ISLAMABAD (Info Desk) – Fix the domestic culture to develop Pakistan’s economy, said renowned economist Dr Nadeem ul Haque, as he criticized the massive government size and role designed to interfere in a market economy.

Blasting the decades-long practice of relying on foreign aid, Haque was of the view that no progress was possible without changing the mindset. “Pakistan has been outsourced [through consultants],” he remarked.

He was expressing his views in an exclusive interview hosted by Murtaza Solangi for Stratheia.

Open The Door Of Cultural Changes, Economic Boom Shall Follow: Dr Nadeem ul Haque

According to Haque, this culture is deep rooted and pervasive in Pakistan not only at the state level, but also afflicts individual and societal thinking and worldview.

The world has progressed through exploration, initiative and risk taking, but we, as a nation, are afraid of taking risks. It means there is complete dearth of entrepreneurship, argues Haque, who is currently serving as vice chancellor of Pakistan Institute of Development Economics (PIDE).

WHY CULTURE A DEFINING FACTOR?

To present his case, Haque cited an historical example which introduced irreversible unprecedented socioeconomic changes.  “The [basic] cause of Industrial Revolution was the British culture.”

He also mentioned the Protestant Revolution in this respect, as the West transformed into a developed and industrialized economy.

But in Pakistan, Haque says, the young people want government job for pension and other benefits.

Studies show government job is a very expensive business for Pakistan, he says.

Despite having a population of 250 million, Pakistan is nowhere at the Paris Olympics, Haque mentioned. [This discussion was held before Arshad Nadeem became an exception by grabbing first Olympic gold for Pakistan since 1990s.]

GOVERNMENT JOB, GOVERNMENT LAND

Haque notes there were only two options during the British Raj: get government job or state land. “We are still stuck in that [mode of thinking].”

First get rid of the system erected by the British rulers, he stressed, as Pakistan’s national approach at all levels revolves around it.

Everyone from bureaucracy to judiciary is working on same lines, which, Haque says, can’t fulfil the needs of modern society and state.

He quoted John Lock –  Life, Liberty and Property Rights – and said Pakistan was missing all the three points, essential to formation of a state. “Is individualism possible here [in Pakistan]?” he questioned and added that “doing business isn’t conceivable in this system.”

ALL PERVASIVE STATE FOOTPRINT

He regretted the existing “plot culture” and government permissions required for initiating every venture, saying the country had become “Plotistan”.

Haque said the government, unfortunately, contributes 70% to the country’s GDP. At the same time, the state’s involvement in every affair is resulting in slashing the GDP by 60%, he revealed.

Talking about poor planning and waste of national resources, the respected economist said a study conducted by PIDE showed that proper utilization and development of the land, on which government residences in Islamabad are built, alone could generate $55 billion.

STUNTED BUSINESSES

Private firms in the country are “stunted, seth [the word used in Urdu for a business owner] owned, nonprofessional and unlisted”, says Haque.

These factors make it impossible for them to grow through innovation as there is no merit, he added unlike Apple and other global companies whose size is many times than that of Pakistan’s GDP.

Haque says the “stunted” businesses in Pakistan work on the principle of inheritance and rely on government subsidy – a business model not found anywhere in the world.

That why, he noted, that the largest company listed on Pakistan Stock Exchange was OGDCL – a state—owned enterprise – followed by Pakistan Tobacco Company.

WHAT’S THE OBJECTIVE?

“What do you want to be? Do you want to be a Soviet Union? Are you a capitalist country [free market]?”, Haque raised a valid point.

According to him, he is not against welfare system [state protection through social security and provision of services]. But the business model being followed isn’t that of a free market.

He said smaller companies were not being allowed to grow and added that the people moving in SUVs after obtaining “permits” couldn’t be described as businessmen.

ILL-ADVISED TAXATION MODEL

Haque was very critical of the taxation system and the panacea suggested by international financial institutions like the IMF, which suggests that only enhanced revenue collection will lead to development.

The tax-to-GDP ratio in the United States and the United Kingdom was much lower than Pakistan when compared at the current stage of development, he said as he opposed the idea and policy of hiking taxes.

LACK OF REASONING

When it comes to a persistent decline in quality of education, Haque says Pakistan is missing the concept of learning and education.

In India, Jawaharlal Nehru opted for establishing top level universities and research institutes by investing state resources, he said.

On the other hand, he said the educational centers in Pakistan “are bad teaching institutions” where there is no room for competent individuals.