Monday, 18 November 2013
Friday, 15 November 2013
Economic growth and stabilization
Our economy is facing the problems of high inflation, stagnant growth and balance of payments crises. These three problems are interconnected and share the same root. This is the reckless fiscal policy, pursued by authorities over years, which has led to excessive internal and external borrowing and mounted debt liabilities.
Sunday, 3 November 2013
Wednesday, 9 October 2013
Saturday, 3 August 2013
Respect of feelings: who pays the cost?
Respect of feelings: who pays the cost?
To respect the feelings of others is liked and desired. Sometimes, to take care of the feelings of others incurs a cost and sometimes it does not.
If respect of the feelings incurs a cost and borne by the person who is giving respect then social relations and welfare improve.
However, if the cost is borne by others, then such a respect of feelings is not a respect.
Point: Respect at the cost of others is disrespect in effect.
To respect the feelings of others is liked and desired. Sometimes, to take care of the feelings of others incurs a cost and sometimes it does not.
If respect of the feelings incurs a cost and borne by the person who is giving respect then social relations and welfare improve.
However, if the cost is borne by others, then such a respect of feelings is not a respect.
Point: Respect at the cost of others is disrespect in effect.
Sunday, 7 July 2013
Records are Records
Records are Records
The economy of Pakistan is facing many daunting challenges such as fiscal deficit, trade deficit, low investment and stagnant economic growth. During the past five years, trends in public debt burden, investment and some other economic indicators have set the new records in the economic history of Pakistan.
1. Public debt: Rs 13.6 trillion (excluding current deal with IMF)
2. ...Money printing: Rs 800 billion
3. Corruption: Rs 700 billion- Rs 1500 billion
4. Payments against interest rate: Rs 1 billion
5. Currency devaluation: 66%
6. Public Sector Enterprises annual loss: Rs 5 billion
7. Fiscal deficit: 8%
8. Investment-GDP ratio: 12%
Where first seven economic indicators set the record from top and the 8th (investment-GDP ratio) set the record from bottom. Although these economic records do not represent desired achievements but records are records.
1. Public debt: Rs 13.6 trillion (excluding current deal with IMF)
2. ...Money printing: Rs 800 billion
3. Corruption: Rs 700 billion- Rs 1500 billion
4. Payments against interest rate: Rs 1 billion
5. Currency devaluation: 66%
6. Public Sector Enterprises annual loss: Rs 5 billion
7. Fiscal deficit: 8%
8. Investment-GDP ratio: 12%
Where first seven economic indicators set the record from top and the 8th (investment-GDP ratio) set the record from bottom. Although these economic records do not represent desired achievements but records are records.
Arab spring: A step in the wrong direction
Arab spring: A step in the wrong direction
This is sad to observe the recent political fall down in Egypt. Military coup is not a solution to the problem as it provides temporarily relief but undermines the path of inclusive development ov...er time. Therefore, the removal of president Mursi is a step in the wrong direction.
Since, inclusivity is a key to sustainable socio-political and economic development, forcing the Muslim Brotherhood to the sidelines is not the way forward.
This is sad to observe the recent political fall down in Egypt. Military coup is not a solution to the problem as it provides temporarily relief but undermines the path of inclusive development ov...er time. Therefore, the removal of president Mursi is a step in the wrong direction.
Since, inclusivity is a key to sustainable socio-political and economic development, forcing the Muslim Brotherhood to the sidelines is not the way forward.
Future of gold: Is lust for gold falling?
Future of gold: Is lust for gold falling?
It is historically proven that gold is a safe investment. However, in recent times, gold has become an insecure asset as its price is rapidly falling. Paul Craig Roberts, former US assistant treasury secretary, said that selling tones of gold by Federal Reserve is a concerted effort to scare people away from gold and get them to buy dollars instead.
Now..., investments in gold have been caught between the devil and the deep blue sea because if investors do not sale gold then they will suffer from losses because of further drop in price and if they sale at present lower prices then they may loss the benefit of future rise in price.
Over a decade, a great increase in gold price from $272 an ounce at the end of December 2000 to $1970 on August 23, 2011 panicked the Federal Reserve because the US dollar was losing its value in relation to gold.
Now, it is predicted that gold prices are likely to move much lower, toward $1,000 by 2015.
