Choosing the Right Regressors

Talk at PIDE Nurturing Minds Seminar on 29th Nov 2017. Based on “Lessons in Econometric Methodology: Axiom of Correct Specification”, International Econometric Review, Vol 9, Issue 2.

First, I need to explain why an apparently technical talk about econometric methodology should be placed in a blog on “Islamic WorldView”.  The real reason for this is very complex, and difficult to understand, but at the same time it is important for Muslims to understand. I will give a very brief sketch here, and expand on it later. More complete details are available in my post and paper on the “Deification of Science“. The use of sophisticated math impresses and deceives people, who are unable to see that the foundations on which this complex dance is done are completely unsound, and the results completely unreliable. Describing serious defects in foundations of econometrics is a way to undo the illusion of Western expertise in everything. The most serious problem facing the Ummah is that our eyes have been dazzled by the superficial brilliance of Western knowledge, and neglect the vast treasures that we have inherited in the form of the Quran and the Sunnah. Iqbal described his own escape from the traps of Western intellect as:


Deep and fundamental flaws in the structures of Western knowledge today arise from their worship of the observable, measurable and quantifiable, and neglect of the qualitative, unmeasurable realities of the complex world we live in. In later posts, I will provide greater clarity, depth, and details about flaws in Western epistemology. Here is I just provide an introductory sketch.

Very briefly, the extremely bloody and cruel fights between different religious factions in Europe led to general dis-enchantment, and eventually, rejection of Christianity. This loss of faith was highly traumatic — Deceived by their religious leaders, the Europeans vowed never to trust anything they could not touch or see. This led to a strong bent on EMPIRICAL and EVIDENCE based decision making, which we see going strong to this day. There are many extremely important decisions which are purely qualitative and subjective, and these have been neglected and ignored in the West. This HUGE emphasis on data and numbers, and complete neglect of the hidden, complex and unmeasurable real world processes that generate the data have led to an EXTREMELY unsound methodological basis for econometrics. I have clarified this issue in Methodological Mistakes and Econometric Consequences. These methodological defects are reflected in sloppy practices, which result in huge numbers of misleading and deceptive regression results — nonesense or meaningless regressions. The paper and talk below deals with one very simple issue regarding choice of regressors which is not explained clearly in textbooks and leads to serious mistakes in applied econometrics papers.

SUMMARY OF PAPER: [One (among many) basic widespread misunderstanding about choice of regressors in a regression model]  The importance of relevant missing regressors.

Conventional econometric methodology, as taught in textbooks, creates serious misunderstandings about applied econometrics. Econometricians try out various models, select one according to different criteria, and then interpret the results. The significance of the fact that interpretations are only valid if the model is CORRECT are not highlighted in textbooks. The result is that everyone presents and interprets their models as if the model was correct. This relaxed assumption – that we can assume correct any model that we put down on paper, subject to minor checks like high R-squared and significant t-stats – leads to dramatically defective inferences. In particular, ten different authors may present 10 different specifications for the same variable, and each may provide an interpretation based on the assumption that his model is correctly specified. What is not realized is that there is only one correct specification, which must include all the determinants as regressor, and also exclude all irrelevant variables (though this is not so important). This means that out of millions of regressions based on different possible choices of regressors, only one is correct, while all the rest are wrong. Thus all 10 authors with 10 different specifications cannot be right – at most one of them can be right. In this particular case, we could see at least 90% of the authors are wrong. This generally applies to models published in journals – the vast majority of different specification must be wrong.

Now the question arises as to how much difference this Axiom of Correct Specification makes. If we can get approximately correct results, then perhaps the current relaxed methodology is good enough as a beginning point. Here the talk/paper demonstrates that if one major variable is omitted from the regression model, than anything can happen. Typically, completely meaningless regressors will appear to be significant. For instance, if we regress the consumption of Australia on the GDP of China, we find a very strong regression relationship with R-squared above 90%. Does this means that China’s GDP determines 90% of the variation in Australian consumption. Absolutely not. This is a nonsense regression, also known as a spurious regression. The nonsense regression is cause by the OMISSION of an important variable – namely Australian GDP, which is the primary determinant of Australian Consumption. A major and important assertion of the paper is that the idea that nonsense regressions are caused by INTEGRATED regressors is wrong. This means that the whole theory of integration and co-integration, developed to resolve the problem of nonsense regression, is searching for solutions in the wrong direction. If we focus on solving the problem of selecting the right regressors – ensuring inclusion of all major determinants – then we can resolve the problem of nonsense or meaningless regressions.

Next we discuss how we can ensure the inclusion of all major determinants in the regression equation. Several strategies currently in use are discussed and rejected. One of these is Leamer’s strategy of extreme bounds analysis, and some variants of it. These do not work in terms of finding the right regressors. Bayesian strategies are also discussed. These work very well in the context of forecasting, by using a large collection of models which have high probabilities of being right. This works by diversifying risk – instead of betting on any one model to be correct, we look at a large collection. However, it does not work well for identifying the one true model that we are looking for.
The best strategy currently in existence for finding the right regressors is the General-to-Simple modeling strategy of David Hendry. This is the opposite of standard simple-to-general strategy advocated and used in conventional econometric methodology. There are several complications in applying this strategy, which make it difficult to apply. It is because of these complications that this strategy was considered and rejected by econometrician. For one thing, if we include a large number of regressors, as GeTS required, multicollinearities emerge which make all of our estimates extremely imprecise. Hendry’s methodology has resolved these, and many other difficulties, which arise upon estimation of very large models. This methodology has been implemented in Autometrics package within the PC-GIVE software for econometrics. This is the state-of-the-art in terms of automatic model selection, based purely on statistical properties. However, it is well established that human guidance, where importance of variables is decided by human judgment about real-world causal factors, can substantially improve upon automatic procedures. It is very possible, and happens often in real world data sets, that a regressor which is statistically inferior, but is known to be relevant from either empirical or theoretical considerations, will outperform a statistically superior regressor, which does not make sense from a theoretical perspective. A 70m video-lecture on YouTube is linked below. PPT Slides for the talk, which provide a convenient outline, are available from SlideShare: Choosing the Right Regressors. The paper itself can be downloaded from “Lessons in Econometric Methodology: The Axiom of Correct Specification

For this talk on my personal website, see:



