Friday, 14 February 2014

1+1+1



Ever wonder why you can't find a flat in most cities of Pakistan? With a young population and a large housing shortage, counted to be in millions, why are there no flats?

Cities are spreading into large sprawls building 2 storey houses, diligently following the planner's instruction to build 1+1 and no more. And these must be single family homes. Hence 1+1+1. 2 floors and 1 family. The Planner knows best!

When you ask them they say they are planning an open suburb which to them is the pinnacle of human achievement.

Of course no suburb is complete without wide avenues, underpasses and bypasses to allow 'cruising' lie in Route 66, James Dean and all. That is the image the Planner has in mind.

They also maintain that we are rural people and like to hug the ground and will not live in flats. Needless to say our weather too is flat unfriendly. Of course our culture is “Kothi” in a suburb.

They overlook that people in our old walled cities have for centuries lived in apartments and in buildings that were 5 or 6 stories. So is that not our culture? Did they not feel the heat in those “pre-air-conditioner” days?

Moreover, our people very proudly acquire flats in London, Dubai New York at very expensive prices to enjoy the metropolitan life style.  

As to culture, our people enjoy everything cosmopolitan from MacDonalds to movies like all other races. Could it be that the Planner is wrong?

We can all remember the lovely kothas high on a 4 or a 5 story haveli or a building where much community used to take place. Today the Planner has taken that away from us? Why?  

My friend Parvez Qureshi points to a huge construction boom that could take place if we could only change the Planner's mind. Could we make him give up 1+1+1? Let him experience some vertigo and let building go up.

If restrictions on heights could be relaxed and apartment living encouraged, there could be a building boom in the country. Let each housing unit in our cities (say a radius of 10 miles from the center) say of a 500 yards or more were to be allowed to go to 6 and in some cases to 8 or 10 floors. And these new buildings were allowed to be converted to apartments. Each housing unit could be converted to many flats allowing millions of new homes to be created. Maybe 1+1+1 could become 6+12 ie., 6 floors 12 apartments.

In the conversion each unit would spend about a couple of crore or more. If  million such conversions took place across say our big cities, we could be looking at an investment potential of Rs 20 Trillion or $ 200 billion. That could easily lead to a millions of new accommodations. How wrong is the Planner?

With a construction boom of this kind we would employ a few million additional workers. The boom would last many years and increase our annual growth rate easily by about 1% annually. In addition such activity would have large spinoff effects as other industries are woken up as a result of derived demand.  

Such a boom will also drive urban development, broaden the middle class and develop a demand for consumer goods, entertainment and other urban services. That in turn will develop a boom in futehr development of services to the new middle class, shopping malls, cinemas etc.

In this manner this could be the seed of a virtuous cycle to propel the economy into possible sustainable growth over the long term. We could be looking at high growth rates in the realm of 7 to 8 % for the for the next 10 to 15 years.  All we need is a rule change. Little people will do the rest.

It will also be an equalizing reform as it will not be only the rich who benefit. Largely the middle class will be a beneficiary. Would that the Planner could learn!

At the point the planner starts behaving like my mother scaring me away from naughtiness by saying I should be scared of ghosts an monsters.  He points to lack of sanitation, poor quality construction, congestion, safety etc to say that we should not discard 1+1+1. We need to tell him that all that will be done alongside. The boom will facilitate the change. and because of our boom. Is the Planner scared of working and learning?

The payoff to giving up the suburban 1+1+1 model is so huge, it keeps me awake at night. Surprisingly none of our economic analysts supported and nurtured by our benign aid givers see this.

This is the most important way to wake up our construction industry and with it our economy. The construction industry which write now has been smothered by the Planner is operating at way below potential.      

If only we could change the Planner's mind! But wait, who is the Planner? In most development authorities he is a grade 19 official at best with little prospects of improvement. His masters are many DMG officials who only fleetingly think of urban development as an issue. And of course there is the LMC, Cantonment etc, where I am not sure town planning is even a serious subject.  

Alas, Dear Brutus, the fault is in us, in the way we organize ourselves! If we cannot organize our cities, we cannot have this boom. Hence we will continue to look for aid and money when there is gold lying in the streets.


Thursday, 13 February 2014

A Policy Dinner



There is a lot of agreement that education is the way forward. Oh yes educate them the more you can the better. Give them skills. Give them education. Love it.

Here I am sitting at dinner with donors and the rich industrialists --an interesting combination. So well meaning. So comfortable with each other. So much agreement. They have all the answers. If only they were given a free rein all would be good.

So the donor says we need more taxes and the rich people all say oh yes, but the fault is the middle class undocumented sector. Yes if only those dirty people who work hard could be forced to pay. Yes the ones with all the advantages and the SROs are already heavily taxed. Yes the SROs are a problem but we will have to phase them out slowly. They all nod.

The conversation moves to trade with India. Yes we must but then you know there is protection on their side. So what should we do? Imagine if there free trade and no borders much like European Union. What if we could reverse Partition. Wow we would do so much good. If only we could wipe out history and engineer people. If pigs had wings.

They were all talking about my subject. They were all for education. But the last thing they wanted was my opinion. Like the Taliban, they were in agreement and knew all the answers. Did they have the need to listen to someone who has some knowledge of the subject. No.

On questioning them a little, I noticed that they had not even read what the Pakistani economist writes. Why should they since they are comfortable in the supposition of the donor thinking. So all we needed to do was reinforce each other's beliefs. Not try to learn from research and education.

Yet we need to educate them. But then it dawned on me, I was one if them. I was not supposed to be at the table. "Them" don't tell us. "Them" don't participate.

We educate them. Then a clever person came up with this "don't educate them, give them skills." After all they will work for us. That is all. But skill training has not worked in the past. It will now. Because we know what the demand is. Them will do what we say. It will be all right.

I tried asking what is the objective of economic policy and where will growth and employment come from. Investment is at a low and does not bode well for employment. These were trivial questions that may preoccupy an economist but not these giants of thought.

So they will send me even for a PhD with Nobel prize winners. They will even encourage me to write and offer solutions but not to change their minds. If I disagree there is a knowing smile and glances exchanged to ignore this. Our beliefs must not shake. Taliban are less subtle but belief is belief.

I tried to raise several possible hypotheses. Maybe taxes are not the key to progress. People have written that government expenditures and the size of government may be a bigger problem.

Maybe we have too great an emphasis on stabilization. Some people argue growth and employment will only happen if we prioritize structural reform.

Maybe education has to be accompanied with empowerment to think and contribute to debate. Education must lead to jobs.

Maybe we should review the market organization and regulation to see why investment does not take place.

Hey did you read that some poor Pakistani economist has been writing about the need to vitalize domestic commerce and construction to generate jobs. And that requires a wholly different kind of deregulation that we have not even begun to talk about.

Folks, the Government is broken. Some Pakistani economists have prioritized reform of Government in particular civil service reform.

The international consultant may not have the whole picture. The Pakistani economist has a different analysis and evidence. Listen to him. Give him some room. After all the west grew because of their own thought and policy.

But believers are believers. They do not read Pakistani thinkers. They did not want to learn. Only to reaffirm faith. The only fool was me who bought into their education paradigm. They only want "them"  to learn enough to "stand and wait". Don't think!