Why is gold price falling? Some theories are as follows: First, gold prices tend to spike when there are serious economic, financial and geopolitical risks in the global economy. Now the peak of financial crises has gone.
Second, gold performs best when there is a risk of high inflation, as its popularity as a store of value increases. But despite very aggressive monetary policy by many central banks global inflation is actually low and falling further.
Third, gold is not a direct source of income. While equities have dividends, bonds have coupons, and homes provide rents. Now that the global economy is recovering, non-gold assets provide higher returns.
Fourth, gold prices increase in response to expansionary monetary policy that causes a fall in real interest. This is in effect the time to buy gold when real interest is negative and returns on cash and bonds are negative and falling. However, over time, US and other countries will exist from expansionary monetary policies.
Fifth, highly indebted government such as Cyprus and Italy are going towards gold sale. Nevertheless, it is opposite to the theory because in highly indebted governments, bonds are insecure while gold is secure.
However, if we look from the side of consumers then situation is different. India is the largest buyer of the gold and according to some estimates, India will increase 20% demand for gold this year. The India will be followed by China. It is also argued that central bank of emerging economies will increase the demand of gold.
Right now supply side is bringing down gold price and demand side is not enough strong that it can halt falling prices.
What will happen in future?
Hitting the worldwide gold prices is a well-calculated strategy. If we look from the developed nations point of view then it can go to a point which is difficult to return back. However, if we look from developing countries point of view then increasing demand will absorb price fall in near future.
Once again, it is the time for wide income distributional consequences. Who will be rich and who will be poor? It is difficult to say. In my view, those who will take lead will benefit from artificial prices and who will follow perhaps sufferer from this whole scenario
It is historically proven that gold is a safe investment. However, in recent times, gold has become an insecure asset as its price is rapidly falling. Paul Craig Roberts, former US assistant treasury secretary, said that selling tones of gold by Federal Reserve is a concerted effort to scare people away from gold and get them to buy dollars instead.
Now..., investments in gold have been caught between the devil and the deep blue sea because if investors do not sale gold then they will suffer from losses because of further drop in price and if they sale at present lower prices then they may loss the benefit of future rise in price.
Over a decade, a great increase in gold price from $272 an ounce at the end of December 2000 to $1970 on August 23, 2011 panicked the Federal Reserve because the US dollar was losing its value in relation to gold.
Now, it is predicted that gold prices are likely to move much lower, toward $1,000 by 2015.
Why is gold price falling? Some theories are as follows: First, gold prices tend to spike when there are serious economic, financial and geopolitical risks in the global economy. Now the peak of financial crises has gone.
Second, gold performs best when there is a risk of high inflation, as its popularity as a store of value increases. But despite very aggressive monetary policy by many central banks global inflation is actually low and falling further.
Third, gold is not a direct source of income. While equities have dividends, bonds have coupons, and homes provide rents. Now that the global economy is recovering, non-gold assets provide higher returns.
Fourth, gold prices increase in response to expansionary monetary policy that causes a fall in real interest. This is in effect the time to buy gold when real interest is negative and returns on cash and bonds are negative and falling. However, over time, US and other countries will exist from expansionary monetary policies.
Fifth, highly indebted government such as Cyprus and Italy are going towards gold sale. Nevertheless, it is opposite to the theory because in highly indebted governments, bonds are insecure while gold is secure.
However, if we look from the side of consumers then situation is different. India is the largest buyer of the gold and according to some estimates, India will increase 20% demand for gold this year. The India will be followed by China. It is also argued that central bank of emerging economies will increase the demand of gold.
Right now supply side is bringing down gold price and demand side is not enough strong that it can halt falling prices.
What will happen in future?
Hitting the worldwide gold prices is a well-calculated strategy. If we look from the developed nations point of view then it can go to a point which is difficult to return back. However, if we look from developing countries point of view then increasing demand will absorb price fall in near future.
Once again, it is the time for wide income distributional consequences. Who will be rich and who will be poor? It is difficult to say. In my view, those who will take lead will benefit from artificial prices and who will follow perhaps sufferer from this whole scenario
You are the best, I accept, now leave attitude.
You are the best, I accept, now leave attitude.