Urdu: The Power of the Quran

7m Convocation Speech at graduation of Huffaz from Hira Islamic School System at Islamabad on Sat 25th Nov 2017. The Message of the Quran changed the course of history. The Quran describes itself as the complete and perfect gift of God for guidance of mankind. It also says that what we Muslims have been given is far better than anything that they (non-Muslims) can gather. It also says that we should not be deceived by the apparent luxury of the non-Muslims. Today, the glitter of Western knowledge has made Muslims neglect the powerful message of the Quran. It was this message that brought the light which ended the dark ages of Europe. The same message had a powerful impact on Thomas Jefferson, and played an important role in shaping the constitution. Today, the message is just as powerful as it was 1400 years ago – it is perfect and complete and sufficient for our guidance today. Unfortunately, most Muslims are neglecting this message, and paying far more attention to Western knowledge, in the mistaken belief that today our guidance depends on modern teachings. In fact, the secrets of success are the same today as they were 1400 years ago, and the key to internal revolution, to transform our hearts, and thereby to transform the world, are contained in the Quran.

A seven minute speech in URDU for graduates of Hira on this topic:

Slides for the talk in URDU; Available from slideshare

Urdu: Power of the Quran — PPT Slides from Slideshare

Short Link for this post:

Short Link for this blog:

URDU: The Prophet as our guide for revolutionary change

20m talk at Seerah/Meelad Ceremony organized at PIDE (Junior Commons Room) Fri 8th Dec 2017.

The message of Islam, embodied in the person of the Prophet Mohammad SAW, created a revolution, changing the course of history. The CRUCIAL question for us Muslims is: DOES THIS MESSAGE have the same power today? The WEST says no, the message is obsolete and outdated. Progress today requires that we become disciples of the West, and learn all the modern knowledge that they acquired in the past few centuries. Unfortunately most Muslims agree with this analysis. They think that the MESSAGE was complete and perfect for its time, but modern times require us to massively update it.

This is a dangerous illusion. The path to success today is the same as it was 1400 years ago, and this lies in following the Prophet Mohammad SAW. Core and Central Teachings of Islam have to do with how to create an inner transformation, a spiritual revolution, which will enable the growth and perfection of the capabilities for excellence planted as seeds within EVERY human being.  The entire corpus Western knowledge is blind to these possiblities — we cannot learn how to be human by studying calculus, biology, chemistry and physics.  Learning to become a human being is only possible by studying and practising the teachings of Islam.

Some of the key teachings we need to learn, in order to re-create the inner spiritual revolution created in the hearts of the companions, are the following:

  1. Excellence in Conduct. The best Muslim is the one who has the best conduct.
  2. Mercy to all Nations: We have the welfare of the entire humankind in our hearts. This is the responsibility entrusted to the Ummah of Muslims.
  3. All men and women are brothers and sisters, born of Adam and Hawwa. We are all equal, and we are responsible for each other.
  4. Power is given to us to HELP the oppressed, not to oppress.
  5. Wealth is given to us so that we can help the needy, not to flaunt it like Qaroon
  6. The leader of a nation is the servant of the people.
  7. All creation is the family of God. The way to get near to God is to be of service to the Creation

All of these characteristic were displayed by the Prophet Mohammad SAW and modeled for us, so that we can learn them and emulate them. This was how the Muslims reached the zenith of success. Today we have abandoned the Prophetic Model in favor of Hollywood models, which is why we have reached the depths of darkness. The formula for success remains the same as it always was: following the path shown by our Prophet. An 18 minute URDU talk on the Seerah expands on the points made above:

English Slides outlining this talk are available from SLIDESHARE:

Our Prophet Mohammad As A Guide for our Success in Both Worlds

Methodological Mistakes at the Heart of Modern Economics & Econometrics

The Quran 3:196 states that:

لَا يَغُرَّنَّكَ تَقَلُّبُ الَّذِينَ كَفَرُوا فِي الْبِلَادِ

Do not be deceived by the prosperity of the non-Muslims throughout the land. It also tells us that what we (the Muslims) have been given (that is, the Quran), is much better than anything that they (the non-Muslims) can gather. It also tells us that Allah is the friend of those who believe and leads them to the Noor of guidance, while those who reject God are befriended by the devils who lead them astray, from light into darkness.

This post continues the theme initiated in the previous post on the Modern Mu’tazila, by debunking the illusions created by the extremely complex and sophisticated mathematical bases upon which modern economics and econometrics is founded.  This complex and elaborate cover has deceived Muslims into believing that modern econometrics provides us with a sound methodology to obtain information about the real world from data. Similarly, complex mathematical models used in economic theory provide us with insight into the economic processes operating in the real world. Nothing could be further from the truth. There are major and fundamental flaws in the conventional methodology. These have been pointed out be several authors, but the sharp criticisms have been ignored, because no reasonable alternatives are currently available. Several major mistakes in the development of European thought have led to the current methodology for economics and econometrics, based on deep and fundamental flaws. These can be itemized as follows:

  1. The Deification of Science: In a long and complex historical process, Europeans came to believe that their religion (Christianity) was just ignorance and superstition, while the newly emerging sciences were the sole guide and the only source of knowledge. They generalized this belief, without examination, to all religions. This eventually led to the exclusion of morality and ethics from the realm of knowledge. Excluding concepts of justice, fairness, exploitation etc. from economics has led to a highly impoverished subject, incapable of guiding us about the source of deep and increasing income inequalities, and the co-existence of vast amounts of misery, together with vast amounts of wealth, more than enough to eradicate poverty.
  2. The Battle of Methodologies (Methodenstreit): In the late nineteenth century, there was an intellectual battle in economic methodology between the traditional historical and qualitative approach of the German Historical School headed by Gustav Von Schmoller, and newly emerging analytical, quantitative and scientific approach advocated by the Austrian School, headed by Carl Menger. As detailed in Geoffrey Hodgson’s book “How Economics Forgot History“,  this led to the adoption of scientific methodology in economics, without taking care of extremely serious problems created by this approach. Are there universally invariant laws of economics, which operate without regard to historical, geographical and human cultural context, like the scientific law of gravity? Modern economics assumes so, even empirical evidence is strongly against this ideas. In econometrics, we assume that patterns observed in the past will continue in the future, dis-regarding free will of human beings, which allows them to create new and unexpected changes.
  3. Logical Positivism: A philosophy of science which was spectacularly successful in the early twentieth century, and played a central role in creating the foundations of modern economic and econometrics. The main idea of this philosophy was that science is trustworthy and reliable because it is based on observables facts and logic, while religion is superstition because it is based on unobservables entities and speculations. The attempt was made to remove all unobservable terms — like gravity, electrons, electro-magnetic forces, etc. — from science, by replacing them with their equivalents in the form of observables. This attempt eventually failed, leading to the collapse of logical positivism as a philosophy. Nonetheless, despite this failure, the foundations of economics and econometrics were not revised, and economists continue to believe in the principle ideas of logical positivism, even though they have been refuted. As a result, current foundations of economics and econometrics are fundamentally unsound, resting on concepts which have logical contradictions, and have been proven wrong.

