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Tuesday, September 29, 2009

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Avoiding self-criticism
Dr Ashfaque H Khan Self-criticism is widespread in Pakistan. It is unfortunate that as a nation we take pride in maligning our own country. We proudly demean our country and take pleasure in criticising our own socio-economic culture, especially before foreigners. In particular, the so-called elite of the society are seen pointing fingers at their own government and even their own country in diplomatic 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 about macroeconomic statistics. For them, nothing was going in the right direction and the economy was on the verge of collapse. On the other hand, the international rating agencies, such as Standards & Poor's and Moody's, continued to improve Pakistan's credit ratings. Whenever Pakistan went to the international capital markets and floated bonds, its paper was oversubscribed by several times. Goldman and Sachs the global investment bank, expanded its 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, India and China). These international rating agencies and global financial institutions expressed their optimism because they could see Pakistan's economic fundamentals gaining traction with each passing year. On the other hand, our "economic experts" continued to belittle the economic progress that the country was making and at the same time misguiding the general public through the print and electronic media. At times the critics crossed all limits and wrote something which only 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 in 2006, one Pakistani critic wrote in an international newspaper to warn global investors not to invest 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 May 12 in Karachi. Before the Pakistani team would go for the road show, one of the critics wrote in a leading domestic English daily warning global investors not to invest in Pakistani paper. The bond was once again oversubscribed by seven times. At times it was hard to fathom that a Pakistani could go to this extent to damage national interest. But there were many such critics who 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 every government. Unfortunately, such criticism has seldom been practiced in this country. Take the example of India. The former president of the Confederation of Indian Industry the most powerful body of the Indian private sector concluded in one of his presentations, in which he was comparing India and China that (i) India should not emulate China, (ii) India would grow by the Indian model and (iii) Indians must avoid self-criticism. This is the spirit which is lacking 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 South Africa. The number of undernourished children in India is in millions. But how often does one hear 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 is commonly measured as changes in the consumer price index (CPI). The CPI-based inflation remains the official barometer of inflation in many countries around the worlddeveloped or developing. In these countries, the economic authorities review the commodity basket at an interval of 5 to 6 years. Interestingly, India, an emerging economic power, still uses the wholesale price index (WPI) as its main measure of inflation. The WPI, as its name suggests, is designed to measure the changes in prices at the wholesale level of all the commodities. It is not the price that the Indian consumer faces in the market. Furthermore, the base year for the WPI is also 15-years-old (from 1993-94), and therefore does not represent the current production structure of the Indian industry. India does produce CPI-based inflation but it is not used as an official measure of inflation. Furthermore, the bases of CPI-based inflation are threedecades-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 the inflation figure? How many of them have criticised their government as we do in Pakistan? Our inflation number is far superior and updated than that of India and yet our experts would criticise vehemently the inflation number of Pakistan. Constructive criticism is most welcome by any government. We must avoid criticism for the sake of criticism and misguiding the general public. This nation has already paid a heavy price for being misguided by our "experts." We must not discount our successes. As a nation we must learn to celebrate our successes as well. Turn self-criticism into self-confidence, which would 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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