These income inequalities
By Shahid Javed Burki
I BELIEVE that economic disparities of various kinds — in the distribution of income and wealth, in access to economic opportunities, in the differences among various segments of the population to augment incomes by relocating the place of work — will have severe political and social consequences for Pakistan.
These may manifest themselves as soon as the next elections if the latter are allowed to reflect fairly the mood of the populace. That notwithstanding and also given the evidence available from other countries it is surprising how little attention has been paid to this aspect of development by Islamabad’s policymakers.
Policymakers all over the world tend to ignore the consequences of widening income disparities produced by large increases in national product. In that respect Pakistan is not alone. The leaders of India’s Bharatiya Janata Party, the BJP, were surprised that their “Shining India” slogan did not work for the majority of the voters in the elections of 2004. In fact, it had quite the opposite consequence from the one that was intended by the BJP leaders. It made clear to a very large number of people that the light that was being produced by “shining” India was illuminating only a small proportion of the people. This made those who had been left in the dark deeply resentful and they expressed their unhappiness by voting the government out of office.
Democracies can bring about change in direction through elections. That luxury is not available to the citizens who live in other systems. In Pakistan’s own history, there is a good example of how the government’s claim that it had brought growth worked against those in power and in favour of those who were in opposition. President Ayub Khan’s “decade of development” was celebrated in 1968 with great gusto by his administration. The consequence of this celebration for the regime was not dissimilar from that experienced by BJP in India in 2004. However, the Pakistani system did not allow the people to send the government packing; their resentment was expressed in the streets and led to another takeover by the military in 1969 and ultimately to a civil war that split the country into two parts in 1971.
Let me illustrate this point about growth not readily trickling down to the poor and not resulting in a reduction in income and wealth disparities by discussing the case of China, another country that does not have the political maturity to accommodate dissent in an orderly manner. China started on the path of rapid growth in the late 1970s under the leadership of Deng Xiaoping who declared that it was “glorious to be rich”. Deng also suspended his country’s adherence to an ideology that favoured equality over growth by saying that what mattered was not the colour of the cat but that it caught the mice. The cat’s colour referred to economic and political ideology; the mice to the defined goal of public policy. For Deng and his associates, the goal was rapid growth and not a society in which the country’s wealth and the income it produced were equitably distributed among the citizens. Deng was prepared to tolerate income disparities as long as the Chinese economy grew rapidly.
What has happened to the Chinese economy since Deng gave up on ideology and pressed ahead with growth? In the 27 year period since China embarked on the growth path, the country’s gross domestic product has increased at a rate of just over 10 per cent a year while its population increased by 1.2 per cent per annum. This means that the average income per head of the population grew by 8.8 per cent a year. There is another way of looking at this remarkable performance.
In the period since China embarked on the trajectory of growth, the size of the economy has increased thirteen-fold and the average income of its citizens has grown ten-fold. In terms of purchasing power parity — a more accurate measure of the relative size of the economy and income per head of the population — China is now the world’s second largest economy with an output of nearly $7.5 trillion compared to the $11 trillion produced by the United States.
If the country continues to grow at the rate of say eight per cent a year over the next 10 years while the GDP of the United States increases at the rate of three per cent a year, it will overtake the United States as the world’s largest economy by 2016. At that time, the Chinese GDP in today’s prices but expressed in purchasing power parity terms will be $16 trillion compared to US’s $15.5 trillion.
How has this remarkable economic performance translated into the welfare of China’s citizens? The answer to this question came recently from a study carried out by the World Bank. Its results were widely quoted in the western press. According to the Bank’s analysis, growth has not only increased income inequalities but also, surprisingly, impoverished the poor. This goes against the widespread belief in development circles that high rates of growth almost always translate into poverty alleviation. That has not worked for China. At the start of the reform process and the beginning of the period of high growth, the country had a relatively even distribution of income. It is now less equal than India, the US and Russia with a Gini coefficient of 0.45 compared to 0.41 for the United States, 0.31 for Russia and 0.33 for India.