We all want respect and want to avoid rude behavior but we face it. Why do people misbehave? There could be many reasons to explain misbehaving. Yet, four key reasons of misbehaving are attention, power, excitement and revenge. My focus is on the first one that is attention- more formally, attention deficient hyperactivity disorder (ADHD).
People ...have an imaginary status in their mind; this is a different question whether this imaginary status is based on perception or reality. When people do not find their imaginary status in the society then they turn out to be rude.
Seeking attention for expected status is not necessarily an abnormality but the point is why people generalized their misbehaving for all. Some of the people give them their due respect and acknowledge their status. However, misbehavers usually do not make distinction while misbehaving. In practice, sometimes, people who give more respects, they receive more misbehaving-perhaps they appear as soft target.
Point: Misbehaving is itself bad but generalization of misbehaving is tremendously bad.
Question: Why do people generalize their misbehaving?
We all want respect and want to avoid rude behavior but we face it. Why do people misbehave? There could be many reasons to explain misbehaving. Yet, four key reasons of misbehaving are attention, power, excitement and revenge. My focus is on the first one that is attention- more formally, attention deficient hyperactivity disorder (ADHD).
People ...have an imaginary status in their mind; this is a different question whether this imaginary status is based on perception or reality. When people do not find their imaginary status in the society then they turn out to be rude.
Seeking attention for expected status is not necessarily an abnormality but the point is why people generalized their misbehaving for all. Some of the people give them their due respect and acknowledge their status. However, misbehavers usually do not make distinction while misbehaving. In practice, sometimes, people who give more respects, they receive more misbehaving-perhaps they appear as soft target.
Point: Misbehaving is itself bad but generalization of misbehaving is tremendously bad.
Question: Why do people generalize their misbehaving?
Tuesday, 18 June 2013
Empowerment of individuals: Now individuals are more powerful than ever.
Empowerment of individuals: Now individuals are more powerful than ever.
Once I was doing my routine research work in my PhD office at Adam Smith Building in the University of Glasgow, UK. A strange air noise was constantly disturbing my ...focus on the work. I came out of the building and looked up in the air where two helicopters were hovering at 30-angled position. This was something unusual and difficult to interpret.
I asked a Scottish student about this. He told that these are the Glasgow police helicopters that are monitoring an illegal party in the Kelvingrove Park where around 10,000 people gathered to have a fun. I asked why it is illegal.
He told that this party is arranged by two young students on face book without formal permission from the council.
This was amazing that two individuals were able to have an effect on thousands of people and administration of the Glasgow.
Apart from this general observation, in effect, there are number of classic examples that highlight how individuals have been empowered in the recent times.
For example, in August 1991, Tim Berners-Lee alone invented World Wide Web (WWW).
Thomas Edison invented light bulb but he was supported with dozens of people in his lab. William Shockley invented transistor but two of his assistance actually built it. Internet was invented by the contribution of many people. However, the WWW is Berners-Lee’s alone.
How Firefox came about? Recently, Black Ross a 19 year old from Stanford and Ben Goodger a 24 year old from New Zealand, starting from the two ends of the world, in an open source community for free, produced a browser that captured 5% of the Internet Explorer market in about six months.
Now, the era of uploading has given unique opportunities of affecting others. Therefore, now individuals are more powerful than they were in the past.
Global currency of 21st century
Global currency of 21st century
A generation ago, it can be expected that what teachers teach in classes can last for a lifetime of their students. However, this expectation is less convincing in today’s globally dynamic world. Today, we are living in a world where changes are more rapid than ever.
Now students need education and training for technologies which are not yet invented, for jobs which are not yet created, for economic threats which are not yet borne, for solving issue which are not yet created. Therefore, now we need innovative education, which will determine future prosperity and growth.
Recently, OECD Secretary-General Angel GurrÃa, said: “Skills have become the global currency of 21st Century economies.”
In addition, now focus is shifting from qualifications to skills. Thus, in future, returns to an individual and to a society would be mainly determined by skills.
A generation ago, it can be expected that what teachers teach in classes can last for a lifetime of their students. However, this expectation is less convincing in today’s globally dynamic world. Today, we are living in a world where changes are more rapid than ever.
