Corona, crises and reform

April 07, 2020

The emergence of the sugar and wheat profiteering scandal at exactly the moment in time when the most central debate of our lives is about the economic survival of the ordinary person cannot be...

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The emergence of the sugar and wheat profiteering scandal at exactly the moment in time when the most central debate of our lives is about the economic survival of the ordinary person cannot be coincidence. It has too much of a divine perfection written all over it. If Pakistanis want, it can represent a major moment of inflection. If Pakistanis want.

From Brooklyn to Bajaur, from Seoul to Sialkot, from Milan to Mastung, and from London to Larkana, the Covid-19 virus has secured a moment hitherto unthinkable to authors of macroeconomic textbooks, neoliberals, globalists, and kumbaya capitalists. In a matter of mere weeks, we have been put in the position of contending with the stark realization that, thanks to Covid-19’s impact on human psychology, government decision-making, information flows, and public transport, there may be nothing left to trickle down.

When economic activity grinds to a halt, regardless of how lightly (or tightly) a lockdown is enforced, the only ones breaking curfew are the ones who know that their children will starve to death if they don’t. That isn’t the factory owners, or the public sector employees with more wealth than what can be claimed on their tax returns, or well-heeled meso-entrepreneurs, or even highly qualified and highly paid professionals. All of these privileged groups will be able to draw on their savings, for now, and for the several weeks or months during which Covid-19 eats the economy alive, while it makes some among us dead. Those with no savings will not.

The Covid-19 or coronavirus economic crisis will therefore not be solved with the resetting of the cutlery on the table that most Pakistani elites, and quasi-elites eat off of. The neoliberal consensus has persisted despite the pain and misery that pensioners in Liverpool and Los Angeles, the families of poor maids from Manila and Colombo, and Bolsa Familia, NREGA and BISP/Ehsaas beneficiaries from Sao Paulo, Thiruvananthapuram and Rajanpur endured through the 2008-2009 global financial crisis. Its persistence is the reason why sugar and wheat price manipulation – a longstanding normal in Pakistani governance and neoliberal economics – has also endured.

Those of us that have watched these robber barons become rich with a combination of access-public policy, corrupt representational politics, and straight up gangster farm and/or file management over the last few years need to resist the temptation to make this about our egos being sated. Their smug smiles, their self-congratulatory philanthropy, their patronage of the kitsch that qualifies as culture for their pseudo-nouveau riche, pastiche palates. None of it matters. As Covid-19 consumes the macroeconomy, the microeconomy and everyone in it, we will be left without the luxury of our egos – sooner than anyone would like.

This does not mean that we do not acknowledge the damage done by these robber barons to the health and well-being of the republic and the people that the republic exists to serve: among whom the weakest, poorest and most vulnerable need to be first in line. There are three ways above all that the prime minister, the army chief, the chief justice and all others with influence should remember as they process the fallout of the scandal.

First, robber barons like the beneficiaries of the sugar and wheat crisis are able to make billions because they manipulate the ‘system’, from SROs to ordinances to notifications, sometimes so specific that it boggles the mind. This ‘system’ has been designed to benefit two kinds of people. The ‘the rules don’t apply capitalists’ that make all the money at the end of the process, and the ‘rules of business’ enablers that make some of the money along the way. The next time a so-called decision-maker is confronted with, “sir, but the rules of business…”, during a meeting about reform, the said so-called decision-maker should ask how the rules of business allowed real estate and construction, or sugar, or wheat, or T-shirt and knitwear exporters to be afforded subsidies at the expense of taxpayers. The ‘rules’ have been bent for the super rich of Pakistan since forever. It is time to start shredding the same ‘rules’ to the benefit of the people whose morsels Covid-19 is about to take away.

Second, robber barons have only one kind of friend: money. The rotating door of uber-privilege has malfunctioned and crushed the fingers of the sugar and wheat mobsters today, but there is a long queue of other kinds of mobsters lying in wait. Replacing subsidies for one, with the other (without extracting unprecedented concessions) would defeat the opportunity that the transparency of this scandal, combined with the impact of Covid-19, affords public policy.

More importantly, the inefficiencies and deadweight that are created by price manipulation, subsidy awards and sweetheart stimulus packages are not simply wealth transfers from the non-rich to the rich. They are also damaging to the well-being of the legitimate business interests of those among the super rich that are capable of making money whilst benefiting the wider welfare equation (such as generating employment, and paying big taxes) and minimizing distortions to the economy and society.

In short, being rich or even super rich is not a crime. Decision-makers need to distinguish between being sceptical of the demands for subsidies, packages and bailouts, from being taken for another ride by another kind of robber baron, from being reckless and ending up squeezing all big money operators. Targeted subsidies, packages and bailouts need to be used by the government to extract employment, taxes and knock-on improvements in supply chains, domestic manufacturing, productivity and competitiveness.

Too often, the clean-as-a-whistle almost-rich are never able to breach the divide because of the toxic skulduggery of robber barons. It is time to put the power of the state to work for the benefit, not just of the poor, but also the legitimate rich and almost-rich.

Finally, (and for this, I apologize sincerely to victims of the coronavirus; may Allah heal the afflicted, and protect all of us from Covid-19), if you are a reformer, Covid-19 is an unprecedented opportunity for systemic disruption, maybe the most important that you will ever have. As an optimist, I want to believe that the reason some politicians have shined so brightly since Covid-19 struck is because they are motivated to change Pakistan in a way that qualifies as reform. The striking thing about these politicians is that they are distributed across the political spectrum.

How do we avoid Covid-19 from being another earthquake 2005, or internal displacement 2009, or floods 2010, or internal displacement 2014 and 2015? All of those moments were also windows of opportunity for reform. But how did we leverage the heroism of our district and assistant commissioners, our sub-inspectors, and SSPs and ASIs, our doctors and nurses, our municipal workers, and our hawaldars, lance naiks and captains in previous crises? We left them as high and dry as the last time that we were faced with catastrophic disruption.

We cannot keep drawing on the heroism of Pakistanis and returning to business as usual. Business as usual is the sugar and wheat crisis. If you are angry about this, you have to ignore your own ego, and think about the system at large. Covid-19 makes this window of opportunity larger than any that may have existed before. The heroism of the people on the ground needs to be paid back with heroism in the committee room, and on video conferences. We do not need to eat the rich. We need to make sure that the poor eat.

The writer is an analyst and commentator.

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