What is even more worrying is that the real income of the poorest 10 per cent of China’s 1.3 billion fell by 2.4 per cent in the two years to 2003, the period covered by the Bank’s analysis. Over the same period the income of China’s richest 10 per cent increased by more than 16 per cent.
The Chinese leadership is clearly worried by these trends. Hu Jintao, the country’s president and the secretary general of the ruling Communist Party who came to power in 2002, has made narrowing the income and wealth gaps central to his administration’s economic policies. Hu will have to face re-election by the party’s central committee next year for another five years and his performance in this area will weight heavily in its decision.
Those who worry about China’s future do so on the grounds of a possible political upheaval produced by income inequalities and continuing impoverishment of the people living in the countryside. The country does not have enough strength in its political system to contain a serious street challenge to the authority of the Communist Party. This was demonstrated by the crisis produced in 1989 by the crowds that gathered in Tiananmen Square in Beijing to protest against the economic policies that were then being pursued by those in leadership positions.
There are lessons to be learned in Pakistan’s case from the Chinese experience. The healthy increase in income per head of the population in the last three years seems to have translated into reduction in the incidence of poverty and income inequalities. In so far as poverty is concerned, there is no doubt that the number of people who classify as poor probably declined a little as did their proportion in the total population. Trickle down worked a bit more in the countryside than in the large cities.
The poor were helped by the creation of many more jobs in the last two years. The government estimates that 5.82 million jobs were created in this period, compared to an average of just over a million in the last three years. The poor in the rural areas did better than those in the urban areas because in some parts of the country agriculture began to move towards the production of high value added crops. The dairy industry around Lahore and Karachi has begun to develop, feeding the changing patterns of the demand of the well-to-do.
It is equally certain that income inequality has increased. The Economic Survey provides some revealing information about changes in inequality over time. The Gini coefficient, the most popular measure of inequality, increased from 0.28 to 0.30. According to this index, a reading of zero means perfect equality with national income divided equally among all citizens while a reading of one means total inequality with the entire income going into the pockets of one individual. By international standards, a Gini coefficient of 0.30 does not indicate extreme inequality. What is worrying is its trend and also the fact that inequality is much greater in urban rather than in rural areas. Urban Gini is 0.34 compared to 0.25 rural.
In the absence of robust analysis and the lack of much information on the subject, I will offer some thoughts of my own on how I view the inequality in income distribution in Pakistan. In doing this, I will move beyond the measures that are available in the annual Pakistan Economic Survey or the World Bank’s World Development Indicators. The two documents provide some information on Gini coefficients and the shares in national income with the population segmented into quintiles or deciles.
According to the World Bank, which used a survey carried out in 1997-98 for the data it provided, the bottom 10 per cent of the population received 3.7 per cent of national income while the share of the top 10 per cent was 28.3 per cent. The ratio between these two shares was 7.6.
In other words the rich had average incomes almost eight times as much as the average for the poor. Looking at the quintiles, the bottom 20 per cent’s share was 8.8 per cent, that of the next segment was 14 per cent. For the third quintile, the share was 15.9 per cent; for the fourth 15.9 per cent; and for the upper 20 per cent of the population it was 42.3 per cent.
All of this is useful information in getting a broad idea of the extent of income inequality in the country. But it is not very revealing if we wish to analyse how inequalities affect politics, culture, economic development and the make-up of society. Since that is my purpose in this series of articles, I will use some of the available numbers and some guess work to build fuller economic and social profiles of the various income groups in the country.
I will make a beginning in this direction by dividing the population into five broad categories — the very poor, the not-so poor, the middle income class, the rich and the very rich — and then discuss their economic and social situations as well as their geographic distribution. It is not too difficult to indicate the proportion of these categories of people in the population and the shares of income that accrue to them.
Beyond that — to say how the various groups are distributed across the country, their access to various basic needs and services, their relationships with one another etc. — will take me into the realm of speculation. That notwithstanding, it is a useful exercise to undertake, if nothing else then to excite debate and possibly some serious investigation. I will start with this analysis next week.


Who should head a university?
