Archive for the ‘Development’ Category

Strange Economics, Strange Politics

August 31, 2020

By Anjum Altaf

Economics is strange, full of odd things that are rarely challenged. It is a bit like religion that one is supposed to accept without asking any questions.

When I was studying the subject in college, we were told that there were three factors of production — land, labour and capital — of which the first was fixed and the other two were mobile. In simple terms, this meant that while your piece of land stayed where it was your body and your money were not rooted in the same way.

Out of college, one got to appreciate the difference between something being mobile and the same thing being freely so. Thus, while labour and capital are technically not fixed to one place, their movement can be restricted in any number of ways.

The movement of capital can be constrained by border controls and limits on convertibility. There was a time when many countries made it very onerous to convert local into foreign currency and to export or import money. Browsing through my late father’s files, I was struck how many letters he had to write, how many forms he had to fill, and how many trips he had to make to the State Bank to get the few pounds that were needed to finance my year abroad during which I picked up all the myths about economics.

Restrictions on the movement of labour are much more easy to grasp. Much as I alway wanted to go to Goa to work, it was out of the question. An invitation to teach at the IIM-Calcutta withered on the vine. Even an acceptance at a conference in Manipal was nixed by the Ministry of External Affairs. 

Countries exercise strict control on who they let in from other lands. Even within countries there can be restrictions on movement as there were for non-Whites in apartheid South Africa and as there still are in China with its internal passport system known as hukou. Cities are so clean in China because poor villagers are not allowed to move there at will. In Pakistan, there are many roadblocks requiring identification before one is allowed entry into cantonment areas. I recall a time when I was denied permission to visit my ancestral home in another city because I did not have the requisite NOC to enter the locality.   

Now consider what has been happening over time. While constraints on the movement of capital have been progressively relaxed, those on that of labour have been progressively tightened. There was a time when Europeans just picked up their bags and moved to Argentina or Brazil and people like James Joyce and DH Lawrence decided they had had enough of the parochialism of their native lands and would rather live in France or Italy or Germany.

Such free movement is no longer possible with rulers like Trump further closing their borders to most outsiders especially those from ‘shithole’ countries and England opting for Brexit to keep out eastern Europeans. Meanwhile capital is circulating around the world at hyper speed, flowing in and out at will. Anyone attempting to restrict unlimited transfers, like Mossadegh or Allende, is deposed by the intelligence agencies of countries displeased with such restrictions.

Here we see the politics of power and powerlessness. The small minority that owns the bulk of global capital exercises its power via the IMF, the World Bank, and the WTO to enforce rules that ensure its capital can roam freely in the pursuit of profit. Meanwhile, the vast majority that owns nothing but its labour is powerless to achieve the same mobility for its human capital and is kept out if it tries by policemen like Homeland Security.

Thus while “hot” money zips in and out across borders, “cold” bodies are often found dead in refrigerated vans or in capsized ferries in freezing waters. If lucky, migrants endure long confinements in refugee camps before being sent back where they tried to escape from.

There was no mention of the concept of power in any of the college courses in economics and although it was never stated, it became clear that the system the subject extolled privileged banknotes over human lives. The system did not exist to serve human beings; human beings existed to serve the system run by capital. Meanwhile, all courses in politics lauded liberal democracy in which people were sovereign and dictated policy by virtue of the power of an equal vote.

If that is indeed the case how come a tiny minority that owns capital always gets what it wants and the vast majority with all its votes ends up empty handed? Is it one-person-one vote or one-dollar-one vote?

I am sorry I made my father use his hard-earned money for me to learn all this rubbish.

This opinion was published in Dawn on August 25, 2020 and is cross-posted here with the author’s permission. The writer was a professor of economics at the Lahore University of Management Sciences. 

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Living Wage

August 19, 2020

By Anjum Altaf

Now that we have discovered all the “essential” workers who were invisible to us, or to whom we had closed our eyes, what are we going to do?

I mean, the people who keep our cities and buildings and homes clean and functional. Is it really alright for them to live the way they have been living all these years — in some hovel, making barely enough to eat, working Sundays so they can accumulate enough leave to visit every four months, for a week, their parents, wives, and children forsaken in some faraway village? Is it really alright and acceptable to you? Is it mandated by some God on high?

I know it before you can say it. We are back in the days of the Roman pantheon and there is a Market God except that now he doesn’t stay atop Mount Olympus but in Hyde Park, in Chicago that is, not London anymore. The Market God ordains the wages based omnisciently on what people deserve — their value-added — and how can we go against the revealed wisdom of the Market God?

But if their value-added is really so insignificant, how come they are so “essential” our cities can’t function without them and we have to bang pots all over the country and name our children after them to celebrate their newfound essentialness and bemoan our newly discovered ignorance?

Does this Market God have feet of clay? In these days of toppling all the ugly and outdated statutes, could we just poke it in its ribs and see if it doubles up with laughter for having fooled us all these years? 

The Market God is a tough cookie having survived Marx who railed against subsistence wages and advocated toppling it. It took succour from Malthus who exonerated the deaths of the poor who would otherwise overrun the globe’s food supply. And it hid behind Hayek who scared the world with The Road to Serfdom

The God that Marx proposed came a cropper at the hands of Lenin and Stalin. Malthus was plain wrong. And, as for Hayek, we have arrived at serfdom by quite another route than he had in mind.

So what is to be done with the Market God still standing tall on its pedestal in Hyde Park? Still smirking at those who thought they would occupy Wall Street. Quite reassured that it would be Biden not Sanders entering the White House, determined, like Obama, to pay obeisance to the Market God and ensure its hegemony over the world notwithstanding some minor words of comfort and empty promises to those prostrate under its chokehold.  

