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Bilal's avatar

Noah, thanks for putting this together. As a Pakistani-American with family still in Lahore, I think you hit the nail on the head.

A few observations:

1. Completely agree with privatization. Regardless of the impact on debt, the truth is most Pakistani state institutions are hopelessly inefficient and corrupt. Most of my friends will never fly PIA to Pakistan ( look up PIA flight 8303), and everyone with the means has switched from the national power grid to privately provided solar energy.

2. The real tragedy of Pakistan is elite capture by the army, bureaucracy and landlords. The army itself is the biggest landowner and business empire in the country. The only analogous system I see is Egypt.

3. As such, the elites have no incentive to change anything. And even if a leader emerged promising change, the vested interests in these institutions would bring this person down (as has happened several times in Pakistan’s history).

4. I completely agree that peace with neighbors is essential for Pakistani stability. Once again, the army has undermined all such efforts to justify continued investment in its infrastructure.

In the end, it’s just a tragic story. The Pakistani people are smart, industrious and entrepreneurial. They deserve better.

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Splainer's avatar

Weirdly little emphasis on Pakistan effectively being ruled by its military in Noah's article. For instance, the word "army" appears just once in a suggestion that it provide "security from terrorists and criminal gangs" (which would be nice, but seems a starry-eyed hope given the army's own striking resemblance to a pro-terrorist, criminal gang). Prime ministers, to a crude approximation, either bend the knee to the army (and nationalists and landlords), or they get ousted (https://news.sky.com/story/in-pakistan-it-seems-there-are-only-two-ways-prime-ministers-leave-office-military-coups-or-assassinations-12737632).

With Pakistan's crooked, army-dominated political establishment, there's little reason to expect privatization to help, and multiple reasons to expect it to fail:

‣ Pakistan's SOEs aren't valuable enough to clear its foreign debt (https://www.noahpinion.blog/p/pakistan-needs-a-plan/comment/49760299);

‣ the privatization process itself is one more opportunity for corruption and digging Pakistan's hole deeper; and

‣ indeed Pakistan already engaged in significant privatization since 1991, and has ended up where it is.

Education would probably help (but takes time to kick in). FDI might help (though given how flighty and unstable it is, there's no guarantee). Peace would help (but is only very partially in Pakistan's gift; it's not like Modi's smiled benignly on Kashmir). Stability would help, but that's Noah being the economist assuming the can opener like in the old joke.

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