The prevalent sense of injustice is inflicting the greatest punishment of all. Parliamentarians and courts overrule the laws overriding any pay cuts relating to them while taxpayers are squeezed further; judicial officials and opposition parties complain that the government passes laws absolving past crimes whereas in reality they all collude in the exercise; desperate people work for little pay and no social security, often in jobs well below their expertise. In the confusion, what citizens see is that special interest groups are still in a position to influence policy at the expense of everyone else.”

No, this excerpt is not about Pakistan, but is in fact Nikos Konstandaras’s latest commentary on the state of affairs in Greece, published last month in his leading Greek newspaper, Kathimerini. However, present day similarities between the two countries are startling. Six years into the Greek crisis, it is becoming increasingly difficult to hope that it will end anytime soon. Likewise nearly 8 years (starting from 2007) since the beginning of our ‘current’ downward economic trajectory and there seems to be no end in sight. Perhaps this time around, in 2013 we expected too much: that the PML(N) government would help set the economy back on its feet within a couple of years; that we could put the problems that had brought us to the brink of bankruptcy behind us; that both our political and economic governance styles would change with this incoming government sweeping away incompetence and corruption.

It now seems that may be it would indeed take a revolution to overcome frameworks, mentalities and behaviors developed over decades. Unfortunately we have had a relentless devaluation at every level where Pakistani society has lost a great deal and gained little in return. The dilemma in our case being that we are not suffering from a single malaise but instead happen to be simultaneously caught in two traps – economic and political. Over the last decade, Pakistan has been in the grip of three main follies: non-productive borrowing, excessive money printing and inflation. But strangely these three follies are accompanied by somewhat an unlikely partner: declining growth. One would have thought that with so much of liquidity being pumped into the system, the GDP growth should have either picked up or at least sustained itself, but as the figures tell us that this has clearly not happened. Obviously the money has been going into the wrong areas and the wrong hands. Result being that the undocumented sector has flourished at the expense of the documented one. Further, the debt in the last 6 years has climbed at an unprecedented rate putting further pressure on an already faltering external account. It is believed that with the current level of total national debt, every Pakistani stands indebted by nearly Rs 100,000. This would still have been sustainable provided the money borrowed had been well spent. However, this has clearly not happened since the percentage of Pakistanis at risk of poverty or severe deprivation (on global benchmarks as per the latest UN report) has climbed in the corresponding period - today in 2014 it stands at as high as nearly 70 percent of the total population. Not to mention the fact that Pakistan will also end up missing quite a few of its Millennium Development Goals.

Ironically, the political trap may be more dangerous than the economic one. The nearly 10 billion dollar bailout package obtained from the International Monetary Fund (and partly from the World Bank) may give the government some temporary relief on budgetary pressures, but for the general public it will make life more miserable as the mutually agreed measures have not been thought through. Meaning, it fails to account for the political and social implications of forcing major changes on people in an environment where they are already reeling under severe economic pressures. Little wonder that in less than eighteen months of PML(N)’s rule, parties like the PTI (Pakistan Tehreek-e-Insaf) appear to be politically benefiting from this discontent and finding traction with the public like never before. Meanwhile, the government, still stuck in a time warp, appears unable to revoke its past mindset and continues to fail in pushing through some key and now urgent reforms.

The good news is that the problems being faced by Pakistan today are by no means unique and this was precisely the reason for my quoting the example of Greece - in contrast a developed and a Euro-Zone economy. Further, with sound policies and a prudent vision, economies like Spain and Bangladesh can achieve a turn around and successfully see through the post 2008 global recession then there is no reason why we cannot do the same. Bangladesh today is again growing in excess of 6% and Spain just clocked a year end growth rate of nearly 4%, a level truly phenomenal for a developed economy. For decades, economists have been building models to try to understand the mysteries of what drives growth. Is economic destiny shaped by culture? Or by government institutions? Or by patterns of industrialization? Years of work on growth theory suggests that there is no secret recipe for a developing nation to achieve prosperity. As it turns out, a simplistic reversion-to-the-mean approach explains economic growth just about as well as some other more complex approaches do in predicting which countries’ economies are poised to boom or to shrink. What it basically means is that out there in the practical world for every good decision there is a reciprocal bad one and ultimately in the end, the overall development and losses have to even out – the equation has to balance. This research also puts a new onus and an added responsibility on respective leaderships of countries competing in the tough modern day economic world.

To prove its point, the research points to the example of how the analysts had predicted that the Soviet economy would soon surpass the American economy in the 1960s, that Japan would do the same in the 1980s, and that the US had achieved a new era of perpetual speedy growth in the late 1990s, but none of these have come to pass as somewhere in-between the respective national economic governance suffered. In other words, when it comes to lifting nations’ fortunes the quality of decision-making by the leadership matters the most!

The writer is an entrepreneur and economic analyst.

kamal.monnoo@gmail.com