This article discusses continuous price hikes of essential items in Pakistan and suggests a non-governmental way out highlighting responsible consumer behavior. The main cause of price-hikes is government itself. So how ridiculous it would be to plead before it or urge it to reduce or control prices. That is why the prescriptions suggested in this article are directly meant for us consumers.
by Dr. Khalil Ahmad
The main cause of price-hikes is government itself. So how ridiculous it would be to plead before it or urge it to reduce or control prices. That is why the prescriptions suggested in this article are directly meant for us consumers.
However, it needs to be explained what a government is not supposed to do if it does not like to be causing price hikes. First, it must not try administrative or judicial measures to reduce or control prices, since factually as a result of these measures prices soar up higher than their previous level. Second, it must not ban movement of this or that item from one place to another on any pretext, since goods and services usually move to where they are paid comparatively better. If goods and services are not allowed to move freely, their prices will move freely but upwards. Third, it must not block the way of products and services coming in from abroad in search of higher prices. Likewise, it must not obstruct going out of products and services to abroad in search of higher prices. For this to take effect, it must not use import duties or export incentives because they disrupt the free movement of goods and services and distort their prices.
Now come to what we ought to do. Weeks back, I wanted to buy apples. But the rate of about Rs.80 per kilo seemed too much on a general level of fruit prices. I could buy some other fruit not rated highly. I decided to abstain. That was my reaction to the price hike of fruits. Alternately, I could write a ‘letter to editor’ or an article for a newspaper to complain about the failure of government in controlling the fruit prices. Or, I could file a writ petition in the high court praying to it to direct the government to control the prices of fruits especially.
But what difference it could or would have made? First, it would have made an irresponsible consumer of me. Can’t I hold back? Must I buy apples? Second, it would have taught others and people in or aspiring to be in the government that controlling prices is one of the duty of the government. Third, it would have made all of us learn that prices could be controlled via administrative and judicial steps. Fourth, it would have been an indication to the fruit producers/traders that consumers were ready to buy fruit at such high prices.
What did I achieve by abstaining? At least I for one tried not to let these four things happen. If the number of such abstainers is high enough to relay a signal to fruit producers/traders that consumers are not ready to buy fruit at such prices, the prices will come down. They cannot hold back such items for long even if they use cold storages. The same is the case with other products also. It involves no government!
What about the sky high prices of wheat/flour these days? Can we abstain from buying wheat/flour, a staple food, our daily bread? A former prime minister’s advice comes to mind that, in that case eat biscuits. But, of course, we must buy wheat or flour even if the prices are higher than what they are now. But what we can do is to use it both carefully and responsibly. Will this bring the prices of wheat/flour down? No, not substantially! However, it depends on the behavior of the majority of consumers.
Then, should we let them make hay? If we want both government and opposition not to do politics on this issue, then let them make millions as is being alleged. Otherwise also, they will be doing the same thing. Doesn’t this amount to favoring them? But on the other side, what can we do? Were we able to thwart the previous sugar and cement scams, for instance? Only that there was much hue and cry, nothing happened that could make such people learn a lesson whose profession is it to make money with the connivance of government. Doesn’t all politics aim at that in Pakistan?
Ah, but that’s quite unacceptable. Ok! Is it acceptable, then, that we use our hard-earned money irresponsibly?
Of course, we should not burn ourselves with the thought of this naked injustice that how the influential elites in Pakistan exploit and loot its people using the institution of government. Let them make millions. We have no door to knock at to seek justice. We have no choice either. Although we know that such a situation does not last long. But, why should we not exercise our choice where it is available to us? It is this policy of inaction that hurts us consumers most. No doubt, we must be actively choosy where we are free to do so!
But the fact is that under a government which cares a dime for its citizens and their freedoms and rights, where there is no rule of law, where justice is a rare animal, and where the institution of government is but an instrument in the hands of influential elites to exploit every public resource for their private interests, what a hapless consumer, like me or us, is capable of doing is being responsible in his choices, being responsible in spending his money, being responsible in using any and everything, and being responsible in shaping his behavior! It is ultimately this consumer behavior of ours that will affect and determine the prices of goods and services.
Let’s try to understand the situation wherein we the consumers are forced to be just helpless and producers or traders are allowed to make easy money. We are forced because the government is on their side, not on ours. Apparently the government tells us that it obstructs the import of this or that product, e.g. wheat/flour, to protect our local industry, or does not allow the export of this or that product, e.g. wheat/flour, to protect the local consumers. But, practically and in their consequence, both of these policies benefit the influential elites and their coteries only. The brunt of the negative consequences of these policies is for us consumers to bear. Not only are we forced to buy low quality and high price products, but are deprived of enjoying the real price of our hard-earned money also.
It is this situation that this article tries to find a way out of. Again, in any case it is we consumers who buy goods and services and it is for us that they are produced. Despite the taxes and regulations imposed by the government and favors it showers on its allies, we are always much free to make use of our choices, i.e. our choices in spending our money and in selecting goods and services we want to buy.
What is required of us most as responsible consumers is caution and restraint! We need to exercise caution and restraint in our decisions of ascertaining our needs and buying goods and services. This must affect, in one way or the other, the structure of prices distorted by the various steps of the government. Nonetheless, as we have been somehow brain-washed by those who believe in an omnipotent government and are used to rely on government for everything from a morsel of bread to a bed of roses, it is indeed difficult for us and it requires independence of mind to be trained in the use of caution and restraint. But, probably, for a hapless lot of consumers like that of us, it is the only non-governmental solution available to cope with the artificial/contrived price hikes!
Dr. Khalil Ahmad is associated with Alternate Solutions Institute, Pakistan’s first free market think-tank
This article appeared in The News International on October 28, 2007.