- Reconciling the trickledown theory with a welfare state
Prime Minister Imran Khan has apparently got conflicting visions which produce the kind of cognitive dissonance that makes for unrealistic policymaking. On the one hand he has expressed admiration of the Ayub era, and on the other, as he told the foundation stone-laying ceremony of another campus of the Air University, he held up as his ideal the welfare state of the Riasat-i-Madina. Apart from the difficulties inherent in admiring the Ayub regime, which was presidential, corrupt and the result of the country’s first military takeover, not to mention its alienation of East Pakistan, and that its economics is not logically reconcilable with a welfare state.
The Ayub regime upheld the trickledown theory, which postulated that the way out of poverty rested on capital formation, and that if wealth was concentrated in a few hands, there would be a trickle-down to the ordinary man. It didn’t work. The 22 Families came into being, but the ordinary man remained as poor as ever. Such a concept is irreconcilable with the welfare state, which guarantees healthcare, education, and cradle-to-grave security. Supply-side economics, such as exemplified by the trickledown theory, does not allow such measures to be taken. After Science and Technology Minister Fawad Chaudhry’s recent declaration that the private sector was supposed to create jobs, and the government was not supposed to give out jobs, may be taken as representing the supply-side school in the government. There is one hitch though: a welfare state aims at full employment, with the state as the employer of last resort. A capitalist state, on the other hand, disapproves of full employment, and ns by pleading for more time. wants the state to stay out of employment.
Mr Khan should clarify his own ideas about where he wants to take the country. He also predicted that 2020 was to be a year of economic recovery. That appears a dream, a self-serving one at that, which will only allow the party faithful to fend off the public’s ireful questions, especially after the multiple tariff hikes, which will not only add directly to the woes of the common man, but fuel indirect inflation as well.
