Wealth and welfare

Imran Khan’s vision of transforming Pakistan into the state of Madina is what we all wish to happen. The Madina state, with so many challenges to deal with simultaneously during its formative phase, had all the qualities of an ideal state. It was egalitarian in character, socialist in mission, and accountable in decisions. It cared for the downtrodden and the hapless without discrimination.

No one in the contemporary world except President Trump makes fun of the marginalised classes in society. Everyone else, at least in highly collectivist cultures, expects the state to put some effective social safety nets in place to take care of the hard-pressed individuals and families. But welfare programmes require a vibrant economy – an economy that produces A far bigger pie of wealth than what is required to provide for security and administration. In more concrete terms, wealth creation precedes wealth re-distribution in the form of zakat and subsidies.

Unfortunately, the state of economy in Pakistan, as it is today, is far from what Imran Khan envisages. The largely debt-ridden, elite-captured, and poorly documented economy cannot afford the luxury of providing free education, shelter homes, healthcare, and justice to two-thirds of 220 million people. The tax-to-GDP ratio is the lowest in the region, sustained by lacunas in the taxation system which lure individuals and businesses into evading and avoiding taxes.

China, which Imran Khan quotes quite often these days for having been able to lift up millions of people out of poverty within a short period of thirty years, has had the advantage of political stability after its cultural revolution in the late sixties. China has achieved spectacular economic success with continuity of policies and long-term planning.

For Imran Khan, the core issue of economic crisis and other predicaments is corruption. To some extent he is right. Corruption is undoubtedly ubiquitous and certainly damages the economy by making it costly and difficult for investors to avail tremendous business opportunities in Pakistan. Every country, particularly those in the OECD (Organization for Economic Cooperation and Development) tries to eradicate the menace of corruption by reforming systems by simplifying procedures and using modern technology (especially ICT).

But corruption is not the cause but a symptom of governance failure. Good governance, which gives legitimacy and moral strength to the rulers, has been historically conspicuous by its absence in Pakistan. There are different Pakistans for different segments of society. Citizens who are either poor or have low social capital – or no linkages with the powerful – have no say and no way to break into the structured paths in Pakistan.

Landlords and capitalists have occupied all structures of power, including the legislature, judiciary and bureaucracy. Rule of law, transparency, accountability, and other elements of good governance have lost their meaning in the political arena. Democracy in Pakistan provides a veneer for sharing the spoils available to the rulers and their cronies

Right from the start, the country was in a state of disarray. For so many years, the political leadership could not build a consensus on the form of government, distribution of powers, character of the state, and many other constitutional matters. Down the line, the economy was founded on foreign aid (mainly Ford Foundation and other US agencies) with skewed development of different sectors. Nationalization during the Bhutto regime and unplanned privatization afterwards compounded the problems of a nascent and fragile economy.

If Imran Khan really means what he says about the state of Madina, he needs to work on institution building as has been done in developed countries. The economy cannot be fixed as a stand-alone project. Politics and the economy are twins – they grow together. Slogans and the rhetoric of accountability, appeals for taxes, and songs of patriotism will not make any difference to a faltering economy. Sustained and systemic reforms are needed to expect any long-term results.

The writer teaches at SZABIST, Islamabad.

Email: dr.zeb@szabist-isb.edu.pk