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This piece is published recently in The News International.
Budget season is here. Everyone is presenting their two cents on the way out of the IMF’s vicious trap (with the latest iteration imposing 105 compliance requirements, including 75 ‘structural conditionalities’), solutions to kill all tax ills, a panacea for the power sector miscarriages, a lethal shovel for the trade deficit serpent, development-centric economic prescriptions to counter pro-cyclical meandering and whatnot.
And thanks to ChatGPT and Google NotebookLM, Facebook and LinkedIn are brimming with macroeconomic commentaries and infographics. Resplendent seminars are being organised, with the same slides but for the new fiscal year, to gauge the impending behemoth. Newspapers, especially oped sections, are the sweet spot for policymakers and even ex-ministers. One may wonder where the magical healing potion was when they were orchestrating the national financial (mis)management. Maybe it is only after defenestration that one gets hold of the knowledge that the job required in the first place.
The typical approach in the prevailing discourse is to perform horizontal and vertical analyses. The former is a trend analysis; for instance, since 2007-08, current and development expenditures of our governments have increased by 1007 per cent and 937 per cent, respectively. The latter works by dividing a certain expenditure, let’s say military expense, by the total budget; this works as a classifier, with an ideological baggage, either accepting or rejecting the line item. And then, the cliche sermon ends with ‘the way forward’, presenting obvious things: cut tax rates, grow the tax base, cut current expenditure, boost development expenditure, rationalise subsidies, produce more, import less, and so on.
At the moment, I am sick and tired of these mantras. And it’s not that I am a sadist who wants Pakistan to fail economically. Rather, what irks is simple: if we know the deliverance already, why are we not implementing it? Either those in power don’t read newspapers or the roadmaps, which are often presented by think tanks to incumbent ministers by hand, or don’t scroll through social media, which of course is almost impossible in this day and age – or they are well versed in all this, but they don’t want to follow it due to the absence of incentives for such tiring endeavours.
Then, what we should focus on, rather than debating constantly sans dialogue, is to, somehow, cure the infamous phenomena of elite capture, which, according to PIDE, works both as a situation in which the elites shape development processes according to their own priorities and as a process in which the powerful elites skim resources intended for the bottom and define policies in a way that protects their own interests. This translates into the financial morass reflected in our budgets and reports, and a development deficit that is borne with excruciating pain by paupers.
Our economy revolves around rents and rent-seekers; this is a colonial way of governance, institutionalised through bureaucratic controls, legal frameworks and economic policies designed to serve colonial interests. Unfortunately, even today, this remains the modus operandi of our governments. Some features of the prevailing economic edifice include: regulatory capture and political control: policy configured by powerful groups who sustain discretionary influence over institutions and economic rules; rent-seeking and distorted incentives: access-based gains dominate, making lobbying and connections more rewarding than productivity; selective taxation: offering exemptions, evasions, and ineffective rates; trade protection and favourable prices: subsidies that do not promote efficiency and instead sustain protected sectors through repeated support.
This involves, on the one hand, favourable pricing formulas, strong protective barriers and conditions that allow cartels and monopolies to operate easily, and, on the other hand, convenient access to cheaper inputs; and debt dependence and property-led accumulation: external financing smooths the BOP crises while domestic wealth concentrates in land and low-productivity assets rather than productive investment.
Now, one may assess exactly how the hackneyed roadmaps fix this, ad capite ad calcem. In the short run, because of lender-imposed fiscal austerity, numbers may improve, but the very economic structure – the incentive structure that promotes the capture of capital (economic, political, cultural) by those in positions of authority – remains the same. And so, this status quo will inevitably lead to social inequity, laggard governance, widespread corruption, the proliferation of patronage networks and the limitation of mobility of the marginalised, again and again.
Lastly, considering the foregoing, some reflections are indispensable: what exactly is the point of fudging the figures, visualising infographics, commencing dazzling seminars and writing all these commentaries, opeds and reports without questioning the very fundamental axis of the political economy? Is there any foundational rethinking of economics year on year, apart from the updated numbers? Does it make sense to exude analyses to those who have permanent employees, graduated from top economic schools, and who, unequivocally, don’t care?
Are we really that stupid to assume that a leopard will change its spots while we continue to feed it?
Welcome back Furqan!
Fantastic analysis! I hope somebody at the top without a vested interest in self-preservation actually reads what you’ve written and tries a course correction.
Sometimes ripping off the bandaid quickly no matter how painful is the best option.
Read Fahd’s piece published today:
https://tribune.com.pk/story/2611798/for-the-love-of-imf
Unfortunately I’m unable to open the article.
yes it is blocked alas
Try using a VPN.
