Global economic policy, including that of the Budget philosophy, must take into consideration that cutting itself off from the trickle-down economy and dismantling elite capture as the main stumbling block in its path, requires understanding that the haphazard funding of sectors, and the people and projects within them, will not deliver equitable and sustainable growth. The growth rate may increase in the short term, but without dismantling the elite capture and the meaningful role of goal-oriented government, which involves different sectors and gets them to solve the main obstacles stated above, which our economy is facing. confronted – net and capture by elites – long-term economic interests primarily related to reducing income inequality, poverty and the climate change crisis.

The role of government should be more mission-oriented and involved in terms of sharing the fruits of progress. PTI’s overall economic policy, including the 2021-2022 budget, like previous governments for many decades now, has not embraced this mission-oriented approach. It has not corrected the underlying stance of the economy by moving away from obsession with GDP growth and less by ensuring a determined role of government. Mariana pointed out in her recent book “Mission economy: a moonshot guide to Changing capitalism”, and which charts a clearer course in this regard: “The ambition of government should be to trigger catalytic reactions across society, one of which part would be being a better partner for business – helping to steer change to meet societal challenges, offer clear rewards to businesses willing to contribute and reduce early high risk investments that companies tend to avoid. And by taking such risks, the government would be recognized as an active investor – not just a lender of last resort – and would gain public support to share the rewards. Without this role of government, the simply providing more funding to poor and middle-income groups will not enable them to move up the income ladder sustainably due to the lack of the environment. necessary institutional and overall government efforts in better economic direction.

And in exercising this role, the government should understand and reflect on the following lines, as pointed out by Mariana in her previous book “The Value of Everything: Doing and Taking Charge of the Global Economy”, while making a good correction. necessary as to which direction an economy should take. She said in this regard: “The question remains: what direction should the economy take so that it benefits the greatest number? Peak GDP growth, a standard answer these days, is far too crude to be useful: it sweeps away all serious questions about value. Another common response is fiscal probity, with governments having balanced budgets or even, as in Germany, a surplus. … The issue of growth must therefore focus less on the rate of growth than on its direction.

After witnessing decades of negative consequences of the neoliberal onslaught in terms of less government, unfettered markets and more privatization and this too under weaker regulation, the government should move away neoliberal jargon such as a ‘facilitator’ and ‘land leveler’ for the private sector. sector. It must also shed its role as leader of the economy as an equal partner in progress, alongside the private sector. Therefore, rather than, for example, opting for as many privatizations as possible, it should improve its own capacities to take the lead in the management of important economic sectors – airlines, railways, electricity supply, among others. others – like China and the Scandinavian countries do. , and many others have joined the tyranny of the private sector because of its ‘profit-over-people’ mentality that prevailed during the golden age of privatization and also under the neoliberal onslaught. .

It is high time the government of Pakistan and other countries with similar experience of neoliberalism reoriented their role. Mariana in her book “The Value of Everything: Doing and Taking Charge of the Global Economy” stressed about this reorientation: “Indeed, a vital way to tackle some of today’s most pressing societal issues. hui is to learn the lessons of historical periods when bold ambitions were set to tackle a difficult technological problem. Consider two lessons from man’s mission to the moon. First, the agencies involved, from NASA to DARPA, have developed their own capacities and skills. They did not outsource their tasks… Second, the Apollo mission required the collaboration of different types of actors and sectors, from aerospace to textile innovations. The objective was not to subsidize one sector (aeronautics) but to solve problems together, which required the collaboration of many sectors and different types of public and private sectors – even those in low-tech sectors such as textiles. . ‘

Pakistan needs this “bold ambition” to correct its economic stance away from the rate of GDP growth and from a naive stance of thinking about recovery, and this too haphazard and without much overall government leadership and role. mission oriented. Instead of offloading responsibility by leaning excessively towards privatization as part of a neoliberal thought process and better negotiating contracts in case privatization is necessary and even in the case of a public partnership- private, the government should build its own capacity and protect the interests of the demos. . This goal-oriented and mission-driven approach also requires government to shape and co-create markets with business, not just facilitate. Without this approach, the stimulus will most likely be quite a frustrating and hollow experience for the target masses. Otherwise, countries that have provided billions of dollars in stimulus, like the United States, have also seen income inequality rise and governments around the world have come under increasing pressure to move away from it. neoliberal thought process of limited government; people in addition to the stimulus, and more importantly, need the dynamic leadership of government and the institutional environment, organizational behaviors, and market fundamentals that this non-neoliberal, goal-oriented and mission-driven leadership creates. In addition, years of outsourcing by successive governments also contributed to the weakness of the public sector, in which it was not prepared – even to effectively deal with situations such as the global financial crisis and such situations. pandemic, and the private sector cannot be invoked to play a deeper role, because as such it has never invested much in this direction, due to its short-term interests in general, and also because it does not have the scale and the means to take on this role that governments can and must take on.

The economic challenges facing Pakistan are indeed very important, such as the rationalization of prices in all sectors of the economy (goods, services, real and financial), reduction of income inequalities, dismantling of the capture elites and the reduction of the climate change crisis, and therefore require the adoption of policies along the lines indicated above. The government, as part of a mission-driven, purpose-driven role, may even consider forming a comprehensive ‘Ministry of Economy’ and ‘Pakistan Development Bank’ – the details of which the authors have provided. in his previous articles in this regard in order to correct the economic situation of Pakistan. management and governance.

(To be continued)

(The writer holds a doctorate in economics from the University of Barcelona; he previously worked at the International Monetary Fund)

He [email protected]

Copyright Business Recorder, 2021