As I sipped the tenderly brewed coffee facing the lush green golf course of a relatively new Lahore Country Club, the new reality of Pakistan became a little clearer. The sprawling premises of the club were a preserve of the Railways Department until the inefficient Pakistan Railways could not manage it and doled it to the new, oligarchic big business of Pakistan. Much ado was made when the land owned by the Railways was privatised and questionable deals were transacted in that moderately unenlightened era. Nothing came out of the public questioning and today a lavish country club, far removed from its downmarket environs, has sprung out for the affluent and the upwardly-mobile classes of Lahore and Punjab.
The classic barriers to entry created by the cliques that lord over Pakistan’s elite clubs is being undone. Pay a handsome fee now (way over a million rupees) and you are a member to this new “club” built on the ashes of the Raj steelframe, albeit, reminding one of the nasty remarks of Churchill on how the brown, rapacious Rajas would appropriate the space created by the wise and just colonists. As my host elaborated on the entry procedures to Lahore’s richy-rich club, I could not help but remember the compensation to a suicide bomber that has also increased over the years and now hovers between one to two million rupees. A grossly-overlooked fact is that the grinding poverty in the pockets of Pakistan, seemingly unaffected by the consumerist prosperity, is the key to our current turmoil and violence.
At the end of the day, the ideological battles, the foreign interventions and incursions aside, it is all about inequality and the fact that the poverty is now a mushrooming social reality. Apathy to the shameful criminal inequities is another visible trend. Take the new avatars of Pakistan – the media hosts at the leading television channels: the rants and ramblings overly obsess with ideology, of myopia and inward looking gambles. Let Pakistan follow Iran without a drop of gasoline; or let it be a Vietnam in the making forgetting that Pakistan’s heterogeneity and complexity defies even the best of sociologists and policy experts. Nowhere is poverty, especially that of the tribal belt, given the importance that it should be.
And when the international do-gooders want to do something about poverty they come up with packages that have been tried and tested across the globe with dismal results. How can piecemeal advisory aid impact in a gnawing and in-your-face policy vacuum? What happened to the FATA electoral reforms; plans to introduce local self-governance in the tribal areas; and the correction of draconian legal regime meant to advance the great game and colonialism? Above all, the much touted second and now third prong of FATA policy, namely development, employment and economic opportunity. The dehumanising poverty that facilitates selling the lives of young men in the name of esoteric jihad is nothing but years and years of exploitation and now a manifestation of unbearable poverty.
The truth is that Pakistan’s elites – both the political and the unelected – and their purported watchdogs are fairly oblivious to the fundamental reality of how the consumerist culture and emergence of Richistans in a sea of squalor and violence are aggravating deprivation, dispossession and hunger.
Never before has a predominantly agricultural country sbeen food-deficient and a victim of blatant capitalist speculation. Monopolies are not new phenomenon; however, cartels control oil, cement and all other elements of economic activity and survival. Yet, these are issues skirted around and a hapless civilian government, a product and victim of both the powerful elites and their machinations is the prime target of media critique. The corporate media not unlike India and other iniquitous societies is by and large indifferent to such monopolies and the capitalist machinations; much of its solution for inflation is executive control of prices.
The emergence of such Richistans is not restricted to Pakistan alone. Globalisation has to sell fabulous, vulgar wealth as a spectator sport and the ultimate marker of achievement. And the world’s war and oil industry have to fuel this all-pervasive greed.
True, the skewed growth during the last eight years has enabled many people to gate-crash into the world of elitism and create newer island-Richistans. The question is, at what and whose expense? Income and resource distribution have worsened and without a plan for redistribution there is no way to achieve peace, security and sustained progress in Pakistan. Sooner or later, the surrounding pooristans, tribalistans, conflictistans, violenceistans will gobble up these Richistans.
Estimates suggest that food price inflation have led to significant increase in Pakistani poverty levels. 20 percent inflation in food prices theoretically results in an 8 percent increase in the poverty head count. And, the official estimates suggest that the galloping inflation is above 30 percent. We are heading towards a situation where 50 percent of the population will be poor. Needless to mention, this situation ought to be the foremost priority of the State and its international partners. Domestic rhetoric on ideology and the global rants on terror can only destabilise Pakistan further that is in no one’s interest. The ruling party needs to revisit its social agenda and reclaim its original redistributive ethos. This is the time for initiating land reform; of increasing access of the poor to productive resources and undoing the structural roots of poverty. These policy priorities must drive the stabilisation packages proposed by all and sundry. The urgency of the storm, which has brewed for long time, needs to be recognised. It is already thumping the fragile contours of Pakistani society.
Raza Rumi is a writer. He blogs at www.razarumi.com and edits a cyber magazine, Pak Tea House, and the Lahore Nama blog-zine.
Photo Credits: Title photo is courtesy of Aamer Mukhtar at Flickr.com
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Raza,
When you write about the consequences of poverty and inequality and how poverty can be reduced, it is natural to look at the experience of others for clues. As human beings, how else do we learn?
One way is to learn from your own experience the hard way after making a lot of mistakes. The other is to learn from the mistakes of others. I personally prefer the latter.
Hopefully, you can come up with better ideas when you seriously answer the following questions based on intelligent analysis:
Is there really a strong connection and correlation between poverty/inequality and rising violence in our society? If so, what is it? Has anyone seriously explored this hypothesis?
Can poverty be reduced without encouraging investors/businesses to invest? How do we encourage them?
Where will the resources come from to alleviate poverty? Even if we equally divided the nation’s entire gdp, we would end inequality but wouldn’t that make every one poor?
Will violence and militancy simply evaporate even if we reduced inequality or ended poverty?
I think it’s much easier to write a column or blog post than to come up with defensible answers to these questions. Just sticking to our ideologies and pre-conceived, untested notions will not help.