By Dr Tariq Rahman
THE first university to be established on modern European lines in South Asia was the University of Calcutta. It started functioning in 1858, one year after the great trauma of 1857 which left the British politically insecure.
Possibly for that reason and, of course, because of colonial exigencies, the chief executive officer (CEO) of the university, called the vice-chancellor, was a functionary of the state — a judge.
The chancellor was the viceroy himself. The syndicate — the most powerful decision-making body — was dominated by the functionaries of the state. In short, the model of the modern university in India was not Oxford and Cambridge or even London: it was a new model — the colonial model. In this model, the faculty was not entrusted with too many decision-making powers; that remained the prerogative of the state and was to be exercised by its own functionaries.
The university is changing very fast before our eyes. The private sector is investing in universities. The armed forces have created their own universities. And, most significantly, the Higher Education Commission (HEC) is bringing about rapid changes in public universities. One institution of the colonial university, the non-academic CEO, remains intact, however. Indeed, whereas colonial vice-chancellors used to be from the judiciary and the bureaucracy, nowadays they are also from the military and the corporate sector. Why did this happen? Is it desirable? These are some of the questions I will try to answer in this article.
It happened because the CEO has power, a reasonable salary and perks. And, of course, individuals retiring from the elite services (armed forces and the higher bureaucracy) want both power and benefits. As for the state, Pakistan being a garrison state the ruling elite is most comfortable with CEOs from the establishment or at least those who the establishment approves of. That such CEOs do not allow creative, seemingly radical, ideas to flourish is not a problem for the ruling elite. That, in fact, is exactly what it wants.
The arguments against the appointment of non-academics as CEOs of universities fall broadly into two categories: the pragmatic; the symbolic and psychological.
The first of these refers to the desideratum of efficiency. The argument is that non-academics, whether military officers, bureaucrats or corporate executives and owners, have a long training in administration. Thus, they can administer universities better than academics who, presumably, spend most of their time in archives, libraries, laboratories or the classroom. This argument is based only on assumptions. Nobody has ever presented data to prove it.
A few people have mentioned the names of physicians and surgeons from the army who set up medical colleges or were outstanding administrators. However, the number of civilian doctors who were equally competent is not mentioned. As for the universities, anecdotal evidence suggests that non-academics do not perform better than academics. In some cases, famous scholars have been targeted by such people presumably because of their intellectual independence. However, hard data is hard to come by.
Another version of the argument is that, since the bureaucracy and the military enjoy inordinate power in Pakistan, they can get things done for their universities and individual faculty members more easily than academics. This, unfortunately, is true in some situations but it is true only because the country is deviating from the rule of law, institutions are becoming weaker than individuals and because a certain feudal, arbitrary kind of power manipulation is becoming the norm.
If academics are given power at all levels beginning from the rotation of the head of department in universities, they will become competent in administration. If only such people are appointed CEOs it would mean refusal to succumb to the weakening of institutional authority which reduces the power of academia in society. In any case, administration requires common sense, decency and a sense of justice and fair play. These may be present in academics as well as non-academics. Thus, it makes no sense to deprive academics of legitimate authority in academic institutions for unsure gains. In short, the pragmatic argument in favour of appointing non-academics as CEO is fallacious.
Now let us come to symbolic reasons. A CEO of a university is a symbol of learning. He or she is respected not only because of the authority conferred by the office but also because he or she is a scholar or scientist of repute. Anyone who is not known in the academic world is not respected by university faculty the world over. Foreign visitors often only just manage to suppress derisive smiles when they discover that a certain vice-chancellor has been a lieutenant-general or a federal secretary. Moreover, the subordination of academics by non-academics gives the wrong message to everybody i.e. that a society respects academia less than other elitist groups.
The highest rank in the military goes to military officers, the highest rank in the bureaucracy goes to bureaucrats, the highest rank in the judiciary goes to a judge. However, in university the highest rank may go to someone who started their career as a lieutenant or an assistant commissioner. This is symbolic of society’s mistrust of academia and should be corrected.
