Archive for the ‘Development’ Category

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.”

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:

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

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:

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

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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Healthcare: Dubious Distinctions

March 20, 2018

By Samia Altaf

Two recent reports about Pakistan’s health system tell of deficiencies of far reaching significance.

The first, from UNICEF, confers on Pakistan the dubious distinction of registering the highest number of deaths in newborns (neonatal mortality) in the past decade. It is now number one in the world, climbing from number three, and ahead of Afghanistan and the Central African Republic. The second, a National Nutrition Survey, informs that 45% of Pakistan’s children are stunted, suffering from chronic, extreme, and irreversible malnourishment that causes permanent physical and cognitive deficiencies. What would this half of future generations be capable of with its severely limited capacity to learn even if the opportunity for education is available? It would fall sick much quicker and get better a lot slower creating a permanent burden on the already constrained health service delivery system.

The situation in other areas of healthcare, though not part of these reports, is equally grim. Measles continues to be endemic with 6,494 cases last year in Pakistan compared to 1,511 in poor Afghanistan and 513 in war-torn Syria. This is a stinging indictment of the national Expanded Program on Immunization, underway since 1988, which provides 50% coverage when 90% is minimum needed for herd immunity. Maternal mortality, deaths in women due to pregnancy related events, continues to be unacceptably high — 286 per 100,000 nationally and 786 in Balochistan. Deficiencies in large city hospitals with patients dying in hospital corridors or refused treatment have forced the CJP to step in the mess that should be cleaned by the Ministry of Health. The story of spurious drugs and the problems of DRAP are too familiar to need recounting.

Isn’t it remarkable that the marked decline in health outcomes has been accompanied by a sharp increase in the number of medical colleges and universities, hospitals, doctors, nurses, and midwives. Advances in technology and fancy apps have facilitated diagnosis and treatment. Donors continue their generous funding — Punjab has received a $65 million grant from DFID and the loan of an equal amount from the World Bank. This has  led to the current reform of the ministry of health — two ministers instead of one and two secretaries instead of one.

What is going on? Is it that we still don’t have enough doctors for our population? It is true that the doctor to patient ratio is half that recommended by the WHO. But then, why are so many young doctors unemployed? Why are so many people going to non-doctors? China’s population is five times that of Pakistan. Its Infant Mortality Rate (deaths in children under one year) is 12, seven times less than Pakistan’s and its Maternal Mortality Rate is 27, ten times lower. Yet, China has never tried to get its doctor to patient ratio up to the number recommended by the WHO.  

“The state needs to take charge,” exhorts an editorial in this newspaper (28.2.2018). But the state is firmly in charge. New programs are launched every few months and plans to control communicable diseases in children and provide services to women are articulated in documents PC-1s. Frenzied activity is manifested in fancy new programs such as the health card scheme, the formation of public companies to manage hospital waste, the engagement of expensive foreign consultants, all amidst regular pronouncements from government officials. The state has a panel of technical experts — eminent doctors working in its system — that has been advising governments for the past many decades and continues to do so now. The results speak for themselves. Why would future results be any different if the same experts continue as advisors?  

There are two sets of problems. First, there is no mechanism to critically evaluate the  recommendations of the experts to determine if they are in the interest of citizens or in the self interests of the experts. No oversight is provided either by citizens or by their representatives who either do not know how to monitor or don’t sufficiently care about the situation. Ironically, suo moto notices by the Court call on the same set of experts to provide answers to the problems they should be held accountable for.

Second, the Ministry of Health lurches from one leaking hole-in-the-dyke to another driven by donor is offering funding, bright ideas of dignitaries, or explanations called forth by the judiciary. There is no overarching systemic vision compatible with the country’s constraints and challenges, none that has stood the test of time, regime-change, or public scrutiny. The mindset that survives is that more is better – more consultants, more doctors, more beds, more ministries. The results are staring us in the face as documented in the reports mentioned above.  

Solutions at the margins in the absence of a robust public health system will not resolve the healthcare crisis. Just as more flyovers and underpasses cannot stay ahead of traffic congestion if the city continues to sprawl, increasing the number of doctors or hospitals cannot make up for the growing burden of disease in an unhealthy environment. Take air pollution as an example, where, on average, the exposure of Pakistanis to critical particulates is 6.5 times the safe level recommended by WHO. Asides from adding to morbidity, air pollution killed about 60,000 Pakistanis in 2012 making the country the fifth-deadliest in that category. Here too, we could be vying for first place with the commissioning of numerous coal-based power plants across the country.

