(1/n: on #NationalDialogue) There has (or had) been 13yrs of continuity in Sindh, 10yrs in Punjab (former govt) & 8yrs in KP. Do we really need such a dialogue for prov. govts to start implementing wat is already part of their manifestos: local govts, police, health, edu reforms?
(2/n) How does a national dialogue improve an average persons life? Are we to imply that the provincial govts (some ruling for more than a decade) will deliver on the above only after the judiciary, military & all the other groups first agree to some power sharing in the centre?
(3/n) Y do we think tht somehow a power sharing agreement in centre will incentive provincial govts to start using available resources in interest of their ppl? Especially wen, following 18th amendment, resources & decision making powers have already been devolved in most cases.
(4/n) There is a clear gap in how a power sharing agreement between elites will translate into improved public service delivery for masses. If devolution of power & decade-long continuity in prov. govts has done little to improve governance, then the problem lies elsewhere.
(5/n) In my own view, rather than thinking about how best elites can sort out their differences, we have a much better chance of improving average person's life if we start questioning the elites for watever the heck they hav been up to in provinces over many years of their rule.
(6/n) Or else, someone needs to explain to the rest of us how a new power sharing formulae in centre will incentivise provincial elites to suddenly start appointing people on merit, devolve powers to local govts, implement institutional reforms in police, health, education etc.
(n/n) Unless someone can show this, a #NationalDialogue is simply elites trying to work out their problems for their own sake. A resolution of their conflicting interests does not guarantee an improvement in lives of masses.
P.S. If all of the above is too abstract, here is another way to think about it: You can give subsidies and tax breaks to every interest group out there to keep them happy, but that is only going to screw up the country even more!
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(1/n) The previous thread discussed supply side factors & focused only on food infl. But wat about the demand side? There is a lot happening here as well. After remaining stable around 10% for about 2 yrs, growth rate of money supply increased from 11% in Dec-19 to 16% in Oct-20.
(2/n) To wat extent such a sharp increase in money supply will affect inflation is not immediately obvious. This will partly depend on wat ppl decide to do with it & how the SBP will respond to it. But before this, lets look at why money supply has increased so much since Dec-19.
(3/n) While money growth started increasing from Dec-19, most of the increase was during the post-COVID period. Money growth increased from 11% to 13% during pre-COVID months and from 13% to 16% during post-COVID months (black line).
(1/n) While there is a general upward trend in food prices in #Pakistan, there is also a lot of heterogeneity is how prices of key food items have changed across cities. This points to a mix of local, national and global factors underlying the upsurge in food prices recently.
(2/n) For example, average wheat flour price has increased by almost 5% in Punjab since May but the increase is much higher in Sindh, KP & Balochistan.
(3/n) In contrast, average onion prices have increased most in Punjab, Islamabad & Sindh but fallen significantly in Balochistan (due to imports from Iran?). Prices in KP have also increased but by less than half of the increase in Punjab, Isb & Sindh.
(1/n) There is often a lot of emphasis on social security in political discourse around 'riasat-e-madina' in #Pakistan. But in the few books I hav ever picked up, the bigger story is always about development of trade networks & of financial instruments required for achieving this
(2/n) To an extent that George Saliba's whole thesis on the downfall of Islamic civilisation is centred around the diversion of east-west trade away from the traditional trade networks passing through Islamic lands.
(3/n) Arguing further tht it was the wealth creation frm trade which allowed Muslim elites to finance the scientific enterprise. And once traditional trade routes lost their appeal to newfound shipping routes, both wealth creation and, consequently, scientific enterprise declined
(1/n) To ans questions raised in comments to my earlier post, let me explain y I hav a serious issue with this graph. Note that the graph DEFINES that anyone earning more than $300 per month belongs to middle class. This is exactly wat is wrong with it. Y?
(2/n) In short, bec purchasing power of $ has continued to change over time. Let's start frm 2014. Recall that while exchange rate remained almost fixed between 2014-18, domestic prices kept increasing by more than increase in world prices. Result: real exchange rate appreciated.
(3/n) Now the graph. A person earning $300 in 2014 does not hav same purchasing power as one earning $300 in 2017. In fact, one earning $300 in 2017 is poorer than one earning $300 in 2014. Y? Bec, due to overvaluation in exch rate, $1 buys u less in 2017 than wat it did in 2014.
(Comment: 1/n) More than that, I will argue that the biggest disservice our govt does is not letting unproductive businesses go bust. There r guaranteed returns/prices, trade restrictions & plethora of (bad) regulations making sure that the economy remains more of the same.
(2/n) This then means that we keep using our resources to produce same goods/services rather than allowing them to get reallocated to more productive activities. See an earlier thread for more detailed discussion
(3/n) It is not hard to appreciate why govts are often reluctant to let businesses to go bust even if they are unproductive. Doing so makes people temporarily unemployed and give leeway to opposition to blame the govt for not doing anything about this.
(1/n) It turns out year-on-year credit growth is -ve in real terms. (Real) Outstanding credit in Aug-20 is 9.23% lower compared to Aug-19 & 9.47% lower compared to Aug-18. Now one can argue tht 2018 is not an appropriate benchmark since this was the year of debt fuelled growth.
(2/n) If u buy this argument then relevant benchmark is probably FY17/16. The picture improves considerably. But note that total credit in Aug-20 is still 2.57% lower than wat it was in Aug-17. There is still more to the story: distance frm pre-crisis trend is likely much bigger.
(3/n) But there r few positives as well. First, total credit (real terms) to export sector has continued to increase over this period. It stood 14.92% higher in Aug-20 than what it was in Aug-18. This confirms that the economy has rebalanced towards exports during last two years.