Syed Bakhtiyar Kazmi
It was rather amusing, during coffee table discussions, to find out that there are those who believe that being on the Grey List is not a worrying development - the layman view from my previous article; been there seen that! Frankly, I had never even thought that the Grey List may even nudge us towards a higher objective of standing on our own two feet, and saying no to foreign investment and external debt; pretty optimistic view for my money. Also that China and Saudi Arabia will eventually support us since we are giving full cooperation to them on their respective agendas, CPEC and military adventurism; apparently, we seem to not understand transactional strategies. Finally, we should do absolutely nothing because we belong to the Nuclear Club; I for one am clueless on how that works! In all these interactions, I tried to point out, unsuccessfully I might add, that this time it might be different and that action or inaction can have related multiple consequences which are likely to be even more complex and perhaps adverse.
Given my professional background, my educated guess on anything to do with the world of finance and accounting, nine times out of ten, probably should be far more accurate than a rocket scientist. Contrarily, I am well aware that I know absolutely nothing about rocket science, which I feel is perhaps a better character trait; knowing what you don’t know is always better than the knowledge you have. And why is that? Well, because in general, acquisition of all knowledge about anything is impossible. But in a country educated by a hyper active electronic media and Google, the illusion of knowledge is at its worst; even rocket scientists believe that they are an authority on economics.
On the other hand, my view that the chips were stacked against Pakistan in the FATF (“Grey List and the Layman”) was based not on any accounting experience or economic study or any detailed knowledge thereof, but on pure common sense, which unfortunately is becoming less and less common; simply the Americans were ahead in the numbers game. Except that, based on the information available till the writing of this piece, China and Saudi Arabia withdrawing support to Pakistan comes as a complete surprise, and simultaneously is a devastating development; the former two countries were supposedly our only friends on the Globe. Sometimes even common sense fails you because the unseen, hence the unknown, is umpteen times more complicated than how things appear to be.
Most likely, to venture another guess based on common sense, by the time this article is published, the media would have forgotten the Grey List and Pakistan. However, what the media does or does not do is completely irrelevant in the larger scheme of things, what remains critical is that those at the helm of affairs deliberate upon the short-term and long-term repercussions, if any, of being placed on the Grey List, why our friends ditched us and whether they are still our friends and we can continue to trust them, where did government policy, and action, if any, fail and what corrective measures are needed for reversing gears.
Frankly, nothing is simple when it comes to economic policy and its consequences, which can be easily demonstrated by teasers given in the next paragraph.
When a lower GDP growth, if at all is, qualitatively better than a higher GDP growth; notwithstanding that any attempt to come to a solution of this teaser requires more than a cursory idea of GDP. Under what circumstances can a stagnant tax-to-GDP ratio encourage economic growth? If the government could make available additional funding towards the education budget, where should it be utilized, primary or higher education? Are there any limits to borrowing and building infrastructure, if not why don’t we do more, if yes what happens thereafter? And I won’t even bother to frame questions about what kind of investment is better for a developing country and in what sectors, services or manufacturing, and how much debt and what kind of debt is good debt! By the way, readers can email me for answers.
Which is why, I feel that wars should be left to Generals, toothaches left to the dentists, heart attacks left to cardiac specialists, faucet leaks left to plumbers, vehicle repairs left to mechanics, missile technology left to rocket scientists, and so on and so forth. Economic decisions, especially the Grey List kind, should vest with government experts rather than being discussed in a free for all media circus.
Articulated thusly, I believe that rational men would generally agree with the premise. Except I fear that I underestimate the advent of the Dunning-Kruger Effect in Pakistan.
“Coined in 1999 by then-Cornell psychologists David Dunning and Justin Kruger, the eponymous Dunning-Kruger Effect is a cognitive bias whereby people who are incompetent at something are unable to recognize their own incompetence. And not only do they fail to recognize their incompetence, they’re also likely to feel confident that they actually are competent”- extract from Forbes.
We live in a world where Google, Facebook and the likes have created a virtual reality where everybody believes himself to be more than competent to comment on the economy, the constitution; in fact I have acquaintances who claim to know why what and how of not only domestic developments but what Trump wants! That we don’t understand or don’t want to understand is not the problem anymore; more to the point, feeling confident that we understand when we don’t, is the reason we have become Sense Sensitive; and that is not good!
(The writer is a chartered accountant based in Islamabad. Email: [email protected])