The fact that modern economic theory is based on drastically wrong foundational ideas leads to the necessity of creating a new set of foundations for economics, especially if we want to build a new discipline of Islamic Economics. This requires providing an alternative methodology which does not suffer from the defects described above. A major flaw in existing economics is that it completely fails to consider ethical and moral issues, which are actually central to economics. The necessity of taking into account moral considerations has been highlighted by  Hausman and MacPherson: Economic Analysis, Moral Philosophy, and  Public Policy.  However, economists have been unable to take these ideas on board in mainstream economics because of ideological blinders, and also because logical positivism says the ethics and morality are not part of science. Here, Islam offers us an excellent platform on which to build a new economic theory grounded on ideas of economic justice, fair play, and equity. Below, I provide links to lectures on a proposed new methodology for Islamic Economics which would avoid the defects of conventional modern economic theory highlighted above:

Lecture  on Islamic Economics: A New Methodology delivered in 17th IRTI Distance Learning Course on Islamic Economics , 28th May 2013 — Part I is 38 minutes:

Part II of the lecture is 52 minutes.

For Related Readings — short posts — see links below:

Fundamental Flaws of Conventional Economics: WEA  Pedagogy Blog Post. Provides more explanation and details about how twentieth century economics departed radically from previous schools of thought and constructed foundations based on logical positivism. Explains how these foundations have fundamental flaws, which are reflected in the blindness of economics to important issues related to human welfare.

Three Goals for Pedagogical Change: WEA Pedagogy Blog Post.

Deification of Science: WEA Pedagogy Blog Post — this paper provides an introduction to my complex and difficult paper on this topic. It explains why the methodology of social sciences currently in use in the West is fundamentally flawed, and how this problem can be fixed.

The Rise and Fall of Logical Positivism: WEA Pedagogy Blog Post. Provides a short history of the philsophy of logical positivism and the history of its spectacular rise, and equally spectacular fall in the twentieth century. This is a short post of less than 1000 words. For readers who would like more details, please see Logical Positivism and Islamic Economics.




The Modern Mu’tazila

In the name of Allah, The Beneficent, The Merciful

Introduction: The Shock-and-Awe of Western Knowledge, created by their global conquest, colonization, and apparent success, has created a deep sense of inferiority among the Muslims today. This is what I have called the Second Crisis of Knowledge in the Islamic Civilization. This crisis is all encompassing, and requires a massive and multi-dimensional effort on many different fronts to counter-act and cure. Some aspects are discussed in the post below. This post is the FIRST of a series designed to develop and articulate an Islamic World-View, to counteract the poisons of a Eurocentric worldview which we all imbibe during the course of a Western education.  I plan to make weekly postings on different aspects of this problem on this blog, which I have re-named to An Islamic WorldView,

The Second Crisis of Knowledge in the Islamic Civilization:

There is universal agreement that the teachings of Islam created a revolution in history. The Quran emphasizes the importance of the final message of God, the greatest Gift of God to humanity, in several verses; for example:

This day I have perfected for you your religion and completed My favor upon you and have approved for you Islam as religion

The message of Quran, planted in the hearts of men, transformed ignorant and backwards Arabs into the leaders of the world. The civilization that they created dominated the Earth for a thousand years. The Enlightenment Quran (by Ziad Al-Marsafy) documents how Islamic teachings, acquired via the re-conquest of Andalus, ended the Dark Ages of Europe. Thomas Jefferson’s Quran (by Denise Spielberg) describes the deep influence of the Quran on Jefferson, and on the shaping of the Constitution of the USA. A large amount of recent research shows both the strong influence of Islamic ideas on shaping modern civilization, and also, the suppression of this fact in standard Eurocentric accounts of human history.

The burning question of central importance is: Does this message have the same value today as it did 1400 years ago? Can it create a revolution within the hearts of men, and can it turn the tides of history, like it did once before?

The European answer is a clear and definite NO – The message of Islam was perfect for its own time, but is now seriously obsolete and out-of-date.

The position of the Modern Mu’tazila is similar to that of the Europeans. They argue that if Islam had solutions to offer to our modern problems, then we would not see the Ummah in the desperate conditions that we find it today. They argue that all that was good and perfect in the teachings of Islam has already been incorporated into the Western corpus of knowledge. Furthermore, the West has made substantial progress and advances, while we have slid back into ignorance, and today our salvation lies in following them. We Muslims are living in the Dark Ages of Jahilliya again, and the only path to our enlightenment lies in learning from the West.

The problem of the Modern Mu’tazila (MM), like that of the Ancient Mu’tazila, is that they have become deeply impressed by a corpus of knowledge alien to Islam. The MM have accepted the knowledge claims made by West, that their knowledge is JTB – Justified, True, Belief. It is objective, factual, based on solid reasons, and undeniable. Once this is accepted, then at all points where Islam conflicts with Western knowledge claims, Islamic teachings have to be modified to match them. The MM cannot accept claims that Islamic teachings conflict with Western knowledge, since that would mean that Islamic teachings are wrong. Thus, their energies are spent in harmonizing the two bodies of knowledge. This is the explicit goal of many groups of Muslims seeking to align Western and Eastern Knowledge. In particular, the project of “Islamization of knowledge” is partially based on these ideas.

The idea that the Knowledge of the West on par with, or superior to, the Quran in terms of providing solutions to the problems facing the Muslim Ummah today, is what I have called the Second Crisis of Knowledge in the Islamic Civilization. As per Hadeeth, Islam came as a stranger, and will become a stranger; the original teachings of Islam are strange and unfamiliar to most Muslims today. HOWEVER, most Muslims and especially the MM, believe the OPPOSITE: that we are already very familiar with these teachings, and, since they do not find anything in these teachings which matches the brilliance of the West, they consider these teachings to be obsolete and out-of-date, not relevant to our contemporary problems, except in a marginal way. A 10 minute video-talk on YouTube which summarizes and explains this further is linked below — Also, the problem is articulated and discussed in the remaining portion of this post after the video link.

