Economic Hit of Pakistan: CAD Focus vs GDP Neglect

CAD focus vs GDP neglect (IKnomics Hit) :

"کرنٹ اکاؤنٹ خسارہ" CAD:  ایک صاحب کی دکان خسارہ میں چل رہی تھی- ایک دن انہوں نے فاتحانہ اعلان کیا کہ پچھلے مہینہ انہوں نے CAD خسارہ پر قابو پا لیا! پوچھا وہ کیسے؟ فرمایا "بڑا آسان تھا، بس دکان بند کر دی، تمام ملازمیں کو فارغ کر دیا، تمام ضروری اور غیر ضروری اخراجات بھی ختم کر دئے، کرنٹ خسارہ زیرو!"

جی ڈی پی GDP گروتھ:

ایک صاحب کی دکان خسارہ میں چل رہی تھی- ایک دن انہوں نے فاتحانہ اعلان کیا کہ انہوں نے CAD خسارہ پر قابو پا لیا! پوچھا وہ کیسے؟ فرمایا "بڑا مشکل اور تکلیف دہ تھا، میں نے ایکسپرٹس سے مشورہ کر کے اپنے بوسیدہ سسٹمز کو تبدیل کرنے کا فیصلہ کیا، اس انویسٹمنٹ کے لئے مجھے  قرضہ لینا پڑا جس سے نئے سسٹمز خریدے اور دو سال لگا کر تمام بوسیدہ سسٹمز تبدیل کئے، فضول اخراجات ختم کئے، پراسیسز آسان کئے، اب میرے کسٹمرز بھی خوش ہیں ان کو بہترین پراڈکٹس کم قیمت پر، کم وقت میں آسانی سے دستیاب ہیں، کاروبار میں اضافہ ہوا، نئی پراڈکٹ لائنز شروع کیں، ملازمین کی تنخواہوں میں اضافہ ہوا، نئے ملازمین کو جاب دیں،  کرنٹ خسارہ منافع میں تبدیل ہو گیا!"

Over the last 3 years IKnomics policies has crippled the economy whilst propoganda machine trumpets false economic principles related to magical properties of CAD while denigrating GDP.

Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period. As a broad measure of overall domestic production, GDP functions as a comprehensive scorecard of a given country's economic health. It encapsulates growth in economy due to growth of business, production, services, and the resultant employment opportunities.

On the other hand, Current Account Deficit or CAD is the difference between the money coming in due to exports and the money going out due to imports. It is no where in world  used as indicator of economic health of country. CAD only tells you about the ability to service external debt, as such it is only in Pakistan's IMF dictated "IKnomics" that CAD was used for measuring health of Pakistan economy during first 3 years of IK with disastrous consequences.

The single minded focus on IMF CAD related policies were responsible for the crash of GDP from 5.8% to - 0.4%, reduction in jobs over the last three years by over 5 million, and increase in inflation (too much money chasing too few goods), and hemorrhage of economic sentiments.

IK should have curtailed luxury imports without impacting raw materials for our production. Instead of clamping down hard on smuggling and significantly increasing duties on luxury items, IK tremendously increased the exchange rate and utilities costs while simultaneously going after the small and micro businesses, which resulted in decrease in production and increase in prices of all  the inputs, increasing the prices of outputs, reducing the viability of many businesses and their shutting down. 

Ability to service debt is measured as a percentage of the productivity of economy (i.e GDP). A country with high GDP growth can sustain larger debt. This is similar to a person earning 100k can service a larger debt than a person earning only 10k. There are several countries with higher debt to GDP then pakistan but that is not a problem for them. For example Japan has around 200% whereas Pakistan is around 50%. Over here IK increased the policy rate to 13.5% that made the local debt servicing the largest single item of our expenditure around half of all expenditure even more than military expenditure!

