The ‘bombshell’ school of economics

The state of Pakistan’s economy is a new anguish of concern for the country’s media, politicians, and of course its citizens. It’s difficult to recall the last time when so many television talk shows focused on the IMF; exchange rate; inflation; debt; and electricity, which somewhat defines the limits of airtime discussions on Pakistan’s economy. The quality of that discussion is another matter.

Increasing demand for a discourse on economic issues, and weak understanding of economics within media houses at large has left a gap. That gap is being filled by everyone and their aunties who have fashionably become economic experts overnight on television channels. The consequences: men and women of influence who don’t have economic background are (a) misinforming their audience; and/or (b) creating a sense of panic or otherwise aggravating uncertainties.

For example, one journalist with quite some following was recently found arguing that the size of Pakistan’s economy has shrunk. Yes ‘shrunk’. With 3 percent growth, and full year inflation expected around 7-8 percent, it’s difficult to imagine how has the economy exactly shrunk. A few others have been making claims to have inside scoops that the IMF wants interest rate to be increased by mammoth percent and how the rupee is going to witness unmentionable levels of depreciation.

In part, this kind of ill-informed and panic-creating commentary is politically motivated, where the obvious idea is to make the situation look far worse than it is. In equal parts, if not more, a clear lack of understanding of economics is the main culprit. For many, political economy is a cool theme to discuss these days. But they forget that it’s about ‘politics of economy’ which demands at least a basic grip on economics.

Economics has certain stubborn facts and inexorable laws. Despite the laws and hard facts, economic realities remain nuanced. Just because there is a lot of mathematics involved in economics does not mean that it is not a social science. There was a reason why US President Harry Truman once frustratingly said “give me a one-handed economist’’. Even basic concept of trade-offs, explained through the classic textbook example of guns-and-butter, looks fairly easy, but it takes years to appreciate its application in real life.

Ergo, those in the position of influence, especially those who have significant followers on electronic and social media will do well not to taint their arguments with limitless despair, nor with unbounded hope. Economic uncertainty is worse than political uncertainty; the former effects the livelihood of all and sundry across the country; the latter not so much. Which also demands responsible behaviour from the authorities.

The markets, be it financial; commodity; or labour, need clear, extensive, and frequent communication from both finance ministry and the central bank. The 20th century inspiration of limited Fed-speak doesn’t cut it anymore. Equally important for the state and society is to develop economic media.

With the country having undergone democratic transition, the growing need for economic transition (read: reforms) entails a media that is well-versed in economic affairs. ‘Ogra drops a petrol bomb’ mindset needs to change. Nor should economic media be limited to exposing financial corruption.

The process of economic reforms is inherently fraught with conflicts between political and economic sections of society. Spicy headlines don’t help the case. Instead, media coverage on economics need to focus on increasing transparency and awareness about reforms and increase the political payoffs for coordination and cooperation amongst the stakeholders.

If understanding of economic issues is what it is in the media, it will be hard to gather public consensus on the necessary economic reforms. Freedom of economic press is only half measure, if poor analysis misguides readers and create panic and agitation – as does the ‘Ogra drops petrol bomb’ mindset.