In a recent opinion piece for The News, former operations advisor at the World Bank Abid Hasan argues that Pakistan needs a new aid strategy, one that prioritises grant aid over loans and gives more attention to the effectiveness of aid programs. Whether you agree with some, all, or none of Hasan Saheb’s points, he makes a mostly reasoned case for his position. I say “mostly”, though, because at the very end of his piece he repeats a mantra that I hear fairly often which simply doesn’t make any sense.
Mr Abid Hasan ends his piece about aid strategy with the following sentence: “As a nuclear state, and the sixth largest state in the world, Pakistan should be an economic powerhouse rather than an international beggar.” Like I said, this is something that we’ve have heard before, specifically when spoken last year in a speech by Shahbaz Sharif.
It was particular ironic to read this as the day before, it was reported that American President Barack Obama is planning to slash America’s nuclear programme. At the same time, the US economy grew slightly. So what’s the connection between a country’s nuclear programme and its economy?
During the Cold War, renowned Canadian-American economist John Kenneth Galbraith explained that accelerated military spending actually hurts the economy.
The general effect of massive military expenditures has been a transfer of capital away from civilian industry over the years and a resulting weakness that is easy to see. The specific effect within the industrial system is even more visible. Modern military spending concentrates on , and certainly benefits, the narrow range of industry and the highly specialized technology that serve missile, aircraft, and marine weaponry. But this development and the associated distortion in the allocation of resources–the technical competence, capital, labor, and other resources lavished on this small specialized sector of the economic system–have been at heavy cost to the industries on which we depend for domestic or international competitive performance. As we have pressed ahead on a narrow band of industry that serves our weaponry, we have left behind, left competitively vulnerable, our steel, automobile, textile, chemical, and a great range of other industries.
Sounds familiar? Obviously this doesn’t mean that the we should slash military spending – just ask India. But it means that we need to take a rational approach to military budget and let logic and not emotions determine spending priorities. We have nuclear weapons, and no one is going to take them from us. But investing in more nuclear weapons isn’t going to improve our economy. Investing in education is.