One must read the history of how government investment in infrastructure (GDP growth ) got USA out of the global Great Depression. This came to be known as Keynesian Economics that is taught in every Economics 101 course in the chapter on overcoming recession. See this 

https://www.popularmechanics.com/technology/infrastructure/a24692/fdr-new-deal-wpa-infrastructure/

How Economic Hit through policy rate increase happened

How Economic Hitmen duped IK's policy to astronomically increase the loan interest burden on Pakistanis. 

1. By increasing the policy rate from around 5% to 13.5% after tabdeeli, IK government doubled the interest payments (markup expense) to nearly half of the total expenditure. That is double of what was being spent during previous regime. 

2. Markup suddenly became the single largest outlay even more than the entire military expenditure and military pensions. 

3. To compensate for this, government had to stop/slow down all development expenditures, was forced to increase the utility rates and petrol prices, thereby severely decreasing the GDP and employment. 

4. SBP demand based rationale was that higher policy rates will reduce inflation. However, inflation in Pakistan skyrocketed to around 12-14%. SBP demand rationale was contrary to the cost rationale emerging worldwide where countries like Brazil had by decreasing the policy rate decreased their inflation. Ironically , SBP website shows research papers which also establish that Pakistan's inflation will decrease with decreasing policy rate. 

5. The myth sold to Pakistan through the Economic hit media brigade that Pakistan has too much debt. This is again contrary to the fact that many of the countries around the world have even hundred percent to 200 percent debt to GDP ratio, and they are not having such problems. Analysis shows that it is not the higher debt, but the higher policy rates which creates the burden. Most of the countries that have higher debt to GDP ratio than Pakistan have policy rate of less than 2% , in some cases even negative policy rates. Pakistan suffered because of high policy rates not because of high debt. 

Do you know that yearly pensions expenditure of government is as large as the yearly civil government expenditure.

Who was the enemy of 5G War waged in Pakistan

All are corrupt Narrative

Gates, Musk et al Divorce Settlements and Marriage Institution

Abusive Leadership Style: Trump, Modi and Imran Khan

Voting Machines- Is Technology a Panacea: Technology is as good as the people using it

کیا صرف ٹیکنالوجی لگا دینے سے ٹرانسپیرنسی و شفافیت حاصل ہو جاتی ہے؟

My dear PM, technology in itself is not a panacea. Technology is as good as the people using it! 

Taking on Challenging Responsibilities vs Trying to be a Superwoman

What is the problem with the following advice:
"Don't get too proud, she said, of your capabilities at handling anything — or soon people will expect you to handle everything. The world is always eager to find someone who can handle everything (because the world is lazy, and doesn't want to do the work) and soon you will be responsible for more than you can manage. You will be doing more than what is fair, or even sensible — and you will be doing thousands of things that you were never designed to do.

Don't get seduced by the idea that you are some kind of Superwoman — as much as the world wants to put that honorific upon you. (Telling women that they are superheroes is a trick the world has always played, for making women do all the work.)

Power of Psychological Assumptions in Matchmaking Processes

Power of assumption?
Match-making processes would be markedly different for society that assumes "you are mentally ill unless proven healthy" vs the society that assumes "you are healthy unless proven mentally ill".
This is similar to the power of assumption in law:
"You are innocent unless proven guilty" vs "you are guilty unless proven innocent" through due process.
The impact on behaviors, societal norms and management processes differ tremendously in societies using the assumption "innocent unless proven guilty" (simpler open fast processes of developed countries) vs 'guilty unless proven innocent (complex convoluted opaque tedious processes of developing countries like Pakistan).

Hill Park Karachi over the Years and Social Networks of Old Familiar Faces

ھل پارک 1975, PECHS, Karachi

 I went regularly in the mornings during 1995-2012 when my children were growing up. Feeding the ducks and climbing up and down the hilly slopes was the nearest to tracking/hiking children could get in Karachi. I also frequented it during 1980-86 during my engineering and MBA days, and even used to study there too . I still go there some times.

My Khaloo was a regular visitor of Hill Park with his children from 1970-88. While on visit from Islamabad to Karachi and staying at Khala's place in PECHS has some very interesting time there.

