A Fool’s Errand

ballukhan: I believe you just summarized the position that pakistani governments have taken for 50 years (i.e. kashmir is the core issue and cannot be pushed under the rug while discussing economic issues)!! I guess you are just confused and just clean bowled your own government`s wicket!! ha! ha!

PS: Of course both governments have finally gotten some sense in their heads and softened their historically rigid stands on this point.

ironman #74 So do you mean that the indian government is conducting the peace initiative without broad support from the indian public?

mantolives #68 i dont know why you are so hung up on such an elementary point.

let me try to present the case in the context of pakistan. i wont bother going over the basic case for free trade - namely the law of comparative advantage - has of course been in elementary economics textbooks since the time of ricardo and assume you are familiar with all that and have rejected it for reasons that you do not wish to provide. I will make the case in the form of a set of equations to keep things concise.

Equation 1: (What I will call the Pig Equation): P=IG,

where P=Protectionism
IG=Interference by the Government (i.e. by underpaid, overhungry, government officials).

Equation 2: (What I call the Rape Equation): R=APE
Where R=Rip off of the country by
APE=Apes (aka corrupt government officials, corrupt businessmen)

I could go on, but I believe the above to equations are sufficient by themselves to make the case to anyone who has tried to do business in pakistan the old fashioned way (the honest way).

``....Peace will not come simply because India will start selling us Maruti 800s and we will start exporting anwar ratol aam to India... Peace will come only with the resolution of outstanding disputes... using trade as a peace maker is like sweeping the real filth under the carpet.....``

The ``Real filth`` = ``Core-Issue`` and ``Root-Causes`` !!!

ferozk #62 You raise a number of interesting points:

a. In the class discussion you describe, the end goal of all public policies seems to be ``political power``. I submit that political power of itself cannot be a goal. The logical end goal for any human society has to be: human welfare. Political power is merely a means to that end. (as Kant put it, we must see humans as being the ends of themselves, never the means to some other end). Any other goal is clearly irrational.

b. On economic competition with india: i am not sure i understood you, but you seem to say that pakistani firms cannot compete with indian firms, many of which are much bigger and better established than anything we have. This of course is a common fear among not just pakistanis but among protectionists in virtually every country in the world. But as has been demonstrated both by the clear and simple logic of the law of comparitive advantage, as well as through two centuries of experience in the post-mercantilist world, this fear is not justified. We should be thinking of ways to get indian firms interested in investing in Pakistan for example (the US, rich as it is, has individual states reaching out and seeking investors - the Chinese are getting ready to set up their first car plant in the US!!). The only losers in all this will be those who deserve to lose: corrupt bureaucrats (e.g. no tariffs means no customs official running around doing favors in return for kickbacks; no export rebates means no finance ministry official getting kickbacks on rebates from paper exports) and fake businessmen (fellows who do exports on paper in order to get rebates, fellows who suck the blood of the consumer through shoddy products, high cost production and higher prices, fellows who take bank loans for fake enterprises).

Hope this ranting on the subject makes sense. :-)

tahmed32,

``Anyway, I am glad that for every one Aleph Null we have an OrdinaryHindu to maintain some level of maturity on chowk.``

Tahmed, AlephNull`s views are probably the views of all indians with at least half a brain.

I liked this line he wrote:
``...reducing their capacity for future mischief, which is all that one can really hope for with Pakistan.``

- - - - -

You, the ordinary pakistani, has no say in anything...even tho you like to pretend otherwise. You have to follow what some uniformed fellow orders. Thats your life...take it or leave it (no pun intended).

Sitting in his barracks, this unifored fellow often gets bored and thinks of some mischief to brighten things a bit. This unfortunate situation is not likely to change in the near future.

``...reducing their capacity for future mischief, which is all that one can really hope for with Pakistan.``

Sad...but true.

ferozk #71 I see that in my previous post i was preaching to the converted (on the matter of protectionism). I agree with the points you make in #71 to ylh.

re: Mantolives # 68

Protectionism does not have a defence in an economic sense, but protectionism makes for a good political argument. I am generally against protectionism. Limited protectionism is a slippery slope and in this sense, it is defined politically. Protectionism goes against the grain of the free trade principle and in this realm, I think that fair trade is another cloak for protectionist measures.

