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Tuesday, June 08, 2010

Pakistan Economic Research Report
By Hammad Cheema | 3264 Views | 18 Comments |

| Economic & Finance

Pakistan Economic Research Report

An analysis of the Pakistan’s Economy along with other countries

Author: Asad Mahmood

The aim of the report is to analyze the current Pakistani economic state and provide guidance towards a socio economic policy in line with the manifesto of the party. An extensive secondary research was carried out examining and presenting various viewpoints. The development challenges for Pakistan include a complete overhaul of the current economic system....

PDF of economic report

Comments

By Asad27 @ Tuesday, June 08, 2010 2:21 PM | (Asad27)

A well researched report, the author welcomes comments/suggestions and encourages all to read.
Thanks
Asad

By Pakistan Tehreek-e-Insaf @ Tuesday, June 08, 2010 2:37 PM | (Anonymous)

Comments from the following blog entry: Second Economic report by Insaf Research wing (IRW) published, located at: http://insaf.pk/News/tabid/60/articleType/ArticleView/articleId/4060/Second-Economic-report-by-Insaf-Research-wing-IRW-published.aspx

By Haroon @ Wednesday, June 09, 2010 10:46 AM | (safarian14)

Great effort – few critics

I liked Chapter 5 and 6 but by the time I got there I was already tired. format. You have some very interesting stuff in Chapter 5 which could be tempting for entrepreneurs, like not having enough storage facilities for perishable commodities like fruits and vegetables.

If I were you I will highlight the facts in Chapter 5 without going too much in the history and background (rather keep them as an addendum). I am saying so because you need to assess who your audiences are.

ADA is a good idea but I am not aware how many governmental bodies currently oversee AD; maybe reforming current structure will be more cost effective i.e. build on the current structure. We have the law but lack implementation.

Excellent Work

Haroon Ali

By frazbama @ Thursday, June 10, 2010 3:28 AM | (frazbama)

Very good work.

Eventually we should get down to addressing: what is the vision and objective of the plan? what are we looking to achieve?

What is prosperity? Is it the average amount of money in a person's pocket? Or is it the value of the individual in terms of his/her education, knowledge, skill etc?

The primary benefit of Marxist philosophy is the ability of the state to add value to the most valuable resource of any nation - it's people. The only revolution to have emerged in the last 10,000 years (all religions or ideologies were merely reformist desiring to perpetuate the trade-for-profit capitalist systems) that radically sought to address the disparity between the rich and poor was communism because it focuses on the root of the problem - i.e. the concept and advocacy of private property.

If it is felt that a country's most valuable resource is its people, than communism as a system is the best way to organize the factors and means of production through the elimination of private property.

If however, we persist with our faith in a mixed or market based capitalist system (Islamic or otherwise), than there are only two ways nations with these systems have risen.

One is through colonization: a) by securing cheap raw materials from physical control of colonies etc. and b) by ensuring that value-added goods are given monopolized market access to the colonized nations by the occupying nation.

The other way to succeed in the market / mixed capitalist system is as outlined by the dramatic growth of countries like Japan, Korea, Germany, Taiwan, Malaysia, Thailand etc. Though these nations may have had good leadership and either created sound institutions or had a history of such, the only reason these nations took off so quickly (despite being poorer than Pakistanis in 1947) was the blessings of the United States of America.

The United States of America wanted to suppress Communism at all costs. Being the only capitalist state that had wealth, currency and infrastructure left intact after World War II along with a very well off population and a growing middle class, the United States of America was able to adjust the levers of the market systems to ensure that countries like Japan and Germany never fell into the lap of the USSR and Communists. The USA simply opened its markets to all goods produced in these countries. Just as USA did the same for Korea after the Korean war. Just like the USA did the same for the 'Asian Tigers' in South East Asia after it's failure in Vietnam.

While the USA gave plenty of credit for the industries of these nations' owners of the factors of production, the real reason they managed to take off was due to an unfettered access to American consumer markets. If someone is told that whatever products they produce will be sold, that person will never stop producing. It is basic human nature. This is why the 1950's Japan, with extremely poor quality of products managed to stay in business.

Unfettered market access - as provided to Thailand, Malaysia and a host of other countries is the only proven way out if sticking to the market economy is the ideology. American market access was the primary reason of success for Asian Tigers.