(Continuation of Post on the Modern Mu’tazila — DIFFERENT articulation from the 10 minute summary above. For the full hour-long video, see: Second Crisis)

Allama Iqbal, Poet Laureate of the Islamic Civilization, has expressed this problem facing the Ummah as follows:

My eyes were not dazzled by the brilliance of the West – (Kheera na kar ska mujhay, Jalwa’ Danishe Farang)  They were protected by the dust of Medina & Najaf – (Surma hay mairy ankh ka, Khak-e-Medina o Najaf)

Although Iqbal was protected from it, the rest of the Ummah was not. The superficial dazzle of Western knowledge has blinded them to the depths of wisdom hidden in the Quran. This puts in the Ummah into Double Darkness, termed Jahl-e-Murakkab (or compound ignorance). Not only are the teachings of Islam strange and unfamiliar, but the Ummah believes that they already know these teachings – so that have no incentive to try and learn them; that would be useless Tahseel-e-Hasil (acquisition of that which is already owned). Ignorance can be cured by learning, but there is no cure for Jahl-e-Murakkab, since people will not make effort to learn that which they believe they already know.

In fact, the teachings of Islam are just as revolutionary, fresh, original, and unfamiliar to the world today as they were 1400 years ago. They have the same potential today to change the tides of history. They are indeed complete and perfect, sufficient for our guidance today. HOWEVER, MM believe them to be seriously incomplete, since our guidance today requires heavy supplementation of Islamic teachings by the latest Western knowledge. MM also believe them to be imperfect and in need of updating – For instance, Islam allows polygamy, slavery, brutal punishments, and prohibits interest. In these areas, and many others, we can improve on the original teachings of Islam.

The claim that teachings of the Quran are sufficient for our guidance today, baffles, frustrates and severely angers and annoys the Modern Mu’tazila. This is because they believe that it is precisely this type of sentimental attachment to the past, and a refusal to face the realities of the modern world, which led to the decline of Muslims. Furthermore, to remain engaged with contemplation of the Quran and the faded glories of the ancient Muslims, in face of the pressing need to modernize and catch-up, making up for lost centuries, is a beyond-hopeless ostrich-strategy, doomed to failure.

The Quran warns us not be deceived by the apparent success of the non-Muslims. Even though the West has been tremendously successful on the front of material wealth and power, they have been spectacularly un-successful on the front of human development. The Final Message of Allah, brought to mankind by our Prophet Mohammad SallAllaho Alaihe Wa-sallam, teaches us how human beings can achieve the full potential buried within the hearts of all humans. It tells us that we all have the capacity to rise above the angels, as well as the capacity to be lower than the beasts. It teaches us the spiritual, mental and emotional practices requires to transforms the seeds of humanity within out hearts into the tree of Eeman, which is solidly planted in the ground and has branches reaching out to the skies. This message — how to develop our human potential — is contained nowhere within the teachings of the West. By learning physics, chemistry and mathematics, we can acquire power over the external world, but we cannot acquire self-control, discipline and spiritual progress. Islam teaches us how to use the material world to make spiritual progress, while the West teaches us the reverse — how to damage our souls, in order achieve material gains. Man is the greatest creation of Allah, and the spectacular progress of Islam occured when our civilization learned to cultivate and nurture the potential of human beings to be fully human. Decline occurred when we lost this skill, and the associated institutional structures. Today, our progress again depends on learning to be human beings, which only Islam can teach us. If we can learn to do this, we can show the world the way out of the current morass, where greed for riches has led to destruction of millions of lives of humans and animals, destructions of treasures of environmental resources, and brought the planetary ecology to the brink of collapse. May Allah T’aala help us to accomplish the mission that the Ummah was created for, which was to guide all of Mankind towards to good, and to prevent them from the evil. Ameen.


A one-hour video on “The Second Crisis of Knowledge in the Islamic Civilization” which expands further on the themes discussed briefly above.

Islamic Approaches to Knowledge This links to the first, 90-minute, lecture in the course: Introduction to Statistics: An Islamic Approach, which explains how and why an Islamic approach completely changes our approach to education. The meaning of “knowledge” is different within the Islamic and Western traditions. Acquisition of knowledge is the highest form of worship, but this acquisition must be done with the correct intentions, obeying the orders of Allah, and the Sunnah of the Prophet Sallallaho Alaihe Wassalam. The Western methodology of teaching and learning must be replaced by Islamic methods, which requires radical changes in the educational process.

An e-book which provides a lot of details and a collection of various articles on different aspect of the Islamic WorldView is available from: An Islamic Worldview: Essays on the Conflict between Islam and Modernity.



Pakistan Economy in the Domestic, Regional & Global Context:

Training Session in 24th Mid-Career Management Course, National Institute for Management Islamabad, Monday 24th Oct 2017

Brief Summary: Today’s world is dominated by wrong ideas. Every party spending time and effort on using media to propagate ideas IS AN INTERESTED party — no one spends time and money to spread PURE TRUTH. THis makes job of sorting out truth from falsehood very difficult. Many dominant, widely believed ideas are simply not true. For example, deaths due to Islamic terrorism in Europe and USA are about the same as deaths due to strikes by lightning — but perception is that these are much more. Similarly, the Corruption PERCEPTION index says that Pakistan is highly corrupt, but empirical evidence shows the USA is much more corrupt. — see my article: Corruption: Measuring the Unmeasurable, for more details

Ideas are far more powerful than is commonly realized –( See the Power of Ideas). In particular, good expectations about the future are self-fulfilling, because if people have confidence in Pakistan, they will invest in it, and help bring about a better future. Today. some people are talking about high deficit and debt of Pakistan as being signs of a weak economy. In fact, as explained in detail in the video lecture below, the two-gap model says that we need to have high deficits and debt in order to have high growth. Many bad ideas which economists have given us are the greatest obstacles to growth. Among this is the idea that growth is caused by machines and FDI and exports. Actually growth is caused by investing in our own people. This was realized by Mahbubul Haq after he applied the false growth theories from Harvad, and found that they did not work. He then created a radically new approach based on Human Development. This approach is of great value even today, since our policy makers are still using imported and failed foreign ideas, instead of tested and true domestic ideas. Among the main bad ideas is that WE the elite must carry out development, and then we will share the fruits with poor people of Pakistan. Instead, we have a large number of un-sung heroes who have actually created revolutionary, community driven, approaches to development, which are now being emulated all over the world. If we can liberate our minds from the shackles of colonization, and empower our people, giving them lives with security and dignity, our people will change the future of Pakistan.

