Convocation Address - LUMS Dr. Ishrat Husain - Professor Emeritus and Chairman CEIF
Convocation Address – LUMS
30th June 2018
It is indeed a great honour and privilege to be invited to deliver the convocation address at this highly prestigious university. I am grateful to Syed Babar Ali sahib, an institution by himself and one of my mentors, my friends Razzak Dawood and Sohail Naqvi and the Board of LUMS for conferring this honour upon me.
I have followed with great interest the remarkable journey of your alma mater from a two bungalow Business school in Gulberg to the present multi disciplinary institution of great repute located in one of the most beautiful campuses we can boast about. This journey has indeed been highly impressive but not without its trials and tribulations in establishing high standards, excelling in quality, reaching out to the society and rendering service to the nation. We in Pakistan are really fortunate and proud to have an institution such as yours in the country. I only wish we had many more LUMS spread all over the country because that is the only way we would be able to compete successfully in the fierce globalized market place.
On occasions such as this, the guest speaker is expected to give a lot of gems of wisdom and advice to the graduating class. I must confess I don't have either and therefore I don't intend to follow that tradition. What I would like to do, instead, is to sketch out, to the best of my ability the possible challenges that you are likely to face at the global, national, enterprise and individual level once you embark upon your professional career and pursue your personal aspirations.
I don't wish to pontificate or suggest any solutions, but leave you with some open-ended questions to ponder as to how you should at least prepare yourself to respond to these challenges.
The mega-trends that would shape the global economy reflect a number of major transitions, some of which are interlinked, that are under way and would become even more deep rooted in the future.
The first of these is the shift from industrial economy to knowledge economy. This implies that natural resources and human skills devoted to manufacturing and allied activities would be substituted by human ingenuity, creativity and innovative thinking in production of goods and services. Risk taking, experimentation and learning from failure would become the critical success factors of adding value and boosting the economy. The paradigm of current learning process confined to certain age groups, circumscribed by rigid boundaries of narrow subject matter specializations and imparted in universities and colleges by teachers would give way, gradually, to continuous lifelong learning process driven by the changing demands and technology.
The second major shift is the demographic transition, whereby Japan, European countries and even after a while, China, would be faced with the problem of ageing population and high dependency ratios. In Japan already, it takes two working persons to support one aged person. South Asia and Sub Saharan Africa would be blessed with youthful population. In normal circumstances, the surplus labor countries fill the gaps in deficient labor countries, but this is simply not possible in the present day world where Brexit, Trump, Orban and Northern League have begun to dominate the political scene. How do we cope, despite spread of automation, with this imbalance in the global labor market would determine the future path we would traverse on the forked road – prosperity or chaos and destruction.
The third area which we are already witnessing is the shift in economic power from the West to Asia. China has already become the world's largest exporting nation and would soon take over the United States as the largest economy in the world. Asian countries are now contributing two-thirds to the world economic growth and would remain the driver of growth. With assumption of economic power comes the natural quest for political and military power. Would China and the other Asian countries single mindedly pursue the goal of bridging the gap in the standards of living of their population to bring it to the level of the Western countries, or divert their energies and resources and pursuits in vying to establish their hegemony and thereby creating another repeat of the tensions we had witnessed during the cold war?
The fourth challenge we are going to face is the generation, assimilation and application of new technologies such as Artificial Intelligence, Robotics, Super Computers. Big Data and Data Analytics, Biotechnology, , new materials etc. and the ascendency of big firms that dominate this spot. My fear is that technological developments are moving faster than policy makers' capacity to understand or keep track, or come up with policies and regulations. Would this lead to another kind of inequalities over and above those we already face, i.e. digital inequities?
Ten years ago, most of the investment in the U.S. was carried out by Chevron, Verizon, AT&T, Mobiloil and GE. Today, the five biggest spenders are Amazon, Alphabet, Apple, Intel and Microsoft. Big firms are getting bigger in two thirds of industries earning high profits and squeezing out small firms. The number of new start ups is therefore on a downward curve.
What would be the repercussions on job creation and livelihoods of those who remain at the middle and bottom of the pyramid in this pursuit of technology?
The Tech-centricity of the current and future investment raises questions about the future labor market. Would it create, augment, substitute or destroy jobs? We don't know for sure because there is huge variation and there are many unknowns and imponderables. Estimates range from 14 percent of job losses to 54 percent depending upon the time period chosen and the assumptions of the model. For example, Amazon employs 11,000 staff per billion dollars of fixed capital, whereas Facebook just 1500! Whether the new technologies would take the course of Amazon and Facebook is not obvious.
Undergirding all these four challenges are the rise of protectionism, populism, and pollution, and the decline of liberal democracy and rules-based international order. Globalization and Trade have uplifted a large segment of the population in developing countries above poverty, but the same success is now being perceived as a peril to the living standards of the population in the advanced countries. Protectionism and Populism are their response to this danger.
Climate change including environmental pollution are now widely recognized as a destructive force for the food, energy and water security. Paris agreement was a most welcome and needed consensus document to rally around but the hostile stance of the United States is creating serious doubts and questions about the implementation of the arrangements that were agreed upon.
