When Henry V positioned his army for battle on a recently plowed field (that turned to bog when it rained), bounded by woods the limited the advantage of numbers that the French enjoyed, he knew the terrain favoured his army and disadvantaged the opponent.
The subsequent battle led to abject defeat for the French a fair chunk of their aristocracy perishing under rain of English arrows. 

As is the choice of battlefield in war key to success, in politics the setting of the agenda for battle lies real political mastery.
PTI successfully for the first three years made reforms it’s agenda and despite the the pain the public has to endure, they were after three years beginning to see the benefits of the tortuously difficult task of about structural change.
And the gains of doing so were beginning to reflect in most macroeconomic numbers. Growth had picked and interest rates come down. Employment was gradually picking up, and the opposition seemed lost. But stories politics never do follow a straight path.
For some inexplicable reason it was decided to abandon the firm & winning ground of reform and structural change, and instead much to the joy of the opposition opposition, their mantra of 6% growth becomes the new mantra. That was the touchstone herewith. and growth was all!
Consequently the spigots of spending were opened  and growth was all that matter. And as predictably the heavily armed French Aristocratic nights got bogged down in the muddy fields of Agincourt, Import rapidly rose and trade deficit dramatically deteriorated.
And with that PKR dropped. To cap it all, an already inflationary environment due to international commodity prices was exacerbated by the rupee depreciation. And now GoP grapples with inflation through all manner of administrative controls with their own negative ramifications
The bottomline is to choose what to fight on and force your enemy to adopt your battlefield. PTI’s reform agenda is a winner that the people’ll support. It may imply short term difficulties but the awaam are not foolish and willing to see short term sacrifices for a better future
*it limited

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More from @javedhassan

12 Oct
As one said a few months backs and repeatedly since, stock market can be throwaway cheap but without new liquidity it’ll keep getting cheaper. As soonest the IMF program was put on hold a downward trajectory was inevitable down. PE can be as attractive as you want but if there’s
no confidence in the overall macro direction the market will tank, and that it has promptly done. The idea of a providing procyclical stimulus to an already sharply recovering economy was bound to lead to overheating and ever expanding trade deficits. To delay tariff hikes only
exacerbates the the problem by not dampening demand and further expanding circular debt. Net result will be larger tariff hike than would have been required earlier. Not increasing the rates and maintaining negative real rates only help fuel the consumption driven overheating
Read 6 tweets
10 Oct
Pakistan is stuck on a declining trend of productivity growth rate, and with that sustainable GDP growth rate is also declining - c6% in 70s to now not much more than 4%. This is lower than the regional average. This’ll continue to be so as long as it resolutely refuses to reform
At the heart of the matter is the relentless and ever increasing allocation of resources to some of the most inefficient and globally uncompetitive industries. The bulk of the private sector investment is almost entirely incentivised to capture rental income provided by the state
Almost every industry, save a few like IT or rice/maize, are dependent on tariff protection or subsidy. Few invest their resources - many sit on huge piles of cash - to improve their productive capabilities such that they can compete globally. And GoP incentivises them to do so
Read 5 tweets
22 Sep
There are simple home truths that seem to elude those drumming the beat of growth at any cost. One, our debt levels are such that we need to be generating primary surpluses to avoid further sinking into debt trap. Two, we don’t have the reserves to service both CAD and ext debt.
Any level of growth (c4%) that aggravates those two very basic constraints in our economy is essentially overheating. We can play verbal gymnastics and fine tune the semantics till the cows come in, but the only way out is maintain growth at that level that does not worsen either
So we either control aggregate demand to be inline with our output capacity or just resign ourselves to an even larger IMF bailout program not too far out in the distant future. We can all try to be clever about it but when the $s run out there’s not many other alternatives
Read 4 tweets
21 Sep
If we accept the definition of insanity as “doing the same thing over & over again and expecting a different result”, the asylum wud be filled with Pakistani economists & policy makers. Repeatedly we’ve pursued growth through pro cyclical stimulus. Each time with the same result
There can be no real sustainable growth comparable to that seen in countries like China or Vietnam without deep structural change. Any attempt to buy growth without creating the endogenous capabilities will result in fits of boom and bust. The country has to understand it can’t
continue with the old ways of trying to create industries by subsidies and protection, isolated from the dynamic forces that continually spur innovation in businesses and transform sectors internationally. Neither the consumers nor the state should bear the burden of a few
Read 4 tweets
18 Aug
There are too many good reasons for the #Taliban to act in line with whatever they’ve publicly stated. Contrary to the propaganda machine of the previous degenerate regime & supporters, the Taliban have to deliver to its #Afghanistan people. This is only possible by enabling
an environment of peace and reconciliation that Taliban are promising with their forgiving all the collaborators of the Ghani kleptocracy, which had taken poverty level from 35% to 55% of the population. The Taliban will not have the dollar that previous puppet regimes had to
provide a glitz of a consumption oriented economy. They’ll instead have to contend immediately with a liquidity crunch as dollar flow stops & the corrupt money makes its way out of the country. This is likely to have a deflationary impact, especially in Kabul, where assets price
Read 14 tweets
14 Aug
The final chapter still has to be written. As we come to the dénouement there are still strands in the complex web of subplots that may not yet be apparent. However, its now clear that most journalists & DC think tanks have been clueless about the game actually being played out
While many of the ‘expert’ prognosticators have been hyperventilating about an impending protracted civil war and painting the gory picture of blood strewn streets, the Taliban have been quietly negotiating with traditional power brokers the transfer of power in city after city
When wishful thinking takes over ground realities then it’s possible to imagine India playing a major a role in post US exit scenario’because ‘it’s invested $3bn in Afghanistan’. The fact it’s done with the soon to be jettisoned Ghani kleptocracy is ignored from such analysis
Read 10 tweets

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