Thursday, June 12, 2014

Civilian "Democracy" vs Military "Dictatorship" Debate in Pakistan

Asian Tigers became Asian Tigers under dictators before they became democratic. There is not a single example of a developing country that became a developed country under democratic rule since WW II. Development gap between China, a one-party state, and India, a multi-party democracy, is huge and growing. Developed countries in Europe and North America took centuries to develop under democratic systems. Asian Tigers did it much faster under dictators. China is doing so now. Asia's experience has shown that democratic processes act as speed breakers to slow pace of development and stymie efforts to reduce poverty, ignorance and disease to deliver higher living standards. Let's examine these statements and see how they apply to Pakistan.

Asian Tigers:

Taiwan, Singapore and South Korea  experienced a dramatic rise under authoritarian regimes from 1960s through 1990s. The dictators who led these states also showed the way to fellow Asian dictators in Indonesia, Malaysia, Thailand and China who also industrialized and prospered using the same formula that rejected the Washington Consensus of democracy and free markets as the basis for development of all nations.



1960s Pakistan:

Pakistan was on a similar trajectory as the Asian Tigers during 1960s under Gen Ayub Khan's rule. GDP growth in this decade jumped to an average annual rate of 6 percent from 3 percent in the 1950s, according to Pakistani economist Dr. Ishrat Husain. Dr. Husain says: "The manufacturing sector expanded by 9 percent annually and various new industries were set up. Agriculture grew at a respectable rate of 4 percent with the introduction of Green Revolution technology. Governance improved with a major expansion in the government’s capacity for policy analysis, design and implementation, as well as the far-reaching process of institution building.7 The Pakistani polity evolved from what political scientists called a “soft state” to a “developmental” one that had acquired the semblance of political legitimacy. By 1969, Pakistan’s manufactured exports were higher than the exports of Thailand, Malaysia and Indonesia combined."



Bangladesh:

Some argue that it was Ayub Khan's rule in 1960s that resulted in the loss of Pakistan's eastern wing and the creation of Bangladesh. I strongly disagree with this view. I believe that ill-conceived general elections of 1970 gave the opportunity to Pakistani politicians to lie to mostly poor and illiterate electorate of the time to win their votes. Shaikh Mujib exploited normal regional economic disparities that can be found in any country, including India and US, to argue that Bengalis were unfairly treated. Just look at the income data for various states in US or in India and you'll see huge gaps in incomes and standards of living. Indian Punjab's per capita income of Rs. 88,783 is 1.4 times higher than West Bengal's Rs. 62,831. Bihar's per capita income of Rs. 28,317 is less than a quarter of Haryana's Rs. 122,660. New Jersey's per capita income of  $53,628 is much higher than Mississippi's $33,073. 

In the end, Zulfikar Ali Bhutto refused to sit down and talk with Shaikh Mujib and forced the split. Here's how one of Bhutto's friends late Gov Salman Taseer offered his view in his book "Bhutto: A Political Biography"

"Blame can never be satisfactorily or finally apportioned to the major players in this grisly drama, but that Bhutto, Mujibur Rahman and Yahya Khan share responsibility there can be no doubt. Many, indeed, are inclined to the view that Bhutto, as the most sure-footed politician of the three and thus the best equipped to assess the consequences of his actions, must accept the lion's share of the blame. Argument on this point will remain one of the central themes of Pakistani politics, perhaps for decades."

The fact is that economic gap between former East Pakistan and Pakistan has grown over the last 40 years, and the per capita income in Pakistan now stands at more than twice Bangladesh's in 2012 in nominal dollar terms,  higher than 1.6X in 1971.

The China Miracle: Fastest GDP Growth in World History



India: 


As China's share of the world's extreme poor (living below $1.25 per day per person level) has dramatically declined, India's share has significantly increased.  India now contributes 33% (up from 22 % in 1981). While the extreme poor in Sub-Saharan Africa represented only 11 percent of the world’s total in 1981, they now account for 34% of the world’s extreme poor, and China comes next contributing 13 percent (down from 43 percent in 1981), according to the World Bank report titled State of the Poor.

The share of poverty in  South Asia region excluding India has slightly increased from 7% in 1981 to 9% now, according to the report. India now has the world's largest share of the world's poor, hungry, illiterate and sick who still lack access to very basic sanitation.

