Saturday, 24 April 2010

Get the basics right!

This is a term that my friend Meekal used with me today. All we need is get the basics right! Others around the table also yelled, “it is not rocket science!” All we need is “Get the basics right!”

My question “what are the basics?” was drowned out! We all know what the basics are without actually talking about it. This is how economics is done in Pakistan.

With persistence I found out what the basics were.
· Get inflation down
· Increase revenues
· Increase exports
· Increase growth

Makes it easy! Does it not!

We wish all the good things and call it economics.

For sixty years Plan after Plan as wished for these good things, increase production, increase growth, increase exports. It is just so sad that the economy will not listen to these economists and deliver all good things like production, growth and exports. And not to forget that all this must happen with low inflation.

Of course we must keep asking for more revenues and every discussion must not well-worn examples of the rich not paying taxes. Ok so let us have a new tax and collection must improve. There you go. Now see “It is not rocket science!” What is it about rocket science that these guys like? Every three minutes, someone mutters “it is not rocket science!” and all nod in agreement. Discussion killed! Time for next anecdote!

Well how about another list of basics!
· Improving law and order
· Securing property rights
· Strengthening contracting
· Reducing transaction costs
· Redesigning and reframing markets for efficiency
· Removing incentives for rentseeking and putting in place incentives for entrepreneurship

This was what government was supposed to do. This is the basics of governance! Sure it requires hard work and much thinking to make this happen. And yes it is even more complicated than rocket science.
If our friends would be more inquiring, they would find out that the development experience of the last sixty years has shown the primacy of these basics over their usual list of basics. Without better governance, all those good things that our economists take with for may not happen. A little reflection will show that Plan after Plan wishing for increased growth exports and production with higher revenues have come to naught because of “poor governance!”

Perhaps, saying “it is not rocket science!” stops these people from thinking. All of us need to come out of our comfort zone and encourage discussion and debate.