The task is by no means impossible and much can be achieved with a simple focus on the provision of clean air, clean drinking water, safe sanitation, a critical education, and gender equality. In 2012, the Infant Mortality Rate in Bangladesh was less than half that of Pakistan’s although the rates were comparable in 1990. This remarkable progress in Bangladesh has occurred despite the fact that it is only two-thirds as affluent as Pakistan in terms of per capita income.    

The Pakistani story has been one of neglecting the basics and channeling funds to intermediaries on half-baked schemes that yield no benefit to citizens. The global rankings provide evidence that is impossible to refute.

The writer is a public health physician and author of So Much Aid, So Little Development: Stories from Pakistan. This opinion appeared in Dawn on March 19, 2018 and is reproduced here with permission of the author.

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Rotten Tomatoes

November 5, 2017

By Anjum Altaf

Rather than asserting that the military and the judiciary could be criticized if criticism was merited, a distinguished minister has taken the position that parliament is just as sacrosanct and hence above being challenged.

In anticipation of what is likely to follow, this being Pakistan, one cannot afford to lose any time taking to task another minister who has asked for the treatment. I am referring to a news item in which the Minister for Industries, Commerce and Investment has informed the Punjab Assembly that there would be “no tomato import despite mafia’s manoeuvring.”

The minister is said to have elaborated that “now tomatoes from Khyber Pakhtunkhwa were being sold at Rs. 70 per kilo in the city and would continue to be sold till prices get further stabilized with supplies from Sindh arriving in the local market.” The justification for the policy is contained in a direct quote from the minister: “Why pass the advantage on to foreign farmers instead of our own?” According to the minister, “an influential mafia” was trying hard for resumption of import from India which would not be allowed to happen.

This minister needs to have a whole load of rotten tomatoes thrown at his head and the party chief responsible for his appointment to the ministry needs to explain the poor selection. Imagine a modern minister for commerce who can publicly state “Why pass on the advantage to foreign [producers] instead of our own?” Just follow through with the implications of the logic — it would put an end to all international trade because the only things traded are those that are made better or at lower cost by foreign producers.

There are a whole host of other problems with the argument. First, note the irony that the statement is coming from a minister in a country where even common pins are being imported from China and garbage collection is being contracted out to the Turks. There has not been a peep about the advantage being passed on to foreigners in these and a slew of other sectors.  

Second, this new-found love of “our own” is confined to producers, setting aside entirely the welfare of consumers who vastly outnumber the former. Why? Are consumers not equally are own? And is the government not elected to enhance the welfare of the majority?

Third, what if someone extends the minister’s argument to the provincial level? Why pass on the advantage to producers in KPK and Sindh instead of our own farmers in the Punjab? Such a person would immediately be labelled an anti-national element even though the logic of the argument remains unchanged.

Fourth, who is this “influential mafia” trying hard for resumption of import from India? What does it have to gain from the import? And, if this is actually a resumption of something that was taking place earlier, why wasn’t this mafia hauled in for anti-state activities at that time? Could it not be a producer mafia trying to block imports? Would a producer mafia not be infinitely more influential than one of consumers?

The point of all these seemingly absurd questions is to highlight the mindlessness of the minister’s statement and the sheer vacuousness of the logic offered for his decision. The fact of the matter is that a blind nationalism is at the bottom of this ridiculous anti-trade stance that is hurting the budget of the vast majority of citizens who have to purchase essential commodities in the market.

At the time when tomatoes were selling for Rs. 300 a kilo in Lahore they were available at Indian Rs. 40 a kilo in Amritsar a mere 30 miles away. But a visceral Indo-phobia, shared by many of our influentials, stood in the way of consumers benefiting from the lower priced supply. It was then that another distinguished minister, the Federal Minister for National Food Security and Research said that “the government will never allow import of any vegetables, including tomato and onion, from India despite record high prices of these kitchen items in local markets due to limited local supply.” He elaborated that “this step has been taken to encourage the local farmers to grow more besides saving huge foreign exchange.”