Branding, Consumerism and Islamic Principles of Trade

مغربی کیپٹلزم کی اشتراکیت کو ضم کرنے کے بعد اس سے بڑی کیا کامیابی ہو گی کہ اس دو سو سال سے لڑنے والے مزہبی پیشوا خود کیپٹلسٹ کنزیومرزم کے سب سے بڑے داعی بن جائیں-

تاریخ میں کیپٹلزم سے لڑنے والے اب تک کے تمام نظام فکر لڑتے لڑتے خود کیپٹلزم میں ضم ہو گئے ہیں مثلاً اشتراکیت, 

 anarchist, socialist, religious and nationalist viewpoints, socialist tendencies (e.g. anarcho-syndicalism, social democracy and Bolshevism), philosophy of historical materialism, small-scale cooperatives and family businesses, and large-scale antitrust regulations,.... etc

 مغربی کیپٹلزم کی اس سے بڑی کیا کامیابی ہو گی کہ مغرب سے لڑنے والے اسلام کے پیشوا جو خود کو سید بادشاہ اور اسیر مالٹا کی روایات کے امین گردانتے ہیں وہ  خود کیپٹلسٹ کنزیومرزم کے سب سے بڑے حمایتی اور داعی بن کر سامنے آ رہے ہیں-

"We are all capitalists now!" 

Socialists admitted this after the implosion of Soviet Union & fall of Berlin Wall. Do Muslim scholars who have embraced capitalist consumerism can muster the moral courage to admit it too?

اپنے برانڈ کے پرچار کرنے والوں کو کس نے مجبور کیا ہے کہ اسلامی روایات اور سادگی کا درس دیں؟

کیپٹلسٹ برانڈنگ اور کنزیومرزم کا اسلامی روایات سے کیا تعلق ہے؟ ان کو کس نے مجبور کیا کہ سورۃ التکاثر میں " الھاکم التکاثر"[1] کا درس دیں؟ " لم یسرفوا" [2]  کا درس دیں؟ فویل.. الزین ہم یراءون "[3] کا درس دیں؟

احیاء العلوم میں غزالی نے cost plus pricing کے مقابلہ میں demand pricing (منہ مانگی قیمت) کے چند واقعات درج کئے ہیں جن سے اسلام کا مدعا ظاہر ہوتا ہے- جن میں بیچنے والا مُصِر تھا کہ اس سے مارکیٹ پرائس بہت زیادہ بڑھنے کے باوجود کم قیمت خرید پر جائز منافع کے ساتھ مارکیٹ سے کم cost plus پرائس پر خریدا جائے- [4]

مسئلہ تعیشات کو بیچنے، کاروبار کرنے یا پرائس فکسنگ  کا نہیں بلکہ مذہبی پیشوا کا سادگی کا درس دیتے دیتے اس کو برانڈ بنانا [5]، اس کا کنزیومرزم کے زریعے ان لوگوں میں ترغیب پیدا کرنا ہے جو افورڈ نہ کر سکتے ہوں.[6]، اور عوام کو خود نمائی اور دنیاوی دکھاوے کی ایسی دوڑ میں مبتلا کرنا ہے جو معاشرے میں ہیجان اور ڈپریشن پیدا کرتی ہے [7]، جو عوام میں ضرورت (needs) کا خواہشات (wants) سے فرق دور کر کے معاشرے میں زہنی بیمار پیدا کر رہی ہے [8] .. ..