As I said in an earlier comment, I do admire your initiative to start this debate online.
Rescuing banks, not farmers
By Devinder Sharma
Tt didn’t hurt when the farmers were dying. Over 200,000 farmers in India have committed suicide in the past 15 years. And more than 40 per cent of India’s 600 million farmers want to quit agriculture looking for menial jobs in the cities.
The national media kept quiet.
But with the markets crashing, the media is now crying. “Act fast, go big. It is not only about bulls and bears anymore. It’s about India. And it’s hurting” says a lead story in a leading Indian daily. It didn’t hurt when the farmers were dying.
There is blood on Dalal Street (India’s Wall Street). But all these years the government refused to acknowledge that farmers were dying and agriculture bleeding.
Only a few months back, the day Finance Minister P Chidambaram in his budget speech announced Rs600,000 million loan waiver for the beleaguered farming community, there was an orchestrated outcry: “Where will this money come from?” Television anchors were visibly angry at this ‘supposed windfall’ for the farmers, the print media was outraged at this ‘political and not economic’ decision just before the ensuing elections, and the industry leaders were seen sulking.
Six months later, no one is asking the same question. With the global financial crisis failing to work itself out, the Reserve Bank of India (RBI) is under pressure to intervene. Soon after the Wall Street mayhem, the RBI had pumped in Rs840,000 millions in the domestic banking system through liquidity facility adjustment. An additional Rs200,000 millions has been released through a 0.5 per cent reduction in cash reserve ratio (CRR), to be further slashed by 100 basis points. It took RBI five years to make the first cut in CRR, and the next cut comes five days later. This sure is some urgency.
Despite the finance minister saying that the fundamentals are strong, the banks are on a massive borrowing spree. In the first week of October alone, they borrowed Rs900,075 millions every day from RBI through liquid facility adjustment. In the days to come, the RBI is under pressure to release another Rs300,000 millions through the CRR, and also to cut repo rate – the rate at which it lends to banks. And thanks to the loan waiver, the banks will receive another Rs500,000 millions in the coming weeks as part reimbursement for the farm loan waiver and fertiliser loan.
Isn’t it a fact that Rs600,000 million loan waiver (later enhanced to Rs710,000 millions) was actually a relief to the banks? What seemed to be a ‘political’ decision in the name of pulling out the indebted farmers was actually meant to maintain and sustain the health of the banking system. If the government had not provided the loan waiver, banks would have been in terrible liquidity crisis. With farmers unable to repay, these banks would have been saddled with massive non-performing assets (or a shortfall in liquidity) or non-availability of Rs710,000 millions in cash.
In other words, the loan waiver was a partial bailout for the banks. Now no one is asking: “Where will this money come from?” On the contrary, most analysts are asking for more ‘speed and sagacity’ to tide over the crisis. The industry has already demanded a bailout package of Rs1000,000 millions.
If only such ‘speed and sagacity’ was shown to tide over the terrible agrarian crisis sweeping throughout the country for over a decade now, thousands of farmers would have been saved from committing suicide. If only the RBI had stepped in to make more cash (or liquidity) available, the nation could have easily provided an assured employment to each and every Indian not only for 100 days but for all the 365 days in a year. The National Rural Employment Guarantee Programme (NREGA) can be easily extended to bring every unemployed Indian under its gambit.
And it is here that I fail to understand the sagacious logic of keeping the poor hungry and then expecting a higher economic growth trajectory; of paying a multi-million dollar salary (in addition to lucrative perks) to the bosses of the banks and corporate houses and then make the man on the street pay for the losses; in other words the logic behind privatising the profits and socialising the losses.
Lawmakers investigating the bailed out insurance company AIG, were shocked to learn that days after the government rescued the company, it unashamedly spent $ 44,000 on a posh California retreat for its executives, complete with spa, banquets and golf outings.
Why blame the American corporate leaders when President George Bush himself had given them a free rope: “Government should not decide the compensation for America’s corporate executives.” Probably what he meant was that come what may, the US government will continue to provide funds to meet obscene corporate salaries and perks.
Prime Minister Manmohan Singh too had removed the upper ceiling on corporate salaries. According to Merril-Lynch and Capgemini, driven by impressive economic gains and robust market capitalism growth in 2007, India led the world in High-Net-Worth-Individual population growth at 22.7 per cent. Two year earlier, in 2005, there were 83,000 high net worth individuals with a wealth of at least $1 million (and this does not include immovable property). You guessed it right. The number of millionaires has gone up quite considerably in the meantime.
This brings me back to the same question. How long will the world go on encouraging an economic system that makes the rich richer and the poor poorer? While 36 billionaires in India have a collective economic wealth equivalent to one-third of the country’s GDP, the country’s 600 million farmers collectively account for only 17 per cent share. With every passing year, the share of agriculture in GDP continues to slide down still further.
The average monthly income of a farm household (which includes five members of a family and two cattle) does not exceed Rs 2,400. The value erosion in real farm income over the past few decades has never been discussed, but the erosion in paper wealth of shareholders is being projected as a national disaster.
Bailing out the farmers from a distressing situation is always considered to be bad economics. It is branded as a political compulsion, and the sooner politicians emerge out of it the better it would be for economic growth and development. This economic prescription, which every economists worth the name is willing to endorse, is invariably for the farming community, the landless workers and the marginalised communities. They need to learn to be enterprising, and therefore must stop living on government subsidies.
When it comes to the enterprising millionaires – corporates and the banks – government bailouts are not only a must, but should be done speedily. “Where will the money come from?” is not a question to be asked when you are subsidising the rich and the elite. It is their birth right. You need to understand.
—By special arrangement
The writer is a New Delhi-based trade policy analyst.