Badly Governed to Ungovernable

I have written many times about how conditions in Pakistan are fast deteriorating from badly governed to ungovernable. Our official economy is a pack of lies.

The economy documented by the government is taxed and called ‘formal’. The economy, legal but not documented by the government, is called ‘informal’ and not taxed. That is the government’s own fault. Then there is the economy that our wonderful constitution has exempted from income tax entirely, which was to be expected from a bunch of feudal lords. That is the agricultural economy in which obscenely big landlords are not legally required to pay income tax. That is ‘Above the Law’ economy. This is the fault of the State and the so-called people’s representatives who make and manage the constitution. Then there is the underground economy that deals in contraband and the banned. That is called the ‘Black Economy’. Both the informal and black economies are individually larger than the formal taxed economy and together they are at least three times as big.

Yet every Pakistani pays a myriad of indirect consumption taxes on almost everything, like the General Sales Tax. Consumption taxes are fine as long as they are not too high, used to ‘compensate’ for ‘losses’ when prices decline as happened with fuel recently, or constantly raised by a government desperate for revenues so as to meet the fiscal deficit target promised to the IMF. Thus it is pejorative and defamatory to say that, “Pakistanis hardly pay taxes.” Every Pakistani pays a lot of indirect tax and salaried Pakistanis pay income tax too. Others pay as little income tax as possible. Why should they when rulers and politicians hardly pay any taxes and hide their assets at home and abroad in the names of their families, cronies or brass plate companies registered in tax havens? Why should they when they hardly get anything in return for their taxes? That is Pakistan’s economy in a nutshell.

When the official economy and the government’s treasury withers, the formal and informal private sector wither with it too. Add the steep decline of public sector enterprises many of which are strategic and you have a picture of utter chaos.

Infrastructure maintenance is negligible, new infrastructure building absent. People wonder why, when Musharraf left over 19,000 megawatts of electricity producing capacity, we have acute shortages. We have them because our transmission lines are decrepit and getting worse and new ones are not being installed. The existing ones cannot take the required load without blowing, which they often do. This is just one example of the growing failure of government and its public sector enterprises. All are failing: no electricity, no gas, no water, unreliable fuel supply, declining road, rail and air transport, inadequate schools and colleges, healthcare, hospitals, housing, affordable food, jobs, justice and everything that is basic human needs and is the bounden constitutional and divine duty of any government to provide, most especially one that calls itself ‘Islamic’.

In such a situation only the black or underground economy thrives: tax evasion done best by our rulers and politicians, bootlegging, drugs peddling, prostitution, pornography, gun running, black marketing, black mailing, hoarding, adulteration, kidnapping for ransom, bank heists, armed theft, mercenaries for hire… I haven’t mentioned many more but the biggest and most fatally damaging is economic terrorism by corrupt governments and their institutions that are the biggest Mafias of them all.

Financial criminality in the public sector is well known – commissions, kickbacks and theft of public money any old how. Public sector enterprises are yet another corruption centre. The latest is running them into the ground, paying them huge subsidies to remain afloat and finally ‘privatizing’ them for a song to crony front men.

The only way that an ordinary businessman in Pakistan can be ‘successful’ is by hook or by crook, “putting wheels on files” by greasing palms and evading as much tax as possible to keep going. If a businessman wants to become big time he has three options: join cartel-mafias, become a crony-front man of the official Mafia or enter politics and get into government. Try and do it morally and legally and you will come a cropper because morality and legality are singularly absent in Pakistan, morality hijacked by obscurants and politicians and legality by lawyers and judges who break laws wantonly while only their exhibitionism remains. Values get warped as people’s minds are constantly polluted by vile and bile, hatred, violence and deliberate mutation and mutilation of God’s Word spewed out daily from the loudspeakers of mosques, television, in schools and colleges by semi-educated ‘teachers’ while young boys are regularly sodomized in seminaries by those who claim to speak for God. The law courts, swamped by mediocrity, ignorance and imbalance, are unable to cope with outdated laws, inadequate judges, criminal and incompetent police. No wonder there are some 3 million cases pending in the judiciary, some 17,000 in the Supreme Court. What a joke. Cases that should be heard and decided fast are ignored and judgments ‘reserved’ as if justice delayed is not justice denied, like whether there was rampant electoral fraud, while cases that are jokes like the price of samosas and Atiqa Odho’s alleged bottles get urgent attention. And we are expected to respect rulers, mullahs, judges and lawyers who shower flower petals on the Punjab policeman Mumtaz Qadri who is the self-confessed murderer of Salman Taseer Shaheed while lawyers who support the murderer are elevated to the superior judiciary? Give us a break. The case is being ignored for fear of reprisal because terrorists have kidnapped Salman Taseer’s son as insurance for Qadri. It now emerges that the file of Salman Taseer’s murder case has disappeared into “thin air” and no one seems to know where it is. We all know where it is and why it has ‘disappeared’ but we have no proof. Call this a State?