I confess I want to bring the Market God down but I propose going for its head not its feet. This is my concession to its power. I would let it stand but chop its head off — like that of Ozymandias — to leave “Two vast and trunkless legs of stone” while “Nothing besides remains… Of that colossal wreck.”

Here is why I would let the Market God upright on its trunkless legs. Because the Market God has an Immaculate Son known as Competition and Competition has its saving graces giving us a few good things like efficiency and innovation. But Competition also gives us subsistence wages and inequality and exercises an inescapable chokehold. No one person can mess around with Competition.

Think of this. If I pay my workers a living wage I would be out of business in a flash if my competitors didn’t follow suit. And if all the workers in a country persuade their government to mandate a living wage, investment would flee to countries that didn’t match the move. And, we know quite well, there is no global government that can put a universal floor under all wages to forestall this heartless footloose investment. The Immaculate Son has its knee on the necks of labour and in no hurry to lift it.

So the minute we talk of raising minimum wages, howls are let loose and a myriad admonitions  pour forth from Hyde Park about distorting the market. We are told how the move would backfire because firms would freeze hiring and turn to robots hurting the very essential workers one is wanting to protect. Does one really want that given the already wretched state of their lives?

One is supposed to be struck dumb by this argument. But wait, there is a non-distortionary way around the conundrum. Go for the head of the Market God, not its feet, and let the Immaculate Son do what it does.   

Here is the proposal. Let the Market God determine every individual’s value-added as before. Let it give an ego-boosting Rs. 25 lakhs per month to some completely non-essential person and value an essential one at Rs. 15,000. Just cap the take-home income at the top — a ratio of 1 to 50 between the lowest and highest take-homes ought to be quite enough. If the minimum monthly take-home is Rs. 15,000, let the maximum be Rs. 7.5 lakh. Everything above that is taxed away entirely.

Don’t be fooled by the threat that the highly-valued would pack up and leave. They have nowhere to go with their green passports and even if they do they will discover they are worth much less than they thought. Cap the upside and watch the Market God adjust production and prices to make the new regime sustainable. Then hear the perverse pleas to raise the minimum wage. 

Let this pool of funds make up the difference between what the Market God deems proper for an individual and what society deems to be a living wage. Let the local representatives of Hyde Park come up with an estimate of the living wage. But let them do it from behind a Veil of Ignorance. If they were to be reborn as an essential worker where would they peg the living wage? Let’s start from there and iterate to where we wish to go.

This opinion was published n Dawn on July 31, 2020 and is reproduced here with the author’s permission. The writer was dean of the School of Humanities and Social Sciences at the Lahore University of Management Sciences. 

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Use Your Heads

August 15, 2020

By Anjum Altaf

For the life of me I can’t figure out why Aitchison College students still have to wear those things on their heads. I was reminded of them when a retired teacher shared a chapter of the autobiography he is writing adorning it with the picture of a bevy of boys milling around him all capped in that anachronistic headgear. 

Before jumping to conclusions I decided to check with a former student and was educated about the origins of the institution as the Punjab Chiefs’ College in 1886. I was informed that this headgear was part of the proper attire of the Punjab chiefs of the times and it was only natural that their offspring, the future chiefs, would continue the tradition. 

That much made sense except that very soon after, the British renamed the college for a wannabe chief of their own, one Mr. Aitchison. Not just that, they showed the chiefs who was boss by putting the same covering on the heads of their bearers whose principal task it was to open doors for the Sahib, the Memsahib, and the babalog. They must have taken a perverse pride in doing this to the very people they had themselves elevated to chiefdom for siding with them in 1857.

In that context, it was quite understandable that, as long as they stayed, the British would enjoy rubbing the chiefs’ noses in the dust by continuing to parade their offspring visually at par with the minions of the Empire. But why did this tradition survive once the British had left and the students joining the college were no longer little chiefs? Surely it was not because Aitchison College was preparing its graduates to compete for the positions of doormen at the Punjab and Sind Clubs, those relics of the Raj that prominent Pakistanis were dying to worm themselves into.

I apologise for venturing down this irresistible rabbit hole when my intention was really to pull some very different rabbits out of the hats. I wanted to explore their unexpected relationship with the real world and to draw therefrom some potentially useful conclusions. 

It struck me that mandating something, even a thing as silly as donning a hat, could trigger a mini enterprise. At Aitchison, turbans were to be worn once a week at the general assembly and on special occasions. But that meant they had to be produced in quantity. So a small living quarter was assigned to a craftsman and a room allocated in the Department of Supply and Rationing (DSR) where he would make the hats (kulla) around which the cloth (blue in winter, grey is summer) would be wrapped. This cloth had to be starched every week for the Aitchison turban (pugree) was particularly flamboyant with its plume (turra) rising high and splayed like a Japanese fan or a rooster comb. It would wilt after one use and the hat would need retying with a freshly starched replacement. 

In the 1970s, when Taj was in command, a hat cost Rs. 20 and the charge for tying it was Rs. 10. Kamal Din took over when Taj passed away and the hat is now about Rs. 300. In short, the mandate spawned a veritable mini-economy and to prove the point it also had its black market. A number of peons began a rent-a-turban operation for those little chiefs who could not remember to have it tied in time. There was also a Muhammad Sharif and Sons, turban designer, on the Mall, presumably for those who favoured the high end of the product line.  