Our ministers are not alone in articulating such puerile logic emanating from their Indo-phobia. I recall a meeting in which an ex-chief of the ISI similarly railed against trade with India because it would destroy “our own” industry. The specific example he gave was of footwear that was being produced at lower cost across the border and whose import would put Pakistani producers “out of business.” During a break, a participant jokingly enquired about the make of the shoes the chief was wearing — it turned out they were Italian.

The point to note is that this India-centric anti-trade hysteria is shared by many who have no compunctions consuming products imported from all other countries and whose income brackets are such that commodities like tomatoes and onions are a miniscule proportion of their budgets. These are people who tell their car drivers to fill up the tank without ever asking the going price of petrol. They are indulging in the psychic pleasure of “hurting” India at no cost to themselves while pushing millions of people who can afford to buy only a litre of gas at a time below the poverty line.

The ultimate irony is that such callous and shallow prejudice does virtually nothing to hurt India. On the contrary, the gap between the two countries continues to widen while our leaders make fools of themselves trying to prove to a wide-eyed world that India is the “mother of all terrorisms.” It is a sad commentary on the state of affairs and a sign of the extent to which people have given up that nobody even bothers to point out these follies before the narrow window for questioning inevitably draws tightly shut.

This opinion appeared in Dawn on October 27, 2017 and is reproduced here with the author’s permission. An Urdu translation appeared on the Dawn website the following day.

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Plain Truths About the Economy

July 30, 2017

By Anjum Altaf

Every so often someone promises to turn Pakistan into an Asian tiger. It is not a bad ambition but it hasn’t happened yet. Not just that, we don’t seem to be moving forward much. All the more reason for an honest examination because knowing where one is starting from is just as important as knowing where one wants to go.

With help of some illustrative numbers one can establish three points. The Pakistani economy is existing at a low level; it is in relative decline; and too many of its citizens are struggling at or below subsistence level. Getting from here to Asian tiger status would require something beyond more of the same.

First, the state of the economy. The Federal Bureau of Statistics website shows that in 2015 per capita income in current prices was Rs. 153,620 per year or about Rs. 13,000 per month (in round numbers) which is also the current minimum wage. This means that if Pakistan’s total yearly income was divided equally among its citizens, each person would get Rs. 13,000 per month – a household of four would have around Rs. 50,000 a month to live on. Add up essential household expenditures and it is obvious this is a survival-level allocation implying that the Pakistani economy in aggregate is a survival-level economy for its citizens.

Easily available data allows for comparisons with Malaysia, an Asian tiger cub, and South Korea, an Asian tiger. Adjusting for purchasing power, the respective yearly income per person in the two countries is five and seven times that of Pakistan. In other words, instead of Rs. 50,000 a Pakistani household of four would require Rs.2.5 lakh or 3.5 lakh per month to attain the average standard of living in Malaysia or South Korea. That is the difference between a survival economy and a prospering one. No wonder people would like to leave Pakistan to work in Malaysia but none would want to migrate in the other direction.

To achieve the status of an Asian tiger like South Korea, Pakistan’s income per person needs to multiply seven times. How long would that take? Even if the economic rate of growth increases from the existing 5% to 7% and is sustained year after year, it would take over 25 years to reach where South Korea is today. Getting there in 15 years would require a growth rate of 12% which is way beyond anything Pakistan has ever achieved.

Second, while the Pakistani economy is growing, it is declining relative to most other developing economies. In 1990, India’s per capita income was 40% lower than that of Pakistan; by 2009 it had drawn level; today, it is around 20% higher. China’s per capita income in 1990 was 50% less than Pakistan’s; today it is 200% higher. At these relative rates, far from becoming an Asian tiger Pakistan will soon be relegated to the status of an also-ran.

Third, if income were equally shared and every individual received a monthly amount of Rs. 13,000 the reality of the survival economy would be inescapable. It is masked by the illusion of opulence created by a highly unequal income distribution – so unequal that half the total national income goes to just the richest 20% of households.  A recent news report discussing salaries of bank CEOs revealed that Rs. 50 lakhs per month was not an outlier. With some individuals living at first world elite levels, it follows there must be others living below the average in order to keep the total income constant. In fact, the majority of individuals in Pakistan have monthly allocations well below the survival level of Rs. 13,000.

