South Asians (from India-Pakistan-Bangladesh) are well known for low wages, good work ethics and more importantly for delicious feasts. Investment Bankers from Europe and Americas like to congratulate South Asians for being at the center of global financial attraction and the preferred destination for investment. Especially since China, Singapore, Thailand, Korea and Malaysia have achieved their development objectives, its now time for South Asia to move up. South Asians however, disappointed the world and more importantly its citizens for repeated failures in Transparency, Governance and Rule of Law.
All this despite the fact that South Asia happens to be blessed with abundant resources ranging from the majestic Himalayas in the north to the beautiful blue waters of the Arabian Sea, Indian Ocean and Bay of Bengal in the south. Population of 1.5 billion people, mostly young and hard working. Large agricultural lands add to its growing industrial base enjoying a good portion of world textiles and garments production. Resources couldn’t help Pakistan from spiraling down to its current low. South Asians would like to know “is it because of the corrupt politicians, or is it because of the System itself?”
First, there was the war of 1971, until then Pakistan was the combination of West and East Pakistan and a shining star for Development Economics, before the generals decided it launch genocide on its own citizens in the country’s Eastern Wing, resulting in a humiliating defeat for the Pakistan Army, making way for the birth of independent Bangladesh.
In reality, West Pakistani generals in their utter brilliance managed to secede from the majority part of the country (East Pakistan), breaking up a united Pakistan into the new Pakistan and Bangladesh. Statistics will show that the economic progress of united Pakistan in the 60’s came mainly from the export of Jute (East Pakistan) and Cotton products (West Pakistan), whereas the distribution of wealth favored mostly the Western wing, regardless of East Pakistan’s contribution or its majority population.
It doesn’t take rocket science to figure out why the poor farmers and workers in the East would stand up to this economic injustice. But the generals knew better, they chose guns and bullets to do the talking. By December 1971, Pakistan was defeated, general Niazi surrendered half of Pakistan to India along with 90,000 soldiers. The highly prosperous, populous, hard working wing of the country had been lost forever. The stupid generals still couldn’t get it.
Neither did the politicians rallying around Bhutto understand what they lost. For them, it was not possible for Mr Bhutto to loose an election to a nobody called Mujib from the backward farm land of Bengal (East Pakistan). Heck, Bhutto was UC Berkley, Oxford, UN, Foreign Minister, Nuclear Weapons and all that, and what did Mujib have – nothing! that was according to the enlightened men and women around Bhutto. Mujib did have something. Brains. Yup, he knew how to talk to his people, he knew to what extent his people would tolerate injustice, he knew how to break that tolerance level. That was the magic of Mujib which Bhutto’s ego refused to see, no matter the consequences.
In post 9171 scenario, the country went from being Divided Pakistan to Weakened Pakistan. For decades the country saw the rise and fall of one military dictator after another. Politicians lined up to the generals like models holding signs reading “Take me, I’ll be obedient!”. Generals chose. And the “models” delivered, faithfully. In the process, some “models” earned billions. Connections with other equally shameful and corrupt “royals” were established and exploited for mutual gains.
Business was booming. Except for the poor man who had to work harder than before for his tax and Vat had to bear the responsibility for filling up the deep pockets of the greedy top brass. Electricity generation, foreign currency reserve, current account deficit, devaluation of currency, unemployment and inflation joined hands in an unholy alliance to convert a Weakened Pakistan into a Bankrupt Pakistan. None of these economic causes qualify as anything other than man made, the work of few elites abusing the mass people, while billions of dollars found their way into European banks, picking up multi million pound flats along the way.
Nawaz Sharif’s economic model rested on Chinese and Arabian investments in mega infrastructure projects. While that sounds very promising, the country’s ability to sustain long term foreign debt was deteriorating quickly. Country’s ability to service foreign debt depends on its foreign currency earnings and reserves, not on Chinese investments in roads although in the long run good infrastructure becomes essential. Pakistan’s foreign currency reserve as of writing stood at 2 weeks imports. It should be more like 3 to 6 months imports. Exports stagnated while imports increased. Are workers becoming more costly to hire?
Foreign buyers like the low wages in South Asia. But that’s not all. Low labor wages is but one of the many ingredients making up total production cost. Energy, shipment, insurance, technology, labor efficiency etc contribute just as well. More than anything else, lack of power hindered manufacturers from investing in export driven factories, on the other hand, due to higher production costs foreign buyers preferred to look east, leaving the country with stagnating foreign currency earnings. This could not have happened without the contribution of the C factor.
This political-economic model, its architecture, guarantees the enrichment (beyond our imagination) of few elites at the top while the “productive forces” will continue to break their backs – working, paying vat and taxes and finally be forced to vote (thereby legalize) in favor of a blood thirsty greed based corruption ridden “system” of hidden imperialism. Imran Khan may be clean, but him alone hardly stands a chance to rectify the grand old system of greed and corruption that plagues the administrative machinery.
When would be a good time to strengthen the argument for upscaling an alternative to this unjust and harsh political-economic abusive system? Have you given the “alternative” a thought, would you even like to know what the alternative is…