The lesson I take away from this is that if things were to be mandated intelligently they could have significant multiplier effects. For example, if it were mandated that every high school student should graduate knowing how to play a musical instrument, it would give rise to a huge industry of instrument making as well as provide employment to very skilled performers who are on the severely endangered list. Very few know that the most revered instrument maker of the subcontinent, Rikhi Ram, started in Lahore before being driven away to Delhi. Now it is almost impossible to get a sitar repaired, let alone made, in Pakistan.

The beneficial effects of such a mandate go beyond economics. With a cohort of discerning listeners we might be spared the new breed of performers who are completely ignorant of the grammar of music. We might also, if we extend a mandate of voice training to madrassahs, get to hearing the kind of mellifluous azaans that their sanctity demands instead of the most grotesque cacophony to which they have been reduced today.

Imagine a mandate that all candidates for the civil service exam would need to demonstrate proficiency in one regional language other than their own. Academies would spring up overnight, language education and teachers would be in demand, books would be printed, and the impact on national integration would be phenomenal.

Or imagine a mandate that entrance test to colleges would include a section testing knowledge of literature in a local language. One would witness the amazing sight of parents, presently contemptible of all things desi, breaking down the doors of schools to improve the teaching of indigenous literature. Just with one stroke of the pen we would eliminate the whining that students are ignorant of literature and simultaneously boost the index of critical thinking that has touched rock bottom — ik nuqte vich gal mukdi ae.

So retire the turban but think seriously of intelligent mandates with positive multiplier effects that can revive local economies, create employment for the marginalized, and rejuvenate society at the same time.    

This opinion was published in The News on Sunday on July 19, 2020 and is reproduced here with the author’s permission. The writer is the author of Transgressions: Poems Inspired by Faiz Ahmed Faiz, Delhi 2019, Karachi 2020.

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The Post-COVID Economy

July 15, 2020

By Anjum Altaf

How amazing that governments all over the world that could not find any money for public health or education have now, all of a sudden, discovered they can conjure up over ten percent of GDP to revive the economy after the COVID pandemic. What this means is that we don’t have to worry where the money will come from. Governments have signalled they have it and presumably they have figured out how they will pay for it — by monetizing the debt or growing out of it or inflating it away.

What this does mean is that we can move on to thinking about the economy that is to be revived with all this money. Are we aiming to restore the wretched economy that was damaged by the pandemic? Was that economy really all that great? Weren’t we fighting against its inequities all these years? Isn’t it the economy that has gotten us into this crisis by devastating the natural habitat? Isn’t it the economy that was hurtling us towards a global climate catastrophe whose previews we have seen with torrential rains, out-of-control fires, and unbearable heat? Have we suddenly fallen in love with the same economy and cannot think beyond wishing to restore it?

Paul Krugman has hit the nail on the head: The economy is not an end in itself. It is a means to improving the living conditions of all the people who labour to make it work. It is in that perspective that we should be thinking. Every incapacitating tragedy also provides a pivot that can reorient the future born out of the ashes of the past. So our task is to think of the kind of economy we want and what we have to do to get it. We should dream big. We will not get everything we want but we can set a direction in which to go and a chart a vision to move towards.

We can begin to articulate this vision by reimagining the scene of the millions of migrant workers trudging out of the cities they had built to the villages where they had to leave their parents and spouses and children behind while they slaved away as fodder in the economic system that has collapsed. We have to ponder over the millions of people who didn’t have a home to stay in when the stay-at-home orders were passed, the millions who didn’t have access to clean water when the advice to wash hands frequently was given. Who among us is going to say this is the natural order of things, this is how things should be again?

Think back to Iqbal who said: jis khet se dehqaaN ko meyassir nahiiN rozi / us khet ke har khosha-e-gundam ko jala do (burn to the ground every sheaf of the field that cannot feed its tillers). We all love Iqbal, don’t we? So how can an economic system that treats its newly-discovered “essential workers,” in the words on one returning migrant, as “vermin” be considered acceptable in the new economy. The new economy has to put a floor below every one of these workers, provide them a livelihood where they can afford to keep their families together. Does this mean creating jobs in small cities closer to rural areas? Perhaps, but that is a matter of detail.

We need to get money into the hands of these workers so that they can kickstart the new economy by effectively demanding what they value instead of being given what some Mughal potentate thinks they need. Again, whether this purchasing power would come from some initial income transfer or some version of a universal basic income is a matter of detail that can be thrashed out at the appropriate time. But clearly the new economy would have no place for turning the entire country into a housing society where plots are allotted and flipped over and then ring roads are constructed to transport the fortunate beneficiaries back into the cities. There would be no place for signal-free corridors through which these denizens of low-density enclaves would speed through while the pedestrians and bike riders who built them have to risk their lives to cross from one side to the other.

I am waiting to be asked how all this is going to be paid for. But, in my turn, I will ask if we want to have an economy in which a dozen individuals in a country own more wealth than the entire bottom half of the population? Mahmood and Ayaz should prepare to stand in the same line and not just in the mosque. I propose a very generous ratio of 50 to 1 between the lowest and highest monthly take-home incomes — everything above that should be taxed away entirely. Raise the floor and the ceiling will rise. I am sure our valiant armed forces would also readily make their contribution to the achievement of a Riasat-e-Madina by reducing their budget by ten percent every year. They know full well how much sacrifice the people have made for them over 70 years and now is the right time for them to pay back. As it is, a disproportionately large conventional force is not needed in a country with a nuclear weapon. The demobilized soldiers should be employed in a public works force to repair and renovate all the rural infrastructure that badly needs revitalising. 