Given the extreme inequality, independent estimates suggest that over half the individuals in the country could be classified as vulnerable in the sense that any unforeseen expense can plunge them into poverty. Thus not only is the Pakistani economy a low-level economy in the aggregate, the majority of its citizens are living at well below an acceptable survival income, in fact in various degrees of deprivation.

How do individuals exist at this level of deprivation? By being poorly educated, in fragile health, increasingly indebted, and overworked because of dependence on multiple jobs. Care to follow the story of someone earning the minimum monthly wage of Rs. 13,000 and you will appreciate the real state of the Pakistani economy. Given this human capital, how do its leaders propose to turn Pakistan into an Asian tiger in our lifetimes?

Understanding our existing predicament raises the real question: How did Pakistan get left behind in this impoverished state? Obviously it is not Pakistan’s fault – nothing says this was its fated destiny – but that of those occupying the driver’s seat all these years. How come China and India starting way behind have overtaken the Pakistani economy and moved so far ahead all in a matter of a few decades? Or how a small country like South Korea became so prosperous with limited natural resources? How come Malaysia has leveraged its strategic location and managed its ethnic diversity while Pakistan has not?

As we move into the election cycle we should be asking political parties some tough questions about their visions and development plans. We should not be fobbed off with easy answers. Corruption is not a good enough reason; it exists everywhere and the sizes of scams are in fact much greater in India. Overpopulation is also an unconvincing explanation given that both China and India are six times more populous. We should also not be distracted by the promise of CPEC. Even if it comes off perfectly it will add at best another 2.5% to the rate of growth of national income without any accompanying reforms of a fundamental nature.

Pakistan’s predicament is clearly related to some very poor policy choices, badly misplaced priorities and shockingly abysmal governance. We can infer some of these from the comparative experience of China which trailed us less than three decades back and is now so far ahead that we look upon it as a saviour. Such an exploration would be the subject of a subsequent article.

This opinion appeared in Dawn on July 25, 2017 and is reproduced here with the author’s permission. The writer would like to thank the following colleagues and students for very valuable suggestions on a number of early drafts: Dr. Ali Cheema, Dr. Farrukh Iqbal, Dr. Ijaz Nabi, Dr. Nadeem ul Haque, Dr. Anupam Khanna, Mr. Shahid Mehmood, Mr. Faizaan Qayyum and Ms. Marwah Maqbool. Any residual errors are the responsibility of the author.

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A Guide to Inequality

June 14, 2017

By Anjum Altaf

It is good that inequality is attracting attention in Pakistan because there are significant gaps in our understanding of the phenomenon.

What is under scrutiny in the West is economic inequality which is only one aspect and that too a rather peculiar one. Inequality has at least two other important dimensions – political and social. Political inequality refers to unequal say in choosing how one wishes to be governed and within the representative form of governance such equality is now ensured by giving every citizen a vote. Although the struggle for political equality goes back at least four centuries, its full achievement is quite recent. Very few are aware that only around 15 percent of the adult population was eligible to vote in the 1946 elections in India. Women obtained political equality as late as the 1940s in some European countries and Blacks became eligible to vote much later than Whites in the U.S.

Social inequality can be appreciated by thinking of who can share your dining table. Your uncle surely can but your cook would most likely eat in the kitchen in separate utensils. Societies stratified by status are socially unequal, caste-based systems being the most obvious examples in South Asia. Some aspects of gender and race discrimination like prohibiting women to drive in Saudi Arabia or restricting Blacks from certain schools in the U.S. are or were forms of social inequality.

Political and social inequalities have engendered protracted struggles over a number of centuries with very clear goals – the achievement of full equality. These goals have been largely achieved in the West which is why one doesn’t hear much about them anymore. The situation is quite different in South Asia where social inequality is the norm. Political equality does exist in principle but in a peculiar form because of the nature of its origin – a fallout of decolonization and not the outcome of a prolonged popular struggle. Consider how one-person-one-vote is moderated through biraderi and caste identities and how many women cast their votes as instructed by men.