Pakistan Growth By Decades. Source: National Trade and Transport Facility


In a recent book "Street Smarts", a hedge fund Manager Jim Rogers makes some important points to explain how East Asians have succeeded in rapidly developing while others have failed:

 "Many Asians say that the Asian Way is first to open your economy, to bring prosperity to your country, and then, only after that, to open up your political system. They say that the reason the Russians failed is that did it the other way around. Russia opened up its political system in the absence of a sound economy, everybody bitched and complained, and chaos inevitably ensued. As an example of the Asian path to political openness, they point to South Korea and Taiwan, both of which were once vicious dictatorships supported by the United States. Japan was at one time a one-party state supported by the US military. Singapore achieved its current status under one-party, authoritarian rule. All these countries have since become more prosperous and more open. 

Plato, in The Republic, says that the way societies evolve is by going from dictatorship to oligarchy to democracy to chaos and back to dictatorship. It has a certain logic, and Plato was a very smart guy. I do not know if the Asians ever read The Republic, but the Asian way seems to suggest that Plato knew whereof he spoke." Not only is the Asian model different from that of the Soviets, it stands China in marked contrast to those thirty-year dictatorships previously mentioned. Chinese leaders have put a high premium upon changing the country's economy, presumably to seek prosperity for the 1.3 billion people who live there." 

"And yet,in 1947, when it achieved independence, India was one of the more successful countries in the world, a democratic country. But despite democracy, or maybe because of it, India has never lived up to its potential. China was a shambles as recently as 1980. India was far ahead of it. Bt since then China has left India, literally in the dust....As China rises, India continues to decline relatively. Its debt-to-GDP ratio is now 90 percent, making a strong growth rate virtually impossible."




Pakistan's Economic History:

Since 1947, Pakistan has seen three periods of military rule: 1960s, 1980s and 2000s. In each of these decades, Pakistan's economy has performed significantly better than in decades under political governments.



In a 10/12/1988 interview with Professor Anatol Lieven of King's College and quoted in a book "Pakistan-A Hard Country", here is how eminent Pakistani economist Dr. Mabubul Haq explained lower economic growth under "democratic" governments:


"..every time a new political government comes in they have to distribute huge amounts of state money and jobs as rewards to politicians who have supported them, and short term populist measures to try to convince the people that their election promises meant something, which leaves nothing for long-term development. As far as development is concerned, our system has all the worst features of oligarchy and democracy put together.

That is why only technocratic, non-political governments in Pakistan have ever been able to increase revenues. But they can not stay in power for long because they have no political support...For the same reason we have not been able to deregulate the economy as much as I wanted, despite seven years of trying, because the politicians and officials both like the system Bhutto (Late Prime Minister Zulfikar Ali Bhutto) put in place. It suits them both very well, because it gave them lots of lucrative state-sponsored jobs in industry and banking to take for themselves or distribute to their relatives and supporters."
Human and Economic Development under Musharraf:

Pakistan saw yet another confirmation of accelerated economic and human development under military rule in years 2000-2007. Pakistan's HDI grew an average rate of 2.7% per year under President Musharraf from 2000 to 2007, and then its pace slowed to 0.7% per year in 2008 to 2012 under elected politicians, according to the 2013 Human Development Report titled “The Rise of the South: Human Progress in a Diverse World”.

Source: Human Development Report 2013-Pakistan



 At 0.515, Pakistan's HDI is lower than the average HDI value of 0.558 for South Asia which is the second lowest among the various regions of the world tracked by UNDP. Between 2000 and 2012, the region registered annual growth of 1.43% in HDI value, which is the highest of the regions. Afghanistan achieved the fastest growth (3.9%), followed by Pakistan (1.7%) and India (1.5%), according to the United Nations Development Program.

Overall, Pakistan's human development score rose by 18.9% during Musharraf years and increased just 3.4% under elected leadership since 2008. The news on the human development front got even worse in the last three years, with HDI growth slowing down as low as 0.59% — a paltry average annual increase of under 0.20 per cent.

 Who's to blame for this dramatic slowdown in the nation's human development?  Who gave it a low priority? Zardari? Peoples' Party? Sharif brothers? PML (N)? PML (Q)? Awami National Party? Muttahida Qaumi Movement?  The answer is: All of them. They were all part of the government. In fact, the biggest share of the blame must be assigned to PML (N).



Sharif brothers weren't part of the ruling coalition at the center. So why should the PML (N) share the blame for falling growth in the nation's HDI? They must accept a large part of the blame because education and health, the biggest contributors to human development, are both provincial subjects and PML(N) was responsible for education and health care of more than half of Pakistan's population.

Pakistan R&D as Percentage of GDP Source: World Bank


Going further back to the  decade of 1990s when the civilian leadership of the country alternated between PML (N) and PPP,  the increase in Pakistan's HDI was 9.3% from 1990 to 2000, less than half of the HDI gain of 18.9% on Musharraf's watch from 2000 to 2007.