Let us come to the psychological consequences of making non-academics heads of universities. The CEO is in a powerful position, taking decisions which affect the lives of academics and the future of knowledge in the country. If such decisions are made by non-academics they will be influenced by ways of thinking which are non-academic: the maintenance of the status quo, the unquestioning assumptions regarding national interest, the conventional values of the establishment. Even the understanding of the significance of publications, the citation of a scholar’s work, etc, are unknown to people who have never done this kind of work.
As such, non-academics, even if they are efficient in daily administration, cannot really take informed decisions or understand what academia is all about. They can understand specialised training but not that of which academia is a symbol: the life of the mind, the pleasure in ideas and the deconstruction of conventional stereotypes and belief systems.
Moreover, it is degrading for individual academics to feel that they do not enjoy power in the university. After all, academics are not supposed to enjoy power in the military, the judiciary, the bureaucracy or the corporate sector. The university is the only place where they can and should make the most significant decisions. To deprive them of this is unjust and makes academics feel under-confident, powerless and dominated.
In this context, let us look at the appointment of non-academics in public-sector universities. The media has been full of reports about non-academics being appointed VCs in certain public universities. The HEC has not yet reformed this colonial practice. Some people argue that our universities need to be governed better so this is acceptable. However, most universities of the western world, administered by academics as they are, function better than our universities. Institutions reform themselves provided they are given the self-confidence to look to their own strengths and not bank on outsiders to get them out of trouble.
The Roman Catholic Church is governed by the clergy and was once a very corrupt institution. However, the Church did not invite generals and under-secretaries to run it. It reformed itself and still retains the confidence to correct itself through its internal mechanisms. Similarly, Oxford and Cambridge reformed themselves in the nineteenth century. Had they been taken over by outsiders the dons would no longer be as confident as they are now.
In short, we must have new rules for the appointment of the CEO of Pakistani universities. The basic rule should be that the CEO of a university should be a published academic who has held a professorship in a university for at least five years. Nobody else, however competent, should be eligible for this position. A university may choose a CEO from another university or from its own professors. Either a search committee may look for a CEO or the person may be elected by the professors just as the pope is elected by the cardinals. However, the person chosen should be an academic and a full professor at that.
These conditions for the choice of CEO should be established by an amendment to the University Act so that they are not deviated from. This will ensure that academics gain in prestige, pride, self-esteem and confidence. As these are necessary qualities for the birth of new ideas, especially in the social sciences where such ideas disturb the status quo, our universities will benefit from the change. As yet, none of our universities is in the world’s top 500. Making academics proud of their vocation might improve their ranking, or at least not make them any worse.


Integration & terrorism
By Madeleine Bunting
TONY BLAIR has an important speech to make later this week. It will probably be his last opportunity to influence decisively the public debate on integration and diversity that has so dominated his time in office.
Since 1997, race and immigration have steadily climbed the list of voters’ priorities. They have now, according to Mori polls, arrived in the top slot, of more concern even than health or education.
Tangled up in this debate is a string of emotive issues, from racism and extremist terrorism to veils and the role of faith in a secular society. Over the past near-decade, New Labour has zigzagged its way through the territory; early achievements such as the Macpherson inquiry have been lost from view in a wave of anxiety and fear that followed 9/11. Many of Blair’s colleagues have opportunistically surfed the latter; indeed, he’s not been above that himself.
But if the succession of Downing Street meetings with different participants in this debate is anything to go by - from young Muslims earlier in the autumn to a group of academics last week who helped him on the coming speech - he’s been looking for new inspiration. And it’s sorely needed. The debate has become freighted with muddle-headed assumptions. So here are a few pointers for his speechwriter.
1. Reassure and uplift. Without being complacent, Britain can point to considerable success over the past few decades in absorbing mass immigration, with polls showing much lower resistance to diversity than in many other European countries. Two-thirds of Britons say that multiculturalism makes Britain a better place to live.
This is the basis for optimism - that Britain is remarkably well placed to deal with a future in which ethnic minorities play an ever bigger role (as they will given the age structure of their populations). A resourcefulness and adaptability will ease the adaptation of several major cities, including Birmingham, to becoming majority non-white in the next two decades. Stop the panic-mongering.