References:

[1]...[7]

Sam Walton, ‏Ghazali's Ihsaan in ‎معاملات ‏ ‏and High-end Expensive Brands

There are several types of price setting strategies such as Cost Plus and Demand Driven Pricing. Walmart's success was built on cost plus pricing model. Sam Walton was the founder of the retailing giant of 1990s-2000s. In his autobiography "Made in America" published a few months around his death in 1992, he mentions the example of a toothpaste he was selling at around 2 dollars. He found a vendor who offered the same quality at around 55cents. Managers advised him to sell at around $1.20. Their logic was that Walmart buyers are used to buying this tooth paste at around 2 dollars. $1.2 is a significant decrease. However, he declined. He decided to sell at around 70 cents. His logic was that his CSR is providing consumers with lowest prices. Walmart slogan is "Everyday Lowest Prices". He said around 10% margin is as per his mission. The toothpaste was sold at 70 cents. He writes in the autobiography, while he was suffering from terminal cancer, that this book will come to haunt those who will try to meddle with his legacy. He was writing in the context of the question that what was his contribution to the social welfare of people. He said his mission was to provide his customers with the lowest price anywhere. This mission had made life easier for millions of mass consumers of USA. The benefits of cheaper prices that he had passed on to Americans is unparalleled.

Why Leaders Fail to Recognize their Own Incompetence: Bureaucracy and IK

Why People Fail to Recognize Their Own Incompetence.

Incompetence of the "competent authorities" of pakistani government bureaucrats. And belief of PTIans in competence of IK. 

Dunning Kruger-Effect: Why Unintelligent People Don’t Learn?

Economic Hit of Pakistan and Illusion of Monetary Policy's Independence from Fiscal Policy

Central Banks are required by law everywhere to manage and control monetary policy or value of money. There is nothing "natural" about value of money or forex rates. Monetary policy (always artificially crafted) works in tandem with fiscal policy and international policy to establish value of money. Tools used by fiscal/monetary policy include (1) interest rate changes, (2) unemployment rates, (3) inflation reports, (4) gross domestic product numbers, (5) manufacturing data, and (6) commodities. 

Imran Khan's Tabdeeli- Change Management and BPR

IK got elected on the slogan of "tabdeeli" (change). He doesn't know ABC of change management or how BPR (Businesses Process Reengineering) achieves substantial and visible "tabdeeli". BPR is about reducing the complexity of Inter departmental processes by eliminating 60-80% steps and increasing efficiency by up to 80%, and resulting in substantial reduction of corruption as seen in CNIC process of NADRA, passport process or CDC system for share purchase and sale processes.

Growing up with Magazines

In 1969-70 I was 7 when I started reading Taleem o Tarbiat and other magazines. We had almairah shelves full of magazines issues going back to early 1960s and to even mid 1950s. 

Old issues of subscriptions of Taleem o Tarbiat, Bachon ki Duniya, Naunehal, Khilona which were children magazines. And magazines for my elder sisters such as Ismat, Jame Nau, Zaibun Nisa, Mah e Nau, Sidq, Urdu Digest, Sayyara Digest, Alibqa, Readers Digest, Life,. ... These I would read a few later once I was done with the children magazines.

We would immerse ourselves after school and would continue till  our play time around an hour before Maghreb. Books reading was in parallel 

May Allah give my parents the best of abodes in the hereafter who provided and environment of reading for me and my siblings.

First Makeup Experience: Impact of Childhood Experiences across Time and Space

Vividness of childhood experiences and the distance it travels across time and space. As I am going through the letters, papers and other documents of my parents dating back to the days before their marriage (1940s, they married in 1951), I come across the clues to their personality that I observed during 1966-2003, time of my conscious interactions with them till before their death. Your post reminded me of a page from my mother's diary where she writes about an incident of when she was around 10-12 ( 1946-47) about makeup.

