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Tuesday, September 29, 2009 Add to Clippings Print Story

Avoiding self-criticism

Dr Ashfaque H Khan Self-criticism is widespread in Pakistan. It is unfortunate that as a nation we take pride inmaligning our own country. We proudly demean our country and take pleasure in criticising ourown socio-economic culture, especially before foreigners. In particular, the so-called elite of thesociety are seen pointing fingers at their own government and even their own country indiplomatic functions.

During my eleven years in the ministry of finance, I have seen so-called "economic experts"criticising every aspect of government economic policy and creating confusion aboutmacroeconomic statistics. For them, nothing was going in the right direction and the economywas on the verge of collapse. On the other hand, the international rating agencies, such asStandards & Poor's and Moody's, continued to improve Pakistan's credit ratings. WheneverPakistan went to the international capital markets and floated bonds, its paper wasoversubscribed by several times. Goldman and Sachs – the global investment bank, expandedits list of emerging economies (Next 11) by including Korea and Pakistan, which in its opinion,would play an important role in the global economy along with the BRIC (Brazil, Russia, Indiaand China).

 These international rating agencies and global financial institutions expressed their optimismbecause they could see Pakistan's economic fundamentals gaining traction with each passingyear. On the other hand, our "economic experts" continued to belittle the economic progressthat the country was making and at the same time misguiding the general public through theprint and electronic media. At times the critics crossed all limits and wrote something whichonly a non-Pakistani with the intention to harm Pakistan's interest would write. For example,two or three weeks prior to Pakistan floating its sovereign paper in international markets in2006, one Pakistani critic wrote in an international newspaper to warn global investors not toinvest in Pakistan's sovereign bond. Interestingly, this bond was oversubscribed and Pakistan joined the league of the few countries that succeeded in floating a 30-years paper. Similarly,Pakistan floated another sovereign bond on May 23, 2007--i.e., after the tragic incident of May12 in Karachi. Before the Pakistani team would go for the road show, one of the critics wrote ina leading domestic English daily warning global investors not to invest in Pakistani paper. Thebond was once again oversubscribed by seven times. At times it was hard to fathom that aPakistani could go to this extent to damage national interest. But there were many such criticswho would fail to distinguish between criticising a government and harming national interest.

No government is perfect. There will always be some weaknesses in policy-making; after all,policymakers are also human beings. Criticism is an integral part of good governance. It is the job of the experts to highlight the weaknesses and suggest solutions. Criticism for the sake of criticism is not a healthy practice. Constructive criticism is always welcomed by everygovernment. Unfortunately, such criticism has seldom been practiced in this country.

 Take the example of India. The former president of the Confederation of Indian Industry – themost powerful body of the Indian private sector – concluded in one of his presentations, inwhich he was comparing India and China that (i) India should not emulate China, (ii) India wouldgrow by the Indian model and (iii) Indians must avoid self-criticism. This is the spirit which islacking in Pakistan. Is everything milk and honey in India? More than 45 per cent of the poor of South Asia live in India. India is the home of millions of HIV/AIDS patients – second only to SouthAfrica. The number of undernourished children in India is in millions. But how often does onehear Indian experts criticising and demeaning the progress made in their country on

 

macroeconomic front?

 Take yet another example from India. Inflation is one of the most important indicators of macroeconomics. The way inflation is measured in India leaves much to be desired. Inflation iscommonly measured as changes in the consumer price index (CPI). The CPI-based inflationremains the official barometer of inflation in many countries around the world–developed ordeveloping. In these countries, the economic authorities review the commodity basket at aninterval of 5 to 6 years. Interestingly, India, an emerging economic power, still uses thewholesale price index (WPI) as its main measure of inflation. The WPI, as its name suggests, isdesigned to measure the changes in prices at the wholesale level of all the commodities. It isnot the price that the Indian consumer faces in the market. Furthermore, the base year for theWPI is also 15-years-old (from 1993-94), and therefore does not represent the currentproduction structure of the Indian industry. India does produce CPI-based inflation but it is notused as an official measure of inflation. Furthermore, the bases of CPI-based inflation are three-decades-old and certainly do not represent the current consumption patterns of Indian society.While India portrays an inaccurate picture by using an exceedingly old base year for the WPI,how many Indian economic experts have criticised their government for misrepresenting theinflation figure? How many of them have criticised their government as we do in Pakistan? Ourinflation number is far superior and updated than that of India and yet our experts wouldcriticise vehemently the inflation number of Pakistan.

Constructive criticism is most welcome by any government. We must avoid criticism for thesake of criticism and misguiding the general public. This nation has already paid a heavy pricefor being misguided by our "experts." We must not discount our successes. As a nation wemust learn to celebrate our successes as well. Turn self-criticism into self-confidence, whichwould be an asset for all of us in these testing times.

 The writer is dean and professor at NUST Business School in Islamabad. Email: ahkhan@nims.edu.pk

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