Now students need education and training for technologies which are not yet invented, for jobs which are not yet created, for economic threats which are not yet borne, for solving issue which are not yet created. Therefore, now we need innovative education, which will determine future prosperity and growth.
Recently, OECD Secretary-General Angel GurrÃa, said: “Skills have become the global currency of 21st Century economies.”
In addition, now focus is shifting from qualifications to skills. Thus, in future, returns to an individual and to a society would be mainly determined by skills.
Seemingly disequilibrium is perhaps equilibrium in reality
Seemingly disequilibrium is perhaps equilibrium in reality.
When someone throws litter in streets and public places, it looks odd. When bins are not available in streets and public places, it looks odd.
When poor pickers (children) desperately search for garbage to fill their sacks, to earn their livings and to go back homes early then it perhaps reflects equilibrium.
One possible future scenario:
Over the path of development, government will place bins everywhere, people will educated in enough that they would bin with responsibility.
What about poor pickers? Children will be sent to schools and elders will be employed formally by the government to clear the bins.
Q. is it equilibrium or dysfunctional equilibrium?
Q. Is it important to fix disequilibrium one by one or simultaneously?
Q. Should we wait for development spillovers?
Q. What can be done for these poor pickers?
When someone throws litter in streets and public places, it looks odd. When bins are not available in streets and public places, it looks odd.
When poor pickers (children) desperately search for garbage to fill their sacks, to earn their livings and to go back homes early then it perhaps reflects equilibrium.
One possible future scenario:
Over the path of development, government will place bins everywhere, people will educated in enough that they would bin with responsibility.
What about poor pickers? Children will be sent to schools and elders will be employed formally by the government to clear the bins.
Q. is it equilibrium or dysfunctional equilibrium?
Q. Is it important to fix disequilibrium one by one or simultaneously?
Q. Should we wait for development spillovers?
Q. What can be done for these poor pickers?
Borrow or not borrow from IMF: Between the devil and the deep blue sea
Borrow or not borrow from IMF: Between the devil and deep blue sea
In 2008, Pakistan borrowed nearly $8 billion from the IMF and began repayments in 2011. Now Pakistan is due to pay almost $5billion by end 2014. Question arises what previous government has done with $8 billion. In principle this amount need to be used to undertake adjustments and structural changes to avoid future borrowing dependency and to create internal capacity to repay the loan. Sadly, little have been done on this front.
If Pakistan does not borrow then it will face the problem of balance of payment crisis, as foreign exchange reserves are available only for 6 weeks imports. According to Asian Development Bank, Pakistan needs between $6-$9 billion to avoid a balance of payments crisis. On the other hand, if new government goes for borrowing then it has to bear several costs as follows:
It has to impose general sales tax, which will be unwelcomed by taxpayers.
It has to reduce fiscal deficit from 8% to 3.5%, which will require tough time for those who will bear the burden, particularly poor.
Federal government has to insist provinces to generate surpluses to contribute to consolidate fiscal burden.
It has to bring public debt GDP ratio from the current 62% to 42% that will keep the government under tight constraint.
What is the way forward?
In 2008, Pakistan borrowed nearly $8 billion from the IMF and began repayments in 2011. Now Pakistan is due to pay almost $5billion by end 2014. Question arises what previous government has done with $8 billion. In principle this amount need to be used to undertake adjustments and structural changes to avoid future borrowing dependency and to create internal capacity to repay the loan. Sadly, little have been done on this front.
If Pakistan does not borrow then it will face the problem of balance of payment crisis, as foreign exchange reserves are available only for 6 weeks imports. According to Asian Development Bank, Pakistan needs between $6-$9 billion to avoid a balance of payments crisis. On the other hand, if new government goes for borrowing then it has to bear several costs as follows:
It has to impose general sales tax, which will be unwelcomed by taxpayers.
It has to reduce fiscal deficit from 8% to 3.5%, which will require tough time for those who will bear the burden, particularly poor.
Federal government has to insist provinces to generate surpluses to contribute to consolidate fiscal burden.
It has to bring public debt GDP ratio from the current 62% to 42% that will keep the government under tight constraint.
What is the way forward?
Silent Spectators on Face Book (FB)
Silent Spectators on Face Book (FB)
Where FB gave a unique opportunity of socialization to many users, it also gave a unique opportunity to silent spectators on FB to realign their social relations, to revise their judgments about friends and to update their friendship levels.
