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The worst era ever?

April 09, 2013

THE last PPP government is frequently termed as Pakistan’s worst. Some use such assessments to merely lambast the PPP. Others argue that incompetence was so extraordinary that it proves that democracy is unsuitable for Pakistan.

The PPP’s performance was indeed disappointing. However, the assertion that incompetence was so acute that extra-constitutional steps are justified rests on spurious statistics and hyperbole.

Many claim that the PPP destroyed the economy.

Pundits report that it incurred more debt than all previous governments combined. This is an evocative and hair-raising but meaningless comparison.

Firstly, nominal debt values cannot be compared over time since inflation has reduced rupee values significantly since 1947. A small debt from 1950 equals a debt several times larger today in real terms.

Secondly, as the real size of economies increases, so do their debt-carrying capacities. Thus, anyone employing this comparison is a bad economist or a good politician.

Good economists compare debt ratios over time, eg, annual debt-servicing levels compared with exports and/or tax revenues. World Bank databases show that Pakistan’s external debt service-to-export ratio deteriorated from 10 per cent in 2006 to 15pc by 2010 but improved to 9pc in 2011. However, it was worse (26-40pc) in certain years under Musharraf, Sharif and Zia!

The Pakistan Economic Survey shows that the public debt-public revenue ratio deteriorated from 404pc in 2008 to 474pc in 2011 before improving to 419pc. It once touched 589pc under Musharraf!

Analysts portray the 2008-2013 GDP growth as Pakistan’s lowest. (World Bank databases show that growth was actually slightly lower during 1997-2002 under Sharif and Musharraf.)

If one takes a dozen critical indicators, the 2008-2013 performance may emerge as the worst. However, this period experienced Pakistan’s worst-ever combination of external threats, including the worst recession since 1929 globally and the worst floods since independence nationally.

Would the 2008-2013 performance still be the poorest, and that too poor enough to justify extra-constitutionalism, once the impact of these factors is removed? This determination requires rigorous econometric analysis which unfortunately is unavailable. Off-hand, the latter outcome is extremely unlikely.

Critics claim that this was Pakistan’s most corrupt government by spuriously highlighting Pakistan’s post-2008 deterioration on Transparency’s corruption perception index rankings. However, Pakistan’s rankings could deteriorate even because of decreased corruption perceptions in other countries.

Pakistan’s corruption trends can only be gauged through its own absolute scores over time on this index, which journalists rarely report. Pakistan’s scores have fluctuated between 2.1 and 2.6 (out of 10) since 1999.

The worst score within this narrow band occurred under Musharraf. Media reports about astronomical corruption increased after 2008, though without court convictions, they must be treated with caution. Transparency reports Rs18 trillion of post-2008 corruption, media headlines scream. However, reading further, one discovers questionable inclusions, which represent weak economic performance rather than corruption.

One hears repeated claims about unprecedented post-2008 insecurity. However, under Musharraf, the Taliban’s physical control extended close to Islamabad and even inside it if one counts their Lal Masjid fortress.

The Pakistan Institute of Peace Studies reports that suicide attacks/fatalities have decreased after 2009-2010. Baloch nationalists are now contesting elections unlike under Musharraf. However, Karachi violence, sectarian attacks and crime have increased recently.

In summary, PPP’s performance was the poorest on many immediate dimensions but also better than earlier periods on some, despite a tougher environment.

Most major immediate problems (energy-related, inflation and insecurity) were legacies inherited from Musharraf.

Despite inheriting these issues, it could have resolved them instead of making some of them worse eg, by initiating poor-friendly taxation given the persistent stagflation; holding early, credible elections in Balochistan; and tackling militants forcefully. However, this comparison with non-democratic eras is legitimate when comparing the virtues of democracy with non-democratic alternatives.

More importantly, there is no evidence of extraordinary incompetence which justifies extra-constitutionalism. To give a flavour of what extraordinary incompetence looks like, a quick global tour is helpful.

Governments in Liberia, Rwanda and Somalia completely collapsed faced with rebellions during the 1990s. Zimbabwe recently experienced inflation of trillion per cent (compared with Pakistan’s recent highest of 20pc plus under Musharraf). Argentinian and Indonesian GDPs contracted by 25-50pc over two years. Pakistan’s growth remained positive throughout 2008-13.

Ironically, most of these countries moved from autocracy towards democracy subsequently. To suggest the opposite for Pakistan despite its far better performance is nonsensical.

Turning to abstract issues, devolution, curtailment of presidential powers and institution of an independent election commission and judiciary represent major democratic advancement. While the debt comparison above is meaningless, it can be legitimately claimed that this era probably produced more democratic advancement than all previous eras combined.

Ironically, these previous eras include the 30 years of three dictators who promised “genuine” democracy. The credit for this advancement goes to all major parties in proportion to their parliamentary strength.

Many dismiss this advancement outright since immediate issues remained unaddressed.

Coming from those who suffered grievously during 2008-2013, e.g., the bottom 25pc or the Hazaras, such dismissal makes sense. Coming from the majority which escaped acute suffering, especially those who boast endlessly of having longer-term perspectives than illiterates, it reflects shocking short-sightedness.

Such advancement only will eventually produce the good governance that can resolve immediate issues effectively.

However, immediate performances and hyperbole ultimately determine electoral fates. Given the PPP’s poor immediate performance and failure to debunk hyperbole, it would be neither surprising nor unjust if voters seek change in May. But this will not represent democracy’s death-knell, rather its rejuvenation.

The writer is a political economist at the University of California, Berkeley.