| 06 January 2004 | Tuesday | 13 Ziqa'ad 1424 |
Crisis management
Amending the Constitution
To exploit the window of opportunity made available by demographic asymmetry, the developing world must take a number of positive actions. By now rich countries fully recognize that they have to rely, in some way or the other, on the copious supply of young and skilled workers from poor countries. They have to do that in order to sustain the growth of their knowledge based industries. That the developing world has many more young people than the developed world - in absolute numbers as well as their share in total population - will not automatically produce material benefits for the former.
That can only happen if people are well educated and trained to participate in the knowledge-based economy developing around the world. A combination of demographic advantage, developments in information and communication technology sector, transformation of manufacturing processes by transnational corporations and their willingness to outsource a lot of work to the developing world have opened a number of new possibilities for the countries that are still relatively poor. To see where these opportunities lie, let us first look at the way technological development and innovation contribute to development.
That such a link exists was demonstrated many decades ago by economist Robert Solow who introduced the term "total factor productivity" into economic jargon. Solow's main contribution was to recognize that output increases are not entirely the result of greater application of labour and capital to production processes. Something additional is at work, and that is technological improvement.
The total productivity of an economy, or of a sector, or of an individual enterprise is the consequence of a combination of labour, capital and technology. Take two countries with exactly the same amount of labour and capital. The one that is more technically sophisticated will always outperform the one that is relatively backward. That is why India is likely to do better than Pakistan unless Pakistan closes the technology gap.
But to get back to Professor Solow's discovery, he had looked at capital in the traditional way. It was defined as land and machinery. Later capital came to be treated in much broader terms than the original Solow construct. It was not just machinery in the case of non-agricultural pursuits that qualified as "capital" but also such intangibles as human and social capital.
Human capital formation was the result of investments in health, education and training. Social capital was the product of how individuals and groups of individuals related and worked with one another. Education and knowledge accumulation was a critical input in the formation of all types of capital.
How much of the productivity increase and corresponding growth in national output should be attributed to such intangibles as human and social capital? This question has become increasingly important as the rapid evolution of information and communication technology has made a tremendous amount of difference to the way human and social capitals develop. In fact, information and communication technology may be significantly contributing to the amounts of these two "capitals" that are becoming available for use in various economic systems. This was not anticipated by Professor Solow.
In 1987 the MIT professor, who in the meantime, had gone on to win the Nobel Prize in economics, developed what came to be known as "the productivity paradox." He puzzled why when you could see the computer age everywhere it was not visible in productivity statistics. Solow had a point and it needed an explanation. The first commercial computer was installed in the early 1950s by General Electric and tens of thousands of companies had followed suit.
American firms in particular - but those in other countries as well - had invested heavily in successive generations of IBM 360s, Univacs and Digital Equipment mini computers. However, all the investment in computing had not yielded productivity gains. In fact, productivity growth in all developed economies had slowed significantly.
In the United States, the annual rate of increase in output per hour - one common measure of productivity - during the 1960s was 2.6 per cent. From 1973 to 1995 it dropped to an abysmally low 1.5 per cent in spite of the mass arrival of personal computers and the development of the Internet. In the 1985-1995 period, computers migrated from the data centres in the firms to office desks and most homes. This was Solow's paradox.
But then after 1995, growth in productivity suddenly picked up. Again to use America as an example, productivity growth increased from 1.5 per cent per year in the previous two decades to 2.5 per cent. Noticing this change several prominent economists, US federal chairman Alan Greenspan included, began to talk about the dawn of a new economy. But why did this increase in productivity happen with such a long time lag?
Technology gurus had an answer that seemed plausible. They hypothesized that technology's impact is felt when investments in any particular innovation reaches a critical mass. They pointed out that in the decade before productivity increases began to appear, capital investment in computers and telecommunications equipment was on a rising trend, peaking in the US at 50 per cent of all business capital spending. But economists were not impressed with this line of thinking. They failed to see a causal link between information and communications technology on the one hand and growth and development on the other.