1. Living in a Post-Fact & Post-Truth World
We’re living in post-fact and post-truth world. Today, there are so many truths available that it’s very hard to know what is true and what is false. Islam gives has the responsibility to not forward anything without verifying it ourselves. Reality is not made of bricks, stones and mountains but we can see only reflection of reality which is inside our mind. Lot of things that we know is not part of our experience but we get to know by narration instead of direct observation.
This interesting problem is capsulated in story called, ‘Lady and the Tiger’. It gives us very important fact that all parties that give information are interested parties in fact. There is no dis-interested party in the world. So, it’s very difficult to find out the truth.
2. Ideas are Powerful Shaper of Reality
According to Keynes, the practical men feel themselves quite away from philosophy. But actually what they are doing is based on philosophy without their knowledge. It is true as lot of people without any knowledge of modern economics or philosophy they are living their lives but even then these things profoundly shaping our world.
“Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back”, John Maynard Keynes.
Number of deaths by terrorist attacks, in EU, are slightly larger than people killed by lightening. But people killed by homicide, consumer products, walking in traffic, sporting accidents, heat wave, traffic accidents, suicide, respiratory illness, heart disease and cancer are much larger, respectively, than by terrorist attacks. By this information one can easily decide that how much resources should be spent to stop terrorist attack and how much for cancer, heart disease and other things. Reality is that billions are spent on terrorist attacks and very little money is spent on all of the other causes. Same thing is happening in USA where right wing extremist (white people) are committing about 120 terrorist attacks compare to 60 by Islamist and 20 by left wing extremists (black people). Total number of incidents is negligible but department of Homeland security spends billions of dollars on fighting these but other causes of deaths, those are more harmful, are completely neglected.
3. Pakistan is among the most Corrupt Countries
Most of the facts that we know are not the reality like Pakistan is 116 out of 176 countries in corruption but it’s an appearance. It doesn’t have connection with reality of corruption. In fact US government pays CIA to fabricate the reports. Corporation generate huge sum of profits by wars so they do lobbying and finance campaigns for wars. Projection to the public was that Iraq has weapons of mass-destruction but it was known that it’s not true. Similarly big pharma finance the politicians to pass the laws in their favor like to stop importing cheap medicines so that they can sell at high price.
Global financial crisis is another trillion dollar scandal. Vast number of banks and financial agencies were involved in fraud at large scale. Book, ‘When Pentagon was for Sale’, describes the scandal of massive overbilling in Pentagon and also giving contracts on favoritism and so on.
But despite all these huge scandals, US is at 18 in list of most corrupt countries out of 176 countries. If only dollar value is calculated of these fraudulent activities then it will be cleared that there is highest level of corruption in USA.
There is difference between perception and reality. It is perception that Islamic terrorists are destroying the world but reality is entirely opposite.
4. Two Gap Model of Growth
There is well known Two Gap model of growth which states that if country wants to grow then investment should be made in future of country. For it money is needed to invest today to get results in future. Now there are two type of money. Some of the money is domestic and for imports of machinery etc. the foreign currency is needed. There are two gaps here of which one is domestic saving gap that how can we raise money to invest in domestic market and secondly how can we raise foreign exchange to finance imports. Standard recommendation is that public should have lot of savings from which investment can be made and secondly high exports are necessary to generate foreign exchange earnings. These two gaps leads to low growth of countries.
The solution to these problem is to borrow to finance domestic investment and to fulfill exchange requirements. There is a problem with this solution that if country borrow money and misuse it then it’ll cause great damage to the country. On the hand if borrowed money is invest efficiently then there is no harm in borrowing revenues can be generated by it.
Pakistan has lot of borrowing but there is no harm as all money is invest on power plants, roads, capital goods etc. These investments are massively important for growth of economy in long run. Pakistan will achieve self-sufficiency in electricity through these investments and it’ll help industry to increase exports in near future. Domestic borrowing is done a lot by Pakistan but it’s going in right directions. Fixed capital investment in Pakistan is very strong which requires confidence in the future.
One sided scare story is Pakistan is drowning in in huge debt and economy will collapse soon. But the reality check is that economy is projected to exceed 6% growth which is maximum that can be seen in decades.
5. Who is Circulating False Facts? Why?
Now the question is who is circulating the false facts and why are they doing it?
The reality is that majority of people are simple minded dupes. For instance, Taliban were created by RAW, but lot of simple minded Muslims have been misguided into thinking that Taliban has something to do with Islam. Pakistan has got huge diplomatic achievement when support Iran against KSA and President of Iran visited Pakistan. The relations were becoming good that could also be helpful for increasing exports to Iran. But all of this was sabotaged when all headlines were about Kalbhushan Jadav instead of Iranian president even though he had been caught 40 days earlier. Iranian President returned and relations with Iran went even worse instead of improving as one specific group didn’t want Pakistan to develop good relations with Iran.
6. Quran: Leadership is circulated among the People
Quran says that leadership of the world is circulated among the people. Giovanni Arrighi, famous sociologist, analyzed the trend in world power and see that after every seven or eight decades the world power shifts. For past few centuries the European powers are in lead but he says now Asian countries will take lead on Europeans. He predicts that China is going to be next hegemon as GDP of Chine, on the basis of purchasing power parity, exceed the USA.
Pakistan is lucky to have China as trade partner but India and now USA are opposed to it.
There is strong pro-US, anti-Chine lobby within Pakistan and doing everything to derail the CPEC. Investment in future requires confidence but if the confidence is shattered in the economy then it destroys the investment. Confidence is state of mind which can be disturbed by false facts. There is a self-fulfilling prophecy that if we believe in the future it generates the strong future but if we doubt ourselves it also weakens the power. So the importance of soft power is huge to manipulate the public opinion now a days.
Can we take Pakistan to top 10 economies in 2050?
Some outsiders have predicted it’s possible. If we look at physical resources and all the material facts then we’ll see that it’s not impossible but biggest difficulty is due to mindsets as out of the box thinking is needed to achieve this goal.
7. Obstacles to Rapid Growth
