Archive for November, 2008

Original Note: Economists Must Learn to Subtract on Adbusters

A very good point that I remember from The 11th Hour was a comment made by one of the scholars. He suggested that the ‘missing’ social and environmental costs in the pricing picture of most goods must be added to represent the ‘true’ cost of production. So for a smoke producing factory, that would mean that they are taxed for the amount that would require the government or a regulatory authority to replenish the environment and bring it back to its pre-smoked condition. Now this prop stirs many questions and comments but I believe this is a good start toward a more perfect model for the economic structure that would pursue growth with preservation and sustainability.

Original Article: Holding Obama’s Feet to the Fire on www.redpepper.org.uk

Doug Henwood’s analysis is fairly respectful but you have to admit that his is a viewpoint of the far left - and that would leave out the other three quarter of America. While we may be seeing a shift in the dominant American political ideology from Center Right to Center Left, it isn’t as progressive as that of most of the European countries just as yet. So yes, appointing a bunch of oldies wouldn’t help his cause of a fresh start but if we believed ‘all’ of what Obama said in his rallies to come to reality, we are either too innocent or flat out stupid. Rally speeches and political promises are always delivered to energize the base and rouse the emotions and can hardly ever be implemented in letter and spirit.

I think Gary Younge makes a very good point there. If we tell the Left folks that all they believed in was a big fat lie and that they should give up on Obama already then we are pushing them into a disarray. So let’s not do that. Let’s be critical - not cynical.  Let’s give Obama time. The times are too serious for a totally ‘fresh start.’ He needs people with experience even if they come with a set of pre-conceived notions and may hurt the cause for a true ‘change’. I think it’s still too early to call.

Original article: ‘After more balanced coverage, what next?‘ by Mosharraf Zaidi in (http://www.mosharrafzaidi.com) in The News on 25 Nov 2008

A good review of a silent change in the way the western media covers Pakistan and its political interests. If this trend is slowly taking shape then this may begin to weaken the dynasties of politics in our country and give the power of government to the people, where it really belong.

In response to the article, ‘How Japanese carmakers took different route‘ that was published on www.cnn.com today.

This is perhaps the most expected news that there can be – Japanese carmakers investing more into the technology of clean fuel and hybrid cars as their US counterparts seek shelter in the arms of the American taxpayers. For over two decades now, the story about how the Japanese carmakers are outsmarting the American Big 3s in their own country has been reported time and time again. At every significant event in the automotive industry during these years, someone somewhere always identified this discrepancy. Yet things never changed in Detroit. Many CEOs, Presidents and Board Chairman have come and gone with their ideas to change the way things are done in their company but somehow no real ‘change’ happened.

Was it the American arrogance, the misperceived belief that only America knows how to run the automotive business or was it an act of willful ignorance and innocent hope that things would turn out in their favor? One can argue endlessly over the failure of the Big Three to evolve with time and contribute to the green revolution in the automobile industry but one thing is for sure – their resistance to change serves as a great case study and learning lesson for other organizations all over the world.

Guest Blog by TuTu Malang.

“Understand when others will not;

Forgive when others cannot;

Care when others don’t

And love inspite of all your hardships, troubles and pain”

‘Pakistan, Forex & Musharaf’ by Kalwar on Teeth Maestro

@ A.H.Kalwar

First, I must acknowledge Kalwar’s attempt at analyzing the problems of our current economic situation, though not completely correct in the manner he has connected all of the dots. First, the exchange rate policy that Pakistan has adopted, since our last IMF program which was initiated in the 90s, is that of floating exchange rate (though it’s not been practiced that way most of the time). In a ‘fixed exchange rate’ policy, the central bank of the country sets the official rate and all banks must stick to it. This was the policy that Pakistan had adopted in the 80s and in the early 90s until IMF came and suggested otherwise. If you remember, we don’t have exchange rate notifications released by the State Bank as they are done by OGRA for oil prices every fortnightly (now that is highly regulated). If Musharaf government ran the affairs this way, you would be right in claiming that he pursued a ‘fixed exchange rate’ policy, but it actually didn’t. Now, why I say that Pakistan’s foreign exchange rate policy isn’t exactly ‘floating rate’ is because our State Bank (on the advice of the government) pumps in dollars in the open market to keep it around a certain level. This may be termed as ‘attempting’ to regulate the exchange rate around a certain place but it can never guarantee it. If the flight of foreign capital speeds up, this method will hardly have any bearing on the rate.

Now let me comment on your claim that a high dollar rate boosts exports and reduces the demand for imports. Let me tackle the first part of this claim – ‘high dollar boosts our exports’. You are totally right at saying that a weak rupee would help our exporters gain a competitive price advantage in the international markets but please remember that it is only a short-term effect. As the Rupee loses its value, the domestic inflation gets a kick in the rear which forces the State Bank to readjust their discount rate – increasing the cost of production for the industries, which ultimately not only eliminates the short-term benefit earlier reaped by exporters but might even push their costs so high that they find themselves at a disadvantage against their international competitors. Now the second part of the claim – ‘reduces demand for imports.’ While the demand for some imports may reduce by weakening the rupee, this is the worst way to achieve that objective. You and I know that the government has a wonderful tool if it wants to reduce the demand for a certain category of items and this method can be used very effectively to meet that end. It is called ‘taxation.’ The oldest rule in the economics book is ‘if you want less of something – tax it, if you want more of something – subsidize it.’ When one begins to look at reduced demands as a positive side effect of a weaker rupee, one has failed to register the impact of the same on imports of essential items such as machinery for industry expansion, raw material etc. Their increased import bill would pump the cost of production even higher, making them ever less competitive in the domestic or international market.

