Equanomics: Part - I

Equanomics is what this nation might need to address its woes. However, what has sustained over decades as the economic order of this society can only be termed Unequanomics.

Let me explain. As the nation struggled to find some direction and order after its infancy, it entered the Ayub Khan years. In economic terms, these were the Shoaib Khan and Dr Mahbubul Haq years, both from the World Bank. The economic model that has survived since has carried the stamp of the World Bank envisioned economic order.

Dr Mahbubul Haq, who continued to provide economic expertise to governments in the following decades, evolved his economic belief with time towards greater inclusivity but the larger thrust of his foundational thought was very much the capitalist development model. So what did it mean to an evolving economy in the initial years? It centred on industrialisation even as agriculture remained in the focus to source raw material to the fledgling industry. Even today Pakistan is struggling to break-out of this mould. The government exercised two controls to ensure the success of its development model: licensing installation of industry – which opened the gates to corrupting the licensing authority, introducing the bureaucracy to dirty money; and, the tax and duty structure that placated the government as a partner to the plan by ensuring the demand stayed local and found pace with supply from the domestic industry.

A tradition ensued. Every year, the annual budget was an event for the masses and the media. The budget truly impacted the common man, mostly adversely. Duties on sugar, tea and cigarettes essentially controlled the everyday life of a citizen. Flour too, though that became a tool only in the Bhutto years. Economics today has become far more fiscal and less developmental, an exercise in balancing numbers without a strategy to spur growth.

Thus, the 22 families that owned the entire industry of Pakistan – Dawoods, Saigols, Valikas, and the likes – sat atop a pyramid of wealth and privilege unmatched by those whose life revolved from one annual budget to the next. Those that were rich were filthy rich, the signs and remains of which continue to dot our society even today, and the rest were mere mortals in the economic sense. This structure was engraved in the economic ordinariness of the country. The dollar was at Rs5.25, and perpetually so. East Pakistan exported jute and muslin and the West contributed with cotton and cloth, and the economy subsisted basically on agriculture. The Joneses were as bad as most.

This model was shattered by Bhutto who needed to break the hold of this self-perpetuating governing elite –politics, industry and big agriculture were all woven into one powerful nexus. Bhutto called on the labourer and the ‘haari’ to revolt against this exploitation and gave him slogans to live by. He announced the return of the mills to the labourers even if such was sans substance, and indulged in partial land reforms to keep the ‘haari’ in good humour.

He essentially turned the economic model on its head and carved for himself a political apex around support of the former serfs. He nationalised industry but failed to keep it profitable. He gave the poor an identity and woke them up to their rights, and even more importantly, opened the labour markets of the Middle East to the lowly and the poor. His own economy tanked in the years that he was in power but induced a sense of euphoria. In true economic sense, those were the lost years of Pakistan but a social revolution had ensued which was to pay political dividends in the following years.

The Zia years saw the return of Mahbubul Haq. ‘Islamic’ capitalism held forth. The IFIs returned and the dollar became the master. Zia’s fraternity with the Middle East meant that the common man continued to thrive. The poor found upward mobility as material rather than intellectual riches began to define status. Buoyed by easy money as Middle-Eastern currencies returned multiple times the Pakistani currency, many found elevated social status which soon converted to political pathways. Most in the legislatures today are a product of such facilitation. Good or bad, it defines why we are how we are.

An era of laissez-faire economy followed in the 1990s, especially under the Sharifs. That also plugged into the global trend of globalised society and economy. Finance was soon integrated as a 24/7 undertaking, and instant movement of money became a reality. Regulatory control was late to catch up as economies through their stock exchanges lay at the mercy of international predators. A sole superpower meant a sole political system built around pervading communicability and a pervasive single global economy.

Many found the 1990s an opportune time to build further on their acquired fortune. Except that, while rest of the world largely followed an agreeable set of moral determinants to manage their personal conduct, these remained patently absent in Pakistan. Stolen money from the system became easy to move abroad to hide from tax and detection. This became the source of new riches. Personal wealth and holdings multiplied. It is thus that the Sharifs and the Zardaris of the political arena are now in the dock to answer questions on their sudden rise to immeasurable wealth.

Built around patronage and elite cronyism, the policy, the economy and its means were suited to favour those who would be of political advantage. Those who got into political power through money now used the position to gather even more, fair or worse, and became even richer. This unfortunate trend has dominated the rapidly restructuring face of Pakistan’s new society. Most of it is sourced in either bad money or easy money. Property and real estate became the investments of choice and helped many more within the political ambit to rapidly multiply their fortunes. Most of the political elites today can be sourced to one of these avenues of accompanying wealth. This has disenfranchised the self-made, honest middle-class professional who remains irrelevant to the power circles of the country. Hence, the state the country is in.

In a system of patronage and clientele, the laws are meant to secure the interests of those who find membership in such exalted association while the common man languishes. The latter’s herd and hearth must be left at the mercy of the state’s neglect as health, education and general succour lay unattended. The state itself has been reduced to a pauper. Impoverished and bankrupt, it runs on borrowing and through taxing those who cannot escape the dragnet – people without power. That is why indirect taxation is pervasive.

While the IFIs will come to the state’s rescue, that will be at a cost which the entire nation will pay in kind or in blood while it will give yet another chance to those at the helm to plunder more. The elites remain independent of the state for their wellbeing, already having secured their reserves abroad, while the state is desperate for its next source of financial oxygen. For those still tied to the state for their future, that may be the only hope.

To be continued

Email: shhzdchdhry@yahoo.com