IT is not clear how serious Mr Zardari is about his oft-repeated pronouncement of ‘changing the system’. Presently there is no evidence to suggest that any such thing is being contemplated in Islamabad.

The oath-taking (is it really necessary for good Muslims?) in a foreign language by members of a massive cabinet in the stately and opulent President House in the presence of the rich and the powerful and the rush to seek armed escorts, flagged cars and ministerial accommodation by the dozens of new cabinet members do not give us much hope for a change in the system. Ours has become a celebratory democracy.

One can argue endlessly about the flaws in our political, economic and social systems but it is the way our ever-growing and massive government functions and the way our leadership succumbs to the trappings of power that need to be addressed first in order to move towards a pragmatic reassessment of the inadequacy of the whole system. The parliamentary system has been completely contaminated during the last decade and the powerful military president has now been replaced by an even more powerful civilian president who may yet — some people hope — bring about the much needed reforms. But maybe not. Mr Zardari seems more of a victim of history rather than its beneficiary who finds it difficult to let go of the great opportunity of exercising unlimited and uncontrolled power. The illegitimate presidential system fathered by Gen Musharraf is alive and kicking.

Just like Gen Musharraf, Mr Zardari has managed to make his prime minister a virtual principal staff officer. (Mr. Bhutto did the reverse when he introduced a puppet president to the nation.) Maybe this is good, as Mr Zardari has shown a lot more spunk than any other leader of the PPP and also commands the undisputed support of the party.

But by just controlling policy Mr Zardari cannot change the system. He has unwittingly allowed the parliament to become a glorified ‘chopal’, where inter-party rivalries set the tone for debate and discourse. Legislation in pursuit of excellence and resolving issues is unheard of as most parliamentarians seem to be unaware of the complexity of issues. The presidential ordinance remains a preferable instrument of change.

To be fair a resolution of the immense problems we currently face requires an extended period of time. But it also requires a determination and vision which seems to be lacking in our leadership. The long, agonising wait for democracy desperately needs to be tempered with hope and opportunity for the people.

But our leadership has yet to demonstrate any competence in providing that to the impoverished masses. It has become entangled in the complexities of a presidential-parliamentary system trying to hold on to the threads of a weakening, artificial alliance. The task of nation-building has been sacrificed for maintaining a precarious political balance.

A shameful feudal-bureaucratic-crony mafia seems to be emerging in defiance of the people’s will. Henry Kissinger’s dictum that power is the ultimate aphrodisiac is proving to be more than true in our beloved homeland as this mafia aims for the stars in its attempts to consolidate its hold on power and the sources of power. Self-interest seems to carry precedent over the general good of society. The people’s representatives are required to be subservient to this scheme of things in order to maintain their presence in the corridors of power.

The most disturbing aspect of the ruling elite is its insouciance. Unfortunately it is becoming endemic and the intelligentsia is also getting affected. Unable to do much except talk and write, our intellectuals are getting despondent at the futility of their outpourings. The vicious system continues to stifle the spirit of the free mind.

Today all our parliamentarians are guilty of this indifference; their collective and individual failure to legislate for the good of this country, to provide for the poor and to attack what is wrong has been overtaken by their desire to enjoy the fruits of affluence.

As poverty continues to grow like an epidemic, our government has, like the previous government, continued to ignore this issue. The government colleges for the poorest are charging Rs1,000 as admission fees and the required character certificate from the government schools costs Rs300 for every student. The board examination fee is also close to Rs1,000. This is a blatant attack on the dignity of the poor and is designed to discourage the poor from sending their children to school. A reminder of the psyche of the ruling elite. We can of course blame the system for this. But then who is responsible for changing the system?

Our history has shown that large cabinets lead to inefficiency and waywardness. Today our economy is being handled by half a dozen different ministries who lack not only a common vision but also any coordination. As usual the government is fumbling in the dark. There is no economic policy in place and the ad hoc approach adopted by our decision-makers is full of contradictions. The raising of interest rates amounts to a deliberate attempt to stifle the economy, create unemployment and slow down economic growth. Previous attempts to check inflation by raising interest rates have failed miserably in our country.

Consider what Paul Krugman, the Nobel Prize-winning economist, said this week in an article: “When depression economics prevails, the usual rules of economic policy no longer apply: virtue becomes vice, caution is risky and prudence is folly.” He goes on to say: “To pull us out of this downward spiral, the federal government will have to provide economic stimulus in the form of higher spending and greater aid to those in distress”.

