Shehryar Hamesh Khan
IF a helicopter took off a dozen times only to come crashing down each time, the only logical conclusion would be that the helicopter requires a complete redesign. Pakistan’s economy, like the helicopter, has crashed 13 times in the last 60 years, each time requiring an International Monetary Fund bailout to prevent us from going bankrupt. It wasn’t always like this. Thirty five years ago, in per capita terms we were richer than India, China and Bangladesh by 15, 38 and 46 percent. Today Pakistan is the poorest country. Its most recent gross domestic product growth estimate was around 3.3 percent, barely sufficient to keep up with the rapid population growth that we have also failed to contain.
The federal government of Pakistan is technically bankrupt. Last year, the sum of interest payment due on the government’s debt obligations and pension payments owed to retired employees was more than the federal government’s net revenue. The entire government, including the military, is running on lent money. The greatest challenge in bringing change is that those who are benefiting the most from the suffering economy and stand to lose the most from change would fight every attempt at reform and attack the people trying to ensure reform. And some of these people are the ones in positions to impact the economy, yet the change they have been hired to bring about does not align with their best interests.
Two primary forces in the status quo hold the country’s economy back. Firstly, the powerful elite who tip the scales of markets in their favour through unfair business practices, tax evasion and preferential access to power. They use their privilege to benefit from other people’s labour rather than create something of value through their own efforts. And the second hurdle is religious extremism. Thousands have been killed, communities have been ripped apart and hundreds of thousands of people have been displaced or forced to flee the country altogether. It is no wonder then that a few want to invest in an environment characterized by violence and intolerance.
Reversing these trends requires a straightforward commitment to fight the entrenched elements and extremists. Consider the unproductive upper class which instead of investing in real businesses buy urban land and sit on it. This is a useless activity that adds nothing to the country’s output and contributes directly to Pakistan’s low investment rate. The value of land keeps rising, not because of any effort by the landowners but because of rapid urbanization caused by an ever increasing population.
So how do we fix this? The proper federal policy response to discourage and prevent such activity would be to tax the value of land appropriately. This would dissuade the rich from hoarding land and instead incentivise them to invest in real businesses that yield long-term benefits for both themselves and the economy. Land would then be available for more productive uses and at cheaper prices. Furthermore, the revenue generated from land taxes could fund much-needed urban infrastructure which is also an issue that needs urgent attention. Although a land tax addresses many issues with one strike, carrying through with the policy requires courage as a large percentage of urban land is in the possession of the privileged elite class. Pakistan’s federal government and policy makers must develop the courage to put the interests of the masses above those of the privileged few, which is the need of the hour.
It is even harder to find courageous leadership when it comes to dealing with religious extremists. One would have hoped that decades of suffering at the hands of religious extremism would convince at least one government or major political party to roll back the purveyors of hate. But no one seems interested. Or perhaps no one has enough courage. And although the military in recent years has taken bold steps to curb extremism, they will need the further backing of the civilian leadership to fulfil their goal. In a country with such a massive chunk of youthful population, unlimited opportunities in agriculture, entrepreneurship and huge untapped mineral reserves, the economy can be cured. However bold steps as stated above are needed. Will Imran Khan play this out using his “cornered tigers” narrative? Only time will tell.
