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I am not sure whether or not Shakespeare is still part of the curriculum today, but almost everyone from before my generation, and thereabouts, will have at one time or the other read the Bard’s masterpieces. Albeit I must confess, while studying for the matriculation exams, The Merchant of Venice was more pain than pleasure. Even those who have not read him, at some time or the other have most likely quoted him. I recently came to know that taking Oxford Dictionary of Quotations as a guide, Shakespeare produced roughly one tenth of all the most quotable utterances written or spoken in English since its inception, a phenomenal feat by any standard.

That bit of information was curtsey Bill Bryson’s book titled, simply, Shakespeare. Notwithstanding, that it was an enjoyable and informative read, it was also an eye opener; apparently most of what the world know about the great literary genius is fictional. Mostly in the words of Bryson hereafter, there remains an enormous amount of fundamental nature that we don’t know about William Shakespeare. The picture that all of us recognize Shakespeare from, the Chandos portrait, may or may not be him and the only two other likeness are an engraving and a life size statue which may or may not be him as well. Even more remarkably, all that exists of his own writings is fourteen words which are mostly his signatures on legal documents; and what was mind blowing was that the name is never spelled the same way in the signatures that survive. Finally there is no written description of him surviving, if at all it was penned, from his lifetime; so all that you read about his nature and character might not be authentic.

The most striking piece of information that I gathered from Bryson’s book, other than Shakespeare himself and his plays, was that during that period approximately 3000 plays are thought to have been staged in London of which texts exist for only 230 including 38 plays by Shakespeare himself. And those survived mainly because his friends made an effort to put them together after his death in what is referred to as the First Folio. Perhaps it may not be farfetched to imagine that many a writers from that time, comparable or even better, have been
lost to history.

So, clearly we know very little about a man who lived just 400 years ago, who may or may not have, there are controversies associated with that too, have written some of the best plays, at least that I have read. Which makes you wonder what else is fictional about all the history that we have been taught and how many of the facts that are flouted around are indeed fictional; for instance is GDP really a determinant of a country’s economic growth, or is that all a fiction.

Doubtless, building “fiction” up from Shakespeare to shake beliefs in GDP is perhaps being unfair at some level to the Bard, for which I apologize to his fans; except that even in the case of GDP all that most people know is limited to the fact that if it is growing than everything is good and vice versa; and if it crosses 5%, wonderful. And with this limited knowledge everyone can go around discussing tax to GDP ratio and debt as a percentage of GDP with complete authority, if not impunity. That is worse than uttering “Et tu Brute” without having ever read Shakespeare.

On the other hand clubbing GDP with Shakespeare does make it interesting for the first time, together with the additional benefit of a summary book review of Mr. Bryson. Nonetheless, getting back to GDP, if you Google GDP you get this: The following equation is used to calculate the GDP: GDP=C+I+G+(X-M) or GDP= private consumption+gross investment+government investment+government spending+(exports-imports). Nominal value changes due to shifts in quantity and price.

Consumption includes durable goods, nondurable goods and services. In order to get to an accurate approximation of consumption you must have a reasonably reliable estimate of a country’s population which is generally not available for most developing nation. In addition to that in all such countries the existence of a formidable informal economy circumvents any attempts to accurately determine consumption. Finally, the fact that it is practically impossible to get to an accurate figure for consumption in a country like Pakistan aside, the investment component includes spending on residential sector. In almost all developing nations documented real estate investment is nowhere near the actual level of trading. To top it all, if the government could actually determine private consumption and investment, would it not have been able to recover the taxes thereon completely?

Most importantly, why is a ratio which increases when you consume more, and hence save less, deemed to be an indicator of economic growth?

As regards government spending, how can government borrowing money, which is the case in most developing countries, and spending on itself be good economic growth? Look at the equation above, if the government doubled its borrowing and spent all the money, GDP will grow, but rest assured the economy is not stabilizing. Take another scenario where government spending goes up by 10 percent and imports also went up by 5 percent, assuming all else being constant, GDP will show growth; here trust your common sense and ignore the economists, this will be a disaster for the economy.

Which brings us to the only component of the equation which in my humble opinion singularly determines the strength and growth of any economy; (X-M), exports minus imports. If this is positive, the economy is doing great; contrarily if over the medium to long term it stays negative, as in the case of Pakistan, the economy is definitely at risk. So why did GDP become so popular? Because the rest of the components in the equation mask the effect of the critical part, (X-M) which was required if globalization was to take off. Accordingly, it made sense for the west, who stood to gain most from globalization, to propagate GDP as the key economic indicator through its multilateral lending arms. To venture a guess, now that the Globalization’s Frankenstein has come back to bite its creator, pretty soon GDP will be ditched and substituted by its critical component only, the trade balance; the sign are already there in the form of Brexit and the American elections. In fact if you Google it, certain economic pundits have already started questioning the usefulness of GDP.

From Pakistan’s perspective unless we dissect GDP and figure out the implication of all its components, we will continue with a struggling economy until comes the Minsky moment.

The writer is a chartered accountant based in Islamabad and can be reached at syed.bakhtiyarkazmi@gmail.com