Acceleration of HDI growth during Musharraf years was not an accident.  Not only did Musharraf's policies accelerate economic growth, helped create 13 million new jobs, cut poverty in half and halved the country's total debt burden in the period from 2000 to 2007, his government also ensured significant investment and focus on education and health care. In 2011, a Pakistani government commission on education found that public funding for education has been cut from 2.5% of GDP in 2007 to just 1.5% - less than the annual subsidy given to the various PSUs including Pakistan Steel and PIA, both of which  continue to sustain huge losses due to patronage-based hiring.

Pakistan's High-Tech Exports Tripled as % of Manufactured Exports. Source: World Bank
Political and Performance Legitimacy:

The issue of rulers' legitimacy often raised in Pakistan is not as black and white as it appears.  Polls showed that military rulers like Gen Pervez Musharraf of Pakistan made up with performance legitimacy for lack of political legitimacy. On the other hand, civilian leaders who ascended to power did demonstrate political legitimacy but they have consistently lacked performance legitimacy. Similarly, the terms "democracy" and "dictatorship" are often vague in Pakistan's context. Pakistani "dictators" were much more "democratic" than civilian politicians in deregulating mass media and allowing lots of political debate which was absent before Musharraf's coup in 1999.

Source: Pew Surveys in Pakistan

Benazir Bhutto Created Taliban:

Many Pakistanis hold the military responsible for creating the Taliban who are now responsible for daily carnage in Pakistan. Few Pakistanis know that the Taliban movement was midwifed by Benazir Bhutto and her right-hand man and interior minister Naseerullah Babar during her term in office in 1993-1996. Benazir is often referred to as the Mother of the Taliban because of her role in giving birth to the Taliban movement. Once born and nurtured by Benazir and Babar, the Taliban quickly became a force to be reckoned with. The Taliban under Mulla Omar's leadership defeated the Afghan Mujahedeen who had fought against the Soviets and quickly took control of much of Afghanistan in just a few years. The Taliban became so confident that they resisted Pakistan's pressure and refused to agree to the Durand Line as international Pak-Afghan border when they were in power in Kabul in 1990s.

Summary: 

Pakistan saw rapid social and economic development under military regimes in 1960s, 1980s and 2000s. Each time the torch passed to a civilian government, both the economy and social sectors suffered a significant slowdown.  If Pakistan had 30 years of continuous military rule with sustained  growth without several lost decades, it would have been an economy several times larger than it is today.



Had Pakistan's development continued on the 1960s trajectory, it is quite conceivable that Pakistan would be a prosperous democracy like the Asian Tigers today.

Here's a recent discussion on democracy in Pakistan:


Pakistan PM Invites Army Intervention; Can Army Chief Save Nawaz Sharif Govt? from WBT TV on Vimeo.

Related Links:

Haq's Musings

Pakistan's Lost Decades

Asian Tigers Brought Prosperity; Democracy Followed

Challenges of Indian Democracy

Pakistan's Economic History

Comparing Bangladesh with Pakistan

Economic and Human Development in Musharraf Years

India's Share of World;s Poor Up from 22% to 33%

Why is Democracy Failing in Pakistan?

Musharraf Era Higher Education Reforms in Pakistan

Comparing 30-Year Dictatorships in Indonesia and Pakistan

41 comments:

Ali Kemal said...

Since a military government is not bound by political exigencies, it can easily formulate and implement policies which may not seem people-friendly – at least in the short term.

In today’s world, military rule is considered the worst form of government as opposed to democratic regimes. It is, however, generally argued that growth is not directly linked to the regime polity. Instead, the economic success of a country lies in higher investments and coherent economic policies. Nevertheless, Pakistan has witnessed a higher growth rate of GDP under military rule as compared to democratic governments.

Since its inception, Pakistan has experienced several episodes of martial laws as well as democratically elected governments. The 66 years of the country’s existence can be divided into seven regimes; Regime 1 (1947-1958) in which the country achieved 3.1 percent growth per year. During these first 11 years, the sole emphasis of the government was on setting up a base for a sustained growth process. The GDP growth during the second phase (1958-71), in which the country was governed by a military ruler, was 6.8 percent. Regime 3 (1971-1977) was the first pure democratic spell and had a 3.9 percent growth rate.

General Zia’s martial law, or Regime 4, had a 6.6 percent GDP growth rate, while a slower growth of 4.5 percent was observed during the second democratic regime – from 1988 to 1999. This democratic era that spanned over almost eleven years can be further divided into four short intermittent governments of the late Benazir Bhutto and Mian Nawaz Sharif, both of whom served in office for two incomplete terms.