We can broadly make three categories of FB users: active users, moderate users and least active users. For third category, we can use the term of silent spectators.
These people randomly log in and quickly scroll pages for few minutes; they are expert in picking the best from a wide variety of uploads. Instead of writing a comment, they just smile and closely observe the behavior of other users from their posts and comments. Accordingly, they update their friendships levels and circles through silent observations.
The bottom line of this point is that people should be careful in uploading biased, emotional and discriminative posts/comments because many silent observers are closely watching them.
Where FB gave a unique opportunity of socialization to many users, it also gave a unique opportunity to silent spectators on FB to realign their social relations, to revise their judgments about friends and to update their friendship levels.
We can broadly make three categories of FB users: active users, moderate users and least active users. For third category, we can use the term of silent spectators.
These people randomly log in and quickly scroll pages for few minutes; they are expert in picking the best from a wide variety of uploads. Instead of writing a comment, they just smile and closely observe the behavior of other users from their posts and comments. Accordingly, they update their friendships levels and circles through silent observations.
The bottom line of this point is that people should be careful in uploading biased, emotional and discriminative posts/comments because many silent observers are closely watching them.
Tuesday, 21 May 2013
Change is a natural process and always around us
Change is always around us.
Change is always around us. Change is a natural process.
Opportunities disappear, new opportunities appear; jobs are lost, new jobs are gained; friendship circles fade away; friendship circles get stronger; businesses grow, businesses fall; failures are on the way; successes are around the corner and so on
People find change difficult irrespective of it is positive or negative nature because adjustment with change takes time.
Change is hard and costly for those who are caught by surprise and hardest for those who are unwilling to change.
Tuesday, 26 February 2013
Crisis, poverty and productivity of physical capital in Pakistan
Political, governance, energy, and other crises affected the performance of machines in Pakistan-ranging from machines at tailor shop to large scale manufacturing industry.
However, some machines are performing out rightly wonderful and their productivity growth is double digit for last few years. These machines are located in the premises of Sate Bank of Pakistan and printing notes to finance present government.
Currency in circulation in June 2008 was 1050 Billion RS and now in 2013 is 11794 Billion RS. It means 71% growth of notes production.
These are the poor who suffer more in both cases. Printing notes hit hard existing poor and make new poor who are in lower middle income group.
Has corruption decentralized in Pakistan?
There are different figures of daily corruption in Pakistan ranging from 7 billion to 15 billion RS, according to different sources such as NAB, TI.
Pakistan’s annual GDP is around 2800B RS; however, annual corruption is greater than GDP. How is it possible? Where does money come from?
If a single person involves in bribery, let say, of 1 B RS then it is corruption of 1 billion and if many persons involve in bribery, let say again, of 1 B RS then corruption is sum of as many hands as people change to finalize the bribery process.
By all accounts, one thing is clear that corruption has accelerated in last few years. Now the question is that whether it is accelerated due to its decentralization nature. Can we say that now corruption has become democratic (awami)?
Tuesday, 12 February 2013
This is own stress or second-hand stress?
This is own stress or second-hand stress?
While doing teaching
fellowship in the University of Glasgow, invigilation of exams with other
faculty members was a due part of the job. For me, it was the most tiring and
difficult part of the job. I often used to think that why invigilation causes
so much fatigue and stress.
Sometimes, I felt that
it was due to 500 years old structure of the building (Bute Hall in University
of Glasgow) where most of the exams take place. Strolling in historical
buildings and newly constructed buildings causes quite different feelings. Here,
in QAU, again feeling the same issue that invigilation is a tough job.
In exams, students are
going through a tough mental process and they emit stressful thoughts in the
environment. As thoughts are contagious, they affect the persons in close
proximity. Therefore, an invigilator suffers from stress even though this is not
own stress.
If someone feels
stress then it is important to check whether this is own stress or second-hand
stress before going for a remedy.
Recently, researchers
(a study led by Professor Elaine Hatfield) in the University of Hawaii found
out that second-hand stress is passed on each other in an office just like flu
and cold.
This research notes
that human brains perform like a sponge that absorbs emotions emitted from
people around. Stress of people around acts like a depressant in the brain,
that forces the brain to think about own worries.
