Memo to Hafeez Shaikh: Do Not Be Afriad of Thinking

Posted on April 2, 2010
Filed Under >Nadeem Ul Haque, Economy & Development, Education
15 Comments
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Nadeem ul Haque

At a recent meeting with the Hafeez Shaikh, the new Finance Minister of Pakistan, some of our best economists came up with the refrain that “Research and inquiry is not necessary, we know it all. We need to act and not think.” Alternatively, “we know it all! The only problem is that no one will implement what we are suggesting.”

I found this a little disturbing. So I asked some “what is it that we know?”

The usual answer the World Bank or some donor report knows it all. This raises a number of issues that need to be understood and discussed.

  • All the donor recommendations are excellent and can be fully implemented off the shelf.
  • All donor consultants who completed those reports are of the best quality.
  • All donor consultants know all local conditions.
  • All solutions can be borrowed there is no local innovation possible.
  • There is no need for a domestic review, critique or discussion of this excellent work.

Let us count some donor successes for these people:

  • Social Action Program which the Bank itself would like to forget.
  • The foreign currency debacle that the both the World Bank and the International Monetary Fund would like to leave behind.
  • The civil service reform program that sent people to Harvard at great expense with no end in mind.
  • The National School of Public policy that merely changed nomenclature at great expense.
  • The Access to Justice that spend millions on the Project Implementation Unit.

I could go on but let us leave it at that.

The proponents of ‘no think, follow the donor’ approach’ would say, the fault was not in the design but in the implementation. Convenient!

Even if I accept that let me ask should we not then do a study to apportion blame on where the fault lies in the design or the implementation? After all a failed policy could be due to poor design or poor implementation or both! Only research could determine what weight should be placed on design or implementation or policy failure.

So no matter where we go there is a need for study and research. To leave all thinking to the donor and all implementation to the locals is a poor approach to policy can in no way lead to good policy. After all, cookbooks alone do not make Michelin chefs.

No matter that in this rush to act, we created the Foreign Currency Deposits (FCD) problem, created a half chewed local government scheme, protected car monopolies, created hotelling monopolies, built up housing scheme scams and so on and so forth. This simplistic approach has led us to crisis after crisis.

Donors who are pre-eminent in policymaking tend to fuel this creed. Donors define the agenda for these activists and the agenda seems to be heavily in favor of activism. Donors argue that “prescriptions are easy” mimicking the activist creed in the country. The donors know it all. Unfortunately we are not implementing it. According to them, the problem has always been the implementation capacity in the country and not their prescription.

Yet the advanced countries do not agree that prescriptions are easy. They have an enormous infrastructure for generating policy research and discussion. Unlike us, they have deep teams for developing policy thinking. Whatever policy initiative is taken is well researched frequently debated. Political parties, even in opposition maintain think-tanks for the development of policy initiatives to be used when they come to power.

Why is it that the policy in the industrial countries has been following academic thinking and not activism? Keynesianism prevailed for a long time and when it lost the academic debate to the market based system, policy changed. It seems that research leads policy and that policymakers do not seem to rush into the most easily available prescription.

Why should prescription and implementation be separated? A good analysis will take into account the prescriptive and implementation aspects of the particular situation. All analysts worth their merit will examine the practical aspects of their prescriptions. To separate the two is, at the minimum, naive.

Given our current state of understanding of socio-politico-economic processes, we should be more humble and inquiring and not claim that ‘prescriptions are easy.’ On the contrary, the hypothesis can be advanced that the reason that change is so slow may be because of our cavalier attitude towards prescriptions and the prescription-making process.

Yet, simplistic schemes are bandied about by our esteemed columnists: fix the deficit, get the macro right, increase development expenditures, get education right! Yes these are all truisms that no one can disagree with. But the issue is doing any of these will require a lot of thinking research, planning, and maneuvering. And all these activities will require a large number of very competent people involved in basically research, implementation and evaluation at various levels. Even implementation has to be based continuous evaluation and revision which in itself is research.

What should be done? There are no shortcuts.

  1. First, we must build up thinking and debate into policy.
  2. Second, we must build teams in institutions. Most institutions remain one-man affairs with no coherence or depth to the team. These heads remain totally insular and are not subject to any form of peer review. Why is there no policy debate in Pakistan and why are their no teams in various institutions that will define and debate policy in their sectors?
  3. Finally, our thinking community must write more well-researched and informed critique of policy rather than blame it all on Musharaf, Shaukat, NS or BB. What happened in the FCD crisis? Who was responsible and why? How did the IPP’s happen? Why was such a strange pro-monopoly policy on cars and hotels developed? Why are our urban development laws so archaic? What is wrong with the archaic cooperative law that it continues to plague us in the current housing scams and in the past coop society frauds?

