Saturday, February 5, 2011

Liberating the Economy?

Published in Frontier Post on 08-02-11

Pakistan is currently entangled with a huge financial crisis. Government coffers are totally empty as portrayed by our masters. Proffers for improvement of our fiscal position are being presented and everyone is focusing on deregulating the economy and liberating the markets from government’s control.

Living in a state which has vast amount of resources like coal, gas and recently found gold but we are unable to meet out energy resources and ultimately not being able to meet our day to day expenditures. Pakistan, the only nuclear power in Islamic world and one of the seven out of 196 plus countries in the world, doesn’t have the energy to light up stoves and bulbs of its inhabitants.

Calls for deregulation and privatization of the economy have increased since the inception of IMF program in Pakistan. IMF stresses on lesser role of government in markets and allowing the private sector to undertake what government has to. Recent example of handing over the contract for reko diq mines to foreign companies explains the policy of government.

Our public sector corporations are going under heavy losses and it is suggested that we should privatize them and let the private sector deal with it. Instance of Telecom sector is quoted in favor of privatization. One thing we forget is that the reason for these losses is mainly due to bad governance and corruption rather than the system itself. Besides accepting our own mistakes, our economists say that governments don’t do business. They, infact, are not designed to do profit making. They are cent per cent right. Governments don’t do business. The primary and sole aim of government is welfare of its residents and when a government isn’t able to do that, it calls for private sector to step in. This is what is happening in Central Asia, they have privatized all their mining and exploration works to outer world and that’s why they are still lagging so much behind even they are very rich in precious resources.

The system being implemented on us is corrupt from its core. Capitalism is designed for those who have the capital. We measure the success of our public sector organizations by the fact that how much dividends does it pay to the government. Subsidies are always maligned as they are a burden to the government especially when you give subsidy by printing more money. We don’t focus on the fact that these corporations and our whole economy is being run on the money of taxpayers. If government is in losses due to subsidies then it is the taxpayers that is ultimately benefitting from government’s loss. If a government's aim and objective is the welfare of people, then a subsidy (without printing money) is the best option for a government. If government goes in to losses by giving subsidy and relief to its nationals then what else a nation would want from a government and it would be a great success for a government if it can do that.

It is so easy for a government to distance itself from its responsibility by privatizing the institutions. Privatization is the same instrument, which these multinational companies have used in Central Asia, Ecuador and in all the less-developed countries. They give us loan and put conditions which challenge the sovereignty of the state, pressurize to hand over the contracts to their companies, as a result they get their money back and also get profit from the loan, its servicing and many more complicated terms. These IMF programmes won’t make us sovereign, infact it will deepen the roots of these colonialists in our country and will force us to give concessions even if their private security contractors kill our citizens.

This very system has distanced citizens from its government. Government’s success is measured by how much profit it is making rather than how happy its residents are. Our economic indicators like GDP focus on production rather than distribution. A state’s GDP may be very high but of what use it is when this production is not equally distributed. Success should be measured as Gross Domestic Smile GDS rather than Gross Domestic Product GDP. Governments should focus on the smiles of its residents rather than GDP and GNP.

Government is trying to push us into private sector monopoly which is further strengthened by government initiatives like copyrights and patents. From a consumer point view, government monopoly is much better than private sector’s monopoly. The electricity tariff speaks volumes about the monopoly of private sector and the hardships it gives to the consumer. Private Sector is much more efficient than the Public Sector but the thing is that private sector is always driven by the desire for profit making and that profit is always on the expense of public. Government may say that there are regulatory authorities to control the monopolies of private sector but this thing is a paradox in itself. If a government cannot do business efficiently then how can it regulate efficiently. We have to understand that by liberalizing the economy, we are threatening our own liberty.

It is about time we get to the basics and bring back our fundamentals. It isn’t too late. The new financial year is upon us and preparation of budget has started. We must streamline our direction and identify the real problem, whether it is bad governance and corruption or the system itself.

Writer is a Government Employee in Planning Commission of Pakistan