If Pakistan wishes to stick to the capitalist system (no matter what form it is - be it more Islamic or less), than it will need the same type of market access and hope that the best capitalism has to offer eventually, after 3-4 decades filters through to the general population. Though the level disparity will continue to remain, as seen even in successful capitalist nations, but it at least provides a way forward for raising the standards of most valuable resource - i.e. a nation's individuals.

All plans that do not first focus on ensured market access are irrelevant.

Of course that is if we want to stick to the capitalist system.

Communism is the only system which by destroying the 10,000 year old ideas based on the advent of the concept of private property, that can ensure a system whereby the most valuable resource, the nations people, are given the best possible skill sets in education, health and confidence.

Often we hear of Pakistani and Mujahideen commanders wax eloquent about the task of bringing down the Soviet Union, a super power. This victory is seen as some kind of divine gift and proof of ideological superiority.

Setting aside the momentary glee, what should be looked at is what happened to the victor and the one who suffered defeat.

Russia, through Communism had secured for itself the most capable and advanced population in the world. Yes, the economic system was unsustainable, but that 'defeated super power' is within 15 years, back on its feet and again rivaling the sole super power for dominance.

Where are the Mujahideen? Where is Pakistan?

Communism may have failed, but it has given Russia the ability to stay ahead for hundreds of years.

When your population suffers from incompetence, suffers from a system whereby the few owners of private property ensure they maintain a firm hold on resources, the most valuable resource of a nation, it's people, will remain underdeveloped. No matter what ideology, what economic system or plan, what political system that comes into place, it will be futile trying to meddle around with monetary and fiscal policies if the basics are not there.

Communism may be extremely inefficient, but it is the most efficient when it comes to ensuring skills, education and welfare are provided to its people. Because human resource development is difficult to 'measure' and 'calculate' when compared with definitions of 'growth', 'profit' and 'productivity', the most valuable contribution of communism gets overlooked and the focus remains on the inefficient side such as the way an industry works or agriculture works etc.

If on the other hand, the idea is to stick to the Capitalist system, then there is only one criteria for success (as Pakistan is no longer in a position to forcibly colonize anyone): ensure complete access to markets - namely the American or European market - just like Malaysia, Thailand and Japan did.

I hope this important report by IRW adds this dimension of economic systems.

By Ahsan @ Friday, June 11, 2010 8:31 AM | (ahsan04)

I am taking the liberty of commenting on your report as a 'member of other nationality'. I am interested in Pakistan because it was a country carved out of subcontinent for Muslims and the fact that it was Godsend opportunity to shape the destiny of Muslims in subcontinent. Something else happened though, a picture of complete chaos and embarassment has emerged after 60 plus years of independence. A lot of well wishers want to see a change in the status quo and we believe Imran Khan & his party have the leadership skills to set that change in motion. Hence this interest.

Your report is an informative and well researched piece of work. It talks about the strengths, potential opportunities, scope for improvement within the system and suggestions for PTI policy formulation. One of my suggestion would be to include graphs or tables. It provides an easier and meaningful snapshot.

The first 43 pages are about the various economic systems around the world, their methodologies and implementation. The background information forms two-thirds of the report, there is a scope to decrease this and increase information related to Pakistan.

India has seen the emergence of middle class in the past decade, is there any parallel learning that can be part of PTI strategy e.g. opening of World class technology institutes, computerisation of Public sector organisations, use of IT in establishing a welfare system etc. Analysing an economic success in a culture very similar to yours may have more clues than looking at Chavez who was able to fund programmes based on oil revenues.

I see no references to your official labour stats say from Pakistan Labour Office, Ministries etc.

Looking into ways to increase factory output or modernising existing industry(say leather, textile) should be high priority. I am sure there is enormous potential in increasing output. Expanding exploration into natural resources is another one.

For all of the above to happen, establishing rule of law is very important and the independence of Supreme Court is a blessing in that direction.

By Asad27 @ Sunday, June 13, 2010 1:33 PM | (Asad27)

Thanks Ahsan, Haroon and frazbama for your comments.

The report is just the start for us as a party in terms of developing a comprehensive economic policy in line with the party's stated goal of creating a welfare state.

Ahsan, The reason for focusing on other countries and analysing different economic systems is simply to educate the party members and also for policy makers to be aware of the factors which led to the economic growth of Singapore, South Korea, Taiwan etc.

