, our perpetual respirators, who preach fair trade yet impose crippling economic policies on the third world and developing nations.

He goes on to say that in practice the developed world has, with globalization, pushed poor countries to eliminate trade barriers but kept their own barriers, preventing them from exporting their products hence depriving them of desperately needed export income. With globalization having so many discontents that discriminates economically against the Third World, the IMF and the World Bank have deepened the poverty crisis among them. How can these institutions established after the Second World War to deal specifically with post war reconstruction and global economic stability turn round to champion economic disproportions which the global market supremacy of today implies.

In these recent days much has been written and said about the imminent economic meltdown we face. After Standard & Poor's cut the country's sovereign long-term foreign-currency rating to CCC+ with a negative outlook, we have reportedly become the world's riskiest borrower. Our forex reserves have dropped about 80 percent over the last 12 months. The rupee has weakened by more than 27 percent against the dollar, the current-account deficit has reached a record $15 billion in the year ending June 30 and inflation has risen to a whopping high of over 30 percent.

By defaulting on our debts we risk further erosion, if there is any left, of local and foreign investor confidence in our comatose government and the battered economy. It will escalate into an economic meltdown with out-of-control price hikes, fewer jobs, more power shortages and a general breakdown in law and order throughout the country (all this already being faced by us). "Bankruptcy, should it happen, could unleash a massive tidal wave of social unrest," the U.S.-based intelligence risk assessment agency Stratfor said in a recent report.

In times when we have taken upon ourselves to fight a war which we deem 'our own', our economic woes pose even a greater threat. Ideological motivation with economic deprivation can be a lethal mix. A huge population perpetually teetering on the poverty line has been sent plummeting below the same. Before the crisis, an estimated 56 million of us, around a third of the population, were living below the poverty line. Millions more are likely to have joined them now.

The state can be justifiably blamed for mismanagement and lack of transparency in the utilization of grants and aid from donor countries and loans from multilateral financial institutions. Over the years these loans and grants, supposed to be tranquilizers for a depressed economy, has transformed us into irredeemable addicts of the same. The natural outcome has been a mismanaged economy based on opportunistic handouts. We have been victims of blatant misplacement of priorities in our development schemes, absolute lack of accountability, corruption of the entire public sector, political instability and paucity of committed leadership.

Our present economic predicament, partially part of a global down-slide, has its roots in the economic policies followed over the years. Our socio political and economic environment has never been conducive for sustainable development. To prove otherwise we need to radically depart from our culture of corruption and mismanagement. We have to commit ourselves to sincere, dedicated and honest governance and take responsibility for our own affairs without passing or shifting the blame.

We have erred criminally in not utilizing our natural and human resource. Our corrupt practices and Utopian ideas have helped mortgage a whole nation. The previous regime fed us with visions of grandeur and economic prosperity. What they actually did was build a mirage and like people floundering in an endless desert many of us, some still do, thought it to be the promised oasis. What could be more insane than gauging our economy, as was done by the swimmer and tennis player resident of the Army House and his self exiled economic czar, to the number of cell-phones in use or the plots sold in Gwadar.

We have not far to look for those guilty of our woes. Policies dictate outcomes. The present economic melt-down as well as the bombs and bullets we face are not crises engineered by someone beyond; but by the contradictions created by us - from within.