Efficiency and equity

#Efficiency #equity

LAHORE: Although economic efficiency is often seen as the cornerstone of development, it should not be the only measure of success. Trade-offs that prioritize equity, resilience or environmental sustainability often lead to inefficiencies that serve broader societal goals.

Economic inefficiencies in Pakistan arise from various factors. While some result from deliberate efforts to promote fairness and social equity, others arise from political motivations, governance challenges and systemic weaknesses.

On the positive side, some failures reflect genuine efforts to address inequality and achieve development goals. For example, subsidies on wheat, sugar, electricity and fuel are intended to make these essential commodities affordable for low-income households, despite the fact that they are introduced. Similarly, initiatives such as the Benazir Income Support Program (BISP), which provide cash assistance to low-income families, may face administrative challenges but demonstrate a commitment to poverty alleviation. Investing in backward areas like Balochistan and interior Sindh may have less immediate returns, but it is crucial to reducing regional disparities.

However, many inefficiencies in Pakistan are politically motivated rather than rooted in genuine concern for fairness. Governments often favor policies and projects that serve political allies or influential groups, to the detriment of economic efficiency and fairness. For example, subsidies or bailouts for industries owned by powerful individuals often prioritize political benefits over economic benefits.

State-owned enterprises (SOEs) such as Pakistan Steel Mills and Pakistan International Airlines (PIA) suffer from inefficiencies due to overstaffing, often due to political pressure to provide jobs rather than increasing operational efficiency. Agricultural subsidies and tax breaks disproportionately benefit large landowners and industrialists, reflecting elite influence rather than equitable policymaking.

Large infrastructure projects, such as motorways or power plants, are sometimes undertaken to win votes in politically important constituencies, even when their economic feasibility is questionable. Corruption, bureaucratic inefficiencies and short-term political considerations often derail policies aimed at equity, wasting resources and damaging long-term goals.

Politically motivated inefficiencies harm the economy by misallocating resources, increasing debt without meaningful development results, and distorting markets — manifesting in recurring shortages of essential commodities like sugar and wheat.

Globally, smart policymakers trade off efficiency for broader goals such as fairness, sustainability and resilience. Subsidies for health care, education and public transport, while economically inefficient, ensure equal access to essential services, reduce inequality and promote social cohesion.

Transitioning to renewable energy sources such as solar or wind may initially be less efficient due to higher costs and technical challenges. However, this choice reflects a commitment to environmental sustainability and long-term climate resilience.

Supporting labour-intensive industries such as textiles or handicrafts may not be as efficient as mechanized production, but it creates employment for marginalized populations. Similarly, maintaining critical resource reserves, although inefficient in purely economic terms, ensures resilience against supply chain disruptions, natural disasters or geopolitical crises.

Investments in traditional industries or cultural heritage conservation may yield modest economic returns but strengthen social identity and support marginalized communities. Imposing stricter regulations on industries for food safety or workplace safety increases costs but highlights societal priorities for health and well-being.

Infrastructure development in sparsely populated rural areas, although less efficient than urban-focused investments, promotes balanced national growth and reduces regional disparities.

Policy makers need to adopt a holistic approach to balance efficiency with equity and sustainability. Disabilities are not always negative — they can reflect societal values ​​and long-term preferences. For Pakistan, overcoming political distortions while embracing constructive trade is key to achieving inclusive and sustainable development.