I have deliberately restrained from using some of the official stats from Pakistani ministries simply because of their unreliability.

Certainly India provides an example of what an educated class can do for the country but one must remember the western system of capitalism is based on consumption rather then self reliance. How many major companies of India do the western consumers know? Whilst India has its positives, but unfortunately the much tooted economic success has not trickled down to the country’s poor. Which is where Chavez comes in.

By Ahsan @ Sunday, June 13, 2010 11:49 PM | (ahsan04)

Thanks for your reply Asad.

This being the preliminary report I am sure in the future you will try to find linkages in the strengths of your economy and that of the reasons for growth in Singapore, Taiwan, South Korea etc. Some of the disconnections that I see are: US aid was used to build the country, land reform and insulation from labour unions. Correct me if I am wrong but these three vital issues have not been tackled. Pakistan army pockets all the aid, land reform faces stiff resistance because feudal lords are part of the power structure and am not aware of the extent of the problem of industrial relations in Pakistan. I want to address a few issues in the category that I think need a lot of attention.

Growth of Middle Class

I want to address your dismissal of the growth of Indian middle class as having not benefitted the poor with a western comparison of ‘how many companies are known there’. First of all let’s not look for western acceptance, my attitude is who cares? Business is all that matters. Having lived in Australia for sometime it is well known that all major banks, telecommunication and call-centre services are all off-shored in India. They are not big brands (Infosys, TCS, Wipro, Satyam etc) but with all the manufacturing being done in china for western democracies how many Chinese global brands do we know about? These Chinese manufacturing units and Indian IT services employ people in millions and thus people avoid poverty. Tomorrow these Chinese and Indian companies may spin-off into their own and may have global brands. So there is an intermediate step of gaining foothold in the market with the strengths you have. In my view any economic strategy of PTI should include ways and means of growing the middle class. A big consumerist middle class drives consumption at an exponential rate and thus provides opportunities to the downtrodden.

India has a strong emerging consumerist middle class in the range of 300 million that grew on the back of a cultural change to acquire education and private entrepreneurship. The success of Indian IT firms attracted them in droves and now the government has asked one of the industry captains to chair the ID project. Lots of villages have IT enabled services and they are able to trade through web. The digitisation of land records is taking ground as well. World class technology institutes is the starting step, tomorrow graduates from Namal University will be an asset to your country. ‘The World is Flat’ by Thomas Friedman has interesting facts about the Indian story.

Moreover look at the growing Indian middle class as a business opportunity, if ‘Goras’ are clamouring for it what stops you guys at preparing a strategy to tap into that market? I know there are issues with the relationship but things will get better.

IT enabled services

Given the crisis that you have, implementing a comprehensive social security system is the need of the hour. This may also provide an opportunity to build strength in developing IT enabled services to life and expanding in other sectors. Say digitisation of land records. How ready is PTI to implement a comprehensive social security system? Chavez could uplift people on the back of the oil revenues, I am wondering where the revenues are going to come from? Tax reform, land reform?

I look forward to your next part.

By Asad27 @ Wednesday, June 16, 2010 2:47 PM | (Asad27)

Thanks Ahsan, appreciate the suggestions and agree the road ahead is rocky and an uphill struggle for Pakistan, the economy is a quagmire of interrelated interests as the report succinctly highlights.

Interesting points, but I don’t believe the future of economic restructuring for Pakistan lies in copying the Indian/Chinese model of economic growth. The future lies in creating a sustainable, inclusive economic system. The effects of globalisation are far deeper then they first appear to be. One of the main factor to the growing middleclass in China and India is simply due to the lower labour costs then Western Europe and their economy moving beyond services. As wages catch up companies will look to offshore to cheaper alternatives perhaps, Philippines, Vietnam or any other place where they can reduce their costs. Reality is it will take the BRIC economies a long time to be comparable to the living standards in the West as their current policies have excluded large parts of their population to poverty.

I agree the way forward is the creation of a welfare state in Pakistan which is the stated goal of our party and inshallah we will get there.

By dr.akbar @ Tuesday, September 07, 2010 11:52 AM | (dr.akbar)

A neat report! I agree with the conclusions that the way forward is getting rid of government interventionism and allow smooth functioning of the private sector....

