Unpopular opinion

Pakistan should undergo reforms; there are no two opinions about this. However, in the past, many reform proposals and efforts either failed or were rolled back. The implemented and then abolished Police Order 2002 and efforts made to reform the civil service and local bodies are some examples.

On the economic front, the unimplemented includes the framework for economic growth developed at the Planning Commission in 2011 followed by the PIDE Reform Agenda in 2021. Several ‘charters’ of economy’ authored by think tanks and individuals, which are the rebranded versions of the economic reform agendas, have also failed to get traction over the years. The question then is: why do reform efforts fail?

But before that we need to ask why we need reforms. One justification for this inevitable exercise could be the existing poor systems. And why do poor systems exist? It could be because they benefit some people. The beneficiaries of poor systems who are would-be losers of reforms will resist reforms. Their resistance, if successful, thwarts reforms. What do the would-be losers stand to lose? More often it boils down to money and/or authority.

The one reform that almost all the reform proposals miss out on is ‘checking corruption’. The reason, barring exceptions, could be that politicians and the intelligentsia consider corruption, at best, a ‘minor issue’, at least for economic performance and growth.

Literature on corruption revolves around whether corruption greases the wheel (putting wheels under the files) or sands the wheels of the economy. Though the findings tilt in favour of the sand-the-wheels hypothesis, a majority in Pakistan – again barring exceptions – subscribe to the ‘grease-the-wheels’ view. This view, even if true, completely ignores how millions of poor people, who cannot afford to bribe for the installation of electricity, gas, and water connections, are affected due to the non-provision of basic facilities and what impact this deprivation has on the economy.

It is primarily the elite and middle classes that believe that corruption is a minor issue. The reason could be that they can afford to pay ‘extra cash’ involved in getting a utility connection or securing the transfer of a residential plot. If they were to look at things from the perspective of a poor person who does not have the money to make such payments, things might look different to them.

The grease-the-wheels view is also focused on how corruption directly impacts GDP per se and ignores its adverse impact on the economy through ruptures in the moral fabric of society by way of discontent – imagine a hundred people standing in the queue at a passport or NADRA office, witness that the person coming last manages to jump the queue; imagine the extent of discontent and its consequences for peace or conflict in society and therefore for the economy.

Another reason for the view that corruption is a trivial issue could be that one sees some developed nations advancing despite instances of mega-corruption surfacing here and there – the kind of corruption anecdotally heard about in the international weapon deals etc. What is usually ignored in such cases is that these are rare instances and that the thana-kutchery culture (micro-level corruption) is almost non-existent in developed nations.

The corruption literature barely focuses on the underlying channels through which corruption influences governance and economic performance. But it is essential to analyze how corruption at the micro level hinders reforms and economic performance in Pakistan.

A crucial reform to improve the business environment is to cut down on the number of permissions required to launch/operate a business. If NOCs are typically issued against bribes as goes the common perception, then cutting on NOCs will cut the bribe income for a chain of people. The beneficiaries of bribes will oppose this. The resistance can cause the reform effort to fail. Corruption then hinders reforms and economic growth.

Economic theory considers labour productivity as a key driver of economic performance. Does corruption influence labour productivity? Yes. How? The incompetent manage to cheat examination and hiring systems by bribing paper setters, paper custodians, exam invigilators, graders, and government hirers. The incompetent thus gets a degree and lands a government job. Can such a person be productive at work? No. Is this scenario too strange for Pakistanis? No. Can we reform to award degrees and hire only on merit? Not easy – the chain of bribe beneficiaries will oppose it strongly. Corruption then contributes to low labour productivity and poor economic performance. Corruption hinders reform.

Street crimes involving extortion and kidnappings have forced businesses to hire security guards and/or move the business to another city/country. This has increased the cost of doing business. People who have closely studied the police department say that there have been a few instances where an SHO got a coveted post after paying a certain amount and is expected to make monthly payments up and down the hierarchy. If this scenario is true, can such an SHO check street crimes? Can we reform the system? This could be very difficult as reforming would mean loss of bribe income. Corruption hinders reform and constrains doing business.

One can list many such examples without being able to complete the list here – unending litigation, stay orders, and sale of adulterated food are just a few more examples that can be dilated upon in this context.

The thana-kutchery (micro level) corruption cannot be checked without checking mega corruption happening at the top, because that would mean catching only the small fish. This would simply not work.

What is the solution? Right now a bigger problem is that Pakistani society takes a very benign view of corruption. To move for the better, we must reform hundreds of systems. To reform the system, corruption must be addressed. To address corruption, we must change the mindset that corruption is a ‘minor issue’, to be left only to the anti-corruption departments and the FIA.

To change the mindset we must inculcate in the younger generation the channels and adverse effects of corruption while they are in schools, colleges, and universities.

But will the stakeholders allow putting the topic of corruption in the curriculum? If even this is difficult, then imagine how difficult it would be to curb corruption itself. But we have to start somewhere and curriculum seems to be the least difficult starting point.

The writer runs Taleeminfo.pk - an educational information startup – and teaches

economics in Islamabad. He tweets/posts @khawajaidrees11 and can be reached at: Idreespide 1@gmail.com