Showing posts from 2009

Gaining “Independence”: An Alternative Reality

“Come in! Gentlemen, come in!” said Mr. Dawit as he looked distractedly from his rather engrossed conversation with a very official looking gentlemen. “Please have a seat. Make yourself comfortable. Just give me a minute and I will be with you. Unfortunately this message from the president is very important and has to be dealt with immediately.”With that, he went back to his conversation with the very official looking gentleman seated next to him. The tone of the conversation was much too low for the three rather timid looking gentlemen who had been invited into the very spacious and well-appointed suite of the finest hotel of the time in Philadelphia. The atmosphere was very imposing for our three colonial gentlemen who rarely entered such opulent surroundings.The two gentlemen huddled in that very official conversation were also of a superior air and manner, obviously used to greater wealth and privilege than their three visitors. The latter huddled together on one small sofa leavi…

The Process of Rentseeking--A club in Lahore

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Masood Hasan's article in the news reproduced below is one of the first attempts to show how the nature of elite rentseeking. No only do they continue to get subsidies for elite country clubs but they also run those institutions in teh most corrupt manner possible.

We must do much more to expose this dark side of Pakistan's elitism and rentseeking. A number of deep rooted political economy issues need to be exposed through this effort to generate an understanding and a momentum for reform.

On Wednesday, October 21, 2009
Masood Hasan wrote

"Those who lament the better days of the past that are no more could perhaps be forgiven for being nostalgic. One refers to the garish and cheap Club that is now the successor of what was once an elegant establishment at the Montgomery Hall in Lahore's Lawrence Gardens. That Club where people of good breeding and class were to be found is long gone, replaced as so often in Pakistan with a motley crowd of powe…

Parvez Hoodbhoy remembers a friend

Faheem Husain was someone that many of us from the seventies generation admired. In the article below, Parvez Hodhbhoy captures him better than I have words for. Why do we in Pakistan not use, honor and cherish people like Fahim?
Faheem Hussain -- as I knew him
It was mid-October 1973 when, after a gruelling 26-hour train ride from Karachi, I reached the physics department of Islamabad University (or Quaid-e-Azam University, as it is now known). As I dumped my luggage and "hold-all" in front of the chairman's office, a tall, handsome man with twinkling eyes looked at me curiously. He was wearing a bright orange Che Guevara t-shirt and shocking green pants. His long beard, though shorter than mine, was just as unruly and unkempt. We struck up a conversation. At 23, I had just graduated from MIT and was to be a lecturer in the department; he had already been teaching as associate professor for five years. The conversation turned out to be the beginning of a lifelong friendsh…

Who's Corrupt?

I am from a corrupt country. On the Transparency International (TI) index, Pakistan ranks 134 out of 180. Indeed, stories of our leaders’ corruption are rife and we are continually looked upon with suspicion. We also believe that we are bad, very bad!

We are called corrupt because of perception surveys. Question include “do you expect to pay a bribe when you get a certain public service”. So if a minor underpaid functionary in tattered clothes collects a small tip of a few dollars, of course that is bribery. And then dark, poor countries are considered corrupt!

But recently, this has become laughable. The pure countries at the top of the TI scale — the white countries — do not seem so lily white. Of course there is no little guy collecting small bribes and there are no meaningful bribes collected for providing public services.

But then as we have seen in the last two decades, corporate balance sheets have been doctored, shareholders ripped off by venal corporate bosses while boards gleef…

On Zubair's Reply--Rethinking Pakistan's economy

Thank you Zubair for a nice comment! On the Tyranny of MacroeconomicsI have often lamented that we Pakistanis do not engage in civilized debate and too quickly get into the mode of “argument and personal attacks.” Zubair’s comment is heartening and welcome as an offer to expand a debate so that all of us can learn.Zubair argues that “There is little doubt in the argument that unless macroeconomic conditions are right and sustainable, economic development cannot be maintained.” Frankly on the surface this statement looks like “motherhood and apple pie” but dig a little deeper and you begin to worry. Think about it! Zubair’s statement can be rephrased in medical terms as “There is little doubt in the argument that unless vital signs (body temperature and blood pressure) are right and sustainable, “life” cannot be maintained.” Does that mean that treatment should focus only on maintaining those vital signs without treating the underlying cause! Most of us know that if a patient has cance…

Zubair Iqbal's reply

ConYour comments, though oft-repeated, are valuable and should be considered for continued progress toward an alternative solution--if possible--for Pakistan's economic malaise.

There is little doubt in the argument that unless macroeconomic conditions are right and sustainable, economic development cannot be maintained. Hence, there is little merit is being flippant about macroeconomics, even by a Nobel laureate. I agree that one should not disregard the building blocks--which in cases such as subsidies to maintain a "wrong" exchange rate and promote protectionism are a cause of macroeconomic imbalances--but a tighter macroeconomic stance strictly adhered to, would force corrections to prices and, thus, help restore sustainable growth.

"Conditionality" has been given a bad name by countries like Pakistan which have been able to break it and still continue to obtain financing. I agree conditionality works only if strictly enforced--it is in the long term interest…


Nice piece by Zubair! It is typical of most economic writing (other examples are Ashfaq and Meekal) in Pakistan which has now been conditioned to think “macro-first” ignoring the underlying micro and institutional problems.Written in typical IMF fashion giving primacy to macroeconomics assuming that it is independent o political economy, institutions and governance.For example“It has become fashionable to trace the current economic malady to “wrong” growth strategy of the past 60 years. This is neither meaningful nor helpful in understanding the current policy imperatives. Yes, there has been a secular weakening of institutions but that is not an excuse for inappropriate policies. ???” This is what Krugman calls the dark age of macroeconomics. Failure of underlying institutions and lack of policymaking capacity can only manifest itself through poor policy choices. Add to that the deliberate attempt by the powers that be to destroy policymaking capacity (case in point Tariq Hasan at HE…