There are a number of points i would like to mention but would take a dig at few of them as of now,

1. On page 8 it is mentioned, "The unbridled and unregulated western economies however came close to a meltdown beginning 2007 and came to rely on government for massive bailouts. The state’s role as the only powerful force to reverse the present decline now remains unchallenged."

--- Could you specify any place/country on earth where the market is "unbridled" with government's monetary (mis) management and the fraudulent Fractional Reserve based Centralized Banking system that keeps on churning fake/Counterfeit money into the market increasing the supply of money, taking away it purchasing power! An unbridled and unregulated market- A free Market-- would have a commodity of exchange that is selected by it (had been gold or silver-- throughout ages) and not imposed upon it by government intervention and would have honest full reserve banking... There is no free market Capitalism as such in present day world---- what exists are only semblances of a free market--- instance's of lesser interventionism---

Well you won't find much common ground between capitalism and socialism except that they both agree "that Interventionism always fails" --- but the failure of one intervention serves as pretext for even bigger government interventionism since all government cares about is to increase its power and to increase it money! The Sub-prime Mortgage crisis of 2007-08 shows exactly that .... for it was in the wake of dot com bust of 1999 that the bush administration intervened to keep the interest rates lower than what the market rate would be and stimulated a bubble in the housing industry --- in theory the outline is that lower interest rates and market stimulus temper with the "time preferences" of the people and sends out false signals to the market so as to depict greater savings which causes the investors to embark upon long term unsustainable projects as a result of credit expansion by the banking system. Mal-investments and overcapacity becomes evident as the people return to their old time preferences and interest rates push up as a result of inflationary spending's and credit expansion --- as soon as the banks chicken out, the better... The bubbles are kept afloat by continuous stimulus packages otherwise the bust will ensue, the longer government intervene to maintain the bubbles the greater will be the bust--- it should come as of no surprise when a wrecking recession hits the US (expectantly-- bond market or the stock) exactly because of the Obama's stimulus ---"states role in addressing the flaws".

This is the outline of the Austrian theory who very rightly had been predicting the bubbles and the busts of the 80's, late 90's and also of 2008 Fannie and Freddie mortgage crisis... It has been more that 50 years of we told you so by the Austrians but the its the government that put it aside in favor of Keynesian Economics that tell it to spend beyond its means and that is what the politicians want to hear.... the outline of the theory is mentioned in Human Action/Theory of money and credit by LVM, America's great depression by MN Rothbard or for an easier review see Lessons for the Young Economist by Robert P Murphy...

2. The only way to become a welfare state is allow the free market capitalism... We can't move water uphill and if Nordic states like Finland or Sweden are examples of where we want to be --- we would be completely bankrupt as they are now... their model of a welfare state is highly unsustainable--- http://mises.org/daily/4655

3. I hope the next economic paper would tackle the issue of money and the banking system in detail--- though Islamic banking is endowed with impressive names for its functional mechanisms-- it depends on the same fraudulent fractional reserve banking as is a conventional bank for assets backed financing schemes--- one reason that the Islamic banking fared well during the recession was that its Reserve ratio was comparatively higher as compared to conventional banks at that time --- Same case was for the conventional banking in Lebanon where reserves ratios were at a sound 70%. But statistics can not be used to defy logic and it is logical that the supposedly Islamic bank would fare no better than a conventional one if the Central bank did not watch its back--- As of now Islamic banking may be a sincere effort but it is nowhere near honest banking---let alone the issue of riba!

4. Since it is mentioned that we need 'Keynesian measures' it is apparent that the paper encourages deficit spending and increasing taxes. Though deficit spending translate into increasing taxes in the future they also crowd out the private sector in competition for scarce capital resources and channels savings into politically driven projects which are responsible for market inefficiency---

The tax rate (i presume direct) is measured at 10% of GDP ... What about the "indirect taxes" , the sales taxes and the inflation tax, price flooring (esp of gas and petrol) etc ... adding them all up would certainly yield a minimum of 30 % .... even beyond--- Also as Ludwig Von Mises explained that to 'Increasing taxes to fight inflation and poverty is to cure a patient suffering from chronic bronchitis by shooting him' --- how about decreasing government spending (which has not really been mentioned)---- decreasing the taxes providing friendly trade environment--- after all government cant create prosperity by spending money it does not have --- and as shown vividly by Prof. Henry Hazlitt decades long bestseller " Economics in one lesson" -- that if a government creates a job, it takes away a job.... so that government spending is of no benefit at all but occurs (mostly) at the expense of market efficiency and freedom!