Although Krugman is talking about America, this statement is equally applicable to Pakistan. But our ruling elite, who have shown remarkable resistance to new ideas, are determined to follow a failed strategy. We have become a nation of ‘ill’ literates.

THE government was claiming that it was not prepared to discipline itself when trying to get away from the IMF because it used to be a very tough organisation about conditionalities.

To quote The Economist: “A bailout by the International Monetary Fund was a uniformly horrid experience. Cold-eyed, sharp-suited men pored over your country’s books, demanding painful structural reforms and bone-chilling fiscal stringency. Faced with the current turmoil in emerging markets, the fund now seems more like a generous uncle.”

One personally doubts if it will be a very generous uncle with Pakistan, but without agreement with the IMF the Friends of Pakistan are not likely to be too friendly. There was no option but to come to an agreement with the Fund.

We are not a well-run country. The machinery of government disparagingly called the bureaucracy was destroyed in the name of democracy by Zulfikar Ali Bhutto. He simultaneously proceeded to destroy the private sector in the name of socialism. The combination was catastrophic.

In Pakistan charisma is the secret of political success. Currently, Nawaz Sharif is blessed with it except that it happens to be substantially in the Punjab. So was the late Benazir Bhutto. Hers was a bit more national. Its remarkable element was that it was highly international.

The economy recovered under Ziaul Haq but he proceeded to destroy the relatively relaxed nature of educated Pakistani society in the name of Islam. It was a form of orthodoxy practised in Saudi Arabia. Pakistan, without oil, could not afford it because it discouraged foreigners from visiting Pakistan. These things became a setback for development because there is always an international element in import substitution and export diversification. The political governments which followed also failed because the main economic objective of their leaders was increasing their own personal wealth.

The Musharraf government which took over in 1999 had to invite the IMF to bail them out. At that time the IMF was in effect the ‘Imperious Monetary Fund’. The US representative for all practical purposes operated the Fund.

Stanley Fischer, formerly the US representative and No. 2 in the Fund, has said in a recent interview: “There were cases in the 1990s when the Fund had too much conditionality on things that weren’t essential. There was a period … when the Fund wanted fiscal contraction when fiscal contraction probably wasn’t necessary…. Some of the countries do get into crises because they are pursuing the wrong policies. You’ve got to correct that.” Pakistan probably does need a correction, except that it is not that simple.

When the IMF agreement was terminated the Pakistan economy was badly managed in the name of liberalisation, deregulation and privatisation. There is nothing wrong with liberalisation, deregulation or privatisation but in a developing economy we have to realise their limitations. There has to be a framework within which industrialisation and services should operate. Savings, investment and export promotion and diversification should be the goal of economic management. Fiscal policy should be limited to borrowing for investment. Countries like Pakistan have no support arrangement for the poor or the unemployed. The provision of education and health services is also poorly managed, corrupt and insufficiently financed.

All governments are reluctant to reduce current expenditure. This is especially true of Pakistan. For instance, even during Musharraf’s tenure the prime minister’s secretariat was supposed to be employing about 800 people. What on earth they were doing remains a mystery. No one questioned the prime minister.

On the whole, there seemed to be considerable over-employment in the public sector. Elected governments claim to be increasing employment. A recent event proves this. PIA announced the re-employment of 4,000 personnel who, it is claimed, had been removed for political reasons. If we are going to concentrate on economic growth the reduction of current expenditure is inevitable. But who cares?

Inflation is an issue. The previous government had no control over petroleum prices; in order to help the PML-Q it decided to provide huge subsidies on petroleum products. Large borrowings were made from the State Bank. The borrowing increased the money supply and became inflationary. The State Bank decided to deal with it by reducing bank liquidity. The markets crashed — but food prices have kept rising.

In developing economies an increase in the price of essentials is difficult to bring down. An interest rate increase is not going to do much about this. Because of low price elasticity the prices of essentials may well go up.

The depreciation of the rupee has also had an inflationary effect which was the result of people moving from rupees into US dollars. An interest rate increase is not likely to bring in extra foreign exchange. In Pakistan all elected governments tend towards fiscal irresponsibility. Some sort of compromise between an increase in interest rates and dealing with a recession appears necessary.

Banks were deliberately made excessively liquid by the previous government after the IMF programme was terminated. The objective was to increase the demand for consumer durables and other investments. This happened. We had decided to live dangerously when we ignored rising current account deficits. As a result the stock market kept rising and so did real estate. Now that things have collapsed banks are finding it difficult to recover loans advanced for such purposes.

