PAKISTAN needs to plug resource wastages with an effective check on unfair pricing, if it wants to attain economic efficiency coupled with social well-being.

The wastages are more rampant if resources are assumed to be ‘free’ This realisation prompted moves towards a monetisation of perks by the government as well as corporate employers. It did benefit employers as the fluctuating cost of perks was replaced by a fixed cost and employees got a raise in their pay cheques that they tend to value more. Did it actually contain wastages is hard to calculate and whether it necessarily translated into social advantage is not easy to tell.

On the recommendation of the Service Reform Commission, senior government employees were given the option of transport allowance in place of an official car with fuel. The idea was to gradually phase out the perks. Most officers opted for it. It is not known how much the government saved but prime car service station average bill swelled for individuals.

An insider at one such garage confirmed to this writer that charges were raised to make up for fewer service orders for official cars. Here ordinary people are penalised for the impact on the business of garage owner of cost cutting by employers. It complicates the social cost benefit analysis of the monetisation policy.

“Ethics is an important dimension of economics and should be treated as such” — PIDE Vice-Chancellor Dr Asad Zaman

In a charged environment, the high-spirited government’s economic team sees any question that digs deeper in complex issues with suspicion. They avoid critical inquiry and seem conditioned to parrot the party line — an exemplary performance improving consistently. If exports are faltering, the world is responsible. If crops fail, nature is to be blamed.

“Our performance speaks for us. Look at inflation, credit cost, number of projects commissioned, comparative performance of utilities, improvement in logistic services, high foreign reserves and I can go on and on. You are dazzled by our achievements but like to invent side issues? Go ask anyone on the street people are happier than before. Wait till 2018 and you will get a proof through ballot”, a hyperactive member of the government’s economic team said interrupting the question over phone.

Dr Asad Zaman, Vice-Chancellor Pakistan Institute of Development Economics (PIDE), found the question basic and relevant. “Current guidelines of economic policymaking or the institutional framework might tinkle on issue related to fairness under public pressure but the model followed has no space for ethics. On compassionate grounds people or institutions can choose to help the weak, but prices are function of demand and supply and serve the economic purpose best when left to it,” he commented.

“My personal opinion is different. I think ethics is an important dimension of economics and should be treated as such. There is no ready answer to your question but it needs to be investigated for possible options in the context of Pakistan,” he said.

To a pointed question over their experience in the market about a dozen middle class people from different cities interviewed narrated stories of unpleasant experiences. They found pricing of products and services ‘unfair’ and complained lack of any remedy.

“I had to pay Rs75 per packet when the printed price was Rs55. The retailer blamed the distributor who, he said, provided it for Rs70. The distributor was not accessible to explain his position. This is just one instance. Do I have a choice not to buy? I think for essentials there ought to be some regulations and a price monitoring system to check profiteering,” a young office worker argued.

“The prices are no more linked to the cost of production. A shirt that costs Rs300 to its maker sells for Rs3,000, a packet of fresh French fries that costs Rs10 sells for Rs100, a tablet that costs Re1 sells for Rs20, a lab test that costs Rs50 is conducted for Rs500. It is a suppliers market that exploits consumers,” said an annoyed father of two.

“Be it school, tailor, car mechanic, butcher, doctor, lawyer, or grocery retailer down the lane, everyone seems to be colluding to put me down. They seem to charge at whim. I have stopped going to gym after steep increase in their fees, but can I stop visiting doctors or sending kids to school?” a lady said over phone.

Some time back a drug maker defended rising medicine prices comparing profit margins of pharmaceutical sector to FMCG companies, realtors, traders or education. “I am a private businessman investing against all odds for profit. Providing health care is not my responsibility. Let the government or those who claim to care for poor buy medicines from my company and provide people who can’t afford to buy them on their own,” he was angry at the media which, according to him, singled out drug makers as ‘profiteers’.

“Look at the health budget pyramid of an individual. In Pakistan what people spend on medicine is a fraction of what they spend on lab investigations, hospitalisation and visiting clinics,” he complained.

Some analysts were critical and blamed the government for lack of safeguards for commoners in the market.

“The current economic framework based on archaic outlook perpetuates inherently flawed market model that misallocates resources and permits suppliers to amass wealth without adding enough to collective pool of the wealth of the nation,” a keen observer of the market theorised his view.

Published in Dawn, Business & Finance weekly, February 29th, 2016