Politics is in the air, the old guard seems ruffled, there blows a breath of fresh air due to a new contestant in the block, change is being talked about, hopes are being raised and the moon is being once again promised to the people of Pakistan. A word of caution though, much against one’s wish the reality is that there are no shortcuts or quick solutions to the economic impasse we find ourselves in today. Our need to stir investment, promote growth and create jobs in a largely mismanaged and, by now, a dysfunctional economy is a tall order (to say the least) and that too when it is almost mandatory that any turnaround strategy must also include the crucial element of equitable growth to first arrest and then bridge the dangerously increasing gap between the rich and the poor.

 The problems, issues or challenges (whatever you would like to refer them as) are so diverse that tackling an area or two in isolation will just not do. Whosoever, assumes the mantle will need to separate the doable from idealistic, and this is why it is so important now for all the political parties to lower their benchmarks and be very prudent with their announcements in order to avoid embarrassment and disillusionment later on.

One of the first things we were taught in management school was the importance of projections, get them right and you are a performer, while, on the other hand, unrealistic targets can make a perfectly good performance appear ordinary or even disappointing. The solutions can only be effective through a holistic approach that carries a central objective and undertakes policies to tackle all problem areas in tandem. And in doing so, the State needs to be consciously aware of some sour trade-offs between desires and realities, which cannot be avoided. Some compromises, which may be necessary between concentration of wealth vs growth/development, employment vs social equity, inflation vs growth, role of the State vs private sector freedom, equal opportunity vs red carpet to investors, maintaining competitiveness vs cold financial viability, free trade vs protection to the home industry, support/subsidy vs State’s social responsibility, fiscal discipline vs political/security necessities, austerity vs perception and, last but not least, selective inequality vs unity of the nation.

Though most of these contradictions can be overcome in the long-term through comprehensive policies designed primarily in peoples’ interest and State’s advantage, in the short-term, however, these dichotomies will remain and may even form an integral part of the proposed solutions. The new government needs to take all these political, security and social challenges into account when strategizing to promote job creation and equitable distribution of wealth within the country. What it needs to remember is that in general the lack of adequate investment in the people of Pakistan over the last three decades, inequitable distribution of wealth (not just amongst people, but also intra and inter province) and growing inequality (rising gap between the rich and the poor) represent a phenomenon that poses a strong threat to our national security-cum-unity, and needs to be addressed post-haste.

The debate about inequality is an old one. But in the wake of present financial crisis and an unprecedented inflation its tone has changed. For much of the past two decades, the prevailing view among the world’s policy elite was that inequality itself was less important than ensuring that those at the bottom were becoming better-off. Now the focus is on inequality itself, and its supposedly pernicious consequences.

Recent studies reveal that countries with greater disparities of income not only fare worse on all manner of social indicators, but also that inequality perverts politics owing to an unhealthy clout of a plutocratic elite. If these arguments are right, then there might be a case of some fairly radical responses, especially a greater focus on redistribution. The old consensus of boosting growth and combating poverty may still be valid, but not always. We now need to differentiate between the causes of inequality and then focus on ways to increase social mobility. At heart the free market model may be a meritocratic process, but in real life rules and institutions are often rigged in ways that limit competition and favour insiders at the expense of both, growth and equality. We need to refocus government spending on those that need it the most.

To protect the nation from an internal strife one feels (upon viewing the present global economic scenario) that a change in the mindset of both the guiding intellectuals and the decision makers is now overdue. The mad pursuit on part of Pakistan for pushing too strongly on free-market policies needs to take a back seat, at least for the time being. One has to take into account how the rest of the world has already begun to depart from the idealised ways of neoclassical economic theories.

China provides a living case study. It protects its markets, industry and jobs by jealously guarding it with hands-on measures to ensure competitiveness to its home production and by assuming responsibility for providing the basic minimum needs of its people. Today’s China follows the Deng Xiaoping’s vision of “market economy with social characteristics.” Its way of working not only provides profound insights about ways to modify capitalism, but also warns us about what not to do. Experts are increasingly getting convinced that China has succeeded because it did not buy into the modern day model of more debt and less regulation; nor did it take the route of so many developing nations by accepting World Bank and IMF conditionalities and structural adjustment programmes (SAP).

People are also very concerned about how each political party views the correct size of the State’s footprint in governance? They are looking for hope and leadership that has the courage and competence to manage difficult sectors, instead of being content with simply passing the buck. They will be eager to know the balance the new government strikes on privatisation. The list of poorly governed Public Sector Enterprises (PSE) grows longer by the day - from the Steel Mills to the national airline to the State oil company, the PSO, (once a strong Fortune 500 corporation and though still on paper posting a very strong performance, stands mired in circular debt) to the monopolistic Railways (across the border the Indian Railways not only makes a healthy profit, but also provides one of the cheapest global facilities both for cargo and passenger services), and to the national insurance corporation, the deeds of which can easily put the now infamous AIG to shame. However, more importantly, from the government’s standpoint, it needs to remember that the PSE have a key role to play in good governance, like maintaining the leverage of the State, serving as delivery instruments of good governance, anti-trust, incubators, public support mechanism, stoking nationalism and keeping the nation gelled, defence and security, centres of innovation, leading the way in research and development, price and markets stabilisers, potential revenue earners, tools for equitable distribution, and, last but not least, as contributors to job creation.

A large portion of Pakistan’s population falls in the age bracket of 18 to 38, representing youth that is frustrated as it sees no light at the end of the tunnel and the middle-aged population that feels time is quickly running out for them. Regardless of who forms the next government, if they truly want to make a real difference then not only will they first need to find that right combination between the role of the State and private sector autonomy, but also do so quickly!

    The writer is an entrepreneur and economic analyst.

    Email: kamalmannoo@hotmail.com