Solow was one of the several sceptics. Another doubter, Robert Gordon at Northwestern University in Chicago, pointed to a number of alternative explanations such as normal variations in the pace of productivity growth through the business cycle. He didn't think that the ICT revolution had much to contribute to a sharp rise in productivity in the late 1990s.
But productivity increases persisted. While business investment in IT fell sharply all over the world and rate of economic growth slowed, productivity improvements continued, reaching 5.3 per cent in the US in 2003 and a scorching annualized rate of 9.4 per cent in the third quarter of 2003. It was clear that all these developments needed a theory.
It came from Erik Brynjolfsson, a young MIT economist working at the Sloan School, whose ideas seemed to convince the doubters. He argued that productivity gains following investments in ICT can take more than five years - sometimes even longer. This happens since ancillary changes must accompany investments in ICT hardware and software. "IT is just the tip of the iceberg in terms of the investment that goes into these projects. Ninety per cent of the investment - literary, 90 per cent - goes into creating new organizational and human capital," he argued. Without intangible capital - human and social in particular - which takes time to form, investment in ICT does not produce productivity increases.
There are many examples of how human and social capital can combine with investment in ICT to produce extraordinary increases in productivity. One illustration of this is "swarming," a technique pioneered, like so many others in this field, by the US army. The technique is based on peer-to-peer networking in which employees in an organization - an army, a government department, an NGO, a firm - pull together to form an ad hoc team from anywhere to work on a specific task. According to one account, "swarming was developed as a tactic by the US army to enable separate units to come together for a particular attack. By enabling small forces to co-ordinate with each other directly, rather than through a central command post, the army has cut the time needed to plan military operations from 10 hours during the first Gulf War to just ten minutes in Afghanistan." (Rubens, 2003, p. 3.)
Scores of businesses have adopted "swarming" as a way of applying knowledge to various processes. Hewlett-Packard, or HP, is one such business. According to Craig Samuel, the company's chief knowledge officer, "the potential prize is worth billions of dollars to companies like HP if we can collaborate in the right manner, and the breakthrough technology is the flow of person-to-person (or P2P) information. Napster showed that using P2P it is possible to link individuals around the world into a unit with a common focus very quickly." (Rubens, 2003, p. 2.)
According to this way of thinking, ICT alone does not contribute to productivity increases and economic growth. The use of computers and the internet produces positive economic effects only when people working with them adopt new approaches. They can "swarm" over finding solutions to the problems that would have taken long time to solve even with computers had work habits not changed.
It took education and knowledge accumulation to make an effective use of the ubiquitous computer. But knowledge has to be constantly acquired to make an effective use of computational power and the rapid flow of information made possible by ICT.
The implications for the developing world of combining rapid fire developments in ICT with human development are obvious. Countries in this part of the world can help themselves in two ways. Through sharp increases in productivity, they can bring about significant increases in the rates of economic growth. This has already begun to happen in the places where large investments have been made in developing ICT not only by the private sector, as in India and to a lesser extent in Brazil, but also by the government, as in China. These investments will produce productivity increases down the road which, in turn, will contribute to increase in GDP growth.
There are estimates that the extraordinary developments in India's IT sector have already added at least one percentage point to its rate of GDP growth. That the Indian policymakers are now talking confidently about achieving and sustaining rates of GDP growth of seven to eight per cent a year is because of the extraordinary inroads knowledge-based technologies are making in the country's economy. China will draw similar benefit once its large investments in the ICT sector begin to bear fruit.
Another important contribution the ICT sector can make in the developing world is to allow the dispersal of production processes. This would be similar to what transnational corporations are already doing. Producers in developing countries by using ICT can take work to the places where people live rather than have them congregate to towns and cities which are the centres of economic activity.
By using ICT, developing countries can slow down the rate of rural to urban migration and constrain the further growth of such mega cities as Karachi, Calcutta, Lahore and Bombay.
