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  • Writer's pictureSaleem Qamar Butt

A Poor Country of Rich People

One always wonders why a few countries are more developed and prosperous than many other neighbouring countries in the same region with similar geography, demography, history and resources. This phenomenon is more pronounced in the former colonial states, which continue to be ruled by the exploitative elite still following the extractive (aimed at excluding the majority of society from the process of political decision-making and income distribution) model of colonial rule of the past centuries. The USA, Britain, France, Germany, Italy, Spain, China, Turkey, Malaysia, Singapore and Japan versus Central American states, sub-Saharan Africa, and most of the countries in Central and South Asia can be cited as examples. Ironically, as a common denominator, in almost all poor countries, the filthy rich elite is found to be ruling over poor masses living in abject poverty. Pakistan is also one such country, which is blessed with enormous natural resources and more than 60% healthy but uneducated and unskilled youth. Sadly, despite superb performance by some institutions and individuals, the country is limping on external and internal loans but the ruling elite and other rich cartels and communities continue to expand their personal wealth beyond measures without paying due taxes. The inflation, rising poverty and consequent law and order situation is beyond control that is ticking as a bomb while parliamentarians and all politicians remain busy in worthless leg pulling and media bouts with kid gloves.

The Pakistani diaspora and other thinking Pakistanis are suffering from high levels of anxiety and wondering as to what would put Pakistan on the right track to become a prosperous, developed and well governed modern and moderate Islamic state as per the vision of the founding father. In the last seven decades, various civil and military governments in Pakistan undertook many patchy steps to improve the state of affairs in the country but in vain due to neglect of the fundamental changes that other developed and even neighbouring countries like China, India, and Iran brought about i.e. making all political and economic policies and systems inclusive ( aimed at including the widest possible strata of society in economic and political life) at the critical junctures of respective history and shedding away colonial extractive policies. All leading global politico-economics experts are unanimous in opinion that it is not geography, disease, religion or culture that explains why some nations are rich and some poor, but rather a matter of inclusive institutions and politics. Countries rise when they develop the right pro-growth political institutions; and fail when those institutions ossify or fail to adapt. The legacy of colonial past i.e. powerful ruling elite with monopoly over lands, business, food, education, health and effective influence on judiciary and bureaucracy always seek to grab complete control over government, that undermines overall social progress resulting in failure of national growth.

Like many other deprived and poor countries, Pakistan also suffers from hereditary politics based on sardari/jagirdari/wadera/bradari nizam, corruption, ill-gotten wealth, nepotism, ethnicity, religious cults, big clans and ability to buy votes as well as the election machinery, which enables the powerful elite to rig the system and stay in ruling mode. Therefore, any sensible economic idea or system is doomed to failure with such self serving elite in power (Dr. Meboob-ul-Haq’s five year economic development plan picked up by rising South Korea is an example). The terrible political plunder and consequent failure of once enviably successful PIA, Pakistan Steel Mill, Pakistan Railways, PTCL, government hospitals and Pakistan Postal service vis-à-vis booming private airlines, private steel mills, private transport and logistics companies, international mobile communication companies, expensive private hospitals and courier companies owned by powerful elite say a lot about the rot so deeply engraved in our economic systems due to faulty political system. The same is true for suicidal decay in Pakistan’s bureaucratic, education, health, agriculture, judicial and policing systems besides other stagnant national institutions.

Pakistan’s newly acquired buzzword i.e. geo-economics instead of geo-politics is prone to remain illusionary without putting the extractive political system right first. According to skeptics, CPEC infrastructure and transit trade could never help realise the dream of Pakistan’s geo-economic pivot. Pakistan is a country of more than 220 million people that sees a million-plus young people enter its labor force annually will not prosper only by transporting the goods of other countries. For high level sustained economic growth, Pakistan will have to substantially improve its exports that at present lack inclusive competitiveness due to rampant corruption and undue consideration for guarding political economy as the elite thrives on the status quo. Notwithstanding Pakistan’s persistent political mayhem, its rich elite have cartelized major industries, such as automobiles, spare parts, transport, logistics, textile, fertilizer, rice, wheat, beverages, cold storages, cooking oils, chicken and sugar. Their profitability stems from anti-competitive import tariffs and generous, distorting subsidies. Competition would force Pakistani companies to innovate and increase productivity; gains that could propel some of them to go global. Instead, they take the easier path, enabled by public policy, of selling substandard goods at inflated prices to a captive domestic market. According to a UNDP report discussed by visiting UNDP vice president with the prime minister, economic privileges accorded to Pakistan’s elite groups, including the corporate sector, feudal landlords and the politico-bureaucratic class; add up to an estimated $17.4bn, or roughly 6 percent of the country’s economy. The report uses the prism of “Power, People and Policy” to examine the stark income and economic opportunity disparities in the developing country. The biggest beneficiary of the privileges, which may take the form of tax breaks, cheap input prices, higher output prices or preferential access to capital, land and services – was found to be the country’s corporate sector, which accrued an estimated $4.7bn in privileges. The second and third-highest recipients of privileges were found to be the country’s richest 1 percent, who collectively own 9 percent of the country’s overall income, and the feudal land-owning class, which constitutes 1.1 percent of the population but owns 22 percent of all arable farmland. Both classes have strong representation in the Pakistani Parliament, with most major political parties’ candidates drawn from either the feudal landowning class or the country’s business-owning elite. The deep rooted inequality is disturbing because while the richest 1 percent held 9 percent of the country’s income of US $ 314.4bn in 2018-19, the report found that the poorest 1 percent held just 0.15 percent. Overall, the richest 20 percent of Pakistanis hold 49.6 percent of the national income, compared with the poorest 20 percent, who hold just 7 percent. Therefore, without comprehensive political and economic reforms aimed at inclusive competitiveness, Pakistan’s turn to geo-economics will continue to follow an endless troubled path to the glee and grin of the said elite. People who exploit others come to spend an enormous amount of energy wondering about and justifying that exploitation~

14 April 2021

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