INCONSISTENCY OF POLICIES
Sep 6 - 12, 2010
The last three years of Pakistan's history have been the years of economic policy deficit. The non-elected economic managers hired from outside kept themselves busy most of the times in dealing with the IMF and in devising ways and means to dodge its dictates that were essentially anti-masses and growth-choking.
Policy formulation and policy implementation were subjects the part-time economic managers got little time to focus on. In the prior years, however, we often heard about the idea of structural shift ñ from agriculture to industry - that came from abroad, possibly from the proponents of market capitalism. The previous government showed some seriousness in making use of this foreign recipe, and ended up bringing down both agricultural and industrial outputs.
GROWTH PERFORMANCE OF COMMODITY PRODUCING SECTOR (AS %)
2000-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 F 08-09 R 09-10 P Commodity sector 0.8 1.4 4.2 9.3 9.5 5.1 6.6 1.3 0.8 3.6 A. Agriculture -2.2 0.1 4.1 2.4 6.5 6.3 4.1 1.0 4.0 2.0 Major crops -9.9 -2.5 6.8 1.7 17.7 -3.9 7.7 -6.4 7.3 -0.2 Minor crops -3.2 -3.7 1.9 3.9 1.5 0.4 -1.0 10.9 -1.6 -1.2 Livestock 3.8 3.7 2.6 2.9 2.3 15.8 2.8 4.2 3.5 4.1 Fishing -3.0 -12.3 3.4 2.0 0.6 20.8 15.4 9.2 2.3 1.4 Forestry 9.1 -4.4 11.1 -3.2 -32.4 -1.1 -5.1 -13.0 -3.0 2.2 B. Industry 4.1 2.7 4.2 16.3 12.1 4.1 8.8 1.4 -1.9 4.9 Mining/ Quarrying 5.5 5.7 6.6 15.6 10.0 4.6 3.1 4.4 -0.2 -1.7 Manufacturing 9.3 4.5 6.9 14.0 15.5 8.7 8.3 4.8 -3.7 5.2 -Large scale 11.0 3.5 7.2 18.1 19.9 8.3 8.7 4.0 -8.2 4.4 -Small scale 6.2 6.3 6.3 -20.0 7.5 8.7 8.1 7.5 7.5 7.5 -Slaughtering - - - - 2.4 12..4 4.1 .4.2 4.2 4.3 Construction 0.5 1.6 4.0 -10.7 18.6 10.2 24.3 -5.5 -11.2 15.3 Electricity & gas -13.7 -7.0 -11.7 56.8 -5.7 -26.6 4.7 -23.6 30.8 0.4 GDP (FC) 2.0 3.1 4.7 7.5 9.0 5.8 6.8 3.7 1.2 4.1 GNP (FC) . . 7.5 6.4 8.7 5.6 6.7 3,7 1.7 5.5 F = Final, R = Revised, P = Provisional
With the emphasis on structural shift program, the performance of both agriculture and manufacturing sectors has suffered. Agriculture sector growth, after touching the peak at 6.5 per cent in 2004-05, came down to one per cent in 2007-08. After improving to four per cent in 2008-09, the sector resumed its slide in the next year yielding a dismal growth of just two per cent. Similarly, the manufacturing sector growth, after touching the peak at 15.5 per cent in 2004-05, slid to a negative 3.7 per cent in 2008-09. Thanks to a low base, the growth of 5.2 per cent in FY10 gives impression of a strong comeback. The erratic performance of the two important sectors of real economy testifies the total lack of economic planning.
The foreign recipes are either based on the actual experience of highly developed economies or are designed by the brains behind the international corporatocracy, a global market mechanism that guarantees wealth generation for the rich economies at the expense of poor ones. Alan Greenspan, the ex-US Fed chairman and a free market economist mentions in his book The Age of Turbulence:
"The most encouraging aspect of productivity growth is how remarkably stable it has been for the last century and more. Over much of that period, a substantial boost in US productivity reflected the shift of workers from farms to urban factories and service establishments." He further mentions in a footnote: "Even to this day output per hour on farms is less than in non-farm regions, despite the remarkable gains in crop and livestock yields achieved since the end of World War II."
The Greenspan idea of productivity seems to revolve around numbers alone, for which he is renowned. However, higher global industrial growth at the expense of world agriculture is bound to create food security problems. This situation might favor the US and its giant agribusiness corporations as US agriculture is heavily subsidised and its farmers stand well-protected from international competition. But it spells doom for the poorer economies as nations can't be fed with nuts and bolts. Measuring productivity in numbers alone is insane, and economics sans human consideration is sheer madness.
Alan Greenspan, while discussing India's economy, writes:
"If mass manufacturing is ever to close the gap in standards of living between India and China, the rival to which it is so often compared India will need to encourage agricultural labor to migrate to the manufacturing sector in the cities."
"Growth of agricultural productivity has slowed since the 1980s. Although weather has been partly to blame, a highly subsidised government-directed agriculture that prevents market forces from adjusting acreage usage is the main culprit."
Since little has been mentioned about Pakistan's economy in the book, Greenspan would certainly suggest the same recipe for Pakistan ñ shift of farm workers to non-farm jobs and dismantling of all farm subsidies. Contrary to Alan Greenspan's advocacy of market capitalism, the renegade US economic hit man, John Perkins blames the creation of terrorism monster on the mutant virus of market capitalism. He gives a number of examples in his book Hoodwinked to show that the present day terrorist once used to be the farm workers in various parts of the world. The market capitalism and its main pushers, the US agribusiness corporations displaced these farm workers through market mechanism ñ by making their produce uncompetitive in the world markets. He writes:
"In Mexico, many of the guerillas and narco-traffickers once owned farms where they grew corn. They lost their livelihoods when the North American Free Trade Agreement (Nafta) gave subsidised US producers an unfair price advantage."
The Organic Consumer Organisation describes it thus: "Since Nafta came into effect on January 1, 1994, US corn exports to Mexico have almost doubled to some six million metric tons in 2002. Nafta eliminated quotas limiting corn imports but allowed US subsidy programs to remain in place - promoting dumping of corn into Mexico by US agribusiness at below the cost of production. The price paid to farmers in Mexico for corn fell by over 70 per cent..."
Instead of blindly following the advices of free market economists and the dictates of foreign lenders, we will have to have an understanding of Pakistan's economic strengths and weaknesses. The country's economy is essentially agro-based and agriculture is its strength. We will have to think in retrospect. Are economic policy failures responsible for the creation of Talibans in ex-NWFP, Punjab and elsewhere? We will have to give the younger generation its due in the shape of quality education, skill-based training and social security.
What we need is good governance and real democracy that is the rule of the people, not the feudal lords. Through meaningful and effective land reforms, we should engage in the all important task of agriculture resource reallocation. We don't need to divert the farm labor to industry, rather we need to socially uplift farm workers and encourage them to perform to the maximum.