The people dreaming of a new order know, despite whatever they may be told, that the economy doesn’t exist independently of society and its politics. It was over a half century ago when Karl Polanyi told us that the economy is embedded in society. So, we cannot get a new economy without a new politics. It has never before happened in history. Therefore, people have to struggle for a new politics as well. I have two suggestions, one more radical than the other. The less radical one would require all elected representatives to live in the lowest income localities in their city, send their children to area public schools, and seek health care in local facilities. The improvement in standards would be so rapid it would shock the world.

The more radical suggestion is prompted by the reality that our robber barons would never willingly cease their control of politics and economics. The way around would be to demand a system in which governance is turned over to a group of citizens chosen at random for a fixed tenure. Nothing could be worse than the lots that have lorded over us. This is not as outlandish as it seems; this mode of governance, sortition, has a long history. Even today the American system of justice relies on juries chosen at random and it has not suffered on that account.

So, let us articulate the world we want to live in. Let us dream big and let the struggle begin. We will know when the budget is announced whether it will be business as usual or a step in the direction of a New Pakistan. Watch where the money is headed — to the fat cats or the wretched of the earth.

The writer was the former Dean of the School of Humanities and Social Sciences at LUMS. This opinion was published in The News on Sunday on June 7, 2020 and is cross-posted here with the author’s permission.

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False Signals

October 30, 2019

By Anjum Altaf

The Prime Minister has praised his economic team for an ‘economic turnaround’ that comprises declines in the current account and fiscal deficits and increases in foreign direct investments and remittances. Unfortunately, all these are misleading indicators but one in particular is especially egregious and contradictory.

Why is the increase in remittances considered a part of the economic turnaround and something that governments consider an achievement worthy of praise? Consider an anguished airport conversation with a Pakistani working in Italy and supporting a wife and two children in Pakistan. He used to send the equivalent of Rs. 50,000 per month in lira for family support; now the equivalent of Rs. 80,000 is needed to sustain the same expenditures. The increase in remittances is an outcome of greater economic distress in Pakistan. It is a false signal reflecting economic failure, not success.

Before patting themselves on the back for ever-increasing remittances, policymakers should think through this phenomenon with understanding and empathy. Remittances grow for two reasons: individual migrants send back more money and the stock of migrants increases as more Pakistanis emigrate. The explanation for the first component has been provided above — it reflects the economic distress inflicted on working class families by rapid inflation in Pakistan. But what is the explanation for the increasing number of Pakistanis seeking employment abroad? Very simply, it is the inability of the domestic economy to generate a sufficient number of jobs paying enough to sustain the families of individuals entering the labour market. It is once again a reflection of economic failure, not success.

Consider the miseries inflicted by this phenomenon cruelly celebrated as a success of economic policy. In human terms, it involves young men separated involuntarily from their families — parents, siblings, wives, children — for long stretches of time, often living abroad in poor, exploitative, and discriminatory conditions. 

Many low-income workers abroad have paid huge amounts to unscrupulous middlemen who act as facilitators. A recent ILO estimate puts the amount payed in bribes by South Asian workers in the Gulf at $15 billion. This does not include payments by individuals who are duped and fail to emigrate inflicting huge liabilities on their families.

Even more tragic is the fate of those who get smuggled abroad and are either abandoned in remote places to be incarcerated in camps or left to suffocate in airless containers or sink aboard flimsy ferries. The stories of those who make their way back to Pakistan are harrowing for those willing listen, a devastating indictment of an economy and society that consigns its young to such fates.

There is yet another contradictory and ironic aspect of this phenomenon. If labour is Pakistan’s biggest exportable commodity (in 2018, remittances were $21 billion versus a $14 billion contribution from textiles, the largest commodity export) and our measure of success is an increase in remittances, why don’t we export even more bodies than we are doing at present? Why then make such a hue and cry about overpopulation? Should we not produce even more children and export them to earn abroad and send back remittances?

This is a rhetorical question to highlight the fact that our policymakers talk through their hats but there is a serious aspect to it as well. If we are reduced to exporting human beings for our survival, wouldn’t it make sense to invest in them to increase their productivity and market value abroad. That would mean investing in their health, education, and training as a conscious policy to increase remittances. Shouldn’t governments work to upgrade vocational skills of individuals instead of being obsessed with their moral piety especially given the fact that all the money spent on the latter has yielded little in return besides dogmatism.

Isn’t it a hugely puzzling occurrence that in a country with a population exceeding 200 million with serious problems of under-employment, it is impossible to find a reliably competent plumber or electrician or mason? Or that Pakistani doctors working abroad are sent back as improperly certified? A programme to upgrade the skills and certifications of those wishing to emigrate would have a beneficial spillover effect on the deficiencies in the local market as well.

The Pakistani economy is in intensive care and the indicators the Prime Minister has cited as evidence of an economic turnaround have behaved in exactly the same manner as they have after almost each of the previous twenty-two or so IMF hospitalizations. The real turnaround requires the creation of decent jobs which, in turn, calls for structural reforms and a framework for economic growth. While this may take time, progressively driving remittances down by providing jobs at home should be adopted by the government’s team as a leading measure of the success of a real economic turnaround. Involuntary migration forced by economic desperation is a blight on the face of the nation, not something to celebrate.

This opinion was published in Dawn on 27 October, 2019 and is reproduced here with the author’s permission. The writer was dean of the school of humanities and social sciences at LUMS.

