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The Importance of Economic Literacy

The Importance of Economic Literacy

By Ahmad Mobeen

In a recent statement, the State Bank of Pakistan (SBP) positioned its Forex reserves at a massive $23 billion. But, a careful analysis of the numbers considerably weakens the overly touted performance. Of the $18 billion reserves, over $11 billion held by the SBP are loans and borrowings from various international organizations. Around $2.5 billion are part of gifts from Saudi Arabia and deposits from China, given to bolster their neighbor’s forex figures. Moreover, a balance of $6 billion was already present when the present government took charge.

The balance of payments is barely tractable with an eight-year low export levels and dwindling remittances. Bailout programs by the IMF remain torpor. The debt to GDP and tax to GDP ratios stand at abysmal levels of 64.8% and 10.7% respectively. Unsurprisingly, the debt servicing payments are projected to go north of PKR 10.33 trillion. 

[su_pullquote align=”right”]The debt to GDP and tax to GDP ratios stand at abysmal levels of 64.8% and 10.7% respectively.[/su_pullquote]

Data as such paints a macabre picture of economic instability and crippled financial landscape. It essentially warrants an increasing alienation of the general public from the ruling elite. Despite such a gap in performance and promises, voting patterns and confidence polls tell a different story. The recently concluded AJK elections, for instance, were swept by PML-N, the ruling party against severe odds with the incumbent party, the PPP, winning just two seats. 

What is causing this errant behavior by the general public of Pakistan? Why are they voting for a party that has failed to live up to its promise of economic “revolution”?

Literacy Beyond Syllabi

Although there are varying factors contributing to such behavioral phenomenon, this article aims itself at the culprit-in-chief: lack of rudimentary economic know-how. Whether it’s the central bank’s decision on interest rates, a currency devaluation or ballooning up of BOP deficits, a majority fail to ascertain the impending consequences.  

Pakistan Economic Literacy

Promoting economic literacy | Photo Courtesy: Peter Hershey via Unsplash

A proposed solution to this grave conundrum is to make the study of economics compulsory in all junior to middle schools in Pakistan. Along with subjects like Mathematics and Science, an introduction to Economics should be mandated as part of the general curricula right from the start.

[su_pullquote align=”right”]Along with subjects like Mathematics and Science, an introduction to Economics should be mandated as part of social sciences right from the start.[/su_pullquote]

Many would argue that healthy debates and thoughtful analysis related to the subject do occur. There are economic think tanks and policy advisory councils that undertake cumbersome investigations and advise the ruling authorities. The results are broadcasted to the public too. However, these remain qualified to the upper societal hierarchies and academics. The majority never experience a trickle-down of information as they are either incapable or unwilling. Many don’t take an interest in going through the esoteric and arcane material.

A Revolutionary Impact

Initiating the study of economics as compulsory can begin to have edifying effects. 

In a decade or so, such a measure would ensure self-sufficiency and policy appraisal among the above-mentioned lower hierarchies. The general public could keep track of renegers. For instance, the present government has delivered on only 4 out of its 89 targets (PRIME, Islamabad); know-how on such areas improves voter efficacy.

Pakistan Economic Literacy

Abolishing information asymmetry, involving public in policy making | Photo Courtesy: Sam Wheeler via Unsplash

Arming the public with this knowledge also enables them to identify better-performing firms and industries. Information regarding adherence to international labor standards would help in recognizing issues of societal concern. The plight of bonded laborers of Southern Punjab or child labor atrocities of Sialkot’s sports industry could start peeling off. It would help identify organizations striving to negate externalities from those propelling different types of pollution. Improving public involvement would instill a sense of accountability of projects like Orange Metro Subway Line endangering historical sites of Lahore. 

Eliminating this information asymmetry, the public can actively participate with foundations evaluating policies, government projects and address social issues. Economics, not being a rigid science, should help in discussion of various interpretations in a respectful environment of healthy debates. Simply put, the impact of flimsy interparty clandestine statements and subterfuge bromides would be on a catalytic decline.

Challenges Ahead

Such hypothesized results need a supportive framework for proper implementation. Chances of witnessing this in reality? They remain low as statistics fail to portray an encouraging picture.

The current literacy rate in Pakistan has been hovering around the 60% mark for years. Public announcements to remedy the stagnancy have remained ineffective.

A recent report by Pakistan Institute of Development Economics (PIDE) in collaboration with UNICEF highlights another insidious phenomenon – 59% percent of primary level children are out of school, 44% of whom have no foreseeable chances of exiting this condition in the medium run.

Further exacerbating the matter, as highlighted by the Annual Status of Education Report (ASER), is the fact that enrolled students are not doing any better either. The failure rate is at an astonishingly high rate of 71% amongst the public high school population and a dropout rate exceeding 52% in Islamabad alone.

As Nelson Mandela once said, “Education is the most powerful weapon we can use to change the world”. Substantial government spending and detailed planning are required to act upon the action proposed and achieve the objective of making the population economically literate. 

Pakistan Economic Literacy

Arrival of literacy among the peasants could awaken their minds to the exploitation | Photo Courtesy: Roman Mager via Unsplash

Historically, feudal lords have opposed the arrival of literacy among their peasants as it could awaken their minds to the exploitation. They feared that education would make peasants disaffected from the prevalent relationship and conclude them as obsolete. However, a democratically elected government should ideally have no fear of such a development. Unless the normativeness intended has not been properly entrenched in the society, the resulting application is but a shallow one.

Economic literacy and education, in general, can help unveil such shortcomings and subject the ruling system to the jury of transparency, responsibility, and accountability. This would make any nation state answerable and, eventually, creditworthy in the eyes of its public.

The author is a University of London graduate.

Featured Image Credits: Wild Priest via Flickr

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