By far the most important contribution of ICT is to better integrate the developing world with the global production system. Rather than worry about the digital divide that would, as some have feared, result in producing a further gap in the incomes of developed and developing countries, ICT could help to narrow the differences. Once again, India and China offer good illustrations of the positive consequences of ICT for economic growth and development. But for all this to happen, developing countries have to prepare their workforce by educating and training them and by making it possible for them to accumulate knowledge.
By introducing networking arrangements among people they can introduce new forms of teaching, instruction and knowledge accumulation. The most important ingredient in this knowledge and networking based strategy for economic growth is education, in particular at the tertiary level.
Crisis management
George BUSH (and Tony Blair) could well read Robert Dallek's biography of John F.Kennedy and specifically the chapter on the Cuban missile crisis. For a short-hand version, they could see the film Thirteen Days.
Both take us through the drama of a brief moment in history when the United States and the Soviet Union stood eyeball to eyeball and the slightest miscalculation or loss of nerve could have plunged the world in an unthinkable catastrophe. This is relevant in the context of the prevailing wisdom of pre-emption, which has replaced the doctrine of war as the last resort after all other options have been exhausted.
Then, in October 1962, Cuba was to the United States what Iraq became last year, a clear and present danger, armed with missiles that carried nuclear warheads. Castro was the public enemy number one and indeed the CIA with the blessings and active encouragement of both John and Bobby Kennedy had made attempts to assassinate him.
As with Iraq, much store had been put on the assessments of the exiles who had succeeded in convincing the "brass' in the United States that only Castro stood in the way of the liberation of the Cuban people, hard-pressed by the yoke of the communist dictator. Like Saddam Hussain, Castro was demonized. The mafia too was interested in toppling Castro so that they could get back their gambling casinos and their vice rings. The Bay of Pigs had ended in a fiasco with both loss of face and egg on the face.
As with Saddam's weapons of mass destruction which have yet to be found Cuba too had weapons of mass destruction provided by the USSR with the crucial difference that the United States had incontrovertible proof of them and Adlai Stevenson had provided it to the United Nations with dramatic flourish in what would become known famously as " the Adlai moment."
There was far more justification to take out the Cuban missiles and launch an invasion than there was to go to war in Iraq and for thirteen agonising days the world held its breath as John Kennedy weighed his options in round-the-clock meetings with his war council which went by the name of Ex Comm. and it was a virtual who's who of the military and civil, everybody who was anybody.
The military saw the crisis as a priceless opportunity to put into practice what they had rehearsed in war games and wanted no further time wasted and an invasion launched. What was at stake was the certainty of a nuclear war. Yet it wanted the political option, the resolution of the crisis by means short of war shut out. Kennedy resisted. But he was under intense pressure. He had also to consider domestic public opinion and his own re-election and he was being pulled in different directions.
The Soviet Union too had its hardliners and Khrushchev's predicament was worse than Kennedy. He ran the risk of a coup against him and he blustered and bluffed. An invasion of Cuba would mean that the Soviet Union would occupy Berlin as they had been threatening to do. The United States had imposed a naval blockade of Cuba but to make it sound less menacing, called it "a quarantine." A line had been drawn in the sea and if Soviet vessels crossed it, they would be sunk.
As Robert Dallek writes: "The president's (Kennedy) tension was reflected in his appearance and physical movements." He quotes Bobby Kennedy who recalled the mood as saying that " this was the moment...which we hoped would never come. The danger and concern we all felt hung like a cloud over us all...these few minutes were the time of the greatest worry by the President.
"His hand went up to his face and covered his mouth and he closed his fist. His eyes were tense, almost gray, and we just stared at each other across the table. Was the world on the brink of a holocaust and had we done something wrong? ...I felt we were on the edge of a precipice and it was as if there was no way off."
The crisis was ultimately resolved but it had been a photo-finish. The Soviets backed off and the United States withdrew its Jupiter missiles from Turkey so that there was no loss of face for Khrushchev. The principal lesson learnt was that military solutions to military problems was a formula for mutual destruction, something we in India and Pakistan, both nuclear powers, would do well to heed.