One obstacle to rapid growth can be the debt trap. When debt is taken for wrong purposes and used by corrupt politicians then the people has to pay interest on loan. Such debt proved to be burden on economy and it’s possible but difficult to lessen this burden. However, it is important to differentiate clearly between “good” and “bad” debt. If debt is taken for the right purposes, it can substantially help improve the economy. In Pakistan, currently, most of our newly acquired debt is being put to productive use, but there is a burden of bad debt from the past, so the picture is mixed. In general, most of the poor countries are caught in the debt-trap, but for Pakistan, more important issue than debt is the wrong theories of economic development used by policy makers.
8. Blocking All Paths to Development
East Asian Countries (EAC) achieve miraculous growth from agrarian economy to industrial economy. Everything that these countries did was against the World Bank’s (WB) policies. EAC had the big industries guided by the government whereas WB policies restrict the interference of government in the economy. EAC had industrial policies to create coordination and subsidies the favorite industries. It means instead of being out of the market the government play crucial role which is against the WB policies. There were also price controls and restrictions on FDI whereas WB suggest to promote free market movement. In EAC there was also tight government control of money but WTO strictly against the influence of government on monetary policy.
After the East Asian miracle the WB rules closes all these paths to growth for its member countries. In all of such policies there is half-truth but there is also element of half-falsehood. For example WB restrict the involvement of government in economy as it causes harm but it’s half-truth as good government intervention can also put the economy on growth path.
9. Liberating Our Minds
We need to liberate our minds from piousness economic theory. Export led growth says if we just focus on increasing exports that will lead to growth but it’s simply wrong. But it’s part of agenda of foreigners to promote export led growth policies. Actually to create growth we’ve to increase the productive capacity in domestic economy so correct theory is growth led export instead to opposite.
Privatization is recommended as solution to inefficient government but reality check negates this as China has 75% of all its industry in the public sector. So there is issue of improvement of management whether it’s private or public sector. Deception is created in our minds that we should for high life style and luxuries. But recent research on happiness shows that high standards of living causes unhappiness as we’ve to work very hard to maintain a high life style and real drivers of happiness are family, friends and social circle. Striving for luxuries is opposite of Islamic teaching of simplicity.
It is thought that high growth rate will change the future of Pakistan but actually it’s not right methodology. Right approach is to help the poor people because they’re the people who will drive country ahead.
10. Pak Development Experience: Mehboob-ul-Haq Phase-I
In 1960’s Harvard group came to Pakistan and implement the economic theory that is applicable currently. According to this theory growth occur by building factories and by putting saved money into machines to produce more. What happened as a result was that all the money accumulated in hands of 22 families. So growth did occur but it didn’t go to the people. Same kind of policy has been implemented in the world. Russia planned to adopt free market ideology but they were planning to adopt implement is gradually. But Sachs go for shock therapy and as a result the economy of Russia collapse and millions of people became poor except few billionaires. All the Washington-Consensus policies had the same result everywhere.
11. Pak Development Experience: Mehboob-ul-Haq Phase-II
Mehboob-ul-Haq created the Human Development Index and focused on humans instead of growth. He focused on education and health instead of machine led growth. These things were not part of economic theory before he created HDI. Even today economists target the GDP growth per capita but discourse must be changed. Instead of GDP growth the focus must be on malnutrition, unemployment, health, education etc.
12. Pak Development Experience: Mehboob-ul-Haq Phase-III
In phase III of MH development he came to the realization that human beings are means and ends of development. Conventional wisdom is to use human beings for the production of wealth but MH says the opposite of it and said wealth should be used for betterment of human beings. Conventional wisdom, currently being followed in Pakistan Planning Commission, is to first produce wealth and then distribute it to the poor. But we must do the opposite of it as first we’ve to help the poor and then they’ll produce the wealth. According to conventional economics the social development is burden but in actual the social development is essential for development. So development is all about human beings but not about factories and roads.
13. Key Lessons from Experience
One of the major lessons from alternative economics is that if we want development then millions of engines of growth are needed but government itself can’t do it. So, investment in local productive capabilities leads to growth. We’ve to create agents of change who are we but nobody else. We can’t wait for external forces to make planning for us and to develop us. We’ve to unlearn the dependency on foreigners for policy making and also in other fields. We also have to overcome the inferiority complex because it prevent us from thinking about our own problems. If we go to WB then can provide 20 things to follow to achieve growth but unfortunately the solution of our problems is not available in these recommendations.
Basically our bureaucratic system is designed to rule people but not to serve people. We need to change this thinking of bureaucrats and to motivate them to work for service of people as Islamic teachings taught us that leader of the people is actually servant of the people.
14. From Outcome to Process
One of the major problems with modern economic and social thought is they focus on outcomes. It’s not how change happens because change happens when we focus on process and on how we play the game. Islamic teachings are also similar that outcomes are not in our hands but what we do is in our hand. So, if we do the right thing right now then we’ve achieved success whether or not it leads to the word success. We should not think about consequences but do what is in our power.
Instead of external goals like how can I change governments and other people we must focus on internal goals like change in myself, home and neighborhood.
15. We’ve many Un-Sung Heroes
Pakistan has produced lot of thought leaders like we mentioned Mehboob-ul-Haq who changed the word Development and had massive impact on the world. Akhtar Hameed Khan created the idea of community development which is now very strong and powerful concept all over the globe. Similarly Muhammad Yunus created the Grameen Bank which is first viable model for microfinancing and it’s now being implemented all over the world. Fazle-Hussain Abid who is leader of BRAC had recommend the first intervention in poverty which has been successful in graduating people out of poverty. Adbus-Sattar Edhi has done huge service to society similarly Indus hospital gives free health treatment to poor. Education and health are responsibility of society to poor. Except these big heroes there are many other un-sung heroes in our society who has done great work for society in their capabilities.
This concept has been practiced for centuries in Muslim societies in which education was free for all children and give health care to everyone.