The only defence for protectionism lies in the ability of the nation to compete economically in a global market place. If you take a look at the areas covered under protectionist umbrellas, you will notice that their scales of production are not really that efficient. Protectionism, in the long term, actually ends up harming the industry, because an absence of competition does not offer an incentive to evolve according to the needs of the market place. Secondly, protectionist areas of economic activity end up, more or less, as staganant monopolies. The net loss, which is accrued from this is shifted to the consumer in higher prices and limited options and in the process, the purchasing power of the consumer is, in real terms, lessened and not enhenced.

In case of Pakistan, if SAFTA opens up the Pakistani market to Indian goods, then Pakistani businesses will have to upgrade and modernize their means of production in order to compete. The problem is not in a lack of competive spirit vis-a-vis Pakistani businesses towards Indian businesses, but in the mismanagement of economic resources in Pakistan, which creates a higher price for the finished product. If, on the other hand, Pakistan can better manage its economic costs of production and streamline and limit its inefficient means of production, given the parity between Indian and Pakistani monetary units, Pakistani goods can still be competitive.

I agree with you that in the short term analysis, Pakistan will have a hard time dealing the inflow of Indian goods and it will be limited to only those Pakistani business concerns, which never attempted to modernize and intead, sought political patronage in terms of protectionist policies to mask their inefficient means of production. SAFTA will simply make the Pakistani economic sector, in the long term, more lean and more competitive. The long term benefits of SAFTA outweigh the short and immediate term disadvantages. The early stages of this process will be very painful; in terms of unemployment and market shares for Pakistani businesses, but the Pakistani consumer will greatly benefit from this process.

Hence, if you are looking for an argument against protectionism; protectionism harms the interests of the average consumer and since the consumer spending is critical to the growth of an economy, protectionism generally retards economic growth. India is a brilliant example of this policy. Protectionism did not help the Indian economy and it was only, when India started to liberalize its economy, did see a progressive and a sustained growth in its economy. Pakistan, instead went from a liberal market to a nationalized and a highly protected market under Z. A. Bhutto and thus, severely restricted its economic growth. Pakistan has to; Pakistan must liberalize its economy and if SAFTA pushes Pakistan into a liberal economic regime, Pakistani economy will benefit from such a policy more than it could benefit from any protectionist regime.

Ciao

re: Veeresh # 14

Veeresh, you once suggested that I start thinking about transnational oil pipelines and power grids and ``get real``. Below is what I once wrote in article on Chowk named ``A Asian Waltz``, which was published on August 8, 2000.

``In a utilitarian sense, the economic needs of the world will eventually outweigh the political needs of India and Pakistan``.

India needs to ``get real`` and start benefiting from an Iranian gas pipeline via Pakistan and instead of resisting it! LOL

re: tahmed32 # 62

My own understanding about Pakistan`s futility in competing with India evolved after a serious and an illuminating discussion I had with a class group. It was 1993 and I remember the year, because it was the year of graduation from a masters` program. The discussion was the part of a summer program, which dealt with case studies of international problems. We covered a whole range of topics.

Using the example of the EU, the consensus was that India and Pakistan will have to subordinate their political problems to their economic interests. Basically, the lesson was that political power is predicated on the projection of military power and military power is based on the economic strenght of a nation. The lessons of the collapse of the Soviet Union were a very recent memory in 1993. In today`s terms, that argument can be rephrased to suggest that political and military power projections are based on the economic projections of a nation and in this sense, Pakistani economy is hopelessly outclassed by the Indian economy and thus, for Pakistan to seek a co-equal status with India in political terms, economically sustained, is impossible.

As the evolution of my thoughts went, by 1998, with the twin nuclear explosions of India and Pakistan, it was clear that Kashmir problem had, to a significant degree, been solved and the status quo of the LoC being mutated into a final line of demaracation, was the now a defacto reality, between India and Pakistan. Lahore 1999 and Agra 2001 both hinted at this reality. It took me a while to get rid of the emotional baggage even though intellectually, I had questioned the basis of Pakistan`s foreign policy and my own understanding of the issue and been convinced that Pakistan, if it continued to pursue its policy, it would head into a cul-de-sac.

