Victims of Our Own Narrative

Markets in Pakistan should be allowed to generate profits, but not at the expense of the customer

Zafar Masud writes in Dawn: Shiller, a Yale-based behavioral economist, argues that markets are shaped by ‘animal spirits’; individual actors have irrational tendencies, which can be amplified by the collective mood of the market. This sometimes results in irrational and suboptimal outcomes, such as speculative asset bubbles.

Dr Bogan, a Cornell economist, aptly encapsulates it: “Markets are not perfectly efficient because it’s a collection of people, and they have flaws, biases, imperfections. And so markets aren’t perfectly efficient either”…markets tend to be imperfect…governments had to intervene to save falling ‘free-market players’ in the ‘larger public interest’.

The fact is that it’s the interest of people which is at the heart of any policymaking. While markets should be free to operate with minimal regulations, regulators must have enough in their arsenals to ensure that there’s no exploitation of consumers, and there should be perfect competition and a level playing field.

In Pakistan’s case, markets and economic freedom are challenged and at the same time regulators’ independence and capacity are hampered. In the Heritage Foundation’s Economic Freedom Index, Pakistan ranks 152nd out of 180 countries… More here >