The Myth of Growth:Pakistan's Lost Opportunity

HP:

``There is definitely less hunger and less visible poverty in every third world country. ``

in india too??

i thought, according to you, mumbai hasn`t change in 20 years ;)

#16 by masadi

“you ``fitting into the niche`` spells total disaster, and I am sure you know that, but since you don`t see any alternative you default to the status quo.”

That perhaps is correct. The reason I don’t see an alternative is because there is none now. Recall that there was an alternative presented after the Second World War and many political leaders and economists attempted to follow that model. This is not the time and place to go into the details of the failure but some reasons of the failure are pretty much obvious.

If you know the history of the Sino-Soviet relations, you would perhaps understand that the split was based on nationalism. For an outsider, that split destroyed the socialist alternative but if we look at it from the Chinese pov (they initiated the split) you would learn that they perhaps had realized, before anyone else, that the system presented was not workable. We see the Chinese shift towards the capitalism right after the split. Despite the ideological differences, they gravitated to the capitalist system and now are reaping the benefits of correctly analyzing the futility of the alternate. The question is: could they have achieved what they have now by staying within the socialist system? The socialist unity might have held Shaitan-e Bozorg in check for just a few more years but the price for China or even Russia would have increased manifold.

Ideally there is an alternate but practically there is none, not at least now. I did use chanting to point you to the practical side of the issue. When you oppose a system, the first requirement is that you present an alternative. Since the only alternative was tried and tested and it failed due to various reasons, there is not much left in arguing for it. You cannot bring that same system back as an alternative because at that point you are just promoting a failed system. So your ire becomes chanting.

I am not suggesting that you tone down your message. instead, I am suggesting that in your own thought process, you will have to account for the failure of the alternative you come up with.

We see that many countries in East Asia and even in South America have benefited by linking their economies with the current system. Capitalism has a problem. It offers nothing to the poor but in many countries now the trend is to mix capitalism with the socialist ideals of basic benefits for the common folks. South America is moving towards that end and in fact, I see that even the US is at the verge of becoming convinced that some of the socialist programs help the poor and they are being adopted by the free market conservatives too.

On side not:- Pakistan`s economy is booming. Yes, booming...........

Haan, booming MY FOOT...............

zeemax sahib jii

Your analytical points are well taken. My main points are if economy is booming, then why an average Pakistani is unable to see it or why an average Pakistani is unable to be beneficial by a so called economy.

Question is simple:- Lets take a simple and straight forward example.........

Suppose , My annual income is $ 300,000 and PLUS. I am depositing all my money in a bank for saving purposes and for having a stable , sound personal and individual economy and I am boasting infront of all my friends I am rich, look at my bank balance I am rich. I am Millionare...............WoW. Yes, they will be envious of my strong economy.


Now, look at my home . I am still living in a third rated subsidized very very small studio apartment in a low lying area with a big family. All my family members are working day and night to earn more and more, nobody is having a decent meal, decent clothes and decent living.

What is the use of my bank balance?

Same is with Pakistan. Pakistani Govt. is not giving even the basic right of decent living to it`s average Pakistanim citizens. Whats the use of this booming economy? Poors are becoming poorer with out their basic needs of food, clothes and shelter. More than 85% Pakistanis are living below the poverty level. Majority are beggars on the streets. And here we are discussing booming economy!!!

Who we are fooling here? I strongly believe Pakistan is a failed state , unable to give basic security and respect to it`s citizens. Booming economy , yes, booming for the President of Pakistan, booming for MNAs , MPAs, Islamabad. That is where booming economy going to...........tsk,tsk.tsk

Re: # 13
Well, at least he`s not making unintelligible posts about ``the murders of prophets`` anymore.

http://chowk.com/show_article.cgi?aid=00001240&channel=civic%20center

HP <<< There will be major hiccups with the new economy but third world countries acting alone or collectively have very little clout in the market and they will have to play by the rules set by the rich countries. It seems to be a position of helplessness but many third world countries have built up their economies from the helpless situations in the past. This world has moved beyond chanting. >>>

What I wrote was not ``chanting``. Why should the vast majority of humankind on earth fight over the crumbs within a system set by the rich countries, which consolidate the surplus for themselves (and not even for their populations as a whole)? You are accepting the default and status quo. If you look at the least developed countries today, the percentage of their populations that are in poverty, extreme deprivation has remained more or less the same but the number of people affected are almost double that of those that were affected 30 years back. Given population increase for these countries, a direct affect of their under developed condition, you ``fitting into the niche`` spells total disaster, and I am sure you know that, but since you don`t see any alternative you default to the status quo.

