How will economic repairs be possible?

While the movement of the Students against Discrimination was ostensibly against the quota system, the root cause lay within the economy. In scholarly terms there are called the two sins of economy -- unemployment and inflation. Had the Awami League government managed to keep these two sins more or less in control, then they would not have had to face with unfortunate exit. A party which has grown from the grassroots, finally had become dependent on intelligence agencies and businesspersons.

If intelligence agencies and businesspersons could ensure the stability of any ruler, then no military rule would come to an end. In the history of Bangladesh, power begins and ends at the hands of the students. The intelligence agencies will give misplaced advice to whichever government comes to power. As for the businesspersons, they have already changed colours.

The problem is with the economists. They can't change their colours with the change of government. Just as a good physician discusses the problems of a human body, economists too caution the government about the problems of the economy. This may often not be politically palatable and so the economists become the foe of the government. They are even taunted as being a part of the "civil society".

One of the most renowned names in macro economy Maynard Keynes said that it was politicians and economists that determine the fate of most things in this society. Very few people outside of this can be influencers. In the society in which he grew up, Keynes saw politicians coming to listen to him. British prime minister Winston Churchill would call economists, listen to them.

Once Churchill proudly said that the British had the best common sense and Keyes was proof. Unfortunately, in our society politicians and economists are invariably at loggerheads. The economists are always disparaged and lashed out at, because they do now spew out rhetoric on development at regular intervals.

The politicians do not know that there is separate school for such development narrative and that is development economics. But more important than that is the prevailing macro management where all the failures combined can remove a government, as in Sri Lanka and Bangladesh.

Economic repairs now will have to start with macro management. In order to salvage the economy, it is urgent to control inflation on a short term, maintain safe reserves, ensure credit flow in the private sector, ensure proportional stability in trade balance, and take inclusive measures to reduce unemployment on a somewhat midterm basis. It would not be correct to say that the previous government has failed in these areas. It was just a matter of massive negligence and contradictions.

The government’s research institution BIDS had held up multiple indicators. The figures pertaining to unemployed educated youth was alarming. In fact, almost half the educated youth are unemployed. But the actual statistics were forcefully concealed. The politicians only spewed out success stories. The word “unemployment” was taboo.

Government jobs do not even account for 5 per cent of the employment structure. The private sector has not been flourishing due to corruption in the banking sector. Even so, it is the private sector that is providing most employment. Yet many of the jobs provided to the youth in the private sector amount to little better than slavery. The rest of the youth join up with politics. Students of the ruling party camp drive up to the campus in cars followed by an entourage of motorbikes. The leaders have no sources of income, but no dearth of wealth.

If a car breaks down, it requires repairs. Our economy is not parked in a peaceful place. It is on the precipice of a hill, ready to go tumbling down. This fall must be prevented. It is the responsibility of this government to first control inflation and to ensure the reserves remain safe. The allocations of the development budget must be held up for the time being. Our development projects are the costliest in the world. Corruption and inefficiency gobble up 50 per cent of the funds. A glaring example of this is the Rooppur Nuclear Power Plant foisted upon us by Putin and imported in the interests of a handful of our bureaucrats and politicians.

If the government has the legal provision, it must cancel the law passed in the budget to whiten black money. The shady provision regarding bank directors must be dropped too. The duty-free facility for members of parliament to purchase cars is totally discriminatory. This is an example of unethical practice in a revenue-weak country. In short, the budget needs to be perused and revised. The sum regarding bank loans must be cut down. Unless the meaningless money-devouring decisions are curtailed, inflation will not go down.

I doubt if any economist has the desire to delve into the task of detailing the mistakes made by the previous government. After all, they will not be saying anything new. If the media records of the past four decades are collected, it will be seen that the government did not listen to a single bit of advice from the economists. Until the World Bank and IMF grabbed them by the throats, the government paid no heed to controlling inflation, the dollar rates, the reserves, interest rates and such. There were two reasons behind this. One, their aim was simply to appease the wealthy and so what was necessary to this end.

Two, unqualified sycophants were placed at the top positions of almost all financial institutions, positions which required knowledgeable leadership. Instead, loyal civil servants were put in those places, with total disregard to academics. After all, educated decisions would not be politically palatable in most cases. That does not mean the civil servants are not capable to intelligent decisions. But it is easier to ensure that the bureaucrats take decisions that appease the corrupt businesspersons and those at the pinnacle of power. Educated intellectuals may not be so easy to manipulate.

Those who believe in market economy have proven that quota or controlling the market at any cost leads to increased inefficiency and does not ensure optimum use of resources. If anyone calls such economists drugs addicts or progeny of razakars, it makes no difference. We have to teach all this in our micro economy classes. When dependence on knowledge decreases in a society, it is dangerous. The ruling party politicians merrily spewed out figures of per capita income and decreasing poverty, but turned their backs to indicators on knowledge-based economics, innovation, media freedom, quality of education and institutional excellence. Therein lies the downfall of Sheikh Hasina’s government.

When institutions are damaged, it is hard to carry out economic repairs. It may be natural for certain political parties to be eager to known when the interim government calls for an election. But they must accept that the present government must be given due time. It must be given time to at least activate the financial institutions, to draw up certain regulations of these institutions, all of which is imperative for long-term repairs.

* Biru Paksha Paul is a professor of economics at the University of New York and Cortland

* This column appeared in the print and online edition of Prothom Alo and has been rewritten for the English edition by Ayesha Kabir