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WASHINGTON DIARY: A corrupt economic system Dr Manzur Ejaz
The continuation of a corrupt economic system benefits the ruling elites. They have no incentive to change anything because no sane person kills the hen that lays the golden eggs
Every year I am asked to analyse the budget to see where Pakistans economy is heading. For a few years I tried to sift through the numbers to make sense of budget allocations, revenue sources and deficits, but it all proved to be a fruitless exercise. I have come to the conclusion that Pakistans annual budget presentations, in the dictator-picked or elected Assemblies, are just rituals besides declarations of new indirect taxes and inflation-prone measures.
Every year by increasing the salaries of certain sections of the government and making rosy promises to the rest of the population, the budgets are declared people-friendly. Several indirect taxes and price hikes are slipped through and, all in all, by the end of the next year the inflation would eat up the salary hikes and leave people stuck with skyrocketing prices of every necessity. Other than that little variations are made in the allocation for defence, the ruling elites comforts, education and health services.
I have been wondering how the budget process can be rational when most of the economy remains undocumented and statistics quoted are all concocted numbers. But one thing remains constant that by the end of every year, the rich become richer and the poor get poorer. The rich are never affected by inflation or other economic woes that the country is professed to be facing. As a matter of fact, the ruling elite increases its share of national wealth every year by legal or illegal means.
Every year, the economy remains on the brink of collapse and the government in the begging and/or blackmailing mode in the international community. Every year, new excuses are made for the economic troubles: they range from rising world commodity prices to fighting terrorism. Nowadays, fighting terrorism is the excuse to shield the corrupt system. It is hard to recall a year in the last half century when there was no debilitating crisis jeopardising economic sustainability.
The question is: how and why is such a perilous status quo maintained? The simple answer is that the continuation of a corrupt economic system benefits the ruling elites. They have no incentive to change anything because no sane person kills the hen that lays the golden eggs.
To start with, few of the ones who occupy the seats of the legislative Assemblies seats pay their taxes. From the prime minister downward, most of the legislators have exempted themselves by refusing to make agricultural income taxable. The ones who did not inherit agricultural land bought some to dump their income from other sources. The industrialists, traders, merchants and other wealth owners have their own ways to pay little or nothing to the taxman.
The bureaucracy and other aristocratic classes are having a good time with golf clubs in the middle of cities like Lahore. They live in government-provided large bungalows on prime locations and have access to huge clubs for almost nothing. They also get their share in the national wealth.
Persons from the most powerful institution, the military, enrich themselves from land grants, housing colonies, unaccounted for huge perks and taking a big chunk of industrial wealth. By the time of retirement the higher level of military officials become millionaires enjoying infinite perks. They join elite clubs and live happily thereafter.
In short, the entire ruling elite is benefitting from the broken corrupt system. In the entire world, Pakistan is the country where the elites money-making mechanism is the easiest. It is known in the international donor agencies that Pakistans ruling elite always protects the vested interests and ignores the masses. Therefore, the international agencies have developed a habit of demanding higher indirect taxes biting the people: they know fully well that Pakistans ruling elite is never going to touch the vested interests, so why waste time and energy?
From day one of the countrys birth, the overarching coalition made up of the feudal partnering with the mullah, military, bureaucracy and industrial/trading elite has maintained the corrupt system. All the partners in alliance have continued scratching each others back where military and civilian spells have made no difference in the overall system. Even the mullahs extremism has served the ruling elites interests: the rich have become much richer during the sectarian feuds and the Taliban have risen. This is the reason that the ruling classes did not bother about religious extremism for so long. On the contrary, they have helped (or continue to help) them in every way they can.
The ruling alliance is well and healthy despite harsh statements against each other. However, the alliance is challenged by the lawyers and judges representing middle class interests. Other professional groups random demonstrations against members of the ruling elite (for example, doctors versus Jamshed Dasti) are also becoming more frequent. Nevertheless, the forces challenging the traditional ruling alliance are weak, incoherent and unrepresented at the political level. Dismantling the ruling alliance is a long drawn out struggle and no one can tell when the status quo will change. Till then I feel analysing annual budgets is a waste of time.
