Benefits that last

02 Mar 2017


ABOUT one more year to go. The stage is almost set for the general election in 2018. As we brace ourselves for another year of political rallies, party manifestos and campaign slogans, what are we likely to see (or hear) from political parties on the campaign front?

One can reasonably anticipate the electoral battle to be fought over physical, tangible deliverables. In recent years, the ability to deliver large infrastructure projects has to a great degree served as the benchmark for gauging any party’s competence. Unsur­prisingly, this has been one of the strengths of the incumbent PML-N. We should thus be prepared to see politicians romanticising the Metro Bus, the Orange Line, the building of better roads, bridges etc.

Because of this fixation with infrastructure projects, important policy and ideological debates — how to revitalise the economy, create greater job opportunities, improve tax revenues, develop durable social security, health and education programmes etc — will get drowned out.

Spending programmes can help expand the voter base.

This obsession with infrastructure as opposed to ideological-based policy has traditionally been explained by the fact that structures are visible and, thus, increase chances of re-election. For instance, Lahore’s Metro Bus that carries thousands of people every day or the signal-free corridor that has reduced travel time by one-third serve as interesting campaign narratives for the incumbent government to improve its chances of getting re-elected in 2018.

It would be naïve to think that politicians undertake infrastructure projects solely for the benefit of society. It would be equally naïve to think that such projects don’t benefit society.

From a public-choice perspective, the traditional view of spending on physical deliverables as a good way of assuring re-election is misplaced. The reason this appears to boost chances of re-election is because infrastructure projects are visible deliverables that represent sunk costs, ie they cannot be torn down by subsequent governments (at least not without much difficulty). For instance, it is hard to imagine a government being able to tear down Lahore’s Metro Bus project, despite the criticism it faces. This is so because such structures create endurable benefits (endowment effects) for people that are difficult to retract at a later stage.

When in power, parties focus on erecting structures to create more of these benefits in the hope that it will help them in the next election. Perhaps this explains why, despite initial criticism of the Metro Bus in Lahore and Multan, the PTI has joined the bandwagon to replicate a similar project in Peshawar.

The idea of building lasting structures to secure public support is tempting. However, it is not the only way of creating important endowment effects. Contrary to popular belief, public choice indicates that spending public funds on programmes such as healthcare, education, social security etc may also create similar endowment effects.

The Benazir Income Support Programme (BISP) is an example of a spending programme that has created significant endowment effects. Presently, some 5.4 million underprivileged people receive regular stipends to improve their real income. Even though the PPP is no longer in power, the programme has survived some four years of PML-N rule. One reason for this is that such programmes, like structures, generate endowment effects that are difficult to appropriate in the future. If the PML-N government had tried to scrap this programme, the 5.4m people who benefit from it would have stood up together to oppose this step. The party would have faced resistance, which it could have possibly not withstood, simply because the cost of dismantling a successful spending programme is higher than the cost of continuing it.

Similarly, another reason why spending programmes might be more attractive stems from their ability to benefit more people spread out across the country than infrastructure-based projects. For instance, the signal-free corridor in Lahore benefits only a small minority of the elite, whereas the beneficiaries of BISP are dispersed across all provinces. Thus, such spending programmes can help expand the voter base in different geographic regions.

In view of the above, if politicians shift gear and spend more on socioeconomic programmes, they are more likely to attract a greater number of voters while creating endowment effects that are difficult to confiscate in the future.

One hopes that this realisation comes sooner rather than later. Spending programmes are equally, if not more, likely to create endurable benefits for the people than any physical structural development – which may improve chances of re-election. And who could deny that it would be good to take a break from pompous campaign rhetoric revolving around structures, and refreshing to see politicians rhapsodise over the success of their education policies, healthcare programmes and the like.

The writer is a lawyer with an interest in intellectual property law.

Published in Dawn, March 2nd, 2017