On average, the growth rate was 5 percent during Regime 6 (1999-2008). It was the government of General Pervez Musharraf. Although the democratic government of the PML-Q was in power during 2002-2007, it is largely believed that the real power was exercised by General Musharraf.

Regime 7 was the democratic dispensation from 2008 to 2013 in which the country experienced a very low growth rate on average at 2.9 percent per annum.
On the surface, it is clear that in Pakistan the growth rate during military regimes was much higher than in democratic regimes. Apart from the GDP rate, several other indicators also improved during military rules. For example, the overall public debt reduced considerably while the position of the foreign exchange reserves improved remarkably during the Musharraf regime. The standard of living increased during all three military rules. It was also observed that since industrial growth was higher during these periods, income disparity widened, which is an integral part of the development process.

http://makemal.blogspot.com/2014/03/a-question-of-real-growth.html

Indi said...

US Aid factor and other external factors are missing from report. Not Authentic

Riaz Haq said...

Indi: "US Aid factor and other external factors are missing from report. Not Authentic"

Aid during Musharraf years was about 1% of GDP, lower than now under Kerry-Lugar. It takes investment of 24% of GDP to get 6% of growth which happened during Musharraf years.

http://www.riazhaq.com/2014/06/pakistan-gdp-grew-just-41-in-2013-14-is.html

Sher said...

China is a communist state....that is very different to a military dictatorship rule. Do you not know that 90% of the problems we have today are due to military intervention. ..misadventures. ...fighting someone else's wars and above all not being held accountable for a series of crimes including high treason.

Riaz Haq said...

Sher: "China is a communist state....that is very different to a military dictatorship rule"

But Asian Tiger dictators like Gen Chiang Kai Shek (Taiwan), Gen Pak Chung He (South Korea) and Lee Kwan Yu (Singapore) were not Communists and they brought prosperity to their people.

http://www.riazhaq.com/2013/12/asian-tiger-dictators-brought.html


Sher: "Do you not know that 90% of the problems we have today are due to military intervention. ..misadventures. ...fighting someone else's wars and above all not being held accountable for a series of crimes including high treason."

You wild allegations do no hold up to scrutiny.

Pakistan has been fighting and needs to continues to fight its own war against Taliban, Al Qaeda terrorists who are responsible for murdering tens of thousands of Pakistani soldiers and civilians.

Abdul said...

You have overlooked many African countries. After independence many of them had a very bright outlook and it seemed for a few years that was the case. Elected Prime Ministers became dictators or were overthrown by dictators and things went downhill rapidly.

I think when you talk about Asian Tigers many of those Dictators were BENEVOLENT and therefore the result.

I dont think Pakistani Military rulers were benevolent or as benevolent as Asian ones.

Riaz Haq said...

Abdul: "I think when you talk about Asian Tigers many of those Dictators were BENEVOLENT and therefore the result.I dont think Pakistani Military rulers were benevolent or as benevolent as Asian ones."

Let's first define what benevolent means: To me, it means someone who spends money and resources and uses his or her power to uplift people. Pakistani dictators absolutely fit this definition.

For example, Pakistan's HDI grew an average rate of 2.7% per year under President Musharraf from 2000 to 2007, and then its pace slowed to 0.7% per year in 2008 to 2012 under elected politicians, according to the 2013 Human Development Report titled “The Rise of the South: Human Progress in a Diverse World”.

Going further back to the decade of 1990s when the civilian leadership of the country alternated between PML (N) and PPP, the increase in Pakistan's HDI was 9.3% from 1990 to 2000, less than half of the HDI gain of 18.9% on Musharraf's watch from 2000 to 2007.

Acceleration of HDI growth during Musharraf years was not an accident. Not only did Musharraf's policies accelerate economic growth, helped create 13 million new jobs, cut poverty in half and halved the country's total debt burden in the period from 2000 to 2007, his government also ensured significant investment and focus on education and health care. The annual budget for higher education increased from only Rs 500 million in 2000 to Rs 28 billion in 2008, to lay the foundations of the development of a strong knowledge economy, according to former education minister Dr. Ata ur Rehman. Student enrollment in universities increased from 270,000 to 900,000 and the number of universities and degree awarding institutions increased from 57 in 2000 to 137 by 2008. In 2011, a Pakistani government commission on education found that public funding for education has been cut from 2.5% of GDP in 2007 to just 1.5% - less than the annual subsidy given to the various PSUs including Pakistan Steel and PIA, both of which continue to sustain huge losses due to patronage-based hiring.

http://www.riazhaq.com/2014/01/musharraf-earned-legitimacy-by-good.html

Sher said...

