Friday December 03, 2021

Rich in poverty

December 26, 2020

LAHORE: Record high inflation has made it too difficult for the poor to afford basic foods; however, one commodity they still get for almost free is water, but it’s so polluted that instead of keeping their immunocompromised bodies in working condition, it actually is poisoning them.

Access to clean drinking water will always depend chiefly on local policies. These include, above all, increased respect for the rule of law, property rights, freedom for people to take advantage of their entrepreneurial spirit and express their discontent with their lot, not to mention other basic freedoms

Increased respect for human rights is not only critical to reduce poverty and protect environmental, it also happens to be an important item of human welfare and development. Governments violating human rights ensure there is no reduction in poverty. Similarly, societies where respect is accorded on the basis of wealth and influence breed poverty. The deeds considered a sin in society are ignored or even appreciated if that is done by a rich and influential person.

We need equitable growth; however growth, of course, has never guaranteed that material wealth will be distributed in a just, let alone an equal, manner.

We have to adopt a viable policy where every citizen enjoys basic needs with respect. When minimum basic needs of a person are fulfilled through a transparent system, he/she gains self-respect and would not bow down to the wishes of the rich to do work that hurts his/her respect. When basic needs of a poor are not addressed, he/she would be willing to accept humiliation from the influential to get some alms.

Poverty as such may not give rise to terrorism, but few disgruntled elements do manipulate the poor to their advantage. Our governments are paying lip service to poverty. They do not have the courage to address the structural causes that breed poverty. We need to remove inequality of assets and opportunities, or the unequal distributional consequences of growth. And, because unskilled jobs are always the first casualty in economic downturns, while employment generally lags behind output recovery, reduced public investment in health, education, and other social programs ultimately increase the vulnerability of the poor.

We have seen that most of the time our governments are busy in pleasing the vested interests that are the main cause of poverty. The traders pay little tax (almost not tax) but they are pampered because of their street power.

The transporters do not pay taxes and violate traffic laws, but the government does not dare to apprehend them. Any legal action against them results in a countrywide transport strike.

The tax collectors cannot raid or attach accounts of tax defaulters that hurt investor confidence (only in Pakistan). The tax evaders or defaulters are dealt strictly in developed economies irrespective of their social status.

Growth could become more stable, with a consistently countercyclical macroeconomic policy stance, prudent capital-account management, and greater resilience to external shocks. We have not developed any buffer for that matter. The attention of most governments particularly the present one is more focused on cornering their opponents. In doing so, they pay little attention to the economic side of governance.

We have seen China reducing the number of poor by 400 million (almost double our population) through consistent and prudent policies. In fact, economies that have succeeded in terms of both economic growth and poverty reduction over the last three decades have done so by adopting pragmatic, heterodox policies. Often invoking investor- and market-friendly language, they have generally encouraged private investment, especially in desired economic activities, such as those that create more job opportunities or offer increasing returns to scale.

We do not lure investors through consistent and prudent policies that have forced almost all foreign investors to demand guaranteed rates of return on their projects for a very long time.

Pakistan is a sort of commercial bank that offers them a rate of return of 15-18 percent on their investments through sovereign guarantees -the highest in the world.

Small-scale programs like micro-credit, formalisation of land titles, and governance reforms to some extent help ameliorate the conditions facing the poor, but they have not reduced poverty significantly.

In countries like Pakistan that almost always depend on foreign assistance, aid conditionality and treaty commitments have significantly constrained policymaking that tends to penalise the poor. Indirect taxation is an addiction that continues to add to the misery of the poor. Currently, the only thing the country is getting richer in is poverty.