Robert Dallek sums up: " Forty years after the crisis, historians almost uniformly agree that this was the most dangerous moment in the forty-five-year cold war. Moreover, despite his part in provoking the crisis, they generally have high praise for Kennedy's performance. His restraint in resisting a military solution that would almost certainly have triggered a nuclear exchange makes him a model of wise statesmanship in a dire solution.
"One need only compare his performance with that of Europe's heads of government before World War I - a disaster that cost millions of lives and wasted unprecedented sums of wealth - to understand how important effective leadership can be in times of international strife. October 1962 was not only Kennedy's finest hour in the White House; it was also an imperishable example of how one man prevented a catastrophe that may yet afflict the world."
It remains for the present day hawks to reacquaint themselves with this piece of history. Crisis management needs a cool head but it also needs the ability of a statesman to weigh all the consequences of military action, to measure the damage that one can inflict on the enemy as against the damage that will be inflicted, not only material damage but moral as well.
Sometimes the moral damage cannot be reconstructed. Before embarking on the war in Iraq, I am wondering if the same sort of agonizing assessment was carried out as was done in the case of the Cuban missile crisis. Or was the first option taken, the military one and everything else was a puppet show?
Amending the Constitution
The dialogue between the government and the MMA on the issue of Legal Framework Order (LFO) finally culminated in the passing of the Seventeenth Amendment to the 1973 Constitution.
Under the agreement General Musharraf would retain the office of the Chief of the Army Staff (for one year) in addition to being president of the country. He also agreed to obtain a vote of confidence as president from his electoral college. Article 58(2)(b) of the Constitution which provides for dissolution of the Assembly by the president has been amended to provide that the president shall refer the matter to the Supreme Court.
The national security council would no longer be a constitutional body. The military chiefs would still be appointed by the president but after consultation with the prime minister. The original retirement age of the judges of the Superior Court has been restored. The provincial local government ordinances, would remain part of the 6th Schedule to the Constitution for a period of six years. This means that after six years these laws could be amended like ordinary laws without prior sanction of the president. Finally validation clause has been introduced which affirms all actions taken by the military government.
Looking at the text of the 17th amendment, one wonders why if the MMA was prepared to accept these amendments, it took a whole year in completing the dialogue. The government has virtually obtained a constitutional mandate for all the controversial acts of General Musharraf without conceding anything substantive in return.
Whether this amendment would confer legitimacy which has eluded the general all along remains to be seen. However, this deal is likely to give some credence to the allegation that the MMA has always been in the government fold and its protest was nothing more than a facade.
This amendment has confirmed the government's position that the LFO was all along part of the Constitution. This is in direct contradiction to the basic premise of the MMA's stand. The other fundamental objection raised by the MMA was that the referendum did not elect the General as president and a uniformed president was not acceptable.
This amendment not only validates the election of General Musharraf as president through referendum but also provided for a vote of confidence to affirm his election. It further provides that the general shall be deemed to be elected to hold the office of the president for five years under the Constitution and his election shall not be called in question in any court or any other forum on any ground.
Thus, whatever doubts that may have existed about the election of the president by referendum, these would now be laid to rest as the election has been affirmed by the electoral college i.e. The parliament and the provincial assemblies. That, at the very least, appears to be the intention of the general and his supporters. Whether the legitimacy which he longs for so desperately still eludes him remains to be seen.
The MMA has claimed that by compelling the general to give up the office of the COAS after one year is a great achievement. Whether General Musharraf has agreed to give up his power base on account of pressure from the MMA or elsewhere is a matter of some doubt. However, the importance of this fact deserves to be acknowledged. After all, Zia died in uniform. There is no doubt that General Musharraf would have preferred to continue as the COAS without any time limit.
The counter-argument is that by providing constitutional cover to an otherwise unconstitutional arrangement even for one year has profoundly distorted the Constitution. Pakistan must be a unique case where the elected president is also a soldier in uniform holding the office of the COAS under a constitutional mandate. This distortion and its long term pervasive consequences as a precedent are sufficient to outweigh the advantage extracted by the MMA from the general.