And lastly i find a bit of paradox in the research paper-- like at one point it admits that interventions are harmful and lead to inefficiency whereas in other instances it prescribes Keynesian doctrines, which pushes for government monetary interventionism--- these two don't add up well...

i hope that it will make some positive contribution to upcoming researches

regards...

By Asad27 @ Tuesday, November 09, 2010 3:57 AM | (Asad27)

Thanks Dr Akbar.

Interesting comments however I disagree on some of your reservations.

You mention “There is no free market Capitalism as such in present day world---- what exists are only semblances of a free market”. The point was that the near melt down in 2008/09 came about because the markets were in effect unregulated/ unbridled. The Financial Services Authority (FSA) in the UK actually had ex and current board members of the banks that made sure the banks were making money without the effective regulation that would have stopped the current economic slow down. It is because the people who were suppose to be regulating and making sure things did not go in to a meltdown were themselves implicated in the near collapse that the paper mentions the unregulated markets.

The reason the research paper suggests implementing Keynesian measures to begin with is that is exactly what the western world including Japan did after their countries were ravaged by two world wars. The governments decided to carry out large scale projects to modernise and humanise their countries, which they did successfully. The research paper must be read as a whole and in the context of the recommendations it is presenting.
I disagree with your contention “The only way to become a welfare state is allow the free market capitalism”. The pitfalls of capitalism were for all to see just over a year ago, by its nature, a capitalist system is build on endless consumption. Currently the UK welfare system is being dismantled and in years to come will further increase the poverty gap between the have’s and the have not’s. The basic premise of a welfare state is that the state has a major role in providing health, welfare, education services as well as regulating the conditions of work. The argument that it’s not feasible and the Nordic country model is unrealistic is borne out of lack of understanding and no concrete evidence. In fact South Korea and Taiwan have created a welfare state and one only needs to refer to the works of Hugo Chavez who has vastly reduced poverty, literacy, infant mortality rates by using the oil revenues. Agree Pakistan does not have vast oil revenues to support the welfare but neither did South Korea, Taiwan or Germany. The increasing trend in the Western world of dismantling the welfare state should not be imitated and used as a model to follow.

Bottom line is exponents of the neo-liberal model will often cite their concern for the poor as a policy driver. Their argument is that the poor will gain from economic efficiency and a reduction in the barriers between them and the wider trading networks. They claim this will increase the overall wealth of a society and in this generalised prosperity the poor will gain – perhaps not as much as the already wealthy but enough to lift them out of poverty. The fundamental problem with this argument is that nowhere has it been borne out. Thirty years of neo-liberal economics in the West has seen inequality increasing with resulting decreases in health equality. So we must come to the conclusion of rejecting this approach and construct a social and economic order that has its core goal the reduction of relative and absolute levels of poverty.

The Scandinavian model (and Sweden in particular) is indicative in this respect. It is often held to be too expensive (but it is worthwhile to remember it was initially constructed when Norway, Denmark and Finland were recovering from war and occupation and Sweden only just started to industrialise) but it is worth looking at the principles rather than the detail. At its core the principle is quite simple – relative income equity, sustained by an economic and tax model and underpinned by fairly universal benefits and services. Sweden in particular is often criticised by neo-liberal economists for high costs and poor economic performance. However, Sweden’s annual GDP growth in the period after 1945 has mirrored that of other Western European countries and its sometimes criticised high inflation rates again follow wider European trends.

Finally the creation of a modern Islamic welfare state coupled with implementing the true essence of Islamic banking is the key to our success. That is the vision of Chairman Khan and our party.

By dr.akbar @ Friday, November 12, 2010 8:11 AM | (dr.akbar)

:) well i think we can have a healthy debate on it---i see your point but i would usually start off with addressing the fiat money issue--- and that of the fractional reserve banking orchestrated by a central bank--- which are the hallmarks of centrally managed economies and quite a significant breach on the free market ...

i would define a free market as a place where exists voluntary exchange of commodities and a free price mechanism as determined by the market laws of supply and demand and where there is protection of rights of the participants involved in an exchange.. or where government is limited to protect people against fraud and coercion---

and capitalism as philosophy where people enjoy property rights.... i don't know how these can fail... I don't think any one of will voluntarily give away property rights so that Soviet commissars can manage it better for them....