The research also
shows that females are at higher risk as they are more in tune with the
feelings of others.
Sometimes people say
that I am not feeling comfortable but I do not know why. Similarly sometimes
some people say that something is wrong but I do not know what that is or
sometimes people become stressful without any reason. To my understanding, this
is due to second hand stress.
Hatfield and Rapson (1993) define emotional contagion:
"The tendency to automatically mimic and synchronize expressions,
vocalizations, postures, and movements with those of another person’s and,
consequently, to converge emotionally.”‖
Theoretically, emotions can be caught in several ways.
Earlier research on this topic shows that this is a conscious
process through imagination, reasoning and analysis.
Recently, most neuroscientists, primatologist and
psychologist argue that this is unconscious process which is my main point in
the above post.
Friday, 8 February 2013
Clarity saves waste of human resources
Five years before, during first week of my stay in Glasgow,
soon realized that here Yes means Yes and No means No.
Initially, it was a bit difficult to adjust with this norm. However,
soon realized potential merits of this approach.
In the presence of such a culture, one does not need to spend
his/her energies to maintain Yes as Yes and No as NO.
Wednesday, 6 February 2013
Importance of values
Developed nations innovate, developing imitate.
Where earlier adjust their values with innovations while latter burst their values with imitation.
Where earlier adjust their values with innovations while latter burst their values with imitation.
Tuesday, 5 February 2013
Wednesday, 30 January 2013
A paradox of time management
Time management is a difficult task to a varying degree everywhere in this world. In developing countries, one main reason for mismanagement of time is an absence of strong institutions.
While, in developed countries one main hindrance to time management is a presence of strong institutions.
In developing countries, day to day appointments, different tasks and assignments are delayed by weak systems and people find themselves in overlapping and appending jobs. Thus, time management becomes hard.
In developed countries, appointments/tasks are gradually being shifted on machines. The machines perform best if discrete solutions are required but perform poor when solutions for obscure matters are required. Since human is not a machine and subject to errors, nonetheless, machines do not accommodate efficiently natural errors of humans.
While, in developed countries one main hindrance to time management is a presence of strong institutions.
In developing countries, day to day appointments, different tasks and assignments are delayed by weak systems and people find themselves in overlapping and appending jobs. Thus, time management becomes hard.
In developed countries, appointments/tasks are gradually being shifted on machines. The machines perform best if discrete solutions are required but perform poor when solutions for obscure matters are required. Since human is not a machine and subject to errors, nonetheless, machines do not accommodate efficiently natural errors of humans.
Wednesday, 23 January 2013
Different Levels of Friendship
Level 1: Salam Dua (Interaction; Hello, Hi) 0-0.1
Level 2: Salam Dua + Maamlat (dealings) 0.1-0.3
Level 3: Salam Dua + Maamlat+ Sacrifice without any cost 0.3-0.5
Level 4: Salam Dua + Maamlat+ Sacrifice + cost but open
option of refusal 0.5-0.7
Level 5: Salam Dua + Maamlat+ Sacrifice+ cost+ no refusal 0.7-0.8
Level 6: Salam Dua + Maamlat+ Sacrifice with cost+ no
refusal+ intensity 0.8-1
Things remain fine, if these levels keep fluctuating in-between
zero and 0.8.
Problems arise when someone delivers at lower level but
expects at higher level.
Problems disappear when someone delivers at the highest level
but expects at the lowest level (ideally zero level).
Problems may arise when someone remained rigid on a specific
level.
A good example is driving; an excellent smooth driving is
that one which keeps changing the speed depending upon the condition of road.
Contribution in Life
Forces of construction and destruction are always at work. Which wins, does not matter as much as it matters where my contribution is plugging in.
One person can not change the world but one person can play his role best.
One person can not change the world but one person can play his role best.
Wednesday, 16 January 2013
Importance of tolerance
It is not difficult to convert a negative into a positive,
given that a high level of tolerance remains persistent.
Wednesday, 2 January 2013
Digital Communication and Misunderstanding
Since, digital communication (Phone, SMS, FB, Twitter, etc.) cannot match perfectly to ‘in person’ communication, an excessive rely on digital communication, without taking a proper combination of in person communication, causes misunderstanding.
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