For the last one year, the MMA had asserted the sovereignty of the parliament. Their stand has been that no single individual can sit in judgment over the elected assembly. Yet that is exactly what has been achieved by Article 58(2)(b) which empowers the president to dissolve the Assembly. The only difference made by the 17th amendment to Article 58(2)(b) as re-introduced by the LFO is that in case of dissolution of the assembly, the president would now refer the matter to Supreme Court. This exercise would be completed within 45 days of the dissolution.
Comparing Article 58(2)(b) as introduced by the LFO and amended by 17th amendment, it appears that this amendment has given a further tactical advantage to the president. All past dissolutions have ultimately been challenged before the Supreme Court by one or the other parties. Being the petitioners the political parties had the initiative in their hands during the proceedings before the court. They could use the judicial forum to make out their political as well as legal case which could reach larger audience through the media.
Now instead of a direct petition by the aggrieved party, a reference would be filed by the president. His legal team would get the first opportunity to justify his action. This would be a huge tactical advantage to his legal team. Whether political parties would be allowed to join these proceedings formally and address the court remains to be seen.
(The Indian Supreme Court has taken the view that on a presidential reference of this nature, the political parties may also be heard.) As to the time-frame prescribed under the amended provision, this again is inconsequential as Article 254 of the Constitution provides validity to the action taken after the lapse of constitutionally mandated period.
Article 58(2)(b) is one of the most controversial provisions of the Constitution. It confers enormous power on the president. All presidents who had this power exercised it as many times as they could. The present assembly is unlikely to avoid the recurring vicious cycle.
Yet there is some force in the argument that there needs to be some check on an all powerful prime minister. Ideally that check should have come from the courts. Sadly the judiciary's performance on this count has been dismal. Thus, some other constitutional mechanism has to be evolved. If it has to be the dismissal by the president, then the president being part of the parliament should also cease to hold office after dissolving the assembly. This could be the best check on abuse of power by the president. If the president knew that he would also have to go with the assembly, he would only dissolve the assembly when it really becomes unavoidable.
Coming to the age of retirement of Judges of the Superior Courts, the 17th Amendment has restored the original provision as it stood before the amendment by Legal Framework (Amendment) Order, 2002, on October 9, 2002. It is somewhat surprising that while the 17th Amendment has reduced the age of retirement enhanced by the LFO it has not made a corresponding reduction in the age of appointment of the judges in the High Court introduced by the same amending provision.
The Legal Framework (Amendment) Order, 2002, had enhanced the age of appointment of High Court Judges from 40 to 45. The 17th Amendment has reduced the age of retirement from High Court from 65 to 62 but has not made a corresponding reduction in the age of appointment to High Court to 40. The net result is that the maximum tenure of a High Court Judge which was 22 years before the LFO has now been reduced to 17 years.
If the government's stand that the LFO was part of the Constitution and 17th Amendment merely amends the Constitution as amended by the LFO is correct, then the reduction of retirement age should not be given retrospective effect. It is arguable that the judges who were holding office at the time when the retirement age was increased had acquired a vested interest to continue till the age prescribed by the LFO as the 17th Amendment is not retrospective.
The manner in which the age of retirement of the judges was enhanced was most embarrassing for its beneficiaries. The manner in which this has been withdrawn is humiliating. The treatment meted out to the Superior Courts, is indeed appalling. Sadly this has been so with the consent of the institution itself.
The 17th Amendment brings an end to the political drama played for a year. However, it is no less controversial than its predecessors. It has continued with our tradition that we amend the Constitution only to adjust to the convenience of our rulers, be they civilian or in uniform. The people have nothing to gain from this. They remain as alienated as ever. Not surprisingly the people have lost faith as well as interest in political events in Islamabad. The net result of the whole exercise is that a military rule has been sanctified yet again.