Daily Times

In a finite world inhabited by mortal beings, the only constant can be change; even striving for betterment is striving for change. Over the centuries change has adopted fresh dimensions vis-à-vis quantum and, more worryingly, speed. Previously, just a few centuries ago, change in quality of life occurred at a snail’s pace, much like watching the grass grow on a golf channel. Thereafter, the Industrial Revolution pushed the speed of change significant notches up, and today, in the information age, change competes with the speed of light.

Unfortunately, for Pakistan, we somehow jump upon every change bandwagon when it is already running out of steam. Historically, we embraced socialist nationalising right left and centre at a time when western think tanks had already started proliferating theoretical proofs supporting capitalism. And rather amusingly, while we continue to wallow in the throes of ‘big government’, the developed world had gone a full circle of privatisation and are back to practising public sector ownership, or at least more government intervention and regulation. There can be an argument that the late worm avoids the early bird, but in our case by the time we turn around, the bird gets hungry again.

And now it is globalisation’s turn. Ironically, we did not embrace globalisation as a choice; rather, it was thrust upon us by international organisations through various conditionalities included in the fine print of loan agreements disguised as programme agreements. And borrow we had to simply to counter the cross border hostilities with our belligerent neighbour in the east; imported ammunition was and still is expensive. Systematically, successive governments dismantled the protectionist policies and regulations, thereby allowing the free flow of capital, goods and services and enforcing copyrights, none of which were conducive for local businesses, in the short or the long term. Consumer choice and foreign investment became the mantra, with everyone ignoring the obvious resemblance both these doctrines had with a Trojan horse.

In essence, what have we achieved in the last few decades whilst obediently pursuing economic theories that were supposed to have strengthened our economy? We nationalised and took the steam out of a budding and robust private sector, and thereafter shoved them unprotected to compete with business umpteen times their size. How can our domestic banks compete with the kind of capital available to foreign financial institutions? In the real world, with these kinds of odds, David’s chances of beating Goliath are next to nothing. Global financial markets fix the price of every commodity, price that is fundamental for global ‘free trade’ and, in turn, can seriously impact third world economies. Is it even logical to think, let alone believe, that our national airline ever had a chance in a ‘fair fight’ against a competitor financed by petro dollars and overly protected in its own domain?

Dear readers, most of you understand the concept of the home advantage from the world of sports, especially cricket; just migrate it to the business world to better understand the concept of protectionism. How are we are not as passionate about our domestic businesses as we are about our cricket team? A current look at the national data page of the State Bank of Pakistan website places the ‘feel-good’ narrative of the domestic economy in a different perspective. Manufacturing is just 12.1 percent of the Gross Domestic Product at current prices. And for those unable to digest anything to do with economics, look around you and try to establish how much of your consumption originated in Pakistan. Yes, we pay a hefty profit for showing films from India who we are almost at war with. No, assembling cars is not similar to manufacturing them, and yes, fast food chains import their food items.

After almost 70 years, we even need others to build our roads and provide electricity. We seem to have completely embraced globalisation without figuring out where to get the money to pay for the promised quality of life provided by others. We could believe that they do it for love and friendship, but wouldn’t that be the height of gullibility? And now that we hardly manufacture anything, and can’t even build our own bridges, the winds of globaliation are changing colours.

As per netvine, “Since 2008, more than 3,500 protectionist measures and administrative requirements have been instituted globally.” Even the IMF, the great supporter of globalisation and implementer-in-chief of the Washington Consensus, has in recent times repeatedly acknowledged that some forms of control on flow of capital are desirable. Whether due to 3D printing, returning manufacturing to home markets, or because of Artificial Intelligence taking over call centre jobs, or as a result of decline in oil trade due to fracking, alternate energy or efficiencies, or by virtue of technological gains in agriculture, there is constant whispering on the net about the coming end of globalisation. And on the global political stage, there aren’t just whispers, there are political promises to raise tariffs and build walls.

In a world moving or U-turning towards self-sustainability and mercantilism, the old policies of export-oriented and import-substitution manufacture would once again take precedence. Is Pakistan prepared for this newest world order? Presumably not at all, or at best ill prepared. Even the self-sustainability paradigm needs to be revisited if the nation’s agricultural produce is in a decline and we are even importing pulses. While all of us were busy trying to save our precious democracy, somebody stole the rug from under our feet!

Admittedly, this is not happening tomorrow, and some may even argue that it can never ever happen. Perhaps true, but then there are multiple risks of being completely dependent on others to the extent of even our cheeseburger, the Minsky moment being one where asset values collapse suddenly and recession sets in. According to Hyman Minsky, trade deficits are a contributor to the Minsky moment. By the way, reading Minsky is worse than reading War and Peace, albeit I have formulated a conspiracy theory that nobody has ever read the latter end-to-end!

We can’t keep borrowing dollars to pay for our imported stuff and imported roads forever; people will simply stop lending, the party will end, and then everything will be a mess. While my inherent prejudices generally restrict peeking across the eastern border, but it would appear that they are well aware of the coming storms. Their policy of “Make in India” is poised to counter the pros and cons of globalisation, whether it continues or dies. In February 2016, their efforts in this direction generated investment commitments to the tune of $230 billion.

It is earnestly recommended that our state seriously nudge the nation towards the old but gold slogan of “Be Pakistani Buy Pakistani.” In a world where international economic thought keeps changing, the only thing you cannot go wrong with is made in Pakistan.

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