A Keynesian Perspective (दानको आश हैन बरु ऋण नै बोकौ!)

This is an article highlighting some achievable ideas on how we can capitalize on economic prosperity. I believe that a very Keynesian perspective can help us achieve better lives for people in our country. This I feel can be achieved by a deliberate but a responsible deficit. To start rather simply, Nepal has a rather escapist tendency to rely on foreign aid and on another country’s generosity to pursue infrastructural growth. I am not too sure how those grants and funds have been mobilized in the past but anything that comes in easy has high chances of being abused. So it is best for the government to borrow instead of relying on donations. Because borrowing naturally makes people conscious about the flow of capital. We have reached a point in time when our government should not shy away from carrying the burden of debt. This is a difficult choice but feeling indebted catalyzes the need to perform and square our finances.

I also feel that it is the primary concern of any government to look after its vulnerable population. So even when times are hard the government should dig deep in their pockets and increase government spending despite being aware of the itself going deep in debt. So two things here- increase borrowing to increase spending. For once the government has to leave no stone unturned to make people realize how far it is willing to go to help people to help themselves. It’s about understanding each other’s problems and working together. It’s about sacrifices.

Now spend on what? The world has been graced with plenty of great thinkers from whom we can learn how they have managed to steer economies from slumps to prosperity. I would like to give an example of the Hoover damn. In the 1930’s, during the great depression, President Herbert Hoover’s government came up with a brilliant idea to fund a project called the Hoover dam to stimulate the economy. The idea was to invest in an infrastructure that would generate income and also create jobs at the same time. The only difficulty in achieving this was to come up with enough funding. The government decided to take the heat and went through the project anyway. And it worked brilliantly. People had jobs which ensured social order, people were spending their incomes and a prosperous blue collar town birthed itself to existence in a place called Boulder in Colorado -thanks to this project. The people were happy however the government had to think of ways to pay back for the costs of the project. So when borrowing gets heavy it is always best to deal with a prominent lender who has the patience to recuperate the lent amount in the long term. This worked brilliantly. Happy days!

In Nepal’s context there are talks going on to create satellite cities around Kathmandu because people are increasingly preferring urban settlements to rural agrarian ones- credit to our growing metropolitan landscape. People want more for themselves and that is a good thing for growth. This fact is backed by an increase of personal spending of around 10% this year. About creating satellite cities sure they are a good thing. The increase of the availability of accommodation regulates house prices and this project can also champion the idea of affordable housing. If the government can fund this idea people will also get employment and this will also reduce our labour drain. The only problem here is that even if the government pulls this off, how can these satellite cities sustain themselves in the long run without income? The difference between the Hoover dam and this project is that the dam continuously generated income as for these cities- these are merely infrastructural progress without the ability to generate any income. So another problem is staring right at us at the end of the project. The only thing that we can do is find ways to connect with global trade. But one thing is for sure that is if we buy only from other countries and have nothing to offer in the global markets that’s another problem in itself.

But hey who knows maybe we will find something better than physical produce. Maybe we will get a slice of China and India’s industrial transfer. Maybe Nepal will become a haven for foreign investments. Who knows.... we just have to keep on thinking and keep trying.