Economic inequality is quite different because complete parity has never been a serious popular demand. It is relevant in restricted domains like gender and ethnicity where the call for equal-pay-for equal-work remains cogent but across-the-board equality has been espoused only by some utopian movements. Even Marxism didn’t subscribe to it – its maxim was ‘from each according to his ability; to each according to his needs.’

The reason economic equality has not been a political demand is that it contradicts the demand for freedom. Individuals wish to choose between work and leisure for themselves and since it is highly unlikely that everyone will have the same preference, income inequalities are accepted as inevitable. Political and social equality are considered birthrights but economic achievement is a function of choice as well.  

The recent attention to economic inequality in the West is not the outcome of a sudden popular yearning for parity. It has more to do with the realization by the elites that inequality might have crossed the point where it threatens both capitalism and democracy, the pillars of the current world order.

Economic inequality was not considered a threat to capitalism as long as it was believed that everyone was becoming better off albeit some more than others. This trickle-down theory has been exposed as mistaken. Since around 1980, the output of the capitalist economy has been sucked up – the richest have gained, the middle has stagnated, and the bottom has lost in real terms. This explains the emergence of the Occupy Wall Street movement and the resulting blasphemous references to socialism in the recent elections in the U.S.   

The concentration of wealth has also distorted democracy because the rich have used  money to protects their assets. It is common for tycoons to pay a lower income tax rate than their secretaries and legal mechanisms have been created to shelter wealth offshore – Trump is reported to have paid no tax for 18 years. Democracy has morphed into plutocracy with one-person-one-vote replaced by one-dollar-one-vote and a growing reaction is paving the way to right-wing populism.

Economic inequality is extreme in South Asia –  the richest 57 individuals in India are reported to own as much wealth as the bottom 70 percent of the population. However, there is no significant political mobilization because people continue to accept economic inequality as the norm. They have always known that it exists – how could they not when it is always in their face – but its wider implications for capitalism and democracy are not issues that agitate the minds of the rulers or the ruled.

Much more relevant for the individual in the economic sphere is equality of opportunity. It is a meaningful political demand that irrespective of the economic status of individuals their children should be entitled to the same opportunities as anyone else’s. This would begin to erode the cumulative accumulation of privilege and wealth that characterizes South Asia.

The real issue remains social inequality. Without gains on this front economic justice would remain unattainable. Not all South Asians have been unaware of this truth. Reflect on the words of Dr. Ambedkar, the author of the Indian Constitution: “On the 26th of January 1950, we are going to enter into a life of contradictions. In politics we will have equality and in social and economic life we will have inequality… How long shall we continue to deny equality in our social and economic life?…  If we continue to deny it for long, we will do so only by putting our political democracy in peril. We must remove this contradiction at the earliest possible moment or else those who suffer from inequality will blow up the structure of political democracy which this Assembly has so laboriously built up.”

This opinion was published in Dawn on June 13, 2017 and is reproduced here with the author’s permission. For a related article, see Poverty and Human Rights.

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CPEC: The Case for Full Disclosure

May 19, 2017

By Anjum Altaf

I am now less interested in CPEC, which is unstoppable, and more fascinated by how people think. Conventional wisdom has individuals using reason to objectively weigh the costs and benefits of an option and then choosing it if benefits exceed costs. More and more evidence on actual behavior suggests that individuals start with their minds already made up and then pick and choose arguments to support their positions.

At this time PML supporters are convinced CPEC is a game-changer while those opposed to the party believe it is a recipe for disaster. The former claim Nawaz Sharif is an astute industrialist and China a trusted friend. The latter argue Nawaz Sharif is corrupt and is using hype to distract attention from his troubles. Supporters are not willing to consider that their party can make bad decisions; opponents are unwilling to concede the the PML could get something right. No one is basing their position on factual information which remains irrelevant to the debate.   

Such attitudes make it difficult to convince anyone that their views might be mistaken. Objectively speaking, everyone should be neutral on the CPEC at this time as enough reliable information is not available to evaluate costs and benefits within reasonable bounds. The rational individual should be withholding judgement and demanding the numbers. Instead, stormtroopers on both sides are frothing at the mouth, ready to dismiss all contrary arguments as treason.

Although I am convinced that few minds are likely to be changed by my opinion, I still feel a responsibility to present the case for neutrality till more data is available for credible analysis. I believe my argument will make sense even to those lacking the expertise of  economists and financial analysts.

