A FEW days ago, President Asif Ali Zardari affixed his signature to the 18th Amendment bill. Now that the political class of 2008 has successfully exorcised the ghosts of generals past from the constitution, perhaps the administration can focus on the two existential threats facing Pakistan jihadist militancy and economic malaise.

Of course, the government's ability to address the former is limited. GHQ is unlikely to relinquish control over security policy anytime soon. The current appearances of amity between the military and the administration on display during a Pakistani delegation's visit (ostensibly headed by the foreign minister) to Washington DC represent the administration's acceptance of the GHQ perspective on national security and relevant aspects of foreign policy.

That leaves economic policy. A review of the administration's policies highlights a concern with stabilising the economy. This is understandable. High inflation and persistently large fiscal and trade deficits are the macroeconomic indicators that animate donor agencies and economic advisers. In this regard the administration successfully negotiated with the International Monetary Fund (IMF) to secure much-needed funds and the State Bank is doing as much as it can to keep inflation under control.

While these have been necessary measures, little else of note has been achieved. The seventh National Finance Award comes to mind and this success was rightly lauded. But legislating on how to divide a shrinking pie (or at least one that is not growing as fast as the number of mouths it is supposed to feed) is not economic policy. Certainly it is not good economic policy. Bringing balance to public finance and the balance of payments should not be ends in and of themselves. Our long-term future can only be secured by ensuring that the creative forces in the economy are spurred to produce more wealth. Making the pie larger, in other words, should be the ultimate goal.

And this is where the everyday clichés bandied about in the media and policy circles — addressing the needs of the common man and the exporter, attracting foreign investment, rental power projects — fall short of what is needed. These are not unimportant concerns, mind you. I am not suggesting that closing the gap between energy demand and supply is not of utmost importance. That these are the concerns does, however, highlight that we are constantly playing catch-up; teetering from one near-collapse to the next. At some point we need to start seriously addressing the long-term challenges. And these are legion. Here are just three of them.

The two most often highlighted are infrastructure and human capital deficiencies. Pakistan's infrastructure is staggeringly inadequate for the purposes of aiding economic growth. Power shortages are now accompanied by gas shortages and water shortages. This is particularly galling since natural gas and water are natural resources that the country was supposed to have been abundant in.

At the same time national transport infrastructure is stuck in a rut. Does anyone, anywhere know how Pakistan's freight mobility (the ease and speed with which goods can be transported from one location to another) compares to other countries? Do the National Highway Authority and Pakistan Railways think about reducing costs and time of delivering goods to local markets and ports without duplicating each other's efforts? You know, transport policy!

Pakistan's human capital woes are well documented. We have a highly illiterate, young population. What this means for the economy is that we have very low labour productivity levels as compared to, say, China or even India. In effect, this means we need more people than those countries to produce the same number of goods. It is a typical refrain in casual conversation that we need to 'educate the masses'. The 18th Amendment to the constitution even demands free public education for five- to 16-year-olds in the country.

Let's do a little arithmetic. According to the government-run website, statpak.gov.pk, five- to 14-year-olds represent nearly 30 per cent of the population. Taking a conservative estimate of the population at 150 million, there are approximately 45 million potential students in the country. Assuming that students only need one teacher for the whole day in classrooms of 50 each (an overcrowded classroom) we need 900,000 teachers right now. If we can find that many graduates who want to teach, can we afford to pay them? At Rs10,000 a month (a pitiful salary), that comes to Rs108bn a year! That is just in teacher pay. That is more than three times the budgeted federal outlay on education for the fiscal year 2009-10, which was Rs31.6bn.

Finally there is the local business culture. An agricultural sector that is still trapped in some sort of mediaeval time warp of feudal practices has the lowest per acre yield in South Asia. On the other hand the bulk of the manufacturing sector includes family-based conglomerates that are adept at asking governments for special considerations, tax breaks and subsidies; not product development, market development, human capital development, efficiency and free-market competition.

The result is a manufacturing sector that is technologically so far behind its international competition that it would take billions of dollars to bring it up to par. Rent-seeking and protectionism is the only way many of the country's manufacturers can stay afloat. This means that two sectors (agriculture and manufacturing) that produce approximately 40 per cent of the country's wealth and employ nearly 60 per cent of its workers are inefficient and in decline. These trends are unsustainable for any economy, let alone one with a population growth rate of over two per cent

So why aren't we trying to resolve these endemic problems? Part of the reason is the sheer severity of our short-term challenges — securing the sanctity of life and the possibility of future investment in the face of terrorist attacks, an increasingly debilitating energy crisis and precariously weak national accounts. These have necessarily kept the government and commentators busy. But if we don't find a cure for this economic myopia, we might just be stumbling slowly and painfully towards economic ruin.