A failing economic model

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One step forward, two steps back: Every time we think the Pakistani economy is heading in the right direction, there comes a reversal followed invariably by a free fall, sending us even lower in terms of per capita, monetary value, debt, deficits, inflation and above all worsening poverty. So where can we go wrong, especially in terms of good vision and long-term planning, because after all it cannot be a coincidence that this phenomenon occurs every 3 to 4 years? After a very careful study of the very economic model that our economic directors have wished to pursue over the past five decades, we see that there are a number of policies or rather areas of intervention where, due to the particular structure of our economy; the very reality of our population / people DNA; and a single national ethic, all government vision and long-term planning has been flawed or to say misdirected. Let’s try to assess what they tend to be.

Primacy of needs versus simple

corporatization

The Pakistani economy, like that of any non-Communist country, is a market economy with the standard principles of profit and capital accumulation. The main difference being that in recent times (in the last 3/4 decades) all the countries that have been able to evolve successfully as stable and strong economies e.g. China, Czech Republic, Canada, Bangladesh , etc. main objective the basic needs of the population and not profit or doomed industrialization. A general definition of self-defeating industrialization being that which in essence (or the way it is implemented) relies on the promotion of manufacturing from another country, relevant examples for Pakistan being: automobiles, motorcycles, home appliances / electronics, pharmaceuticals, high end FMCG, building fixtures, laminates, paper bag, the list goes on. What we need to do is develop industrial plans based on meeting the basic needs of the people and not on safeguarding the interests of big business that profit at the expense of the long-term national interest. While it’s never too late, changing course here certainly involves determination, short-term pain, and patience.

Concentrated focus as a policy

on operational stability

We have seen time and again that countries that allow structural imbalances to set in: overproduction, scarcity, overaccumulation of capital, concentration of wealth, monopolies, cartelization, commodification and privatization of public assets beyond a certain point ( banking as an example), the deconcentration of public housing, health and education, are invariably overtaken by those which, on the contrary, ensure lasting stability in all these key elements of an economy. This is precisely how today’s China economically overtook the United States where, while the United States allowed these imbalances to occur in its production economy, thus stuttering during the 2008 financial crisis. and as recently as during the period of Covid-19, China on the other hand continued to do Well, even in these difficult times, because although it is a modern capitalist model, it monitors and protects very near these aspects of the interest of the company for its economy.

Abnormally thinning the public

ownership

This is the classic area where China has repeatedly demonstrated how effectively harnessing the potential of state-owned enterprises (state-owned enterprises) can lead to prosperity, responsible growth and a fair distribution of wealth. The banks and the excessive capital formation in the hand are the two key areas that China continues to closely monitor to ensure that the wider public interest is not in any way compromised. It still owns most of the financial institutions which, unlike the rest of the world, have played a major role in eradicating poverty. Here in Pakistan, too, economic managers need to re-evaluate the criteria for business success, especially when it comes to state-owned enterprises. Often it is mainly a question of necessity and trust in the state itself. For example, the mantra of simple profits and growth no longer makes sense when a country begins to run out of natural resources, or when growth is in fact a recipe for carbon. In conclusion, when managing or developing a long term vision for public enterprises, the arguments should focus on jobs, careers, supply chain and price controls for humans. common, not just for a few years, but systematically.

Controlling inequalities

In the modern economic history of the fight against inequality, China seems to have led far in this area. The United States, on the contrary, has actually been guilty of fueling inequality since the 1980s by failing to manage the laissez-faire model in a way that does not allow a small segment to flourish at the expense of the majority. Leading economists like Joseph Stiglitz, Piketty, and others have written extensively on the 99% vs. 1% in the United States. China, on the other hand, is working on the idea of ​​treating “absolute rent” as zero to guarantee housing for the average person and its largely public health and education services that call for compulsory and free education for the entire period. at least nine years, are policies that have helped develop quality human resources and increase national productivity per se. Pakistan, throughout its history, has ironically failed to adequately invest in human capital and this happens to be perhaps the biggest gap holding back its industrial future.

Foreign policy and trade pacts

For the economy of any developing country to realize its true potential, two things are very important: peaceful borders and well-designed trade agreements that help domestic manufacturing rather than reduce it. Good recent examples in this regard would be Malaysia, Thailand, Indonesia and lately Bangladesh. Pakistan has unfortunately not been so lucky in this regard. Although a peaceful environment is not totally under our control, the review of trade agreements is an area where, even today, serious work needs to be done.

In conclusion, it would be fair to say that for Pakistan to truly change its economic destiny, it will need to revisit the economic model it has used for the past four to five decades. It is necessary to recognize that the current system not only creates more and more massive imbalances, but also fails to meet public needs for housing, health care and education. Politically, a seemingly democratic facade actually functions as a large-scale sick enterprise riddled with corruption, inefficiency and mediocrity. The faster management looks around and simply emulates a few recent neighborhood success stories, the sooner it will be able to pull the Pakistani economy out of its current stalemate. Above all, this time the inspiration must come from the East and not from the West. .a


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