Dear Mr. Hafeez Shaikh, certainly we need deeper thinking than our current crop of technocrats recommend!

Dr. Nadeem Ul Haque was the former head of the Pakistan Institute of Development Economists (PIDE). He blogs at Development 2.0 where this was first posted.

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15 responses to “Memo to Hafeez Shaikh: Do Not Be Afriad of Thinking”

  1. Abdul Jabbar says:

    I was really impressed with the view of Mr.Abdul Hafeez Shaikh Minister for Finance Revenue during the budget speech, specially when he has admire the role of his driver. This country is not only culturally rich but fully gifted with the infinite natural sources, there is the only shortage of placing the right people on the right job.The best tool to provide the awareness among the children of country regarding the proper utilization of energy in Pakistan because awareness regarding the proper utilization of energy not only equipped them with the knowledge but also shall be one step ahead towards controlling more wastage ,Now a days the kids are the generation of DOT COM they are their own judges jury and proscutors. An action plan is required to be design with the coordination of Education Department to introduce awareness two to three days workshops/samposium/workshops at each district of Pakistan, and necessary lessions regarding the savings of energy may be included in the primary and secondary/higher secondary level, as the children takes lion share to utilize the energy.

  2. Salman says:

    The real problems are economic and development issues. But no one is paying any attention to them

  3. Watan Aziz says:

    Fascinating.

    Some of us, who think in democratic ways, care about equity and justice, find the journey flawed. It is the nature of the pathway.

    I love and admire ZAB. But I found him failing too. He let down dreams of millions who believed in him. That still hurts, but I it is OK.

    I love and admire Jinnah. He too made few mistakes, but given the task he had, there are no complaints there. None. Not a single one.

    But those who love usurpers, have nothing but usurpergasams for them.

    Really.

    It makes me wonder.

    All right, since we are taking statistics. Lets do the numbers some justice.

    Lets make adjustments we know about. Add to ZAB column, the zero he got. Readjust the others to zero for the same base and recalculate the growth rate for the usurpers.

    Now, add another column, the “external assistance” the usurpers got and ZAB never did. Now, readjust and recalculate.

    Finally, add one more column. The kickbacks and the monies cronies got and kept outside or skimmed off the top inside (and we know the numbers) and now readjust. Now, because in the times of Ayub and ZAB, these were paltry sums, but later, oh hooo hooo, they became numbers with trailing zeros that you had to recount the zeros just to make sure you did not omit any. One more time, readjust and recalculate.

    Now, if ZAB is not on the top and out of sight by leaps and bounds, that will be OK. It is not your fault. Your calculator has the “” symbol instead of “=”.

    You see, there are lies and then there are damn statistics. They can be manipulated to show anything you want to or hide any fact you know that exists.

    And we all know that.

    There are two amazing men in Pakistan’s history. Jinnah and ZAB. People work overtime to put them (if not Jinnah, then ZAB for sure) down. When I hear their speeches and watch their footages, it still stirs me up.

    Yes, I love our flawed men of people, by the people and for the people, but not the gang of four usurpers.

  4. Some comments from the ATP Facebook Page:

    – “Mr Hafeez Shaikh should read the book ‘The Confessions of an Economic Hitman’ by Anthony Perkins. And then he and the rest of us can decide on the worth of the IMF, The World Bank and US Aid.”
    – “well i guess they gotta know it all… lolz i mean im not sure they can make independents plans anyhow wid imf karzaaz tht they been taking, whatmore if mr shaikh cant manage all this then he might make a excuse like he has a bank to take care of or sumthing nd leave the place … i mean mr tareen shudnt have been allowed to leave so easily i mean i guess its jus sick i dnt think it wud happen at many other places that some finance minister takes all these steps like mr tareen did and takes up imf loan and then oh i cant manage it all im going i gotta bank to look after i mean what can you expect from these peopls i mean if such behaviour is tolerated then what can 1 say…”
    – “yaar yeh q keh rahay hu is nay tu imf mai nahi phasaya na is nay tu aap ko budget daina hai aur chalaijana hai .Dr hafeez sheikh nay buhat achi perforance di hai is liyey let him priove his self”
    – “we all are responsible for the economical crash,”
    – “we paki’s having number of natural resources but we dont utilize them, why to blame others for our economic crises. We came to world just to buy and eat, as we are capable to produce and sell.”
    – “atleast Musharaf’s team again recognised. no doubt Dr Hafeez is a brilliant chap.”

  5. SGN says:

    Factual point:

    Mr. Abdul Hafeez Shaikh’s official title is Adviser to the Prime Minister on Finance.

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