That is not the way to go. Being ``realistic`` is not accepting the default to total environmental degradation of the earth and eventual destruction, it is to work to fix these problems and take away from the theives what belongs to humanity as a whole. I can never accept the default and my position is not based on slogans, it is based on facts that suggest that solutions to the problems facing humanity are straight forward and easy but have deliberately been masked and avoided by those that hold the command positions of the various institutions. It is a moral position, it is a logical position, it is a position based on justice and it is definitely achievable. People can be a more powerful moving force than the West`s gun.

Asadi,

“The needs of the developing nations are more or less the same and have to do with basic human needs that are going unmet. Self reliance would mean that they take care of these needs first before squandering their resources in export processing and useless military hardware purchase from the West.”

An ideal situation but we are not dealing with an ideal world here. Economies don’t turn around on dreams they need a mature and realistic approach. Even with that, it takes a sustained and a long term planning and execution to change things around.

I would like you to take a look at the third world countries as to where they were in 1950 and where they are now in 2006. A majority of the countries have made substantial progress. Of course, they will have to work on it continually but Rome was not built in one day either.

I agree that there is lots of waste in every economy but despite corruption and wasteful expenses, things has improved all around. There is definitely less hunger and less visible poverty in every third world country.

Self Reliance was a political slogan to promote a particular kind of political ideology and economic system. In the marketplace, reliance is the method to achieve prosperity. Simply put, it is distribution of labor.

As I said earlier, when you have to fight for a share from only the 20% available, the approach should be realistic and not fantastic. It is a slow process but over the years it has proven that many countries have increased their share of the pie by creating niches and by being selective in what they are best equipped to sell in the Market. You know the countries; I don’t need to illustrate that.

“This ``new economy`` is a path to clear suicide by the majority world, so fitting within it, fighting over the ``crumbs`` with the other developing nations will benefit only the rich nations and not those that can form a block with ``self reliance`` as the foremost goal. Of course if they try to do this, the West will feel threatened and show them the ``cannon`` or claim to fight their ``weapons of mass destruction``.”

The new economy is not a path to suicide. That will be another debate and I don’t think at this point I am fully qualified to even discuss that. Just remember the rule of thumb. Economies change with the passage of time. What is good now may not be good 25 years down the line. What was good 50 years ago is utterly bogus now. There will be major hiccups with the new economy but third world countries acting alone or collectively have very little clout in the market and they will have to play by the rules set by the rich countries. It seems to be a position of helplessness but many third world countries have built up their economies from the helpless situations in the past. This world has moved beyond chanting.

Thanks

HP <<< I am sorry in the new economy there is no such thing as “Self reliance”. These words were thrown around in the sixties under the socialist influence >>>

HP sahib it is no illusion. The needs of the developing nations are more or less the same and have to do with basic human needs that are going unmet. Self reliance would mean that they take care of these needs first before squandering their resources in export processing and useless military hardware purchase from the West.

HP <<< The best model for a third world country is to find a niche in the world economy and work on that. For other stuff, they will have to RELY on other countries to produce what they need. >>>

This ``new economy`` is a path to clear suicide by the majority world, so fitting within it, fighting over the ``crumbs`` with the other developing nations will benefit only the rich nations and not those that can form a block with ``self reliance`` as the foremost goal. Of course if they try to do this, the West will feel threatened and show them the ``cannon`` or claim to fight their ``weapons of mass destruction``.

Zee, I like the way you have tried to make this write-up conversation style. But I can not make head or tail of most of the content – I wish you had tried to write it so that bozos like this interactors can actually understand it – instead of the rest of the bozos here who CLAIM to.

Let me get the story straight by putting in my own interpretation.

Not having enough reserves is bad. The Pakistani government was running out – it was down to a three week supply. So it bought some high-priced forex from Dubai to augment its own. When 9/11 happened, lots of Pakistanis who had booties (and perhaps tush) hidden abroad converted that booty into stuff under the pillow – then remittances all dropped off. This left exports as Pakistan’s sole source of foreign exchange. To make up for the differential in interest rates between the rupee and the dollar, it then pumped a trillion rupees into its system. This caused massive inflation. They could (and should) have used that money to set up more state enterprises. End of story.

It is not clear to me if your beef is with the overall direction of the fiscal policy of the Pakistani Government or its short-term tactics.