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Taxation: An Honourable Way Forward

September 17, 2019

By Anjum Altaf

I don’t believe there can be a way forward on our taxation problem unless taxpayers are given a fair and patient hearing and their concerns are allayed in a convincing manner.

Let us consider the period from 1988, when the PPP came into power under Benazir Bhutto, to 2018, when the PML-N lost power under Nawaz Sharif. These two parties shared power during this entire period of 30 years except for the ten-year takeover by Pervez Musharraf from 1999 to 2008.

Now consider the fact that no less than the Supreme Court of the country characterised the rule of the PML-N as that of a mafia and that Nawaz Sharif, currently in prison, was accused of siphoning money abroad and buying properties there with unaccountable funds. Consider also the fact that since 2018, the new government has spared no effort to tar the PPP rule with the same brush. In fact, it has advertised to the world the fact that all political governments in Pakistan since 1988 have been worse than robber gangs.

Let us give the new government the benefit of the doubt on these allegations. But then, consider the implications. Is it the position of the government that taxpayers should have continued to pay taxes to robber gangs knowing full well that their taxes were being diverted abroad to buy ranches, manors and villas? Which party is the one that ought to be deemed naive in this situation? Instead of congratulating them for refusing to be taxed without representation and without even a modicum of honest rule, the government is actually labelling the taxpayers as cheats and criminals. This is either hypocrisy or a complete inability to think through the logic of its arguments.

It has been noted that the government, while declaiming the complete dishonesty of the PPP and the PML-N, has said not a word about the record of the Musharraf era. Let us, once again, concede the benefit of the doubt and accept that the Musharraf era was squeaky clean by contrast. This would then raise the question of why taxpayers were still not prepared to comply in an era of honest governance.

Let us not forget, however, that the Musharraf rule, no matter how clean, was constitutionally illegal and that there is still a case pending to that effect. Once again, instead of congratulating taxpayers for refusing to pay taxes to a usurper, the government is actually implying that people should have passively accepted the fait accompli. Clearly, this too is a position that fails the test of logic.

In order to grasp this contradiction, consider the grip of the MQM on Karachi in its darkest days. Everyone agrees that the MQM was running the city like a robber gang and the existence of various mafias (land, water, transport, etc.) was widely acknowledged. Nobody in their right mind would have expected or asked the city residents to pay taxes to an administration of that kind. That notwithstanding, the MQM was extracting taxes from industrialists and traders under threat of force. This was appropriately known as a jagga tax and was not taxation but extortion or tax terrorism. The obvious conclusion should follow: any forcible collection of taxes by a dishonest or illegal government is a form of terrorism and not taxation.

In this perspective, it is mindless to proffer comparative arguments of the sort favoured by our governments, bureaucrats, academics, consultants and donor agencies. It is completely irrelevant to argue that the tax-to-GDP ratio in Pakistan is below that of neighbouring countries and therefore screws should be tightened on taxpayers. Taxpayers in the other countries might actually value what they are getting in return for their money. Taxpayers in Pakistan have legitimate concerns: Does the government care for us? Where is our money going? Have we approved of the usages? Is the burden being shared fairly? These concerns deserve immediate attention. Responding to them with indignation, contempt or coercion signals that nothing has changed except the rhetoric.

What then is the way forward? Let us continue to give the new government the benefit of the doubt and accept that it comes with clean hands. Still, this is a very tall claim that needs to be proven given that many of its stalwarts are rolling right over from within the folds of the erstwhile robber gangs. We thank a merciful God that has now shown them the path of righteousness but once bitten is twice shy — fool me once, shame on you; fool me twice, shame on me. There must be credible proof of this new-found righteousness before taxpayers can revise their opinions of those who they have had the misfortune to be their rulers.

This points to a clear path. Let each individual associated with the government disclose publicly to taxpayers the taxes they have been paying over the years, the properties they own, the sources of the funds used to acquire them, and the assets in the names of their spouses and children. And if they have erred and wish to be forgiven, they should extend the same forgiveness to all and start with a clean slate and a level playing field. Once taxpayers are satisfied that they have a government of the people leading the way with public disclosure, they would have no hesitation in contributing their fair share.

Of course, it is quite conceivable that many people have been evading taxes for venal, not principled reasons. But the essential point remains: On what grounds can we ask them to pay taxes to dishonest or illegal governments? And, on what ethical principles can dishonest or unconstitutional governments insist on collecting taxes? 

It all boils down to a deficit of trust that has now festered for many decades. It cannot be erased by loud claims. There is only one honourable way to erase that deficit and the first move rests with the government. Without that we shall continue to struggle with extortion no matter what anyone might care to call it.   

The writer was dean of the school of humanities and social sciences at LUMS. This article appeared in Dawn on September 16, 2019 and is reproduced here with the author’s permission.

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Tech in Transit

September 17, 2019

By Faizaan Qayyum

YEARS after Uber and Careem gained popularity, there is a new service in town: Airlift. Unlike existing services, which would essentially function as online marketplaces for private commute, this service links up many more people by selling seats in larger vehicles. And if you were to believe their founders, it is the answer to our people’s transit woes.

Almost as if on cue, there is competition. Swvl, another startup that originated in Egypt, has entered the market, and existing services like Careem are working on similar models to retain their share of commuters. But is a surge in capitalist interest sufficient to establish the positive value of these services in our cities?

One thing is certain: services like Airlift and Swvl can significantly improve the plight of urban commuters just by virtue of their operational model. Where commuters could book a car on Uber, they can now book individual seats on Airlift. The service can match more commuters to a single vehicle (12 for vans, for example, or 27 for a minibus), and therefore reduce costs for both themselves and commuters.