The starting point is the acknowledgement that $56 billion is a significant amount of money in the Pakistani context and that an infusion of this magnitude has the potential to do a lot of good. The big question is: Will the potential be realized?

Instead of answering this question on faith, I suggest participation in a thought experiment. Imagine your family is facing financial hardship and everyone you have approached has turned you down. Now someone comes along offering a loan of a million dollars, an amount that can solve all your problems and change your life. Would you accept the money with your eyes closed?

I am hoping you will ask for the terms of the loan. Suppose you are told you would be expected to convert to another religion. Or that you would have to indenture your children in case you fail to meet the repayment obligations. Would you accept the money on such terms?

These are hypothetical examples. I am not saying the Chinese are asking Pakistanis to give up their religion or indenture future generations. The extreme examples are only meant to dramatize the essential point that only a very foolish or reckless or desperate person would be willing to sign on the dotted line without knowing the terms of the deal. Is that an unreasonable conclusion?

Let us return to CPEC assuming the Chinese would not be asking for any such thing. But let us think of what the Chinese might ask for. Suppose they ask that whatever we buy with the money must be purchased from Chinese suppliers. Would you accept such a condition on a personal loan? If not, would you not worry if the nation is being asked for such an arrangement?

Consider the personal risks of accepting such a demand. The lender could sell you second-rate goods at above-market prices. Any tied arrangement would deprive you of better alternatives available in the market. At the national level, sole-sourcing would eliminate the efficiency gains resulting from procurement of supplies via competitive international bidding. Therefore, we should be reluctant to accept loans conditional on sole-sourcing.

The Chinese may not insist on sole-sourcing but ask instead for guaranteed charges and exorbitant rates of return on the investments independent of whether the projects are profitable or not. Many people know someone unfortunate enough to get enmeshed in exploitative arrangements with loan sharks and are aware of the consequences. This kind of outcome is not to be taken lightly.

These examples are speculative and may appear outlandish and I have no idea if CPEC involves anything of the kind. But that is exactly the point because such examples are by no means purely a figment of the imagination. Readers are well aware that usury, the charging of exorbitant rates of return on loans, is prohibited in most religions for good reason. They know that bonded labor still exists in some industries. Some who know their history would recall that the British passed an act in 1938 to rescue the heavily indebted Punjabi peasantry from the clutches of moneylenders. And there are records of violent opposition to alleged attempts by missionaries to influence people by offering them material temptations.     

The bottom line is that it is never a good practice to accept loans without full knowledge of the terms and conditions, more so when one is desperate for financial assistance. Readers would do well to read Shakespeare’s Merchant of Venice to reinforce this conclusion. And, if convinced, wouldn’t it be ethically wrong to urge the country to accept something that one would personally reject? You should not do to others what you would not do to yourself.

Intellectual honesty demands a stance of neutrality on CPEC till the terms and conditions are disclosed without which one cannot arrive at an objective assessment of whether it could be potentially beneficial for the country. Only then could one move to the next stage of appraisal knowing that even potentially beneficial projects of this magnitude depend for their success on many other factors. Asides from the truly random and uncontrollable ones, these would include the implementation capacity of Pakistani governments whose probity and track record is not one to inspire confidence. What would we need to do to hold the government’s feet to the fire and prevent another Reko Diq?

This opinion appeared in Dawn on May 15, 2017 and is reproduced here with permission of the author. See also, CPEC: Lessons from History and CPEC: Questions Persist.

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Silly Season in Pakistan

April 5, 2017

By Anjum Altaf

The last shred of doubt regarding the reality of climate change should have been removed by the unnaturally early arrival of the silly season. One warming outcome has seen the hot-air balloon of the Pakistani economy lifting off into the stratosphere without anyone ever noticing what happened.

First there was the upward draft in the Wall Street Journal and the Washington Post that removed the veil from the transformation we had failed to observe. Not wanting to leave anything to our blinkered visions, the WSJ blared it all out in one breathless headline: “Pakistan’s Middle Class Soars as Stability Returns: Consumer spending rockets as poverty shrinks, terrorism drops and democracy holds.”