And that western societies are based on endless consumption is because of their economic philosophy which is keynesian-- and that is a big problem because keynesian economics is wrecking the heck out of the world--- the point i would like to emphasize is that the central bank made the bubble when Alan greenspan artificially lowered interest rates and directed/ regulated the market along channels of inefficiency--- which is The Austrian perspective (the school of thought i follow)... and differs significantly from the keynesians--- the Austrians predicted the subprime mortgage crisis and the housing bubble bust as early as 2003. Ron Paul and Peter Schiff were mocked at by keynesians hor saying exactly that.... see for yourself!

http://www.youtube.com/watch?v=MnekzRuu8wo

i can go at it for long but that would kind of defeat the purpose and kill my fingers ... maybe we can get to it at some time...

thanks

By dr.akbar @ Saturday, November 13, 2010 4:19 AM | (dr.akbar)

Well one bit i would like to add is that Sweden, South Korea, England etc are not at all gr8 models ... they have been living on borrowed time... somebody has to pay for all this supposed welfare and the buck is passed onto future generations where they have to cope with ever mounting interest payments on debts that their forefathers have accumulated...

There is sense prevailing in the west that they cannot sustain a welfare state based on artificial prosperity and increasing debt and that isn't a bad thing at all ... Just look at south Korea debts and you may get the point, all their luxury is at the expense of future generations---"The debt of the government ― both central and local ― and social welfare funds such as the National Pension Fund, and state run enterprises totaled 611 trillion won as of September 2009, totaling 59% of GDP---The situation gets more serious when adding the debt of public financial institutions such as the housing, deposit insurance and public capital redemption funds. When including these, the debt of the public sector rises to 710 trillion won, or 69 percent of GDP"------ u seriously think that is sustainable and we should follow that path??

http://www.koreatimes.co.kr/www/news/biz/2010/05/123_60558.html

As for Sweden,90 billion kronor ($10.6 billion) deficit 2009 and growing because government has opened a daddy day care for all its citizens to look after them from cradle to the grave under the supposed welfare plan ... (yup, newspaper cuttings but i want to draw a certain point here)

http://www.thelocal.se/16934/20090115/

England, Economists predict the scale of the shortfall in the budget could this year mount to above £180 billion – higher than even the Chancellor’s forecast of a record £178 billion....

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7266097/Britain-at-risk-of-worse-deficit-crisis-than-Greece.html

well the point is that Western government are cutting on public projects because they are financed by debts and deficits that cannot go forever... the burden on future generations will be enormous! and they will be in a deeper hole than the present if this go on...

yes they should cut on reckless defense budgets too.. the welfare-warfare statehood is taking its toll and we should learn form that rather than being mesmerized by fairytale of a welfare state !

Lest of-course truly free market policies (no subsidies, no tariffs, no dishonest money, no free lunches) and the spirit of private enterprise as under free market competition allows enough parasitic opportunities for the state to feed upon... there can be no favoring of one group of people at the expense of others

Also funny thing that GDP.... because what government spends on products through debt financing and deficit sending also add up to increase the GDP though nothing substantial may have occurred to increase the manufacturing base...

By Asad27 @ Monday, November 15, 2010 7:18 AM | (Asad27)

Thanks Dr Akbar

I guess we have a difference of opinion. I can not get around to your ideas of free market.

I can list a whole range of books, articles that agree with the economics of a welfare state. Bottom line is the creation of a welfare state is possible without the negating effects suffered in the western world.

Lastly it was our religion Islam that created a perfect welfare state and if anything that is the model we should try imitate. That is the policy of the party and chairman.

By dr.akbar @ Monday, November 15, 2010 10:26 AM | (dr.akbar)

Its usual to come across differing opinions. From welfare perspective, the idea of a free market economy in a nut shell would be that private enterprise is much better at welfare than government can ever imagine to be.. can anyone dispute or parallel any government welfare project that can compete with edhi or shaukat khanum etc in term of efficiency and effectiveness...