This model also has other important implications. Because more commuters can now use the same vehicle, this model can effectively take vehicles off the roads — reducing both congestion and environmental impact of commuting. At their smallest, 12 commuters in one van would surely take less space and use less fuel than 12 private cars — or 12 Ubers, or even six Ubers shared by groups of two.

The ability to reserve individual seats also solves, for many, problems of comfort and safety. A guaranteed seat means more comfort, and the presence of other commuters in the same vehicle means lower risk of inappropriate conduct by drivers and other operational staff. Individual seats also lower the risk of theft and even assault.

Nobody stands to gain more from these services than women. The numbers are already telling — almost half of Airlift’s passengers are women. Compare this to a 2016 paper (Muhammad Adeel), which found that in Pakistan females only accounted for 20 per cent of all trips! The same paper also found that 55pc of women didn’t travel at all, while the same figure was 4pc for men.

The cost implication is also significant; I have written previously about how our analyses of commuting facilities are misleading because women face a different set of constraints and must pay a much larger share of total income on commute. By introducing a new safe, and relatively cheaper, mode of transit for women, services like Airlift allow many more women to engage in useful economic activity. This combined benefit of cost, convenience and safety cannot be understated — in preliminary findings, the Women’s Mobility Project at CERP reported that women are much more likely to engage in economic activity if they can find a convenient way to commute. Airlift’s numbers show that this impact is already visible.

So what does this really mean?

Good as they may be, services like Airlift and Swvl are enabled only by the pathetic urban transport systems in all our cities. Twelve people sharing a vehicle is certainly good, both for the environment and for individual commuters. Scale that up to 40 or 100 or 200 — clearly, we are making an argument for an efficient public transit system, and it is the state’s lethargy that is allowing private enterprises like Airlift to fill this gap.

But if we have private companies providing this service, why do we need the state to step in?

The simple answer to that question lies in studying who such services will exclude. While the environmental and gender implications have become immediately apparent, they are applicable only within a class-blind framework that excludes the poorest from analysis. A better system would maintain those advantages and extend them across all income groups.

Among other things, services like Airlift exclude through pricing, mode of payment, areas of service and their own positioning within the market. They target commuters served by private cars, taxis, rickshaws and Uber, but we should remember that such people are a very small part of our total population. By introducing lower rates than Uber, they can cater to more people. But their fares can never compete with public transport, even as these companies burn hundreds of thousands of dollars every month to grab market share.

On the contrary — and this is where we must pay attention — Airlift and Swvl can actually harm the interests of our poorest commuters by taking away relatively richer commuters from public services like the metrobus. A route that runs from Shahdara to Gajju Mata in Lahore is effectively competing with the metrobus, providing guaranteed seats in return for almost thrice the fare. For those who can afford it, the choice is clear. But their switch to other services makes the metrobus less viable, raising questions over its subsidy, and threatening to eventually make service much more expensive for those who can barely afford current fare levels.

It is clear that all benefits that services like Airlift accrue are merely those of an efficient transit system. Whatever success they find is also due to the pitiful state of our transit arrangements — but if they can do it, why can’t cities? Such ‘bus hailing’ apps can be successful as a complement to — and not competition for — existing transit services, and their interest should not encourage the state to completely abdicate its responsibility to its citizens.

There is space for Airlift and Swvl and any number of innovations in transit, but not at the cost of services that cater to everybody. The state has a responsibility towards its poorer citizens. We must look at the bigger picture: develop equitable transit solutions for all, and invite innovations like Airlift to improve the overall urban experience without taking away from the worst off.

The writer is a PhD student in urban/regional planning at the University of Illinois. This article appeared in Dawn on September 16, 2019 and is reproduced here with the author’s permission.

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Inequality and Its Critique

January 22, 2019

By Anjum Altaf

Oxfam presented its new report at Davos whose main takeaway for India is that:

“Indian billionaires saw their fortunes swell by Rs 2,200 crore a day last year, with the top 1 per cent of the country’s richest getting richer by 39 per cent as against just 3 per cent increase in wealth for the bottom-half of the population.”

https://theprint.in/economy/richest-indians-got-wealthier-by-39-worlds-poorest-saw-their-fortunes-dip-by-11-in-2018-says-oxfam-study/180630/

Shekhar Gupta at The Print has castigated this report in very strong terms as methodologically flawed and politically motivated.

Please read the news item and watch Gupta’s critique then write a comment with your own analysis. Where do you come out on this issue? [I wish he would stay still while speaking — it is tortuous to watch]

Here is a set of expert opinions solicited by The Print:

https://theprint.in/talk-point/oxfam-inequality-study-skewed-parameters-to-assess-wealth-or-disbalanced-economic-growth/181348/

Consider the three in conjunction with the following argument which inserts some much needed theory into the debate.

https://thebulwark.com/is-all-economic-growth-created-equal/

Read this as well. The authors are collaborators of Thomas Piketty who brought inequality on the agenda with his Capital in the Twenty First Century.

Nobody has really thrown out Piketty’s data or methodology. For the most serious critique see the following by Debraj Ray:

https://www.econ.nyu.edu/user/debraj/Papers/Piketty.pdf

Those wishing to push further can read the following response by Branko Milanovic:

http://glineq.blogspot.com/2014/06/where-i-disagree-and-agree-with-debraj.html

I look forward to your contributions.