2. It is crucial to delink terrorism from the integration and diversity agenda. They have nothing to do with each other, so nail the myth - perpetrated by politicians and commentators - that integration is an anti-terrorism strategy. The least integrated are isolated, non-English-speaking mothers and grandmothers - hardly bomb-making material. Conversely, integration measured in education, employment or social life is no immunisation from the appeal of Islamist extremism — as the CVs of last year’s London bombers showed.
So go back to basics and reiterate that integration is about equality of opportunity, breaking down intergenerational cycles of poverty, and harmonious social relations. These goals may - or may not, depending on international affairs - reduce the appeal of terrorism in the long run, but any serious government should be interested in them in their own right, not simply as a means to the end of defeating terrorism.
3. Adapt a phrase of Clinton’s: “mend not end” multiculturalism. Ditching the concept has been one of the most egregious of recent government zigzags. Roy Jenkins’s concept of multiculturalism — equality of opportunity, tolerance of diversity — provided a mental map that has facilitated accommodation with Britain’s increasing diversity since the 60s. It has become popular to caricature multiculturalism as a system of static, discrete communities. Recent criticism by Trevor Phillips and Ruth Kelly has served little purpose, doing more to disorientate than provide a compelling alternative.
Of course, the reality is much more fluid: ethnic groups influence each other culturally, politically and economically. They have children together: by 2010 there will be nearly a million mixed-race children. But the state has a vital role to recognise communities and identify their needs if it is to realise that founding principle of multiculturalism - equality of opportunity.
4. Identity has become a major preoccupation in this country during your leadership and what’s badly needed is to summon up a plausible, hopeful future. First, ignore the bogus theory that there is a trade-off between diversity and solidarity - the idea that people are happy to pay taxes only when they share the same ethnic background with beneficiaries of the welfare state. One of the key indicators used is the fact that in areas of high diversity, there are low levels of trust, but the leap to a causal connection is false - low trust is related to poverty not diversity.
Some (including your neighbour, Gordon Brown) believe that the most effective way to generate mutual commitment is by reinvigorating a sense of national identity: elaborate Britishness, and this flag-waving will bind us together. Be wary. Studies by the Economic and Social Research Council’s identities programme indicate that it doesn’t work. Big narratives of nation don’t make much sense to young people muddling through lots of possible identities. Plus, this government has put much emphasis on individual choice and personal freedom, so it’s a bit odd to start trying to impose something as personal as identity - let alone corralling us all into one as uniform and statist as nationalism.
5. Instead, government policy needs to be orientated around two facts. First, identity is increasingly hybrid: British-Asian, British Muslim, British Hindu, Scottish Asian, perhaps also British Pole. Cheap flights and phones sustain transnational identities, and where those identities are secure and affirmed, research shows that children flourish. There is no problem with multiple identities as the US history of Irish or Iranian Americans showed. British has to be a very baggy idea with plenty of room for other affiliations.
Second, identity is often at its strongest when it’s local. This is where the most positive future lies. It is in the local community that there is most possibility of building connections across class and ethnicity. Ask young people from all kinds of backgrounds about belonging and they will say home is Bradford or Birmingham or Bolton or London. Policy should be around building up and strengthening local identities. Encouragingly, this is the direction that the new government-appointed Commission for Integration and Cohesion is planning.
6. Final advice is to pick your words carefully and leave out the following terms. Cohesion is just too plain sticky, and reveals that diversity has become a blank screen on which to project unconnected anxieties about individualisation and the decline of community. Segregation is too controversial to be useful because the word’s emotive US history brings with it a charge sheet of people to blame.
Communalism, a new derogatory term imported from the Indian sub-continent, is being applied particularly to the tendency for young Muslims to define themselves by their religious identity. Representation - who is representing who, and why - is a sterile inquisition that is in danger of bringing all debate about race relations in this country to a standstill.
Your job is to get the national conversation going again - in a more positive direction than the threatening detour it has taken in recent months. —Dawn/Guardian Service


