Pindi needs the Chicago Boys
The reform scoreboard looks dismal. Thirty months after the start of the PTI government, reforms of the police, elections or governance are floundering. From condemning the corrupt to controlling circular debt, there is little progress. Tax and spending initiatives like Ehsaas work well, as do the Nai Roshni and Yellow Cab programs. Spending money is not reform.
In every day in Pakistan, the promise of the PTI of “Tabdeeli” resembles the Arab tales of Scheherazade!
If the reforms consisted of a bus ride to the destination of “Tabdeeli” or Transformation, then the citizens are its passengers and the establishment or the executive is driving us for a better future. Pakistan’s “Reform Bus” has already started promisingly, but has often broken down halfway, leaving passengers discouraged. The most spectacular example was the Musharraf regime, which ended where it started, rehabilitating and strengthening traditional political parties.
Our reforms consistently fail because a journey through unfamiliar territory requires navigation and planning to chart a course, for the path to economic progress is difficult and never straightforward. Without intellectual navigation, we are doomed to get lost or get stuck in avoidable obstacles.
Furthermore, reforms are long-term projects that require an ideological booster, or fuel, to push the Reform Bus through the barriers of old behavior and the response of vested interests.
Whether it is “Qarz Utharo, Mulk Savaro” or “Tabdeeli”, our reform efforts were born out of political opportunism, thus lacking the intellectual and ideological zeal necessary to catalyze and drive true transformation.
So, is a real transformation possible? Yes!
This happened in our lifetime in Malaysia under Mahathir, in South Korea under Gen Sung-Hee Park and in the UK with Margaret Thatcher. Main lessons: First of all, reforms take more than 15 years. Second, the reform ideology lasts longer than the initial leadership. In Britain, Thatcherism outlasted Thatcher and exists today as the main ideology of the Conservative Party. Third, political decisions are best driven by a core group of committed ideological intellectuals, such as “Thatcher’s wise men”. Thatcher’s reforms achieved incredible results in turning the ailing UK IMF-dependent economy into a global financial services center.
Similar successful reforms took place in Chile under Pinochet (1973 – 1989). Today, the Chilean economy is the highest in Latin America with a GDP per capita dropping from just $ 719 in 1975 to $ 14,900 in 2020.
Chile is relevant to Pakistan because the reform and its political coverage were provided by the institution of the Chilean army. However, the intellectual and ideological underpinnings of the reforms were Chilean technocratic economists called “The Chicago Boys”, as a number of them were trained at the University of Chicago under Milton Friedman.
When General Pinochet came to power, he used the economic and political thought of the Chicago Boys’ publication “Program for Economic Development” as the architecture for reform. Beginning in the 1980s, the Chicago Boys were appointed to ministries of finance, economics, planning or as president of the central bank, providing the intellectual and ideological foundation for reforms.
Without a team with intellectual and ideological commitment, Chilean reforms would have failed due to the backlash. For example, the deregulation of the economy led to an increase in short-term unemployment to 20% and inflation to 375% in 1975, followed by a decline in GDP of 19% in 1982.
In the face of opposition that has often derailed reforms, the key success factor has been the maintenance of military rule and the cover of the Chicago Boys to implement three phases of reform over seventeen years.
Compare this with similar Pakistani initiatives, which are mostly slogans to garner votes, without any foundation or sincere intellectual and ideological planning. Large and inexplicable task forces, made up of members without passion or ideological adherence to economic transformation, do not bring about reform.
Often times, business leaders co-opted into advisory boards and task forces have built empires based on the license-raj economy – and so you can’t expect them to dismantle the same. through deregulation and competition. Frequent U-turns, political incoherence, stop-go-stop spoiled by vested interests are the hallmarks of intellectual and ideological scarcity in the commitment to reform. Therefore, our reforms are stillborn or slowly dying.
The Chilean case study does not consist in prescribing the same methods and means, because the regime brutally repressed opponents. Rather, it is to illustrate the proven lesson that all economic transformation projects last longer than a mandate and require an institution to deliver, like the military in South Korea or Chile, the conservatives to the United Kingdom. United or Institutional Revolutionary Party in Mexico.
Second, reforms require the intellectual navigation of committed experts, fueled by ideological zeal, like Thatcher’s Wise Men or Pinochet’s Chicago Boys, to design and lead complex reform efforts.
Pakistan’s Reform Bus is blocked again. Citizen-passengers are discouraged, the establishment or executive leading out of reform options and adopting the same old ways that have failed in the past. If indeed the military is the vehicle for reform and economic transformation in Pakistan, then Pindi must consider the Chilean model and recruit real reformist intellectuals and ideologues, our own local version of the Chicago Boys.
The writer is the founder of Zambeel Partners, Rahgeer Fellows.
Twitter: @ AhmadJalal_1