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Chickens: A Debate

December 9, 2018

[Editor’s Note: Imran Khan’s suggestion to alleviate rural poverty by giving chickens to women was greeted with much ridicule but is there the germ of an idea there that public policy wanks can shape into a viable scheme? On the contrary, is there a convincing enough critique that can show how and why the idea might be infeasible.

Myrah Nerine Butt took the first step in a blog published in Dawn on December 5, 2018 and I requested Faizaan Qayyum to comment on her article. Myrah and Faizaan were Teaching Assistants for a course (ECON 100: Principles of Economics) I taught at LUMS in 2013 and it is gratifying to see them both emerge as articulate public policy practitioners.  Myrah completed a MA in Poverty and Development from the University of Sussex and Faizaan a MA in Urban Studies from the University of Illinois at Urbana-Champaign where he is currently pursuing a PhD. After a few email exchanges we decided we would all benefit from making this debate public and provide others a forum for reasoned discourse.

Towards that end, Myrah’s article is reproduced below followed by the discussion to date. We invite others to join and enrich the debate in order to make a contribution to how the issue of poverty can be addressed in Pakistan.]

Why PM Khan’s chicken and eggs solution has been mocked for all the wrong reasons

By Myrah Nerine Butt

At a ceremony to mark the Pakistan Tehreek-i-Insaf (PTI) government’s 100 days in office, Prime Minister Imran Khan announced that his government would provide chickens to underprivileged women in order to lift them out of poverty.

While a number of political stakeholders have ridiculed his statement, there is a lot of research on how and why this intervention can work. The people who are mocking the initiative are actually far removed from the context and lived experiences of rural women.

To understand the magnitude of the problem of poverty — 7.7 million households are living below the cut-off score of poverty developed by the Benazir Income Support Programme (BISP).

The fate of a lot of lives rests upon the policies developed by the government and trivialising such programmes can be incredibly detrimental to positive change.

To place the chickens within the policy context of Pakistan, I will compare the chicken intervention to one of the most successful poverty alleviation programmes in recent times, the BISP — an unconditional cash transfer programme.

Any woman who falls below a multidimensional poverty line is eligible for a cash handout. This intervention has been seen as a useful tool in alleviating poverty in Pakistan. As per the Food Energy Intake poverty line, BISP reduced the poverty rate by seven percentage points.

I will start by comparing the cash handout with the chickens handout to poor rural women and why chickens might work better given the household dynamics in place.

Firstly, one is a cash transfer while the other can be termed as an asset transfer. Money is more fungible than chickens. While money can be controlled by the men of the household and spent on non-productive or non-household activities, it is likely that chickens would remain in the hands of the women.

Typically, the men tend to goats, cows and buffaloes; there is a masculine connotation attached to tending to superior forms of livestock.

Because chickens are culturally seen as inferior forms of livestock, women are likely to retain control of these assets.

This is likely to increase the role of women in household decision-making: they control the chickens so they may decide on how to divide the eggs in the house or where to spend the resulting income.

On the note of fungibility, a chicken would also limit spending decisions of the household by virtue of being less liquid. Money can be spent on various activities, both good and bad, like responding to health shocks or gambling.

A chicken is a tied investment or forced saving, nudging people away from certain kinds of spending.

***

As opposed to a cash handout, chickens are an investment. They require low capital and the turnover is high.

They can also potentially help households climb out of poverty. However, the return on investment argument can be slightly confusing.

The remarkable high returns on investment are linked to commercial poultry farming; there are economies of scale on large chicken farms.

Rural households cannot tap into these massive economies of scale.

So, while rural households might not be able to capture the economies of scale, the eggs would still initially support subsistence of households and provide a steady basic income once the brood of chickens multiplies.

The idea of handing out chickens instead of cash is largely appealing because there is some evidence of its effectiveness in South Asia.

In addition to supplementing household income and providing subsistence, research shows that increased capacity gained by women and children through village poultry projects have impacts well beyond the improved village poultry production: chickens have increased food security and improved nutrition.

A possible pitfall of the chicken intervention could be the crystallisation of the role of women in the households.

A conditional cash transfer programme in Mexico handed out the cash to women if certain conditions were met, one of which was that the children of the household must regularly go to nutrition monitoring clinics.

The idea was to spur a household-level behavioural change.

However, because the money was handed out to women, they were responsible for meeting the requirements enforced by the state and thus the women had to take the children to the clinics, rather than the men.

This crystallised their role as caregivers and increased their burden of work.

Similarly in this case, women might be limited to the role of raising chickens and could be actively discouraged from other activities, like seeking higher education or formal employment.

It may also contribute towards increasing hidden child labour. Unintended consequences are always a possibility that should be considered when designing an intervention.

Ensuring an intervention that works

The chicken intervention cannot be rolled out in a vacuum — there would be a need to set up supporting infrastructure as well. Ancillary facilities like veterinarian services and training support need to be setup.

Additionally, serious work needs to be done to provide the women access to markets and strengthening market linkages.

There also need to be steps to organise women to work collectively in order to gain from some of the economies of scale and connect to markets.

Poverty alleviation interventions should be incremental and build on lessons learnt from previous interventions. The poverty scorecard developed by the BISP is a huge step in terms of understanding the dimensions of poverty.

The BISP has been able to develop an extensive database of poor households. The scorecard collects information on the various characteristics of the household as well as its assets.

It enables the programme to identify eligible households through the application of a proxy means test, which determines the welfare status of the household on a scale of zero to 100.

This can be very useful for targeting poor households in this programme too.

Additionally, the BISP has been tested and retested, its impact measured at each step. An intervention of such nature would require similar level of rigour in its design and implementation.