Before the excitement could die down and lest a couple of eyebrows be raised, the redoubtable Economist added the gravity of its authoritative voice with an article titled “Pakistan confronts something unfamiliar: optimism” reiterating thereby that we were too befogged to see what was happening before our eyes.

Leave aside the fact that the land wouldn’t know real pessimism if it were staring it in the face, populated largely, as it is, with optimists of which one can count three types. First, those who can only be called ‘resigned optimists’ who subscribe to the Allah maalik hai philosophy that everything would come good in the end because we are God’s chosen people. And who can quarrel with them given that the nation has survived the most incredible stupidities that any ruling class can visit on a country.

Second, the ‘oppositional optimists’ who indulge in temporary pessimism only because it is not their charioteer that is leading the charge. Give a chance to the theocrats or the autocrats or the bureaucrats or the cricket bats and watch how we emerge roaring as the tiger of Asia if not of the entire world.

Third, the ‘incorrigible optimists’ who really need no excuse to feel positive. After soberly recalling all the gross errors committed over the past seventy years and recounting all the obvious but unfortunately missed chances, he or she arrives inevitably at the cheerful “I remain staunchly optimistic” conclusion. For this set, optimism need not be based on any evidence; it is more a genetic trait like green eyes – one is just born so. Press them a bit and they will pluck anything out of the air as the reason for their buoyancy – a very youthful population would do as well as anything else. Never mind we haven’t invested a penny in potty training.

For the EconomistA cricket match and an obscure administrative reform” in FATA are sufficient signs for the great leap forward. Add to that the handy standby: “Pakistan’s stock market has risen faster than any other in Asia over the past 12 months, by a heady 50%.” Heady, indeed. For years the Economist has been warning of dreaded bubbles underlying the heady rise of the Chinese stock market but no such qualms are warranted in the case of Pakistan even as its own regulator cracks down on malpractices in the exchange. It is all a matter of the balloon one wishes to float.

One does wonder though what caused the Economist to so radically change its story. It was just a couple of months back that it posted its last roundup of the Pakistani economy under the title “Roads to nowhere: Pakistan’s misguided obsession with infrastructure” with the despairing subtitle “The government is building more airports, roads and railways, even though the existing ones are underused.” That article labeled our last great economic corridor, the Lahore-Islamabad motorway, a “$1.2bn white elephant” and compared the Prime Minister to Sher Shah Suri. It ended with dripping sarcasm: “the railways minister, recently admitted to parliament that the country would not be getting a bullet train after all. “When we asked the Chinese about it, they laughed at us,” he said.”

The Economist clearly doesn’t expect much of Pakistanis not least to pay attention to what they read. The conclusion to its suddenly upbeat and optimistic gushing notes with genuine surprize: “For Pakistan, however, even to be debating the subject is encouraging.”  

Just to prove wrong the charge that Pakistanis are unable to recognize optimism when they see it a motley set of experts jumped into the fray adding colour to the silly season. Some excoriated the detractors for failing to appreciate the economic takeoff. Others claimed we were already much richer than we believed. Yet others asserted poverty was a thing of the past. I can only presume the malnutritioned children (nearly half of all children in the country) must be so because their parents have better things to do with their wealth much as the unemployment in the Great Depression had been an outcome of the voluntary trade- off between work and leisure.

Wake up Pakistan: feudalism is dead, we are all urban now, poverty is licked, every city is a growling tiger cub, and the Chinese are coming. The writing is on the wall. “Yes, how many times can a man turn his head / Pretending he just doesn’t see? / The answer my friend is blowin’ in the wind / The answer is blowin’ in the wind.”

Think what you may. It is the silly season. It is the season for feeling good. March madness has barely ended. April is the kindest month in our part of the world. But still, why the obsession with the economy? Why not just fly a kite?

This opinion appeared in The News on April 4, 2017 and is reproduced here with permission of the author. See related article Economic Bullshit.

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CPEC: Questions Persist

March 20, 2017

By Anjum Altaf

Is there a fruitful line of inquiry regarding the China Pakistan Economic Corridor (CPEC)? That depends on the questions with which one initiates the inquiry.

Would CPEC be a game-changer for Pakistan? This drawing-room question is particularly useless to begin with. With so much uncertainty and so many variables beyond human control no one except a clairvoyant can predict with any confidence. It is just as pointless, if not actually silly, to take sides. Enough hard information is not available for one side to convince the other on the basis of analysis – believers will continue to believe and doubters will continue to doubt for reasons having little to do with the intricacies of the initiative.

