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May 4, 2003
Review: Bribes from public purse
DO bribes get accounted for in a nation’s GDP estimates? The popular notion is, they don’t. But an economist of importance tells us they do, albeit indirectly. Barring smuggling, most illegal incomes are factored in when such estimates are made.
Will it serve society if a small coterie of men who disrupt national life are bribed out of the public purse to bring them round to stopping their activities? The same economist contends it will.
And he is somebody who teaches economics at the University of Dhaka and was a finance and planning adviser in a non-party caretaker government of Bangladesh, which took control in 1996.
Setting his sights on removing cobwebs of popular fallacies about a subject that repels most for its technical approach, Wahiduddin Mahmud takes it upon himself to make it lucid and simple for a lay person.
Popular Economics, Unpopular Essays, a compilation of articles Mahmud wrote for local newspapers and the lectures he delivered at popular forums, reflects his unconventional views on issues such as politics and economics, national income, corruption and so on.
When comparing a country’s per capita income with another, a realistic picture will emerge if it is taken into account how much purchasing power a dollar has in each country. In this way, the US per capita income, for example, will then be higher than that of Bangladesh by 20 times instead of a mind-boggling 85 times, as is depicted usually.
Mahmud wonders why ordinary people are often more concerned about, say, a five per cent devaluation in a year than about a similar rate of inflation, even though it is the latter that directly affects their living. He then poses a very apt question: why shouldn’t the exchange rate, which is only the local currency’s price of a dollar, vary as frequently as the market price of, say, biscuits or bananas do?
Devaluation is often criticized on the ground that it will increase the prices of imported goods while the official spokesmen try to play down such criticism. Mahmud debunks this “unnecessary debate”, saying the very goal of such an exercise in response to falling reserves is to restrain import demand through price increases.
His thoughts on Bangladesh’s micro-credit miracle are almost tantalizing. In physics, he writes, no one has yet theoretically proved that aeroplanes can fly. This deters no one from flying, since successful practice is a sufficient proof, nor does it prevent aeronautical engineers from improvising on aircraft designs. There is no single general theoretical explanation as to why micro-credit programmes have worked so well in Bangladesh and not so well in other countries.
According to him, even though Bangladesh is a capital-poor country, it is land, and not capital, that is the scarcest factor of production in his country. As the economy grows, its comparative advantage in export will shift to activities that are not only labour-intensive but also land-saving.
It is no accident therefore that jute, a low-value agricultural crop, has given way to ready-made garments as Bangladesh’s predominant export item.
In a piece written on the eve of the then US president Bill Clinton’s visit to Dhaka, he asserts that Bangladesh had come a long way from being a “basket case” — Henry Kissinger’s unfortunate characterization of his country of the early 1970s.
His worry is that once the US scrapped import quotas on textiles in the year 2004, Bangladesh will have to struggle hard to retain its garments export level which stood at the time of writing at $1.7 billion. This sector employs a million workers — mostly women from poor families.
Some of his essays broach both economics and politics, while others deal with purely political issues, particularly the abiding confrontation between the two main political forces of his country.
The quality of editing of this book leaves much to be desired.
Popular Economics: Unpopular Essays
By Wahiduddin Mahmud
The University Press, Dhaka
For info log on to www.uplbooks.com. Email: upl@bangla.net. Available at Oxford University Press, Plot # 38, Sector 15, Korangi Industrial Area, Karachi.
Tel: 111-693-673
Email: ouppak@theoffice.net Website:
www.oup.com.pk
ISBN 984-05-1641-8. 154pp. Tk275
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