The writer can be reached at manzurejaz@yahoo.com
The continuation of a corrupt economic system benefits the ruling elites. They have no incentive to change anything because no sane person kills the hen that lays the golden eggs
Every year I am asked to analyse the budget to see where Pakistans economy is heading. For a few years I tried to sift through the numbers to make sense of budget allocations, revenue sources and deficits, but it all proved to be a fruitless exercise. I have come to the conclusion that Pakistans annual budget presentations, in the dictator-picked or elected Assemblies, are just rituals besides declarations of new indirect taxes and inflation-prone measures.
Every year by increasing the salaries of certain sections of the government and making rosy promises to the rest of the population, the budgets are declared people-friendly. Several indirect taxes and price hikes are slipped through and, all in all, by the end of the next year the inflation would eat up the salary hikes and leave people stuck with skyrocketing prices of every necessity. Other than that little variations are made in the allocation for defence, the ruling elites comforts, education and health services.
I have been wondering how the budget process can be rational when most of the economy remains undocumented and statistics quoted are all concocted numbers. But one thing remains constant that by the end of every year, the rich become richer and the poor get poorer. The rich are never affected by inflation or other economic woes that the country is professed to be facing. As a matter of fact, the ruling elite increases its share of national wealth every year by legal or illegal means.
Every year, the economy remains on the brink of collapse and the government in the begging and/or blackmailing mode in the international community. Every year, new excuses are made for the economic troubles: they range from rising world commodity prices to fighting terrorism. Nowadays, fighting terrorism is the excuse to shield the corrupt system. It is hard to recall a year in the last half century when there was no debilitating crisis jeopardising economic sustainability.
The question is: how and why is such a perilous status quo maintained? The simple answer is that the continuation of a corrupt economic system benefits the ruling elites. They have no incentive to change anything because no sane person kills the hen that lays the golden eggs.
To start with, few of the ones who occupy the seats of the legislative Assemblies seats pay their taxes. From the prime minister downward, most of the legislators have exempted themselves by refusing to make agricultural income taxable. The ones who did not inherit agricultural land bought some to dump their income from other sources. The industrialists, traders, merchants and other wealth owners have their own ways to pay little or nothing to the taxman.
The bureaucracy and other aristocratic classes are having a good time with golf clubs in the middle of cities like Lahore. They live in government-provided large bungalows on prime locations and have access to huge clubs for almost nothing. They also get their share in the national wealth.
Persons from the most powerful institution, the military, enrich themselves from land grants, housing colonies, unaccounted for huge perks and taking a big chunk of industrial wealth. By the time of retirement the higher level of military officials become millionaires enjoying infinite perks. They join elite clubs and live happily thereafter.
In short, the entire ruling elite is benefitting from the broken corrupt system. In the entire world, Pakistan is the country where the elites money-making mechanism is the easiest. It is known in the international donor agencies that Pakistans ruling elite always protects the vested interests and ignores the masses. Therefore, the international agencies have developed a habit of demanding higher indirect taxes biting the people: they know fully well that Pakistans ruling elite is never going to touch the vested interests, so why waste time and energy?
From day one of the countrys birth, the overarching coalition made up of the feudal partnering with the mullah, military, bureaucracy and industrial/trading elite has maintained the corrupt system. All the partners in alliance have continued scratching each others back where military and civilian spells have made no difference in the overall system. Even the mullahs extremism has served the ruling elites interests: the rich have become much richer during the sectarian feuds and the Taliban have risen. This is the reason that the ruling classes did not bother about religious extremism for so long. On the contrary, they have helped (or continue to help) them in every way they can.
The ruling alliance is well and healthy despite harsh statements against each other. However, the alliance is challenged by the lawyers and judges representing middle class interests. Other professional groups random demonstrations against members of the ruling elite (for example, doctors versus Jamshed Dasti) are also becoming more frequent. Nevertheless, the forces challenging the traditional ruling alliance are weak, incoherent and unrepresented at the political level. Dismantling the ruling alliance is a long drawn out struggle and no one can tell when the status quo will change. Till then I feel analysing annual budgets is a waste of time.
The writer can be reached at manzurejaz@yahoo.com
