THERE are valid and weighty reasons for reviewing the strategy for helping people survive the high inflation rate, prohibitive food prices and unemployment. It is also necessary to rationally assess the impact of populist measures on the beneficiaries, society and the national economy.
The government effort to control the runaway surge in food prices by fixing and enforcing market rates is not likely to be as effective as assumed by the establishment. The 14 federal and provincial price control laws have been as ineffective over the past many decades as the laws against food adulteration.
In addition, price controls often give birth to a black market. So long as traders and speculators are free to raise prices, there is no black market, as black-market prices are accepted as normal prices. But when price controls are introduced, goods start disappearing from shops and can only be had at concealed counters run by traders with the connivance of greedy officials. Thus poorly enforced prices may increase the cost of essential items.
Besides, after relying for decades on the deregulation mantra, we are reviving regulatory mechanisms without breaking from capitalist management (or mismanagement) of the economy. How will this policy be viewed by our international mai-baaps? The IMF certificates of success in mid-term tests need not be taken seriously as any critical appraisal will not redound to the bank’s credit.
The unemployment situation has acquired some extremely weird features.
Much faith is being put in the capacity of the Utility Stores Corporation (USC) to supply essential food items and some other household needs at cheaper than market rates. The bosses of the corporation must be laughing at the happy turn in their fortunes, for in the first flush of success, the present government was reported to have decided to wind up the corporation because its house experts did not think it was the government’s job to sell wheat flour and vegetable ghee.
By reducing the high profit margins maintained by wholesalers and retailers, and with a certain level of efficiency in supplying goods to its chain of stores, the USC can offer the consumers considerable relief.
The reality on the ground may not be as rosy as it seems. What proportion of the population can be served by the 5,900 or so utility stores across the country? Since the stores are largely concentrated in major cities, where most troublemakers are found, the officials may have reason to be happy at the prospect of eliminating urban unrest.
However, do the urban agitators have the cash resources to be able to benefit from the services of the utility stores? As many rights activists still not prevented from voicing the people’s concerns have pointed out, the unemployment situation has acquired some extremely weird features. The situation today is that a large number of people are searching for jobs that are not there. A very large number of employees in both the public and private sectors are not being paid their wages even at heavily slashed rates. The ordeal of workers employed at RO plants in Tharparkar is worth reporting. As against the minimum wage for unskilled workers, Rs17,500, they are considered entitled to Rs16,500 per month, but the contractor (who in most cases is in league with the local officials) offers them only Rs10,920 per month. Even this amount is not paid for up to six months. And these wretches have been employed on an ad hoc basis for six to 12 years.
This brings us to the most vexatious issue in the debate on the country’s economic woes — a huge part of the population does not have the resources needed to benefit from the sale of necessities at controlled prices. The government is banking on several measures aimed at supplementing the incomes of the disadvantaged sections of society. These are highly popular activities and yield rich political dividends. But the amounts provided to indigent families fall much below the benefits yielded by social security and cannot be a substitute for a family’s main source of livelihood. In other words, there are no family resources worth the name that the dole money might supplement.
All dole schemes need to be reviewed to avoid the growth of parasitism and loss of hands that are needed for productive work. Parasites in any case are a curse our nation cannot afford to sustain. They are a destabilising factor. As an Arabic proverb says: the head of an idle man is the devil’s workshop.
Even otherwise, a dole system violates the inherent dignity of a human being. In any state that will be accepted as civilised by virtue of its respect for basic human rights, the citizens’ right to earn their livelihood by the sweat of their labour enjoys high priority.
In periods of economic recession, states are advised to launch labour-intensive projects. If nothing else, idle workers may be paid good wages for digging holes in the ground and filling them up, as Keynes once said. Are there no public projects where the unemployed masses could be put to work? Why has the Khyber Pakhtunkhwa government banned the construction of new schools in the public sector? Does it not need, like other provinces, many new schools to meet the requirements of Article 25-A of the Constitution (the children’s right to education). Why can idle labour not be mobilised to clean the canals or heaps of garbage in principal urban centres, or meet the rural areas’ infrastructural needs? Much can be done by putting the unemployed to work and regularly paying them a fair wage instead of humiliating them with inadequate dole money.
One of the keys to overcoming an economic crisis is reduction in state expenditures, especially the non-productive ones. Several leading economists who are not on the state payroll have pointed out that the state could find resources by reducing the size of the unnecessarily large administration and improving the efficiency of services by slashing their extra fat. The state is manifestly short on wisdom and should rush to grab it wherever it is available.
Published in Dawn, February 20th, 2020