The reason for this story was, to simply and humbly beg to differ with you. Sirji, you may have realized the truth 20 years ago, but I only realized it around a decade ago. Twenty years ago, I was 19 years old and still searching for answers in my freshman year at college. :) I think, you have been too kind in your praise and I, given my explanation, do not deserve such accolades! :)

Ciao

Feroze...a digression:

I heard about Harish and although I am in Mumbai, I just do not know how to get in touch with him. I feel helpless and hate the thought that we lead such closeted selfish lives...

temp did give me two numbers, both are not working; I have tried other avenues, but failed. Could you please write to me at farzanavee@yahoo.com and give me details about where I can get in touch with him, or I could ask you to forward my numbers to him...writing is all right, but since I am here, I could do a bit more than that.

Thanks and regards,
Farzana

So far all I have read are catchy phrases like `peace dividend` `competition` and amazingly unreal wishful thinking. No one has made a convincing case against protectionism on this board.

I think the solution lies along the lines of what Yogiraj has suggested... limited protection in limited areas. We need to do what is in our best interest, and not what will make us look most liberal ... using the emotional appeal of `peace dividend` hardly cuts it. Why not sit on the table and make peace with an open mind? Peace will not come simply because India will start selling us Maruti 800s and we will start exporting anwar ratol aam to India... Peace will come only with the resolution of outstanding disputes... using trade as a peace maker is like sweeping the real filth under the carpet.

So let us think of the issue of SAFTA and trade divorced from the so called ideology of peace. Instead let us concentrate on the Economic aspects of it, where I think we are a clear losers.

AnOrdinaryHindu #66 The problem is not that there is not enough information available nowadays for people to get a good picture of what is going on across the border. The problem on chowk at least is that some people (mostly from india for some reason, as one can easily see from the posts) come with only one purpose in mind - to demean the other side (see Aleph Null`s post beneath your post to see what i mean). These individuals wouldnt recognize reality if it hit them on the head, so no point in wasting time with them trying to promote better understanding and fellowship between indians and pakistanis ;-) Fortunately, the general public (if not these chowk warriors) in both countries seem fed up with the constant hostility and seem relieved that finally their leaders are trying to end the unresolved issues of 1947 and move forward.

Anyway, I am glad that for every one Aleph Null we have an OrdinaryHindu to maintain some level of maturity on chowk.

It is good to see the stupid hype over the SAARC dying down. Pakistan went through that futile charade not because they want to sue for peace with India; but rather to buy time and a temporary truce on the eastern front while they pursue their old agenda on the western front; to position themselves as the ‘reasonable’ party for the purposes of aid from their white masters; and to improve prospects for investment. Recall Musharraf himself citing the Pact of Hudaibiya as a model for making and then breaking tactical agreements with kafirs. Wait for the Pakistanis to break all their commitments, as they have invariably done in the past.

For India, any interaction with Pakistan is a useless distraction from more fruitful endeavours, a graveyard of wasted efforts. Still, no real harm will be done by having low-level talks with Pakistan – preferably talks about talks about talks – drag on for a few years. What really matters is that India complete the fencing of the LOC, acquire and deploy those weapon-locating radars and similar devices to increase the efficiency of jhadi-shahidization, complete that innocent hydel project on the Chenab at Baglihar, expand Indian influence in Afghanistan and Central Asia, continue work on the port facilities at Chahbahar in Iran and the road north from Chahbahar, etc. These and similar measures will further the safety and future prosperity of Indians. They will also have the pleasant side-effect of further neutralizing and bypassing Pakistan, destroying their remaining leverage, reducing their capacity for future mischief, which is all that one can really hope for with Pakistan.

re: tahmed32 # 62

``When the judge who put this former military chief and his henchmen behind bars happens to be a Pakistani hindu, that is indeed an indication of something else: namely, that the judiciary in pakistan has indeed managed to survive despite the criminal attacks against it by both zia (who tried to undermine it by instituting sharia courts) and..``

This is a startling and unexpected piece of news. Pakistan`s image in our eyes certainly needs some correction. I wish more such news items became available.

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#61 by arjun_m on January 9, 2004 8:53am PT
#51 by Mantolives on January 9, 2004 2:47am PT
Well of course he is protecting the U.S. still industry, duh. Just like any other country would i am sure.