All the above transitions at the global level and the incertitude associated with them would naturally have serious consequences on our own economy and society. But in addition to that, we are faced with our unique set of problems. Intolerance for other view points, an atmosphere in which outsiders are invariably blamed for our own shortcomings, and a firm belief in conspiracy theories have embroiled us in a perpetual state of denial about our own responsibilities and weaknesses. We have developed a mindset where negativity and cynicism shape our thinking. These trends on our national scene are extremely worrisome. Factionalism and Divisiveness on as many dimensions as possible – religion, sect, ethnicity, geography, income, and gender – are corroding the body fabric of this country. In face of the global challenges I have sketched out, and in a world of inter-country competition where only the fittest can survive these tendencies and mind set are going to make our task difficult.
In the last twenty five years, we have already become laggards in the region, from being ahead of other developing countries in economic and social development in the first forty years of our history. We have to collectively work hard and come to grips with these corrosive tendencies. Each one of you is going to assume leadership role in the fields you choose. I can only appeal to your good sense that you should do your utmost to combat these influences with all the vigor and mental prowess you possess. This is the only hope I have that our younger generation would behave much differently than what we have exhibited.
Now I turn to the role and responsibilities you may consider playing at an individual level in the midst of these challenges and difficulties.
You and your parents have every reason to feel proud – you were able to get admitted to LUMS through fierce competition, you successfully completed a highly intensive period of instruction at the hands of top faculty member. You were exposed to a diverse set of ideas and beliefs, interacted with the most talented colleagues from various backgrounds and got job offers from the leading corporations of the country or got admissions for higher degrees abroad. There is no reason to feel anything but elated and extremely confident about yourself and your capabilities.
Welcome to a small group of elitist society in Pakistan. This group encompassing individuals like yourself in professionals and other walks of life is woven around a narrative of entitlement that is maximization of individual interest to the exclusiveness of others. Why should others who could not do as well as we did be entitled to the same privileges, perks and positions as we do? Look, we have earned it on merit, and therefore, we should be adequately compensated for our high intelligence, hard work and effort. Others were not able to make it, so why should they be aspiring for the same station in life?
Fair enough, there is a lot of weight in this argument. Let us remind ourselves that luck also plays a part in reaching our destination. The members of the narrow elitist group with their intellectual, financial and social advantages pass down the privileges to their children, creating a hereditary elite that is even more insulated from the rest of the society There is nothing wrong with that. But also think for a moment that we live in a society and not separate enclaves. To be a useful member of the society, we need to avoid misplaced notion of the self. Yes, accomplishments by individuals must be celebrated. But a society based purely on self and on individual achievement without due regard to character would soon degenerate.
So how should you shape your role as an individual leader – bright, sharp and intellectually endowed? Allow me to share my own thoughts on this subject with which you may agree or have difference of views. I think an individual such outstanding as yourself should be guided by civic consciousness, by a sense that we live life embedded in community and nation, that we owe a debt to the community and nation and that the essence of the admirable life is community before self. Let me tell you something up front – Ability brings you to the top, but character keeps you there. In this country, where short cuts to success by hook and crook have become the norm, you may earn transitory gains and become materially rich overnight, but I can assure you, that this path would lead you to self-destruction in the long run. Vanity, arrogance and a constant craving for public attention and material goods are natural instincts for instantaneous gratification. But let me claim that humility, a sense of commitment, sharing and giving away to those less well-to-do than you would keep you on a steady path, and in peace with your inner self.
Yes, your accomplishments as individuals deserve recognition and celebration, but a society based purely on self and individual achievement without due regard to character would soon degenerate and disintegrate.
A basic ingredient of character is compassion for others and if that is missing, the delicate fabric that holds the society together i.e. social harmony begins to dissipate. Those who are not as well endowed as you are, not as intelligent as you are, not as fortunate as you are, feel excluded and demoralized, and channel their energies into socially unproductive activities. The State would in that case have to divert its resources from development to combatting the violent insurgence sparked mainly by this deep emotional sense of deprivation, exclusion and lack of belongingness.
How can we feel contented with the fact that the combined income of Karachi, Lahore, Islamabad and a few big urban centers exceed the incomes of 80 deprived districts of Pakistan in Balochistan, KP, FATA, Southern Punjab and Rural Sindh?
Why should we accept the fact that Lahore's Human Development Index is five times higher than that of Awaran? Doesn't it shock us that 96% of Kohistan's population lives below the poverty line, 92% of Harnai ,Barkhan and Tor Ghar and so on the list goes! compared to only 4.3% of Lahore's population, 4.5% of Karachi's population and 3.1% of Islamabad's population. This stark disparity is an anathema for social harmony and national cohesion and is simply unacceptable. But should we simply leave it to the public policy makers that they have to do something about it. Yes it is true it is their responsibility but the combined actions and behaviors of leaders of the society, and business can also make a significant contribution in alleviating this menace. It is a wake up call for the narrow elitist club to which you and I belong that we have to make our best and sincere efforts to arrest this drift,
In the end, I would like to quote Sir Winston Churchill when he paid eulogy to Neville Chamberlain. He said
"The only guide to a man is his conscience, the only shield to his memory is the rectitude and sincerity of his actions. With this shield, however the fates may play, we march always in the ranks of honor."