Pakistani sites are blocked in India (and vice versa).
Both the main post here, and this tribune article are bold challenges to the Kleptocracy – Happy to see Pakistani voices taking this up. Somebody has to call out the Emperor’s new clothes, and once Pakistanis do it, it will be surprising how effective it can be.
Excellent article. Brave.
Pakistan is an exceptionally open society; one can criticise almost anything if one is proven to be a patriotic Pakistani.
the thing is Pakistanis aren’t necessarily anti-military
Yes, criticizing the budget is not something particularly controversial.
Here is Umair Javed (a professor of Sociology at LUMS) in yesterday’s DAWN:
“Respite needed”
https://www.dawn.com/news/2006000/respite-needed
There are only two topics that cannot be criticized in the mainstream Pakistani press. Those are Islam and Pak Fauj. DAWN has clear red lines about what it is acceptable to say about those topics. They indulge in self-censorship because they don’t want to upset the powers that be. As it is, the powers that be are not that fond of DAWN.
yes we won’t write on this today (we are surprised there was no interest in the survey).
but it is this idea that Pakistan endures in a peculiar way. according to nation state logic, it should have splintered long ago (circa 1971)..
write a post on it.. it’s fascinating
interestingly enough BP probably has one of the most interesting IndoPak discourses since we are too unimportant (but still substantive) to hold wide ranging discussions.
I’m also surprised there wasn’t much discussion about the survey results. But it’s still early.
Pakistan did splinter in 1971. But that was before it was a nuclear weapon state. I can’t really think of any examples of nuclear states splitting apart–except for the USSR.
It is not really in anyone’s interest for Pakistan to splinter. In any case, that is an absolute red line for Pak Fauj. But this is partly why the State clamps down on any kind of ethnic nationalism.
It might be in India’s interest if Pakistan disintegrates. But even then, the chaos that would ensue from that would not be particularly good for India either.
Tbh, ideally we should all focus more on issues of public health, policy and the environment. Neglecting those are far more likely to get all of us in trouble than fighting unnecessary wars over religion and land.
After all its not that anyone’s taking our opinions on those into account. And partition for better or for worse is done and dusted. Revisiting wounds from the past tether us there instead of moving ahead.
I really like reading Furqan’s articles on policy and economics because the situation is somewhat similar here. The frustration of common people as a reaction to basic needs not being met is the same everywhere. And then this CJP, focus on actual problems, there are enough instead of dhindhora beating for someone’s resignation. I mean had I gotten a chance like that, I certainly would not waste it to gain political mileage. Lost opportunity by Dipke. Hartal doesn’t solve problems.
Definitely agree with you that we should focus more on public health etc than re-litigating Partition.
Hopefully the “ceasefires” will incentivize a different kind of discourse on BP.
Here’s another piece on the budget which appeared in today’s DAWN:
“Budget blues”
By Arifa Noor
https://www.dawn.com/news/2006299/budget-blues
yeah, even in India, in spite of our vaunted ‘democracy’ and cacophonically ‘free’ media, I would much rather see focus on public health, policy-making etc. Such serious criticism of government is rare though, most of the media landscape is littered with clickbaity fluff and breathless reporting on event narration of day-to-day saas-bahu style political drama.
Accountability is not front and center. And what little I have seen of these ‘cockroach party’ folks, they appear to be yet another disappointing political empty vessel. Chasing sensation and popularity instead of facts.
I am not skeptical on Pakistani capacity to criticize. But I think ‘exceptionally open society’ is quite the stretch.
Lets call a spade a spade – the country’s most popular political leader has been ‘disappeared’ into prison for the foreseeable future, and the army has rammed through “constitutional” amendments that empower the state to ‘legally’ dish out such treatment to anyone they feel is overly critical of the army – not the state, but specifically the army. Shireen Mazari’s daughter is in jail over a tweet, no?
Budgetary discussions and criticism of loss making State Owned Enterprises (SOE) is good, but to be blunt, is there any SOE in Pakistan that is not riddled with PakMil personnel in its senior management, retired or otherwise?
I am not asking for Pakistanis to be ‘anti-military’. That’s unrealistic, its natural that any citizen who’s even remotely patriotic would circle wagons when it comes to their army. But ‘high signal’ discussions demand introspection and objectivity.
For instance, I am more than happy to voice or amplify criticism of the Indian army when it comes to their failings – their budgetary mismanagement, their bumbling bureaucratic ineptness when it comes to modernization, technical acquisitions, and so on.
Frankly, I simply do not see a pathway for Pakistan to begin to meet its mammoth fiscal challenges, without any meaningful reduction of PakMil’s grip on the levers of power. That remains the bottomline for Pakistan.