PTI government’s peak economic performance
Khan leads a lean (no fat) government, which is not plagued by cancerous tendencies like corruption
By Anthony Williams
Kinita Kadakia Patel in her book titled “The Athlete in You”, opens the first chapter with these thoughts “This book is all about a single word: the athlete. We all are athletes in our own spaces, living and fighting to achieve the best for ourselves. But what we need is to compete with our lifestyles and focus on becoming a fitter, healthier and more athletic individual. Let’s understand what an athlete is and how you can become one.” She continues with her thought and writes in the same chapter that “While the average individual may choose to eat better and exercise for health and body image reasons, athletes choose to do so for performance-based reasons. They don’t just want to look good, they want to perform optimally. In a manner of speaking, they are the Ferraris of the body kingdom.”
There is no doubting the fact that our present Prime Minister of Pakistan, Mr. Imran Khan is an athlete; not just for being a legendary cricketer on field, but for performing equally great off field. And now that he leads a lean (no fat) government, which is not plagued by cancerous tendencies (corruption), this article can discuss the economic principles, which will give PTI government its peak economic performance.1-The scarcity principle or No-Free-Lunch principle, which states that “Although we have boundless needs and wants, the resources available to us are limited. So having more of one good thing usually means having less of another”.2-The cost-benefit principle, which states that “An individual (or a firm or a government) should take an action if, and only if, the extra benefits from taking the action are at least as great as the extra costs”.3-The principle of comparative advantage, which states that “Everyone does best when each person (or each country) concentrates on the activities for which his or her opportunity cost is lower”.4-The efficiency principle, which states that “Efficiency is an important social goal, because when the economic pie (federal budget) grows larger, everyone can have a larger slice (development)”.5-The equilibrium principle, which states that “A market in equilibrium leaves no unexploited opportunities for individuals but may not exploit all gains achievable through collective action”.
Let’s apply these principles to the five million homes program announced last month by the Prime Minister himself. The main objective of the government for this program should not be the construction of five million homes in five years, but the emphasis should be to create economic surplus for the home buyers and builders & allied industries. The economic surplus for buyers will be their ability to buy these homes with their present income levels and resource base. The economic surplus for builders etc. will be the economic profits earned and realised by them from this opportunity. The scale of this program and the quantum of profits to be made from it, will entice these builders and its allied industries to employ more labour and hence helping the government deliver on another promise of ten million jobs in five years. The scarcity principle dictates that for this government to be successful, it should stick with this housing program and not start any other major development program in its first tenure; just as PML-N government was smart enough to stick to building roads & allied infrastructure in the previous five years.
There is a comparative advantage ploy hidden in this housing project for the government to exploit and that is, if one million houses (20% of the total) are to be built in Azad Jammu and Kashmir; this would greatly help the cause of freedom of Kashmiris in occupied Kashmir and give an economic incentive to them to migrate to AJK, which like in the Berlin Wall case, may give rise to the peaceful unification and independence of Kashmir. The efficiency principle at work here through this housing program has tremendous short term and long term benefits for the government and the people. Since this program will create better developed communities, whose standard of living will be better than the present Katchi Abadi ones; they will no doubt give boost to local businesses, which in-turn will generate taxes for the government (provided it gets FBR’s house in order) in the short term and with the right kind of local government system, that the federal government intends to implement soon, it can expect highly productive citizens from these communities in the long term future of Pakistan.
So far our news media has emphasised the cost aspect of this housing program but according to the cost-benefit principle, the benefits (a few of which you have just read about in this article) need to be quantified by economists/social scientists to the public on news & social media and here is an opportunity for any Pakistani economist to be known as The new “Mahbub ul Haq” or any Pakistani social scientist to be the next “Akhtar Hameed Khan”. In conclusion, it’s safe to say that the PTI Government is all geared up to start delivering its peak economic performance and that too within its first 100 days. A side note for the Honourable Finance Minister Asad Umar is made here on the sub-principle of the cost-benefit rule, which is the principle that not all costs matter equally in decision making. So the present government should stop considering the costs (interest) being paid by it because of the debt borrowed (sunk costs) by previous governments in its economic thinking, even if it intends to keep highlighting this cost for political gains in the future.
Anthony Williams is CEO of Tax Dosti and Fellow Member of Pakistan Institue of Public Finance Accountants (PIPFA).