And what makes you such an expert? You make a lot of ``definitive`` statements as if you know all the answers - and those are THE answers - and as if there are no reasons why the people in charge of the fiscal policies would have legitimately made some of the decisions that they did.

Also, the chowk editors appear clueless in how to streamline technical lingo – either clueless or just plain lazy – my guess is both! I have this suspicion that as soon as they run into the simplest of technical concepts which require the slightest exercise of brain, they react as follows:

``Uff Allah.... Ye kya museebat aa gayee!!!``

And throw their hands up in a hopeless gesture of despair!

Zee,

I hope you have researched this a little more. I think couple of things need some clarifications from you.

First “ A Rs 1 Trillion windfall could have been easily absorbed in the State Sector through issue of Government securities at market rates to the holders.``

I know others have picked on this too. Please correct me if I am wrong here.

Securities are issued by the governments to raise funds and money. Not to disburse the windfall as you have mentioned. If a governments needs to disburse a windfall without investing it into long term projects itself, it needs to relax the credit thru various means or holdback on money printing. The first (relaxing credit) can lead to inflation so it is a doo dhari talwar. If the government wishes to holdback on printing money, it will have to adjust the exchange rate and it will have an impact on Export and imports both.

So a windfall like this needed a careful study. The next step then is to use the resultant decisions to make changes in the fiscal policy. I would also like to point out that fiscal decisions take their own sweet little time to show results. In this case, the time elapsed between the windfall and the policy development and execution is not enough to make a judgement call.


“The emphasis has to be on “consumption”, not on “self-reliance”.”

I am sorry in the new economy there is no such thing as “Self reliance”. These words were thrown around in the sixties under the socialist influence. There is no way a third world country can achieve self reliance. So there is no point in even recommending that illusion.

Here is the current situation. Roughly 80% of world’s production is consumed in the West + Japan. The rest of the world has to live with the remaining 20% and actually it has to fight for the crumbs. The best model for a third world country is to find a niche in the world economy and work on that. For other stuff, they will have to RELY on other countries to produce what they need.

“On the other hand, the price of sugar, milk, and wheat is now something to be contemplated upon.”

Did you realize that Sugar, milk and wheat are the mainstay of the Pak rural economy and are mostly consumed in the cities? The increasing Sugar and Wheat prices help the farmer. Southern and the central Sindh is dotted with the Sugar mills and it has improved living conditions and incomes in those areas. Similarly, Wheat and Dairy farming has helped Punjab farmers. With inflation as it is, it is important that money should also flow towards the farmland or the whole political structure in Pakistan would crumble.

OTOH, Sugar and Tea are not essential items. Imo, the government should have kept those prices higher to reduce consumption of Tea and Sugar instead of giving in to urban population demands. Import of Tea and Sugar is waste of $s.

zeemax:

``A Rs 1 Trillion windfall could have been easily absorbed in the State Sector through issue of Government securities at market rates to the holders.``

are you saying the state/public sector could have become a job creator for the masses for a long time?

if a public sector is running in-efficiently how long that would have lasted??

would the public sector created any value or wealth for the country???

Pakistan is not doing well.
There are no animal shelters in Pakistan.
Animals in Pakistan are treated cruelly.
Its a very bad place.

<<< The emphasis has to be on “consumption”, not on “self-reliance”. >>>

Dependent development and debt dependency: in short a rape of the `third world` by the neo-colonial network of institutions and their domination of the political, military and economic institutions of the `developing (or force starved) countries`. The reality of our world in a few short sentences.

If only this author would put as much thought into understanding Quran and Islam as he does in these issue...

Zeemax wrote:

++
A Rs 1 Trillion windfall could have been easily absorbed in the State Sector through issue of Government securities at market rates to the holders
++

Who would buy government securities after the freezing of foreign currency accounts by Nawaz Sharif in 1998? The GOP knew its credibility had taken a hit and prudently chose not to test it in 2001/2.

Your recipe might work in 2006/7 (now GOP`s credit perception and worthiness is very healthy)... but 5 years ago it would have been a damp squid.

If Pakistan is doing well, which the economists say it is, then why is (basic) health and (basic) education not improving and why are rural ppl still really badly off? Why are there not decent roads where we need them? Where did that Trillion Rupees go?

Re: # 2

Chalta Sahib,

Until I am banned, (am counting the hours) I can bring up whatever I feel is pertinent. You are welcome to take your pitiful comments to UP.