Quran on Purpose of Life

Video Lecture by: Dr. Lang, Mathematics Professor at Utah University, who converted to Islam after reading Quran.

Following highlights and summary of lecture prepared by Maaz Javed: PIDE Student

When someone wants to know about another religion then the first thing that comes in mind is question about the views of that religion regarding to purpose of life or our existence.

Questions Raised in Minds of People before being Atheist:

It enforces skepticism of a person when it comes in mind that why world is dominated by random, consuming, undiscriminating violence, when he saw the senseless carnage of Vietnam, why did not God spare us all the sufferings, why did he make us so susceptible to sin why didn’t He make us impervious to it?

Is this the most perfect world He could create for our existence?

Same question is raised as that of atheist in Quran in Surah Al-Baqarah verse 30.

‘Behold your Lord, said to the angels: I’m going to place a vice (Khalifa) on earth and Angels said will You place the one who will spread corruption and shed blood while we (angels) celebrate your praises and glorify you?’

‘Why would God create this being, supposedly for some positive role, when he is capable of doing tremendous wrongdoing?’

Answer to these Questions:

God answered to Angels: ‘Truly I know that you don’t know.’

Next verse says, ‘God taught Adam the names of all things and then He placed them before angels and said tell me their names if you are right.’

Angels: ‘Glory to God, we have no knowledge except what you have taught us. In truth it is you are knowing the wise.’

God: ‘O Adam tell them the names and Adam told all the names and God said did I not tell you that I know what is unseen in the heaven and earth and I know what you reveal and conceal.’

So the Quran is saying that God taught man by Himself and man is learning and intellectual creature. God was taking one of the great stories in history of mankind and using it as a vehicle for an entirely original message. Human beings can do huge evil, can do wrong, can create misery but they can also do exactly the opposite. They can choose to choose evil but also can choose to do tremendous good, compassion, can be terribly ugly but can also be terrible beautiful.

Next verse: ‘We said to angels to bow down to Adam and they bow down but not so Ibless (satan), he refused and was arrogant, he was of those who reject faith. And notice why Iblees does not bow down because he refuses as he was arrogant’.

Bowing down can symbolize two things: Superiority or potential superiority of one being over another and can also mean that they serve that creature in some respect. Angelic and Satanic forces will be catalyst for those moral choices that they make. They will heighten the human beings awareness of the rightfulness and wrongfulness of choices, he is about to make. The soul (nafs) will have to make the ultimate choice between good and evil.

In west it is asked what is the root of all evils and it comes out that it is all about money, greed etc. Quran says that root of all evils is not always material wants but at heart of evil there is arrogance putting yourself above all others. So on one hand we hand magnanimous urging comes from one direction and on other hand we have satanic urgings coming from other direction so man is not only learning but also moral creature.

‘By the soul that which whispers into it its morality, its immorality and its God consciousness. Truly he is successful who causes it (soul) to grow and truly he is lost who stunts it.’

God creates us to be exposed to both influences, evil and good.

‘Oh Adam, dwell you and your spouse in the garden and it freely there is what you wish but come not near this tree for then you will be among the wrongdoers.’

It was actually an ordinary tree but Satan later come to Adam and tell him its tree of eternal life of a kingdom that never decays. It turns out to be if there was truly such power in tree then God should be frightened and ordered angels to guard the tree because if Adam eat from it then they will become God. But God just calmly said to Adam if you eat from that tree you’ll be among wrongdoers. God was not worried about itself but just making them clear that if you do this you would commit wrongful deed. God know exactly what He was doing.

‘But Satan cause them to slip and expelled them from the state in which they were. And We said go you all down, some of you being the enemies of others, and earth will be your dwelling place and provision for a time.’

Now it was expected there will be rage, violence, anger and jealousy as Adam eat from the tree. It was expecting God will punish in hard way, stub their toe, make them suffer, and will die in this. And women, she’s the one who will suffer the most, labor pains and greatest humiliation will be the man will rule over her. When man is obviously intellectually inferior because she was seduced by Satan and commit the wrong deed. But in actual the story is entirely different. The greatest sin in the history of human race is called a ‘Slip’ due to Satan. It was just as someone loses the focus for some time and not a big deal. It may be the ‘Slip’ in actual after all they did not commit murder, robbery, pillaging, assault but they just eat couple of fruits. We see that God originally intended to put man on earth as his vice and for it we see period of preparation where he’s being prepared intellectually and growing as moral creature. When God finally put man on earth, it was due man’s first independent choice. It showed that mankind was ready to act on his own but God has empowered him to make choices and he was ready.

‘Adam received words from his Lord and God turned to him mercifully, forgot his off returning ever merciful.’

If there was any doubt up till now, that God is not enraged by what this has happened, is gone but all this was preparation for mankind to begin his earthly sojourn.

‘Go down Adam from this state all of you together and truly there will come to you guidance from me and whoever follows my guidance has nothing to fear nor shall they grieve.’

The couple was feeling remorse and God reaches out to them and tells them nothing to fear. I know this is tough for you but you’ve prepared for it up till now through your entire existence. It had to happen as this is the necessary stage in your development but just hang in there, follow my guidance, be true to me and I’ll be true to you.

Most emphasized things: Intellectual, Choice and Sufferings.

These three things play a central role in our development on earth and are very purpose of our development.

  1. Intellectuality:

Does Quran really emphasize reason as essential to human growth?

Yes. Even western orientalists, people who wrote against the Quran, agree on this. Quran is not far from considering unbelief as an infirmity of the human mind. Rational tone of the Quran is one of its most salient feature beyond doubt.

Consider the following statements from Quran about logic and reasoning.

‘People ignore or reject God science and corrupt religion precisely because they do not use their reason.’

‘In Quran there are signs and lessons for those who are wise.’

‘Similarly Quran says about disbelievers who refuse to reason.’

‘Quran says perhaps you will finally use your reason.’

‘God teaches humanity both directly and indirectly and thumbs sometimes so subtly that we are unaware of His instructions thus He test us in multifarious ways.’

‘From viewpoint of Quran reasons and faith are allies just as logic and false belief are allies.’

‘Similarly, Quran mentions those who benefit most from Quran are persons of insights.’

‘Quran is firmly rooted in knowledge.’

And such statements goes on and on.

So Quran really does put great emphasis on reason and on our spiritual quest.

  1. Emphasis on Choice:

‘Let there be no compulsion in religion, the right way is henceforth clear from error’

It’s a choice between correctness and falsity.

‘Do no the unbelievers know that had God willed He could indeed guide you all mankind. Do the believers know that had God willed he could have guided all mankind. And if we had so willed we could have given every soul its guidance.’

