Money Matters

Economic planning

Money Matters
By Sirajuddin Aziz
Mon, 04, 21

Economics is too important and serious business to be left alone to the politicians. Every economic decision has political implications; and all political decisions directly or indirectly impact the economy. Politics and economics are inter-twined and inseparable. Politician’s foresight is invariably limited to their term of office, rarely do we find politicians, who think beyond; their struggle and principal aim is to seek victory in the next elections.

Economics is too important and serious business to be left alone to the politicians. Every economic decision has political implications; and all political decisions directly or indirectly impact the economy. Politics and economics are inter-twined and inseparable. Politician’s foresight is invariably limited to their term of office, rarely do we find politicians, who think beyond; their struggle and principal aim is to seek victory in the next elections.

This singular objective drives politicians to evaluate and tweak economic policies with a very short time in view. Their time horizon for economic planning is merely 4-5 years. Nations aren’t built in such short tenors, they are made through long-term, in fact very long-term economic planning. We claim friendship with China, but have learnt nothing from them, especially in the context of how to create economic miracle through effective long term economic and financial plans.

Honestly in policymaking or otherwise should never be any financial speculation. Economic models must not steal from the dispossessed and the weak to fill up the coffers of the strong and mighty. Economics is not to be a vehicle for cheating of all the people, by the people and for the people, with mutual consent.

The political will in the last 74 years has been to pursue a common-man friendly economic policy, with steps that are akin to catching the largest fish with the weakest of hooks, bait and line.

Back in the 1950s, following the Marshal plan, we married into the family of countries practicing full laissez-faire. This marriage was one of undiluted commitment. Till the end of the decade of sixties, capitalism was in full force; capital formation in the economy did take place, but unfortunately as in inherent in a capitalist economy, it got concentrated in the hands of few. This resulted in the famously infamous coinage by Dr Mahboobul Haq of the “22 Families” that had begun to rule the economy of the country, to the disadvantage of the remaining families of the nation.

While seeking complete divorce from capitalism, we as a nation courted with the concept of “mixed economy”, where the mix was lopsided towards the “socialist model of economy”. This brought us towards nationalisation of all the key industries of the economy---- “power to the people”, was the slogan.

In the very infancy of this very principle of economic modelling, we saw a military dictator boot out a democratically elected leader, who was eventually, made to climb to the gallows. The experiment with socialism and the mixed economy principle ended there.

The Zia years were most damaging in our history, both politically and economically. The GDP growth experienced was a farce. The domination of one factor of production ie capital, over all others, continued unabatedly. We began, where we had left capitalism. The junta selectively favoured the compliant families, with permits and licences, the country experienced again emergence of economic barons; some turned into economic and political czars. With the power of money, they had amassed, both legitimately and illegitimately, they bought out the political platform of the country. (History records it as, Changamanga).

This was done with peril and wilful damage to the country. The 1992 economic protection Act was a stab right in the middle of the nation’s chest. The relaxation in foreign currency account opening to residents, led to the dollarization of the economy. In this ‘mela of loot and plunder’, the politician’s hands were soaked in dollars. Not to be left behind, the man on the street too had FCY accounts. The flight of capital acquired lightning speed.

JF Kennedy, the most charismatic of all US Presidents spoke thus in 1961, “Economic growth without social progress lets the great majority of the people remain in poverty, while a privileged few reap the benefits of rising abundance.”

The era of President Musharraf years, which came on the heels of the nuclear detonation, was one of creating a consumptive economy. A few privatisation transactions did take place. A wily banker and an untrained politician made a mess of his boss. The buck obviously stopped at the president’s desk. He was eased out, a price paid for both ill-choice of people to run the economy and naïve befriending of the corrupt politicians.

For economic plenty there has to be a collective and all inclusive effort. It is not politics but economic management that has potential to change the lives of the multitudes of any country.

Having said that, there have been leaders of nations who despite being no economist of any stature of recognition have ably led their countries to economic well-being, with stability of sustenance to their initiatives.

Political leadership has to give, economic direction, the methodology for achieving the vision is best left in the hands of technocrats. Japan and Italy are best examples as a case in point.

