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Quest for solutions

Quest for solutions

COMMENTS on a number of my recent articles have stated that I have focused on delineating/diagnosing issues and have not given solutions. This is an attempt at starting that conversation.

We have been talking, broadly, about inequalities in our society. Inequalities not just in wealth and income, but also in power, education, health and other political, social and economic areas. How do we address inequalities that are deeply entrenched in the fabric of our society and are embedded in not only our institutions and organisational set-ups, but in our ways of doing things, ways of being and even in our ways of thinking about ourselves and others?

A decade ago, I was working on a research project with a colleague who, though based in England, originally came from South America. Given the increasing inequality trends in Pakistan, I asked him how he compared Pakistan with South America as they have had significant inequalities too. He said that one glaring difference was that people in Pakistan, especially from the lower-income groups, were too ‘obsequious’.

“The doorman at the hotel I am staying at, why does he act as if I am his lord and master? I understand his duty is to welcome people and open the door for them. But why does he grovel as if he is nothing and I am some higher being? Almost the same thing is true of the driver who is taking me around. Again, being courteous is one thing, but being servile is totally another.”

Are our inequalities so entrenched now that they have warped our sense of personhood too? And will this be an issue when we try to initiate reform? At the very least, we have to keep this in mind when we are thinking of the kind of reforms we want to take up and the probability of their success.

Reforms to address something very basic and entrenched will also have to be very basic and large. We will have to restructure entire institutions and established ways of doing things to impact real outcomes. And the reform effort will not only have to fight the inertia and apathy mentioned here; it will be resisted, tooth and nail, by those who stand to lose from it. This might explain why there is no reform effort in Pakistan currently and why all calls for tabdeeli, political or not, have not garnered the enthusiasm that is even minimally required for starting the process of change.

A lot of debate, especially from status quo supporters, has been around the fact that it is growth that will eventually address our concerns of inequality and poverty. They argue that if we move to eight per cent to 10pc growth per year, poverty will go down. This is the argument that as the size of the pie increases, all will benefit. The other popular analogy is that rising water will raise all boats.

I do not find the argument convincing. Historically, we have seen that while poverty has been going down, even in times of mid-level growth, inequality has been increasing whether growth has been high or low. As we follow the growth agenda, we open up opportunities for all but the ability to benefit from these opportunities is not equally distributed. And there is no reason to think that even over time those who are behind today will catch up. They can fall behind even further.

This is exactly what is happening in the education field. Initial inequalities in opportunity are determining whether you get an education and of what quality. They are determining your future and the future of coming generations. The rich go to elite schools, get good quality education and do well. Their children get the same breaks and can do even better when the economy grows. The poor either do not get an education or get a poor quality one, and cannot get good jobs. They pass on this poor opportunity set to their children.

Reform will have to start with major redistribution and ensure high levels of continued redistribution across time as well. How do we redistribute? Clearly, it cannot be done through taxation alone. Our taxation system is not effective or progressive. But, more importantly, even if it was, it would not be able to change existing wealth inequalities by much. So, going forward we have to think of ways of both a) changing the current wealth distribution, and b) changing how future incomes are distributed.

Irrespective of your ideological position, if inequality is to be addressed, the above two conditions will have to be met. We have to bring land reforms back on the agenda. Land reform is not just about taking land from large holders and giving it to the landless; it is also about making land markets efficient, distributing state-owned land and making land use more effective. We have to reorient our taxation system to make it a lot more progressive. We have to bring back inheritance tax, gift tax, wealth tax and implement an all-encompassing progressive income tax. And on the expenditure side we have to reorient expenditure to ensure that basic investments needed for providing some equality of opportunity to all (good quality education being a big part of this) are effectively made.

This is just the start of a conversation and we will go into details later. But even now, one thing should be clear: if inequality is to be addressed, it will not happen by tinkering with the current system. We will have to re-engineer not only most of our institutions and organisations and way of doing things, we will have to change our thinking about citizenship and its claims too. The last, more than anything else, will be the hardest to address and might be the stumbling block against initiating reform.

The writer is a senior research fellow at the Institute of Development and Economic Alternatives and an associate professor of economics at Lums, Lahore.

Published in Dawn, August 26th, 2016

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