Why did God let us creature of choice? Just program us to do the right thing and not to make a wrong choice.

‘If God had willed He could have made us all one community.’

‘Enlightenment has come from your Lord. He who sees so to his own good he who is blind is so to his own hurt.’

‘Whoever is guided is only to his own gain and whoever is stray I am only a warner.’

‘Revealed to you the book with the truth for mankind who lets himself be guided does so is for his own good and he who goes astray it’s his own hurt’

So, it is clear from above verses that Choice plays a key role in development of human soul.

  1. Suffering:

Every religion deals with suffering in a different way. Like something have to be saved from and some religion stress salvation or if it’s something that have to be transcend through meditation to not feel it. Some religion sees suffering as primarily punishment while some sees it as result of precarious control of many gods working against each other. But all of the religions consider suffering as not a good thing. But Quran says just the opposite. It says to human beings that you are going to suffer in this life but it will play fundamental role in your development as mentioned in following verses.

‘We will try you in something of danger and hunger and loss of wordly goods, with a loss of your lives and fruits of your labor. Most assuredly We will try you. But there is good news and be happy for those who are patient in adversity and suffering. When calamity befalls them they say truly unto God we belong and truly unto Him we shall return.’

‘Do you think that you could enter paradise without having the like of those who passed away before you. Misfortune and hard should be found them and so shaken are they the believers with him exclaim when will God’s help come.’

‘You will certainly be tried in your possessions. Every soul must taste of death and we try you with calamity and prosperity, both as means of trial and to Us you are returned.’

‘We certainly created man to face the stress.’

‘Does he think that no one sees him. Have We not given him the two eyes to see, a tongue and two lips to communicate with.’

It is not just talking about evil people but about good people too. So, the environment of world is made to be where we have to work and struggle and plays a key role. We cannot attain the faith until struggle. We should pursue the uphill climb which means reaching out your fellow man who suffers. We have to learn the wisdom in the book and revelation.

‘We have sent among you of yourself a messenger to recite our signs to you and to cause you to grow. Truly God was gracious to the believers.’

So the purpose, somehow, is to grow. When we came into the world this was actually the stage of our creation.

Quran on Purpose of Life:

‘Those who remember God in standing and sitting and lying down and reflect upon the creations of the heaven and earth and say that, Our Lord! You did not create all this in vain.’

‘We have not created heaven and earth and whatever is between them in play. If we wish to take a sport we could have done it by ourselves.’

God has created us to be believers. The ultimate that they are supposed to get is when they want to experience the relationship of love with God they will turn to God in love and God will turn to them in love. When Quran speaks of God’s love we would normally think of that as God’s love but actually it’s talking about something very special. Here love is presented as relationship between God and man. If we don’t turn to God in love then we will not get His mercy, forgiveness, kindness, beneficence, warmth and generosity but not love. This love is always there for us but unless we enter into that relationship that love never develops. The potential purpose of creation is may be to produce subset of humanity that will freely enter a relationship of love with God.

But then what is the purpose of all three factor (intellect, choice and sacrifice) in human life?

Now the natural thing to do is to study two partners in this relationship.

What are the good deeds according to Quran?

Good attributes according to Quran are,

  • Protect the weak /defend the oppressed.
  • Seek Knowledge and wisdom.

‘Truly those who believe and do good will the most merciful and endow with love and to this end We have made this scripture easy to understand in your own tongue so that you might convey a glad tiding to the God conscious and warn those given to contention.’

What does Quran tells us about God?

Quran tells us about God that nothing could be compare to Him. He is outside of anything that we may compare to Him. Our definitions don’t encompass Him. He is transcendent and we are finite. He transcends time and space and we are bound by it. He is immortal and we are mortal. So, there is no to compare ourselves to Him.

It seems that Quran says that we could never really understands God. But in the beginning of every Surah there is introduction of God in Bismil’lah i.e. God is merciful and most compassionate. God is forgiving and gentle. God is the kind and the generous. God is truthful. So there are ten of thousands of such references in the statements in Quran. Quran defines God’s most beautiful name and is repeated on almost every page His attributes of perfection which are God is the compassion, God is the mercy, forgiving, Just, protector, defendant of the oppressed, the knowing, the wise, the generous, the truthful, the loving, the peaceful and so on. So, every attributes that human beings are supposed to develop are infinitely present in God.




How to make relation to God?

We are here to develop a relationship with God but how can we make relation with God when He is transcendent and we are finite, when He is immortal and we are mortal, when He is unbound by time and space and we are, and so forth and so on.

If one person wants to be get close to other he needs to work on common attributes.

How can one become close to God? What can we share with Him?

We share with Him what He exactly gave us because the Quran tells us that when we were came into this life He breathes into our spirits something of His spirit. So the more we possess the above mentioned attributes those are also attributes of God but in infinites amount the more can we come close to God. The more we grow compassion, the more we grow in our ability to receive and experience the compassion from God and similar is true for truthfulness, justness, kindness and other attributes. It’s a convergence of essential beings.

Analogy: Let’s pretend I have a dog, a goldfish and three daughters. No matter how much my love, compassion, forgiveness, caring I pour upon goldfish it could only experience it to tiny degree while dog will experience it to much higher degree than goldfish. But my daughter, especially as they grow older can experience my being to much higher degree than my dog and goldfish.

But why we have to experience Intellect, Choice and Sufferings?

We are creatures and we grow and we can become anything He want. But we can’t contain any of the attributes that were listed above without Intellect, Choice and Suffering. And all three of these are definitely essential. For example, if we program any computer then we can’t say that its truthful. For this it is necessary for human beings to go through these three things. Because all those attributes (compassion, truth, forgiveness, etc.) are born out of Choice, Intellect and Suffering.

Why Quran talks about Sin as self-destruction?

Quran says when we sin we destroy ourselves. When we grow in very opposite of good attributes then we will be destroying our nature and not allowing ourselves to receive and experience the beauty that could be in store for us in this life and the next. It’s just like coming into this world and developing in the womb none of the physical things that are needed to experience the comfort and joy on a physical level in this life. So, if we don’t develop needed attributes to make relationship with God then we will experience terrible suffering in this life. When Quran is talking about heaven and hell it is essentially telling us we must imagine greatest joy, peace and serenity on the on end but on the other end imagine the most terrible suffering.

God says in Quran,

‘I did not harm you in the least but you destroyed yourself.’