There is a problem of bank liquidity which is being helped to some extent by the State Bank but, for all practical purposes, there is a credit crunch: money markets have dried up; interest rates have risen; and banks are getting desperate about increasing deposits. The entire financial sector is afraid of making advances to almost anyone.NBFIs, i.e. non-bank financial institutions, are in even greater trouble because their deposit mobilisation capabilities are extremely limited — they depended largely on the money market. The NBFIs were supposed to be controlled by the SECP but it has now been decided to hand them over to the State Bank. Until this decision is implemented and the SBP takes some interest in rescuing them the NBFIS will have a tough time surviving.

The real problem is despair about the future. It has naturally led to capital flight. Unless despair is replaced by hope and expectation things will continue to get worse.

LAST week, Frank Gehry’s first major project in Britain was ditched, making it the first big victim, architecturally, of the credit crunch. Plans for a dramatic development of 750 flats facing the sea at Brighton [south-east England] were dropped when the developer, Karis, failed to find fresh funds, three months after Dutch bank ING pulled out.

If Gehry — creator of the famous “Bilbao effect”, by which thrilling architecture triggers urban regeneration – can be tossed aside by recession-wary banks, what about less celebrated architects?

“House builders are in such a hurry to drop projects,” says Amanda Baillieu, editor of Building Design magazine, “they’re text-messaging architects to tell them to stop work. At the same time, banks are foreclosing on loans made to small architectural practices set up over the past few years, in the hope of cashing in on the housing boom. The prediction is that one in five will go bust.”

Some 40 per cent of architects lost their jobs in the last recession, says Sunand Prasad, president of the Royal Institute of British Architects. “It was very hard for young architects in the early 1990s. Luckily, architecture encourages broad thinking. Many found new careers in law, academia, catering and so on. But, when the good times came again in the lead-up to the millennium, it seemed an entire generation had gone missing. It took some time to find them again.”

Older architects are no strangers to recession. The current slump, though, is likely to be very tough indeed. Why? Because in the past, the public sector – whether in Britain, continental Europe or the US – was able to step in when house builders and developers pulled in their horns.

Take President Roosevelt’s Tennessee Valley Authority. Between 1933 and 1944, some 16 magnificent dams with hydro-electric power stations were built along the river, giving thousands of jobs to architects, engineers and contractors, not to mention bringing irrigation, power and economic growth to the poor farming communities of seven southern states.

Today, not only is the TVA the biggest energy producer in the US, its mighty structures remain tourist attractions. In Britain, the superb architectural and engineering work accomplished by the London Passenger Transport Board, a public corporation established in 1933, proved what could be achieved when the going was tough: extensions to the tube [subway] network, new stations and rolling stock. Such work was inspiring; it also created many jobs.

Today, though, the public sector in Britain has increasingly been privatised. Schemes such as PFI and PPP – private finance initiative and public-private partnerships, which fund new public buildings, especially hospitals and schools, and the renovation of the tube — have turned out to be as ill-conceived as critics said they would be a decade ago. With banks and markets floundering, public projects are feeling the squeeze, and there is certainly nothing around the corner as grand and bold as Roosevelt’s awe-inspiring TVA. “About three-quarters of our work is in the public sector,” says John Pringle of Pringle Richards Sharratt.

In times of recession, architects may well need to follow commissions around the world. “If I tell you we’ve got work in 22 countries,” says Norman Foster, “it’s not to brag, but to underline how you can only really beat a slump — unless you’re a one-man band with minimal overheads – if you have commissions spread internationally.”

Nigel Coates, professor of architecture at the Royal College of Art, tells his students: “You don’t choose architecture for the money. You should only do it if you love the idea of being an architect. But I’ve also been saying that recession isn’t altogether a bad thing.”

What might post-recession architecture be like? Alison Brooks, an architect whose practice shared the 2008 Stirling prize for the design of the much-feted Accordia housing development in Cambridge, says: “So much housing raced up in recent years has been mean and transitory. No one wants to lay down roots in homes that are pokey, fast-buck products. What’s the point of building houses no one really wants just because they’re low cost and meet official targets?”

Indeed, what we may see is a swing towards a less showy architecture, with invention squeezed into pint pots. In Britain, meanwhile, the recession, while painful, might spark fresh debate and instill new ideas, readying us for the next building boom when the money flows again.

— The Guardian, London