Bill Gates and the chickens

The global world is obsessed with finding a magic bullet to eliminate poverty. There is a reason why big donor organisations like the Bill and Melinda Gates Foundation love such interventions.

They demonstrate quick results and are easy to measure. The global push towards “value for money” pushes policymakers to consider such interventions.

I would add a note of caution here. Poverty is deprivation on multiple fronts, not just income.

Aspects of time use, productive resources, health, education, rights and availability of services are equally important. Income is used as a crude indicator for all these other aspects.

Because of the multidimensional nature of poverty, it cannot be alleviated with one-time interventions. The causes of poverty are structural and run deep within societies.

Rather than viewing poverty as material deprivation, we need to understand it as a product of inequality and prevalent power relations. We need to analyse the process of design and implementation critically while being realistic about the impact.

The chicken intervention can and should be one of a number of poverty alleviation interventions, not a comprehensive solution. We cannot put all our eggs in one basket at the end of the day.

My fear, therefore, is that the intervention is top-down instead of being bottom-up. While global research and evidence is important, we need to ask ourselves: would it work in our context?

I am curious to find out whether a needs assessment has been conducted. Have the beneficiary women been consulted? Do they want chickens or are we going to force an additional burden on them? What kind of chickens work best in the local context?

For any intervention, the local communities need to be consulted right from the design stage. The intervention should be context-specific and bottom-up rather than top-down.

My key suggestion is to ignore the politicians sitting in the centre. They don’t need chickens like the rural woman might, but ask her before investing money first.

There is a need to step away from mocking PTI’s move to push forth this intervention. The decision is based on international research rather than a complete blind jump.

Let’s try giving the chickens a chance.

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Living in Unhealthy Times

March 30, 2018

By Anjum Altaf

There was a time not too long ago when the burden of disease seemed disproportionately biased against the poor. That someone was always dying among ‘these’ people was the irritated refrain of many an exasperated ‘Begum.’ ‘Fauteedgi’ (an event of death) was a dreaded word that came to be interpreted as a ready excuse to buy a few days off for the staff.

Times have changed. It is hard now to find an affluent family without its own share of prolonged and painful illnesses and ‘fauteedgis,’ often premature. The speed at which graveyards are filling up in rich communities tells a story if anyone is willing to listen.

What happened? Simply, money reached its limit in the ability to buy health. It could protect against many of the factors that caused the most mortality amongst the poor but lost its edge once the factors proliferated.

Take the causes of the majority of the deaths amongst the poor — dirty water and unsafe sanitation. The rich could afford to boil water, filter it, or even switch to the bottled alternative. And everyone who could, moved to a faraway housing society served by water closets and underground sewers. ‘Whoosh’ and the offensive stuff was gone — out of sight, out of mind. Instead of cleaning up the city, the state obliged these fugitives from pestilence favouring them with ring roads and signal-free corridors to transport them back to their places of work quite oblivious to the toxic emissions being added to the environment.

More of this pursuit of one-dimensional progress led to pollution of the air which was a leveller in terms of its negative effects upon the citizenry. The rich could still isolate themselves partially by living in air-conditioned homes, travelling in air-conditioned cars, and working in air-conditioned offices. Still, the protection was not complete and the Begums walking briskly in the public parks and the menfolk indulging in outdoor sports were forced to inhale the same carcinogens that inhabited the air they shared with the have-nots.

Then, along the way, another discriminant between the haves and the have-nots, started to come undone. The quality of food in cities, both cooked and raw, took a nosedive with growing doubts about the safety of virtually any product on the market. The causes were many — plain greed on the part of producers, the failure of quality control on the part of the state, and industrial progress itself with the increasing use of chemicals and chemical processes to increase the weight and shelf-life of produce. There were few who could continue to source their ‘asli’ (pure) supplies from ancestral villages and, for once, the refuge of the rich — processed foods — only added to the likelihood of negative outcomes.

It took a while, but the burden of disease became much more equalized. It did not lessen for the poor but increased sufficiently for the affluent to become a matter of private concern and grief — the number of ‘quls’ (prayers for the dead) per month the affluent felt called upon to attend became occasions for the sharing of woeful tales.

Turn now to the other side of the picture. There was a time when the affluent could literally afford to inoculate themselves against the most common diseases of the poor like diarrhea, cholera, smallpox, measles, etc. But such inoculations were less effective against the carcinogens that began to percolate through polluted air, toxic waterbodies, and contaminated foods. Not only that, it became increasingly difficult to tell spurious medicines from the genuine articles and the overall quality of medical care declined precipitously with the glut of poorly trained providers graduating from substandard private colleges. Once again, the regulators turned a blind eye to what was happening in the pursuit of short-term gains as if money could ward off the damages being inflicted on their own bodies.

There are still a very few left who can afford to travel to Dubai or London or New York for their medical checkups but since they have been ruling the country there is no relief in sight for the rest, rich or poor. A government for the people would recognize that the path to good health requires attention to basics that are simple to conceive and implement — clean water and clean air, safe sanitation and safe food, unadulterated medicines and regulated healthcare, compact cities and public transportation.  

Simple as these measures are, there is little possibility of an intelligent response to the warning signs. In 1952, despite persistent warnings from scientists of precisely such a disaster, a killer smog descended on London killing 4,000 in less than a week and accounting for another 8,000 premature deaths in the months that followed. Do we need a catastrophe of such magnitude to wake up to the obvious dangers accumulating in our environment?

This opinion was published in Dawn on March 21, 2018 and is reproduced here with the author’s permission.

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