Both these countries have seen so many prime ministers come and go, in Rome and Tokyo, yet both countries continued with their march for economic development.

If the Q Block has to continually suffer, alongside the principal tax collection authority, with the game of musical chairs, how can any sane person hope to see formulation of long-term policies. Every new incumbent blamed his predecessor for the economic malaise. In Madrid, Spain at an international conference, where I was present too, I heard the PPP- PML coalition finance minister, now declared as absconder, Mr Ishaq Dar, in his speech berate the country; his message to international financers was do not trust figures of growth given by President Musharraf’s government, because they were fudged. Politicians, make no good economists, for political expediency reigns high on their minds.

The association of politicians to economic theories is more a matter of politics than economics; Thatcherism, Reaganomics, Abenomics and to the worlds disadvantage Trumponomics are a result of economic growth experienced while these leaders were in command. This personalised marketing of an economic policy had actually begun in the early 1980s, where New Zealand FM, under the labour government gave a radical change to its country’s economic system.

Politicians who display in their action, a certain lack of confidence, are the ones who make the most mess of their nations. Those leaders who put up systems for economic development, that are essentially independent of their personalities, have long lasting impact. The Scandinavian model of economic growth has no stamp of any individual politician. Instead the good work of one set of politicians was taken forward by the successive ones.

The tendency of our politicians to take centre stage, even in matters of economy, have only led to greater destabilisation and loadful of flawed economic policies. The limited vision, with a strong unwillingness to accept and let future generations eat the fruit of their labour, has been a destructive factor in planning for the future. I have in many previous pieces in various newspapers, cited that CPEC wasn’t an idea born in the past decade, the Chinese planners were at it building the blue print almost thirty years ago.

Dr Mahathir, Deng Xiao-Ping, Lee Kwun Yew, Park Chung he, etc were politicians who thought for their countries, beyond their own selves. They gave economic doctrine, but let the professionals to deliver; indeed their follow up and accountability mechanism was also flawless too. Non-performance was corrected with speed. No confusion for expelling the under performers.

The unfortunate story of my country is that it never had a politician who was good at economics and no economist who could make to be a good politician. India had Nehru and Manmohan Singh; China had Mao, Chou and Deng and Germany had a Ludwig and Adenauer. Politicians in our country must learn to give space to economics.

Politicians, who have the imagination to become dream merchants of the populace, are the only ones who know the significance of economic planning.

In most countries, the planning commission or minister, are given the highest of importance —where is our ‘Planning Commission’? Does it have any recognisable claim for initiating or putting together long-term thinking!

We, as a nation possess the talent. It is regrettably the lack of ability of politicians to put to best use the available proficiency in many fields. History proves we are good only in placing square pegs in round holes. The consequence of this approach is before us.

Recently, to our collective chagrin we saw footages of our youth resorting to violence; they vandalised public and private assets; including killing law enforcers. Were these youth educated or uneducated? Possibly educated, so why this expression of frustration? This is a direct consequence of the economy’s inability to be absorptive of the young and available workforce. Employment opportunities are not in step with the number of youth wanting a share in the limited job market. Unemployment, which is a direct consequence of economic policy, begets social unrest and violence.

The annual budgets of revenue and expenditure are the only focus of this country. The budget season attracts more discussion and parlays on the short-term goals, than an economic plan. The short-sightedness of politicians must be repelled with long-term economic vision.

The need for framing policies that promote attracting trade and investment opportunities from beyond country’s frontiers is today critically important. We have seen the NE Asian and SE Asian newly industrialised countries emerge as a result of their economy being directional towards, an export-oriented policy making. In 1952, Adlai Stevenson, the American politician conveyed this thought and crafted it wholesomely, “It is not possible for this nation to be at once internationalist and economically isolationist.” This is just as insane as asking “one Siamese twin to high dive while the other plays the piano”.

Leadership's quality is judged by those who are chosen to surround itself. The current leadership at Islamabad conveys more confusion than confidence, about its economic charter. All hopes now are hinged on the new FM. Wishing him the very best for nation's sake than anything more.

The writer is a senior banker and freelance columnist