Surging inequality is a first order problem that requires significant policy attention, say political economists, while raising hopes they have the tools to reverse the process.
And their views represent a growing global consensus among technocrats based on the insight provided by economists, development strategists and philosophers at a conference on surging inequality in advanced economies held in October 2019.
This valuable insight has been developed through a quantum jump in research on surging inequality for the past two decades.
“We sensed a much stronger belief than in the past that inequality is an urgent issue and should be at the top policymakers’ agenda,” wrote Olivier Blanchard and Dani Rodrik in the introduction to the book titled Combating Inequality.
Mr Blanchard a former International Monetary Fund chief economist, is now a senior fellow at Peterson Institute of International Economics (PIIE) and Mr Rodrik a professor of international political economy at Harvard University.
Whatever rights an individual, cultural minority, community or political party seeks for oneself, it is their collective responsibility to acknowledge and defend equally strongly the same rights for all their fellow countrymen
Edited by them, the book is a collection of papers presented at the conference, organised by PIIE.
In Pakistan, to quote Economic Advisor, Finance Ministry, Dr Imtiaz Ahmed, “the recent recovery was a source of unbounded optimism but the country has been hit hard by agitations. The economic bill of agitations is very high along with the human costs, it creates a negative image and sends a bad message to investors.”
Most of the public protests were peaceful (barring those organised by militant religious groups) centre around double-digit inflation, rising unemployment, stagnant or low real wages and lack of civic facilities etc. To resolve these problems, the PTI government has come up with the concept of ‘citizen-centric’ economic security.
The approval of the National Security Policy (NSP) by the Federal Cabinet preceded the presentation of the mini-budget in the National Assembly that would make essential items like medicine and foodstuff costlier for the common citizens.
Then the PTI government did not unveil any strategy or roadmap as to how NSP will provide economic security to all citizens while inequality is rising.
The ground realities are as follows. As a result of the prime minister’s business-friendly policy, the corporate sector made a profit of Rs929 billion in 2020-21 and Rs258bn in the first quarter of this fiscal year, says the Minister of State for Information Farrukh Habib, that was a big jump from corporate profits of Rs587bn during PML-N government in 2018, he added.
On the other hand, the recent Transparency International report shows that 88.9 per cent of the respondents surveyed said their income had shrunk over the past three years. On top of it, in December, inflation had hit a 21-month high to 12.3pc from 11pc.
Scholar Stefanie Stantcheva of Harvard University says the new explanations from economic research shows rising inequality but stagnant support for redistribution.
Can the ‘citizen-centric’ economic security be ensured by Pakistan through centralised hybrid democracy, a cash-trapped government burdened with huge debts and without a long-term strategy enjoying national consensus, and no less important, ignoring citizen’s urge for participatory democracy at the grassroots level.
National Security Advisor Moeed Yusuf says that the (NSP) policy aspect of national cohesion would revolve around the nation’s diversity.
And facing severe criticism from the two mainstream political parties PML-N and PPP against petrol hike and mini-budget, Information Minister Fawad Chaudhry said “we need to reduce bitterness, it diminishes the prestige of politicians and the ruckus in the parliament lowers the repute of politicians in the eyes of the common man.”
But beyond public statements, there is nothing to show that the PTI government is moving in that direction. National cohesion remains elusive.
In fact, the PTI’s tilt towards centralisation has revived sub-national aspirations. In the first phase of the local bodies polls in Khyber Pakhtunkhwa (KP) the two essentially KP-based parties, JUI-F secured the highest number of votes while PTI was pushed to the second position. In Punjab, the PML- N has emerged by far the largest party in Cantonment Board elections.
Belatedly, the government has decided to restrict its investment priorities to areas of federal responsibilities and ensure that the provinces take full fiscal responsibility for all devolved subjects.
Financing of provincial development projects, particularly those relating to devolved subjects, has been stopped by Planning Commission. Some 16 federal ministries have been devolved along with development projects.
But tax and other revenue collections, still retained by the centre, have yet to be devolved as provided by the 18thAmendent.
To quote a social scientist, for federalism, democracy and egalitarianism (as envisaged in the Constitution) to work best, authority and responsibility of three tiers of government should be redistributed as follows. Whatever can be managed by the provinces is excluded from the Centre’s responsibility and whatever can be managed by the local government should be kept outside the provincial jurisdiction. And to improve their performance, the three government tiers should be accountable to each other.
There is also centralisation at the provincial level. After conceding to some of the demands of the opposition, still protesting for further empowerment of local government, Sindh Chief Minister Syed Murad Ali Shah is reported to have said: “You are in minority and remain in minority and you will never be able to take decisions.”
But coming under strong political pressure including sit-in protests organised by Jamaat-i-Islami outside the Sindh Assembly, the provincial government has approached the JI for talks on the issue, says JI Karachi Chief Hafiz Naeem- ur- Rehman. Sindh Information Minister Saeed Ghani told newsmen on January 3 that the provincial government was ready to ‘improve local government law.’
A month-long peaceful sit-in by discontented people of the area at Gwadar forced the provincial government to accede to all their demands. This marked an upsurge in political awareness and social activism of people to secure their rights.
In an online lecture organised by Habib University, thinker Professor Ashis Nandy warned his audience of the social acceptance of a nation-state at the cost of culture, language, ethnicity and identity.
One may add: Whatever rights an individual, cultural minority, community or political party seeks for oneself, it is their collective responsibility to acknowledge and defend equally strongly the same rights for all their fellow countrymen. It is only such a dispensation that can deliver citizen-centric economic security.
Published in Dawn, The Business and Finance Weekly, January 10th, 2022