Published in Business Recorder on October 3, 2023
Lately, there has been an extensive talk about various charters of sorts – the Charter of Democracy, the Charter of Economy and even there has been a discussion on the Charter of Business. However, none of them has worked or materialised in their true sense hitherto, and the most plausible reason arguably may be that there has been no buy-in on such initiatives from the public, the society at large. The real pressure for executing or making any such agreement or charter work is driven from bottom up. Therefore, if any consensus is to be achieved on any facet of politico-economic landscape, then the starting shall have to be the ‘Charter of Society’.
From attracting local and international investments to implementing SOE reforms to undertaking privatisation to setting up sovereign wealth fund, to reorganising provident fund to eventually enhancing the tax net – essentially all about restructuring our “all-in” fiscal account – the starting point is the Charter of Society. With Charter of Society in place, taking difficult decisions from executive to establishment to judiciary, all becomes easier and palatable. The risk of backlash essentially eliminates.
In this context, the Overton Window is an interesting sociology conceptual framework that may also help in establishing a causal link for some of the reasons behind our prevailing economic struggles. The concept of the Overton Window describes the range of ideas and policies that are considered acceptable or mainstream within a given societal, political context. It states that policymakers are generally bound to act within the acceptable spectrum of ideas; with widely accepted ideas being in the middle, and those at the extremes being considered radical or unacceptable, and thereby falling outside of the window.
Worth noting is the fact that the Overton Window is not static – shifting the window entails that proponents of policies that currently lie outside the window engage in persuading/lobbying the public to expand the window.
A narrow Overton Window can make it difficult to have a productive discourse about economy, and to develop aggressive policies. A narrow window can also limit the range of policy options available to potentially hindering efforts to improve the domestic business and economic climate.
Many of the systemic issues plaguing our economy can be attributed to narrow Overton Windows in particular policymaking domains. Distortions caused by government policies in the forms of taxes, subsidies, industrial policies, and trade restrictions that create incentives for firms and individuals to allocate scarce resources in suboptimal ways – discouraging innovation and productivity gains – is one manifestation of this. The prevailing disequilibrium of public capital (unsustainable public debt), and the ballooning SOE problem, are two other manifestations.
Interventions in the form of regulatory strengthening, or setting up a state-owned entity along the lines of a Sovereign Wealth Fund, to redefine the ownership rights of the government with regards to commercial SOEs, ostensibly lie outside the Overton Window at present.
As does the issue of reviewing subsidies to be performance-based (for targeted sectors), or BISP/NSER scorecard-based (for the most vulnerable households), to eradicate rent-seeking. The window of political acceptability should be expanded to promote time-barred, performance based subsidies, subject to export earnings, tax revenue gains, and higher employment; shifting the focus towards growth sectors, such as light engineering, tech, agriculture, agriculture, and other value-added exports.
Review of our taxation structure, and the reconfiguration of pensions are two further manifestations of the scenario where the required interventions appear to lie outside the spectrum of political acceptability. Concepts, such as minimum asset tax or wealth tax, and funding pension liabilities through asset monetization – managed via PPP models – serve as tenable means of exiting some of our politico-economic crises.
It is important to broaden the Overton Window and to create a climate where all views on investment are welcome, regardless of their apparent popularity. It is only through a concerted effort from the government, private sector, and civil society that Pakistan can overcome these challenges and unlock its true economic potential.
It’s not only the re-constitution of the economy, it’s the reprioritization of the whole society & its habits and expansion in its tolerance levels to swallow painful and difficult decisions, which is the need of the hour. We need restructuring of our sociopolitical order, a re-orientation of regulatory and policy interventions, to address the systemic deficiencies that have been allowed to subsist for far too long. In other words, we need a Charter of Society.