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June 13, 2019

Reforms and the poverty trap


June 13, 2019

Pakistan struggles with many problems. The new budget may result in more as inflation hits households. In our media-generated frenzy over current events, we sometimes forget how the lives people live are central to their individual struggles.

Poverty is the biggest struggle for many. It holds back access to quality education, to housing, to healthcare, to opportunity and to so much else. The essential structures that can best enable people to escape poverty, by equalising the field and providing them an environment in which the rule of law prevails, where access to justice is even and education alongside a social welfare net is available to all simply does not exist.

Whereas Pakistanis are, according to international monitoring groups, one of the highest givers of charity among all nations, with Rs240 billion given out in 2018 and a larger sum expected this year, the reality is that these donations by those who possess good will and generosity really achieve very little. They may for a very short period benefit an individual family, but this does not last long.

These dynamics of charity are all the more true given that we have been unable to regularise it and ensure donations to organisations, which can in at least some cases make a real long term difference in lives. We believe in charity, both because of tradition and religious convictions. Perhaps because of our rooting in this, we fail to look at figures which show that charity, whether in the form of donations from within the country or external aid poured into a nation from outside in the end makes very little difference.

Today, one in every four Pakistanis lives in poverty, surviving on less than $1.90 per day. There are others who hover only marginally above this line. The Economic Survey 2018 shows some improvement over the decades, but it is not enough. Forty-four percent of children in the country are stunted and levels of wasting with an impact on mental development are almost as extreme. We do not need figures to understand poverty and suffering.

Reports in the media say that people this year, confronted with rising food price inflation which currently at 8.51 percent, one of the highest in years, were forced to break their fasts in Ramazan with nothing more than roti and water. Others live in circumstances of constant malnutrition month after month and year after year. Women and children suffer most.

As a nation, we have not been able to provide our people enough food, leave alone other needs. Safe water is even more difficult for them to obtain. The improvements noted by the Economic Survey have come essentially as a result of frequently discredited poverty alleviation programmes, notably the Benazir Income Support Programme. This is a suggestion that state assistance can play an essential role in enabling people to escape poverty, even though the BISP scheme is far from ideal and has many flaws.

As the government launches a new scheme under its Ehsaas Programme to offer people food rations and aid in other forms, it is important to understand how poverty can best be tackled. In the first place, reports by prestigious international organisations that World Bank and IMF programmes, which are presently dictating policies in Pakistan, often hurt the interests of the poor rather than protecting them. The requirements laid down frequently by the IMF which harm the interests of working people and undermine labour rights and labour power effectively have a negative impact on the most deprived sections of society. Corporate interests instead advance further.

Such policies, in place in African countries since the 1970s, have according to findings by economists hurt each of the countries they work in by further eroding the living conditions of people. None of these countries has improved in terms of their ability to lift people out of their poverty. Pakistan presents a similar case study, with IMF loans first accepted by it in the 1960s. Almost five decades later, we continue to require loans in even bigger amounts in order to run government. This cannot be a good outcome and raises questions about any benefits the IMF and World Bank claim accrue from their programmes.

Bangladesh has benefitted from World Bank supported programmes, reducing poverty from over 44 percent in 1991 to 13.8 percent in 2016-17. This achievement has however been backed by government policies which have supported investment in human development and indigenous poverty alleviation programmes designed to meet the specific needs of that country. Bangladesh’s commitment and its ability to maintain stable economic growth is something we need to study.

Given that Pakistan already ranks as a developing economy according to the UN and is placed above Bangladesh in terms of economic attainment, it should be even better placed to offer its people much more. That this has not happened is saddening, with Pakistan’s development statistics for population control, health, maternal mortality and education all below those of Bangladesh.

We can move into more stormy terrain. While there is widespread global promotion of the idea that socialism as an economic system results in chaos, there are notable examples of countries which have benefited enormously and quickly from adopting socialist models. In 2006, a militant socialist government took over in Bolivia. It has remained in power through a process of regular election since then. In these years under President Evo Morales, the country experienced spectacular economic growth and poverty reduction, with no hint of chaos. Inflation stands at below four percent a year, less than 20 percent of people experience poverty – down from 38 percent before the socialists took over – and inequality has shrunk dramatically.

Bolivia hopes to attain what Cuba had already achieved less than a decade after its 1959 revolution: the highest literacy rates in the world at 99.75 percent. Women are even more literate than men. People in that country live longer than those in the US because of the universal healthcare available to every Cuban and education for every child is free. There is also a system in place to provide social safety.

While there are still desperately poor people in the country, the achievements of the Cuban state have come despite crippling US sanctions and survived the collapse of the USSR, Cuba’s main ally, in 1991. There has of course been a price paid by people, with repression of some rights a part of Cuba’s history.

There are obvious lessons. The quickest way to rescue people from poverty is through state-ordained reforms designed to benefit a majority of people. When this is not possible, commitment and well-designed programmes can work at least partially.

Pakistan has struggled consistently with its efforts to rescue people from poverty. Charity, whether doled out internally or obtained from external sources, cannot play a long-term role in altering the structures which keep poverty intact. Yes, it can make each of us feel good. Yes, it can demonstrate the generosity of a country, but in the final analysis more thought at the government level is required to make any significant difference and to pull away the shroud of poverty which traps millions of people and prevents them from reaching their potential or helping their country attain what it is capable of.

The writer is a freelance columnist and former newspaper editor.

Email: [email protected]