‘Economic Resilience Act’—I

‘A resilient society is able to react to and respond after a shock. Resilience even opens new doors to enhanced growth and sustainability. …The concept of resilience can also be linked to the concept of sustainability… A development is sustainable if it can be maintained in the long run. Resilience is essential for sustainability. It prevents a person or society from falling off a cliff after being hit by a shock. …a resilient society will enjoy stronger growth over the long run because it will better absorb shocks. For that reason, a resilient society is better equipped to take risks. …As long as the economy is resilient, it will bounce back from temporary disruptions. …The concept of resilience is clearly relevant to the analysis of financial markets and macroeconomic policies. …As it is true in advanced economies, resilience in EMDEs [emerging and developing economies] also involves health resilience. …If international support is feasible, it would foster global resilience. …We all know that climate change is one of the largest challenges of our times. But we rarely consider the potential impact of man-made climate change on humanity’s resilience. …Because we cannot avoid shocks as the world evolves, it is crucial for societies to be resilient – to be able to bounce back.’ — Excerpts from the 2021 published book ‘The resilient society’ by Markus K. Brunnermeier

In a world of overlapping crises of a polycrisis nature, which include the existential threat of climate change crisis, and the associated ‘Pandemicene’ phenomenon, it is important in general to formulate policy in an interconnected way for economy, environment, and epidemiology, and in the specific case of countries of weak democratic credentials like Pakistan, to include elections.

Given both the fast-unfolding nature of existential threats, and that making a dent in any one of these aspects requires dealing with all four of them, there is a need for taking a purpose-driven, mission-oriented wholesome approach in terms of involving both whole of government, the private sector, and the bilaterals/multilaterals. Renowned economist, Mariana Mazucatto in her 2021 published book ‘Mission economy: a moonshot guide to changing capitalism’ indicated about the mission-oriented approach by stating the following: ‘Conventional wisdom continued to portray government as a clunky bureaucratic machine that cannot innovate: at best, its role is to fix, regulate, redistribute; it corrects markets when they go wrong. …we cannot move on from the key problems until we abandon this narrow view. …Public purpose must lie at the centre of how wealth is created collectively to bring stronger alignment between value creation and value distribution. …By rethinking how the relationships between public sector and private sector can be better governed around public purpose, can we create growth that is better balanced and resilient, with new capabilities and opportunities spread across the economy.’

Piecemeal, disjointed, silo approach, and one without inclusivity, especially from the demos to push for dismantling extractive politico-economic institutional design, or more simply ‘elite capture’, will not allow making a meaningful effort in dealing with any of these aspects, and overall reaching a sustainable political and economic situation, one where public opinion determines public policy, and not oligarchs mainly influencing policy as currently is the case.

Reaching an appropriate level of economic resilience requires on one hand including all other three aspects — environment, epidemiology, and election — as complimentary to reaching economic resilience and, on the other, since policy continuity remains a challenge particularly in developing countries like Pakistan, it is important to legislate policy into law. It is in this regard that the writer strongly recommends adopting an ‘Economic Resilience Act’ (ERA). The basic purpose is to constitutionalize economic resilience. Debate should be held for economic philosophical resilience, so as to move towards non-neoliberal, non-overboard austerity, social democratic, counter-cyclical policy of economic resilience requires environmental resilience, epidemiological resilience.

The scope of legislation being proposed in the shape of adopting an ‘Economic Resilience Act’ (ERA) could be understood in the light of following building blocks with regard to achieving resilience in terms of 4 ‘Es’ – economy, environment, epidemiology, and election. Important features of the resilience act should foremost include a mission-oriented approach comprising whole of government, private sector, and bilaterals/multilaterals over 4’Es’.

Moreover, it should include move towards green source of energy, shifting towards EVs as medium-term goal, and in parallel moving towards at least Euro-5 emission standards in general, and oil specifically in the short-term. Euro-7 emissions standards should be an objective only if it is viable financially, but the main goal should be to move towards alternate energy source driven transportation, and energy production.

Also, a mission-oriented plan should be made for energy production, and distribution, with non-neoliberal, institutional economics approach adopted. China should be engaged deeply, proactively and in a purpose-driven way for modernizing energy infrastructure, and moving towards renewable energy, including solarization.

Within economic resilience is required achieving educational resilience, and public and private service resilience, where public service comes from both public representatives, and from inducted service, that is overall government service, including the central superior services (CSS), or simply civil service. Here, the separate creation of civil service should be abolished in favour of one public service for all government servants, encompassing all fields, and has two streams – fast and regular – where sequential evaluations from an independent evaluation office on a regular basis throughout determine promotion, and demotion to a respective stream.

Also, outsourcing of government should be discouraged significantly to improve their resilience in terms of capacity to deliver services, especially in times of existential threats, and overall overlapping polycrisis, and also for having the ability to protect the demos from extractive designs of private sector, especially against market power, and conniving segments of those with political power and conniving regulatory bodies/third party evaluators, including international firms.

In her co-authored book ‘The big con: how the consulting industry weakens our businesses, infantilizes our governments and warps our economies’ published in 2023, noted economist Mariana Mazzucato pointed out with regard to misgivings of over-board outsourcing as ‘The consulting industry today is not merely a helping hand; its advice and actions are not purely technical and neutral, facilitating a more effective functioning of society and reducing the ‘transaction costs’ of clients. It enables the actualization of a particular view of the economy that has created dysfunctions in government and business around the world. …What we call the Big Con is not about criminal activity. It describes the confidence trick the consulting industry performs in contracts with hollowed-out and timid governments and share-holder value-maximizing firms. These contracts enable the consulting industry to earn incomes that far exceed the actual value it provides – a form of ‘economic rents’, or ‘income earned in excess of the reward corresponding to the contribution of a factor of production to value creation’. …While consulting is an old profession, the Big Con grew from the 1980s and 1990s in the wake of reforms by both the ‘neoliberal’ right and ‘Third Way’ progressives – on both sides of the political spectrum.’

(To be continued)