Moving on to your claim on the cyber bubble and the neglected sectors by the Musharaf government. First of all, the cyber bubble was solely a phenomenon of the American stock market and didn’t have as far reaching effects on the global economy as to bring it to a halt or push it on the road to growth. It’s effects as perceived by you are arguably over exaggerated. Second, you may be right at saying that Musharaf government gave priority to other sectors and not to agriculture. Here, I agree with you. But I disagree with the claim that it also ignored the manufacturing sector. Maybe you haven’t read the economic numbers of 2004, 2005 and 2006 when LSM (Large Scale Manufacturing) grew by over 15% every year. Over 15% growth! In 2006, only China had a higher LSM growth rate than Pakistan – in the entire world. That doesn’t come about by ignoring a sector. In 2006, our textile exports alone were more than $10 billion (just for comparison sake, our total exports in the 90s never reached that number). So to say that the last government ignored the manufacturing sector would be totally absurd. Yes, the focus was certainly more on banking and services and it is open to argument whether they needed that much focus or not.

And yes, Musharaf would do anything to keep his seat but so would any other ruler in a country where democratic institutions aren’t very strong. If you doubt my claim, please consult history. When you are in power, the only reason you give it up is when you know you can’t keep it no more. Only a few leaders in history actually gave up power because they believed someone else could do it better. In Western democracies, power changes every 4 or 5 years because the rulers know if they attempted to stay beyond their given time, their democratic institutions would put them behind bars. So Musharaf isn’t the most evil ruler for having done that – they all are the same – and I don’t mean to stay that what he did was right. It was wrong and cost our country a hefty sum in many respects. But to cast him out as Satan’s most favorite son and blame him for all of the problems is not only childish but also misrepresentation. And if you still doubt my assertion, please wait to see what Mr Zardari does when he feels the pinch. This is why the only solution for us is in stronger institutions.

Having said that, we must acknowledge that during Musharaf’s tenure, the government seemed to have a vision and a set of policies. Their policies might not have been all correct but there were many positives in their initiatives.

A friend’s note - quite thought provoking

I found life’s answers in my room: The fan said be cool. The roof said aim high. The windows said see the world. The clock said every minute is precious. The mirror said reflects before you act. The calendar said be up to date. The door said push hard for your goals. The carpet said kneels down and PRAY

A response to ‘Comrade’ Ali Azmat by ReKazim on www.teeth.com.pk  - (Click here to read the article)

I wonder what this bitter, cynical and overly critical author has against Ali Azmat or Shoaib Mansoor for that matter. This is what I find so confusing and unsettling about these self-professed promoters of social justice and freedom. The ideals of civil rights and social justice are based on acceptance, tolerance and appreciation and not on over-judged, ill-perceived character defamation. And very respectfully I would like to inform the writer that the gaining political ideology around the world isn’t pure socialism – it is social capitalism. Social capitalism encourages market competition and entrepreneurial spirit but also allows the people of the republic (through their elected representatives) to monitor and regulate the market. And the fact that Obama was being called a socialist during the campaign was actually an over-exaggerated image portrayal by the neoconservative media (especially Fox News) to win the support of the independent voters by playing on the fear of ‘wealth-distributing’ socialist ideas among the American people. Obama believes in market liberalization with diligent oversight of the government, the emerging ideology that is being accepted as a better alternative to competition-discouraging socialism and free-market capitalism.
While I don’t mean to doubt the writer’s genuine faith in social justice and civil rights, all I wish to say is that let’s promote the culture of acceptance and tolerance – a pre-requisite for a strong democracy.

As Obama delivered his victory speech in Chicago, the people around the world showed a sense of global connectedness that I have never witnessed before. Thousands gathered in Japan, China, Germany and England to celebrate Obama’s historic victory. The President of Kenya declared a national holiday on Thursday. Folks in Indonesia came out on the streets to share their joy for their one-time foreign resident. Though Obama hasn’t shown his support for Pakistan, still many in Pakistan felt a strong sense of joy for the election of a man who has inspired so many in the last two years. A bus passenger in London was quoted by a CNN reporter as saying, ‘this is the coming of a Messiah.’ I don’t remember witnessing even a remotely similar response to the last three US Presidential results. Perhaps, this global reaction had much to do with the staunch rejection of the Bush policies. But I believe this is more than just that. Those who have had the chance to follow this election race recognize appreciate the character and courage of Barack Obama. His relentless belief in the power of hope and optimism has resonated across the globe. Will he rise to the challenge of leading the world to make better choices for a cleaner planet? Will he eliminate the rising divide between the West and the Muslim world? Could he serve as the beacon of light that would brighten these dark times? Will Obama prove to be a global President?

At 11 pm ET, US, 4th November, 2008, Barak Hussein Obama was declared the 44th President elect of the United States. Most of us would have never thought we would witness this moment in our lifetime. Though rooting for this man since the first time I heard him back in October last year, the closer it got to the election day the more weary I became. It just seemed a bit too early for a black man to take the highest office in the United States. And with Obama’s win, the glass ceiling has been shattered. The barrier is no more. The dream has come true. Today, Dr King’s words resonated in so many ears. Today, America has shown to the world its ability to present opportunities to people regardless of the color of their skin. Today, American has true displayed that she is the leader of the democratic world.