All this adds up to Pakistan fast reaching flashpoint. We have one of two options: go up or go down. The third, allowing the system to evolve hoping that it will get better is fraught with the danger of it evolving backward and Pakistan being officially declared a failed state. When states like Greece are on the cusp of financial failure, while the Euro is wobbling and the European Union unscrambling, what do we think we are that we will not fail? We will if we don’t mend our ways. It cannot happen on a wing and a prayer.

Our politicians have perpetually proved that they are incapable of running the state. The fault, dear Cassius, lies not in our stars but in our system that we are dying underlings. When the tide returns, which it definitely will, we must have rulers who are able to ride it on the crest.

We need the haircut of austerity, but not like Greece. We need to totally cut wasteful, corrupt expenditure, reprioritize budgetary allocations and lay maximum emphasis on education, negotiate to ease the debt burden (if Shaukat Aziz could do it why can’t the financial genius Dar?), end everything that stops and chases away investment, not just terrorism but lack of infrastructure and energy, induct competent people into the bureaucracy and public sector enterprises, minimize corruption and provide timely and affordable justice to people and businesses. These are no brainers. Can the present lot do it? Not on your life. A recent newspaper report had it that “Western companies continue to exit Pakistan citing corruption…Walt Disney pulled approximately $200 million worth of yearly textile production from Pakistan and put the country on a banned list of approved supplier countries. The company labeled Pakistan as a risk to their flow of business”. Moody’s has warned that the fuel crisis might lead to Pakistan’s credit rating lowering further.

Can the political alternatives on offer pull our chestnuts out of the fire and make the phoenix rise? Not on your life. Their prime purpose is to gather maximum power, maximize the longevity of their rule and maximize the own wealth while impoverishing Pakistan. Let evolution take its course and suffer Zardari and Sharif in turns. Good luck to you. You will find that good luck turns into bad luck very fast. Right now you are only seeing its beginning.

Government is unraveling fast: the Punjab Governor resigned saying that land grabbing Mafias patronized by the ruling party (for a cut, of course) are more powerful than the governor – what powers does a governor have anyway? Is he such a simpleton that after knowing the Brothers Sharif for years he has only now discovered what they are? The finance minister has been told by the IMF that it will not accept reduction in the fiscal deficit target. He returns home and slaps more sales tax on more items.

The state is unraveling stitch by stitch. At this rate we are in danger of no state. Those who harken for the army yet again do so in utter desperation for lack of viable alternatives. But no army can deliver on good intentions alone as we have seen, not unless they stop confusing wish lists with a coherent strategy to restructure the system of governance that can certainly not be done within the current system that has proven its inefficacy. When the high tide comes we will need champion surfers to ride it on the crest.

Let me end on a pleasant note. David Darst, Chief Investment Strategist of Morgan Stanley, says that with over 100 million people below the age of 30 the rise of Pakistan is just a matter of time. Theoretically correct, but how much time? Till the cows come home and there is no pasture left? The time won’t come unless we get a realistic constitution with a relevant political system that throws up good governments, when there is good governance, justice and balance in society at all levels – political, economic, educational, social, religious, regional, gender, demographic, nutritional, healthcare, dignity, security, housing, clothing, public transport and, above all, reduction in the gulf between rich and poor by pulling the poor up, not pushing the rich down to create equality in poverty, and so much more. It’s the biggest of all possible challenges, not one that a parliament of monkeys and a congress of baboons can meet nor medal bedecked generals marching up the hill and down again like the Duke of York, not without mobilizing the people, specialist help, the vibrancy and energy of youth and a lot guidance from the wise.