Hard reset? How Pakistan can retune its chaotic economy?
Pakistan is on the brink of bankruptcy, maybe its financial crises would be even worse than of Sri Lanka. Fact is its balance of payment is out, it is buying more than what it sells. General public is maniacally obsessed with buying imported items. Pakistan’s financial institutions are extractive and does not promote trade, in-fact they are on a mission to leech away every single dime from already overstrained individuals and businesses. Its system is roughly imitator of ancient Rome or of England. Certain sections of gentry are getting benefits of turmoil on the expense of common citizens.
To bring her out of economic vortex, at first it has to change her way of how its people spend on buying anything of everything. If its people would like to survive and do not want to be deprive of joyful basic amenities of life they must have to resist somethings like although basic necessity it has to refrain from using petroleum or its byproducts.
Every second or third man has its own motorcycle or car of which they have merely a productive use other than of swag and show-off. Equivalent is true for consumer electronics like smartphones, for illustration in urban areas every other boy or girl whether employed or not have more than one smartphone, when questioned how’s the use, reply is they predominantly exhaust these for social media or off swag.
Pitiably both of earlier mentioned items are not produced in homeland, instead are of being heavily imported into. Some will argue of these being produced domestically but fact is import general manifest (IGM) screamingly tell us that parts and raw material is being imported for consumption not for value added manufacturing which in turn lead to exports but to be consumed locally.
Argument is this is helping prevent drain of exchequer, its tech savvy, but to what extent, what is the real benefit, off-course they end up in trash, littering rivers, streams, and ocean and most importantly dollars are banished forever. People would still be able to survive if they are denied of access to smartphones and motorcycles, it’s better to preclude them of consuming petrol and exchequer when they are not good at fetching out best value in terms of economy. If this bait is not causing any catch, it’s better to thwart them of fishing, maybe they are not capable of to embark on this voyage.
Another thing is there is nonexistent innovation, zero research and zero development in any field leaning towards zero evolution and nonappearance of creative destruction. Country’s major industries like agriculture and textile mostly rely on government for incentive of some–kind–of bailout; they are producing if at all on centuries old methods or abandoned technologies, hence are incompetent in surviving on international level.
Patronage is causing horrendous calamities; they know that they would still be paid, if or not they did a fabulous job or deplorable. The solution may include factory reset, or in more common words “the hard reset” as they call of economy, maybe bankruptcy or even meltdown of economy and or dissolution of society is in great interest of the nation. From the ashes or leftover it may give a chance to fragment of society who may pioneer modern innovative ideas and grow next version of civilization and solutions. Financial or Political institution may become more inclusive and less extractive.
If this solution seems not so viable or it appears more hostile; there are certain things that are needed to be updated if not changed. Focus must be put on education, research, development and or on innovation; uninventive segments of society, industry, economy and or system must be abandoned if not expelled.
Land is the resource that is unevenly distributed in Pakistan just like her predecessors or in medieval Europe; it must be repurposed. Certain non-profitable crops must be dropped-out of cultivation like in Iran, they cultivate cumin, saffron, pistachios, nuts and other highly-profitable crops leading to exports and make best use out of available land; whereas we still predominantly cultivate, wheat, rice, sugarcane and staple crops likewise and still import them to coup-up the food shortages. What if we exported ten kilos of pistachios at the rate of three thousand per kilo and in exchange imported ten kilos of wheat at the rate of one hundred per kilo, our trade would be far in surplus.
Degrees are being awarded on the basis of anyone who pays the university fees not on the basis of research. Our universities are mere diploma mills producing clutter. These universities have not even taught them to produce diesel fuel out of Thar coal; it would be better to mimic what universities in China or India doing right now. The degree awarding criteria should not be what candidate spends in of monetary terms but what new innovation they come-up in the end as an outcome to their time spent in doing research. Nourishing Mother or in more classical term “Alma Mater” must relinquish its “Alumna” child when it reaches “Matura” a certain maturity level and grant degrees.
An all-inclusive tax policy may also work, certain segments are taxed poorly and certain are quenched, there is a need to restructure taxation system and slabs. If you would like to bring-in more tax payers then tax rates must be decreased in all segments, if certain segments are not being tax then they must be.
Similarly centralization of all kind of taxation systems is the key, you have to abolish hierarchy and different institutions at federal, provincial, district levels and form a unified taxation agency; this will make a common sense and citizens may know that they have to deal with one authority.
Bailouts, subsidies in all sectors must be revoked and each segment of economy must be brought in free market; there should be Zero room for state patronage for any sector. Only those should be allowed to import who have had exchequer of same amount on their credit due to export they made.