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Cultural change for economy
THE topic of Pakistan’s non-ending economic quagmire elicits many proposals, some good, some reworded, and some repetitive. Rarely, if ever, is there a discussion on cultural aspects impinging on economic outcomes.
I argue that, for the economic transformation of the country, cultural change is as important as factors like investment, savings, fiscal policy, etc. Importantly, the argument centres not just on government and governance — which are the usual targets, for good reason — but also on society. What follows is a brief description of where and what aspects need a change.
Let us start with the sensitive topic of religion. When we talk of the economic performance we would like to emulate, one inescapable conclusion is that religion takes a back seat in the affairs of the state and society and has a temperate, minor influence. Pakistan, however, represents the case of a country and society where faith and extreme attitudes are deeply woven into the fabric of society, as shown recently in an excellent survey by Dr Durre-e-Nayab and her team (PIDE Basics Survey).
This leads to several repercussions. Take the example of the institution of insurance, one of the most effective instruments devised to lessen risks surrounding our lives. Pakistan’s insurance penetration rate is hardly 0.91 per cent, lower even among regional peers (in contrast, 90pc of households in Japan are covered by life insurance), mainly because the majority consider it to be against their religious beliefs. This, in turn, leads to spillovers that go far beyond economics. The search for physical and financial security to counter risks, for example, often leads individuals into the hands of extractive actors, who use them to get their illegal deeds done.
Pakistani society and our governments must give up their ‘let’s kill the rich’ attitude.
Ironically, it’s a form of slavery that religion prohibits, but the same beliefs are cited as a hindrance to accepting instruments like insurance or savings accounts. This mental outlook needs to change.
The second aspect where a cultural change needs to take root is the acceptance of divergent points of view. Modern economic growth did not come about merely through erecting cemented structures. In fact, it was a long, protracted battle of ideas from which theories and practices of modern growth emerged. That transformation was underpinned by intellectual humility and tolerance of others’ opinion.
Such humility, unfortunately, is largely lacking in Pakistan. Across the country, what one usually encounters is the ‘my way or the highway’ approach. People frequently give opinions as if they know everything, repulsed by even the slightest impression that they may be wrong on some issue.
Sadly, this attitude extends to the economist community of Pakistan (generally speaking), their senseless grandstanding being based on limited reading and understanding of historical circumstances, all the while answering to their own inert biases.
Third, Pakistani society and our governments have to give up their ‘let’s kill the rich’ attitude. There is a dire need to realise that not every person in Pakistan who has made his/ her way to riches is a haramkhor. This attitude is anathema to wealth creation. There are enough examples of individuals who have become rich by dint of their hard work, dedication and industriousness.
Yes, there is ample corruption as well as leeches who have accumulated wealth through dubious means. But more often than not, we find that the basis of their accumulation is support from governance structures (subsidies, fat contracts, lax application of laws that help them get away, etc.), which in turn perpetuates a culture of impunity, theft and corruption.
So let’s realise that wealth and wealth creation by genuine means is something to celebrate rather than scoff at.
Fourth, people need to recognise that there is no substitute for hard work (physical and mental). Shortcuts (jugaar) can only take you so far, and are never a good strategy to gain long-term success and credibility. Examples abound, from ‘professors’ who achieved the position through plagiarising papers to ‘double shah’-type characters, but a recent one would do.
Last year, Amazon suspended thousands of accounts from Pakistan for fraudulent business practices. It never occurred to the perpetrators that their behaviour would not only shunt them out of the largest online marketplace, but also severely diminish the chances of other honest entrepreneurs/ businessmen in Pakistan trying to establish themselves there. Neither did the government attempt to prosecute them for tarnishing the country’s already low repute.
Put another way, the attempted jugaar may have severely dented our access to one of the largest firms in the world (Amazon’s market cap stands at $1.77 trillion). These kinds of jugaars and rip-offs are common across the country, in every sphere of life, and are basically a reflection of a lack of ethical and moral standing upon which a healthy, trust-enhancing society is built.
No wonder whether it is the life of Prophet Muhammad (PBUH) or the writings of Adam Smith (who wrote Theory of Moral Sentiments before his magnum opus, Wealth of Nations), one finds heavy stress on fair, just and ethical dealings in matters of commerce and the economy.
Last, but not least, Pakistan cannot hope to have a transformed economy without women being an active part of the labour force. Its female labour force participation rates are lowest even amongst regional peers. The participation rates in KP and Balochistan are not even 12 per cent, with prevalent culture being a huge block. High fertility rates are one outcome of this low participation.
The points and issues to ponder are many, but I will end by suggesting that both society and the government need to realise that economic growth and change is not merely about endless amounts of cement, steel, brick and mortar.
Nor would merely increasing the Public Sector Development Programme ensure economic prosperity (an issue to be taken up later). Breaking the cycle of economic backwardness has to be complemented by a cultural change that values ethics, morality and emancipation of mind from the clutches of obscurantism and mediocrity.
The writer is an economist and presently a Research Fellow at PIDE. The article constitutes his personal opinion.
Published in Dawn, February 16th, 2024
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