The Global Capitalist

Some countries win and other countries lose. While the fortunes of a certain geographic area of the world certainly can change over times, there are some areas in the world that are doomed to poverty forever. One of those areas is Pakistan.

Pakistan has enjoyed one of its most prosperous times in history over the past half decade thanks to increased capitalistic practices and decreased red tape. The country’s GDP has grown in parallel with the rest of Asia and the middle class has been reborn, while the stock market has been one of the world’s best performing markets.

All of this, however, has done nothing to change the attitude of the Pakistani people. Their mindset of blaming others for their misfortunes and justifying violence if their wishes are not met have now transferred itself to the most objective barometer in existence - the equity market. Down 35% over the past 2-3 months, fortunes have been lost as quick as they were gained and many are quick to point fingers at somebody…anybody. Many blame Pervez Musharraf, others blame the people trying to get rid of Mr. Musharraf. Recent violence at the exchange has cause the government to consider intervening in the market and buying shares from those who lost money, just to stem the violence. While I do not blame the government’s intentions - peace is certainly a prerequisite for economic growth - the overlying principle that the government must bail people out of their misfortunes will stop capitalism from truly taking hold and will keep Pakistani mired in a cycle of corruption and poverty. This is the problem with so many of the Asian economies at this point. While they have certainly experienced tremendous growth in this decade, the long term prospects of such economies are difficult to assess as many of them have not truly experienced an economic downturn that will test the countries true commitment to capitalism and free markets. Many, such as Pakistan, are likely to revert back to their beureaucratic ways as soon as difficult times occur. India, seems to be headed for that possibility as well as, as Mr. Singh, the man generally credited with jump starting the Indian economic machine, may face a crucial no-confidence vote in the near future. Sentiment for both Musharaf and Singh, once extremely positive has now turned very negative. Other countries, such as China, may stick with its free market principles far stronger than other countries where democracy is the rule. And while the long term prospects of the Asian economies will truly be better known over the next two years, it is looking very likely that one of the major countries to miss out on the Asian economic miracle will be Pakistan.