A small clarification before I get labeled as an elitist agent and trolled; if the media outburst actually got a bad decision reversed, kudos to them, albeit all the wrongs in the world cannot make a right. Completely ignoring the good, bad and ugly of GIDC, primarily because of a lack of complete knowledge thereto, we seem to have one upped Clemenceau.
The economy is too serious a business to be left to the Economic Team; rather anybody else, including the politicians, judiciary, journalists and the man on the street know better and should run the economy. Admittedly, the economists may not have done a bang up job till now, but to venture a guess, everybody else will do it worse. None of us, at least the sane amongst us, would sit in a plane being flown by a journalist, or get on an operation table if a politician held the scalpel; but we seem to be very okay getting economic advice from the friendly neighbourhood man on the street.
The buzz word behind this recent economic activist movement is elite capture.
Nothing wrong with that, except that the radical right, the anti-socialist, won the battle a long time ago, when the slogan "It is not the business of the government to be in business" became conventional wisdom.
Everyone amongst the new enlarged economic team and all those who argue against elite capture, and who also disagree with the above slogan, please raise their hands? Is there no one?!
Free markets, less government and less taxes on the rich are the foundation of economic theories of eternal growth. Free markets because only the markets know how to allocate resources efficiently. Government is bureaucratic, inefficient and corrupt and seeks to limit individual liberty and threatens freedom necessary for economic innovation and hence should leave businesses alone. The superrich should pay less taxes, especially the corporation because they create employment and drive growth by investing in businesses, which is not the business of the Government anyway.
Imagine the extent of the capture, everybody has to pay more taxes, except that the corporate tax rate was kept stagnant; the argument being that at least we did not let it reduce further!
The capture is absolute. This mantra is indoctrinated at the grass roots level, the curriculum at schools and colleges; every economist that comes out of an educational institution is armed with a free markets play book. The media is enamored with the free market mantra and is going bonkers supporting the privatization agenda. No politician or bureaucrat wants to be caught opposing the slogan, it is not the business of the government to be in business. And all the economic think tanks that have erupted across Pakistan compete to support free trade whilst veraciously framing State Owned Enterprises loses for Pakistan's economic debacle.
If we cannot protect PIA because it might upset Middle Eastern oil states and result in a serious decline in worker's remittance, the primary argument against open skies, why blame PIA for its losses?!
The capture is global. All multilateral financial institutions, global think tanks, multinational financial corporations, global financial media and academic institutions fall over backwards to compete to argue that global free markets is the solution to the world's economic woes and at every opportunity enforce globalization and free trade. In their world, there can be any number of reasons for a developing country to sink into a financial crisis, except free trade; those who argue against free trade are either ill-informed or simply incompetent.
But the math just does not add up.
Have been writing for more than six years now that free trade will do us in, but the free trade party noise drowned it all; "Trading Woes" and "Till debt do us apart" are two articles from around 2013 which one can readily recall.
So who is behind this capture? Well without getting into specifics, obviously the beneficiaries who have very deep pockets. They are the ones who fund the schools and universities so can drive the curriculum, they are the ones who can finance research and hence can decide what to research, they are the ones who make media profitable by their advertisements, they are the ones whose lobbying allow democracy to be workable, and they are the ones who fund the think thanks to ensure that only the right economic theories get thought and the rest is sifted out as utter nonsense.
Accordingly, all that may be written against free trade and privatization, it is never expected to dent conventional economic wisdom, despite empirical evidence to the contrary. We are struggling with a current account deficit and mountainous external debt, and the support for regional free trade specifically and free markets in general and privatization keeps growing.
When common sense takes a hike, the end result is, captured.
(The writer is a chartered accountant based in Islamabad. Email: [email protected])