The following questions pertaining to details of the deal are more useful: Under what conditions are the various components of the initiative being negotiated? What are the financial obligations and terms of repayment? What tax concessions are being offered? What are the revenue and capital cost projections of the various components? Who will bear the operating and maintenance costs?

Citizens responsible for the debt liabilities have a right to ask for this information and expect it to be provided. What are the reasons for the secrecy? What is there to hide? The numbers that are filtering out in dribs and drabs on guaranteed rates of return are not very reassuring. The very fact that information is not being fully shared is a major cause for doubt – people are naturally apprehensive in the absence of transparency.

It is good that the government has set up a CPEC website ( but at this time it is only a list of projects with costs and timelines. The terms of financing and revenue projections are missing. In addition, the website suffers from information overload. For example, it includes the Karachi Circular Railway, Peshawar Mass Transit, Quetta Mass Transit, and the Lahore Orange Train.

These are all plausible projects with individual justifications and may all involve Chinese funding but what do they have to do with the corridor? It seems suspiciously the case that various stakeholders are being bought off by including their pet projects under the CPEC umbrella.

The case with the power projects listed on the website is similar. Each might be justified but why is a wind farm in Bhambore lumped under the CPEC? Wouldn’t it make more sense to treat them as independent projects with separate feasibility studies as is the norm. The indiscriminate lumping together of everything happening in the country is another red flag regarding the coherence of the initiative.

It would help to strip out the core corridor investments and share details of their financing and cost-benefit projections. It is reasonable to expect that barring unforeseen events, a functioning corridor would be beneficial for China. But what would be in it for Pakistan except collecting a toll on the transit trade? How much toll collection is being projected? What would Pakistan be exporting via the corridor given its grossly uncompetitive economy? Why would industrial estates succeed along the isolated corridor when they have failed in major locations like Peshawar and Quetta? How many permanent jobs are expected to be created?

These are legitimate questions deserving answers in order to build consensus and take citizens into confidence. It is not enough for the government to say ‘trust us’ because governments in Pakistan have done nothing to earn that trust. Neither international agencies nor Pakistani citizens believe the various governments have been upfront with facts. Such behavior is not unique to Pakistan – after all, Bush and Blair lied to their citizens to invade Iraq.

In the absence of honest answers, those without vested interest in deal-making can only point to historical precedents and past evidence. Take, for example, one of the most significant trade corridors of recent times, the Suez Canal. Was it a game-changer for the people of Egypt? Or take the game-changers for Pakistan promised in the past – Thar Coal, Saindak, Reko-diq, all, incidentally, with Chinese involvement. What happened? They certainly changed the game for those involved in the multiple transactions but is there anything to show for the people of Pakistan or even the locals of the project sites?

The attempt to turn such questioning into issues of patriotism or of maligning our best friends strengthens the impression that all is not above board. These are the standard tactics of those who wish to divert discussion from facts and stifle inquiry with intimidation. Under normal circumstances citizens would be within their rights to examine the track record of Chinese investments in other countries like Sri Lanka (Google Hambantota) or prior deals with Pakistan like the railway locomotives. In all such cases the Chinese are not to blame – ‘buyer beware’ is rule of the market. The concern is with those negotiating the deals on our behalf and the question remains the same: Do you trust them? If so, on what basis?

Given the lack of transparency and the historical evidence, the following outcomes appear likely: For better or for worse, the CPEC momentum is unstoppable; It will be beneficial for the Chinese economy; It will generate toll revenues for Pakistan which may be more or less than operating costs depending upon contractual terms, much as for the Lahore-Islamabad motorway; Without inclusiveness, economic gains might be outweighed by political stresses; It will definitely change the fortunes of a few thousand individuals in Pakistan; It is unlikely to be a game-changer for the Pakistani people much as the Suez Canal was not one for Egyptians.

On the other hand, this could be the mother of all miracles. Let us bow our heads and pray while the untethered camel wanders into Kashgar.

This opinion was published in The News on March 19, 2017 and is reproduced here with permission of the author. See also, CPEC: Lessons from History.

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