بارہ تیرا سال کی عمر تھی- بھائی صاحب[ شاہ فریدالرحمان] بمبئ سے اینگلوانڈین بیوی مسلمان کر کے لائے تھے- وہ میک اپ کرتی تھیں- دیکھا دیکھی خود بھی شوق ہوا- ہلکا ہلکا پوڈر اور لپ اسٹک لگانا شروع کیا-

اور تو سب دیکھتے ہی تھے- والد مرحوم بہت غور سے دیکھتے تھے- ہم خوش کہ ابا بہت پسند کر رہے ہیں، ہم کتنے خوبصورت معلوم ہوتے ہیں-لیکن کچھ تھا- کوئی چیز کوئی خیال جو عجیب قسم کی گھبراہٹ، ڈر اور شرم بھی محسوس ہوتی - دل چاہتا کہ ابا کے سامنے نہ جائیں- تیسرے یو چوتھے دن ابا مرحوم نے فرمایا، بیٹی یہاں آؤ- جان نکل گئی- ابا آگے آگے اور ہم پیچھے پیچھے- کمرہ میں قالین پر لے کر بیٹھ گئے- کچھ دیر صورت دیکھتے رہے - بڑے درد سے یہ پڑھا 

نہیں حاجت اسے زیور کی جسے خوبی خدا نے دی

اپنے میں خوبی پیدا کرو- کام پیارا ہوتا ہے صورت نہیں- جو حسن اور خوبصورتی سیرت سے.[ذندگی میں پیدا ہوتی ہے وہ زیور اور سولہ سنگھار سے نہیں ].......( اگلا صفحہ نہ مل سکا)

 [This is the page from my mother's diary. Unfortunately the next page is missing. Written around early 1965 when my mother was in her 30s with 4 kids]. 

She recalls bhabhi of her elder brother who had married an AngloIndian. Bhabhi used to do makeup and my mother then 10 put up her first makeup with lipstick. Her father noted that a couple of times and she was feeling apprehensive, then a few days later her father asked her to come to his room and sat down with her on carpet and gave her advice which ended with this
نہیں محتاج زیور کا جسے خوبی خدا نے دی-

Then partition happened, my mother and her siblings and my Nani migrated with nothing. My Nana died soon after and my mother n family till 1950s were hand to mouth. My mother and khalas used to have just couple of clothes. One was being washed while the other was being worn. Even after marriage my mother with my father had meagre resources. Never had the luxury of "makeup". Once in early 1970s my mother showed me the makeup set still within the original box with empty bottles in velvety receptacles that she got as marriage present. I recall it was of "Evening in Paris" with beautiful case and beautiful blue glass bottles, containers. Note plastic utensils were not used then. She had gotten it as present after marriage in 1951.  I think that was the only luxury she had. I never saw my mother putting up a makeup, and never saw her complaining about anything that she did not have. She was deeply religious. We were lower middle class till 1980s. I heard several times my mother giving the same advice to my four sisters, individually at different times before their marriage, that she got from her father
نہیں محتاج زیور کا جسے خوبی خدا نے دی
Although I heard them complaining, putting forward the pleas that times have changed. And that my mother is not aware of the ways of the cities and of the new world. It is not like  the old times of her days, etc. Twenty years have passed since  my mother's death. I saw my four sisters who all are now in upper middle class to upper class strata, transmitting the same values and same advice to their daughters before their marriage and now their daughters' daughters who are getting to the marriage able ages.

I also got this same advice from my mother when I was a child and wanted some new expensive shoes. I have transmitted it to my children too!

How impressionable is the child and how the legacy of such experiences transmits through generations.
May Allah give my parents the best of abodes in the hereafter. Aameen.

History of PKR Pakistani Rupee

چمڑی جاۓ پر دمڑی نہ جاۓ

دمڑی نہ جائے چاہے چمڑی جائے۔

دمڑی کی بڑھیا ٹکہ سرمنڈائی۔

دمڑی کی بلبل ٹکا ہشکا ئی۔[1]

دمڑی کے تین تین۔

دمڑی کی آمدنی نہیں گھڑی بھر کی فرصت نہیں۔

دمڑی کی ہانڈی گئی کتوں کی ذات پہچانی گئی۔

اونٹ دمڑی کا اور دمڑی بھی پاس نہیں۔

دمڑی کی ہانڈی لیتے ہیں تو اسے بھی ٹھونک بجا کر لیتے ہیں۔

دمڑی کی دال بوا پتلی نہ ہو۔[2]