The problem with government run public bureaucracies is that they are not governed by profit or loss indicator but by rules-- and usually not the brightest of them--- ... that's why almost every public bureau end up in deficits and debts and a lot of mess But then 'if we are in government... we will do this and do that.... and not to mention arbitrary power lies with individuals who have the capacity to punish one in order to reward other... one can easily see how a government bureaucrat in customs or income tax differs from the private bureau at Ufone etc in terms of their ability to cater for customer care...

The problem with the system is not that it can be run dishonestly but that it cannot be run honestly... the usual resort is Islam and the times of Umer (r.a)... but continuously debasing and counterfeiting of the currency and properity funded by interest based debt isnt my idea of islamic... neither is excessive taxation to choke out businesses nor protecting the inefficient ones with tariffs or by giving away subsidies... Hazrat Umer (r.a) one vanquished a trader from the market for subsidizing (selling cheaper than the cost price) his goods... And taht Islam is against income tax and any other arbitrary usurpation of someone else's wealth no matter how good the excuse may be... The following hadith relates to the capitalist economic doctrine based on the idea of private ownership of the means of production and distribution in a nutshell;

One cannot be a Muslim till the Life, Honor and Property of others is secure in his hands. --- Sahih Muslim, Mishkaa’t; Ba’ab ul Shafqa’h

(and people never ask that how come the mercentilistic and authoritarian dark age europe was suddenly catalyzed towards the economically advanced concept of private ownership)

The hallmarks of a free market is that in a free market society property rights are voluntarily exchanged and with mutual consent at an agreed price; without any coercion being involved. This has been outlined in the holy Quran as follows;

O ye who believe! Squander not your wealth amongst yourselves in vanity, except it be a trade by mutual consent…- An-Nisa (Chapter 4 Verse 29)

well that can be a topic of a good debate but the point here is that people usually dont distinguish between capitalist schools of thought and lump it all along keynes but there are quite significinat difference between Keynes, friedmanites and austrians as they are different from the Marxist.... i have a bit of an idea about all these and if anyine goes through tehy will find signifiant-signifiant resemblences between the Austrian school and the islamic concepts...

to give people an idea of Austrian Economics i would like them to go through the first few pages of Henry Hazlitt's decade long best seller ---
Economic in one lesson--- http://www.hacer.org/pdf/Hazlitt00.pdf
like it take it don't leave it...

By KHAN @ Monday, December 27, 2010 12:30 PM | (smartkhan1974)

Good to see such research coming from PTI. However, we need to do some ground work like problems faced by poor farmers in fields e.g. seeds, loans, pest-tackle, water for irrigation, storage etc.

I have not seen any thing in research paper discussing economy regarding energy which is heart of economy these days for any country. We are really struggling with water reservoirs, hydro electricity, cemented small canals. More allocation of resources in exploration oil and gas.

Also, we need to take on board the important stake holders on board and their suggestion should be incorporated in research paper. In this way, they would be part of our policies and in would be more in line with the ground realities.

By Ayaz @ Thursday, April 21, 2011 8:10 AM | (ayazbhatti)

exellent job.

By Kashif Bashir @ Friday, July 01, 2011 10:04 PM | (Kashifbashir)

Dear Asad, good research. The long arguments are good so long as they are healthy, and could become "meaningful part of this ongoing research". I believe the points laid out by yourself and other participants are very well orchestrated and I am not intellectually capable enough to offer something better.

Inputs from Ahsan, dr. Akbar are very useful and offer a different perspective, not a different conclusion, and this could help shape your research further.

Importantly, PLEASE, as a very valid feedback from a past comment, do add analytics like Charts, summary tables, trend lines in the research (possibly as annexures) which would really optimize the reading and understanding part.

Thanks alot for this and other very interesting researches. This is something fundamentally different that PTI is attempting and with research comes a roadmap of improvement which is sustainable over a longer term. Unlike us Pakistani's who generally suffer from short sightedness genetically when it comes to planning ahead. Really really appreciate the great work you and the team are putting in...

By Asad27 @ Sunday, July 03, 2011 7:53 AM | (Asad27)

Dear Kashif

Thanks for your constructive feedback and kind comments.

Much appreciated.

Importantly the point regarding use of analytics is critical and inshallah I will include them in my next research report, which I am currently doing on "Budget and Industry".

Thanks
Asad

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