It is very hypocritical of you enjoying a fully democratic society of the US while prescribing dictatorship for Pakistan!
How can you say that Pakistanis deserve military rule, do you think we are ignorant, we don't deserve democracy, or the army is too competent that they can handle a country like Pakistan.every time there has been a military govt we have lost part of the country, have been hostile to our neighbours, the country has been split ethnically and on sectarian lines...the lost is almost endless. And why Army, I mean are you in your senses to suggest that some one should rule the country just because they have weapons and force to silence people, that is exactly the argument, the extremists are using!!
Who ever have the big guns can come and run the place!
I agree that our democracy is not perfect but that does not mean any general can walk in and take away people's right to elect their representative.

Riaz Haq said...

Sher: "It is very hypocritical of you enjoying a fully democratic society of the US while prescribing dictatorship for Pakistan!"

It's clear that you have not understood the crux of my post. So let me try and help you.

I believe democracy is a good system of government for nations that have achieved some basic level of human development.

I also believe that Pakistan can and will eventually achieve that level of human development.

However, the history of developing nations since WW II shows that the fastest way to get to that level of development has been through benevolent dictatorships such as those seen in East and South East Asia.

Let's first define what benevolent means: To me, it means someone who spends money and resources and uses his or her power to uplift people. Pakistani dictators absolutely fit this definition.

For example, Pakistan's HDI grew an average rate of 2.7% per year under President Musharraf from 2000 to 2007, and then its pace slowed to 0.7% per year in 2008 to 2012 under elected politicians, according to the 2013 Human Development Report titled “The Rise of the South: Human Progress in a Diverse World”.

Going further back to the decade of 1990s when the civilian leadership of the country alternated between PML (N) and PPP, the increase in Pakistan's HDI was 9.3% from 1990 to 2000, less than half of the HDI gain of 18.9% on Musharraf's watch from 2000 to 2007.

Acceleration of HDI growth during Musharraf years was not an accident. Not only did Musharraf's policies accelerate economic growth, helped create 13 million new jobs, cut poverty in half and halved the country's total debt burden in the period from 2000 to 2007, his government also ensured significant investment and focus on education and health care. The annual budget for higher education increased from only Rs 500 million in 2000 to Rs 28 billion in 2008, to lay the foundations of the development of a strong knowledge economy, according to former education minister Dr. Ata ur Rehman. Student enrollment in universities increased from 270,000 to 900,000 and the number of universities and degree awarding institutions increased from 57 in 2000 to 137 by 2008. In 2011, a Pakistani government commission on education found that public funding for education has been cut from 2.5% of GDP in 2007 to just 1.5% - less than the annual subsidy given to the various PSUs including Pakistan Steel and PIA, both of which continue to sustain huge losses due to patronage-based hiring.

http://www.riazhaq.com/2014/01/musha...y-by-good.html

Anonymous said...

Nations like N Korea have been authoritarian all along and where do they stand ?

Riaz Haq said...

Anon: "Nations like N Korea have been authoritarian all along and where do they stand ?"

At least North Koreans are much better fed than Indians.

While India ranks at 65 among 79 nations ranked by the International Food Policy Research Institute on its hunger index, North Koreans are considerably ahead at 52 and Pakistanis at 57. The World Hunger data shows that India, which gets a free pass from the western media and active support of western and Russian governments to pursue its nuclear and space programs, is doing a poorer job of feeding its people than the North Koreans. Is this not hypocrisy to cite North Korean hunger as a reason to criticize its space program while lavishing praise on India whose citizens fare worse than North Korean citizens?

http://www.riazhaq.com/2012/12/starving-north-koreas-space-pursuit.html

Anonymous said...

riaz how is it pakistan with 50% dictator history has NEVER exceeded India in HDI??

Riaz Haq said...

There are 3 distinct slopes in the following graph line for Pakistan's HDI.

1990s, 2000-2008, after 2008

http://1.bp.blogspot.com/-Ta-I74y4WI8/UVjODRrpAoI/AAAAAAAADrM/JXfa_WSygXs/s1600/Pakistan+HDI+2013.jpg

Had the slope seen in 2000-2008 been maintained from 1990 to 2013, where do you think Pakistan's HDI would be? Wouldn't it be significantly higher than India's?

Can the same argument be extended to GDP growth since 1960?

Iqbal Singh said...

Mr Riaz Haq : "There are 3 distinct slopes in the following graph line for Pakistan's HDI.
1990s, 2000-2008, after 2008
Had the slope seen in 2000-2008 been maintained from 1990 to 2013, where do you think Pakistan's HDI would be? Wouldn't it be significantly higher than India's?

Can the same argument be extended to GDP growth since 1960?"

First, that didn't happen. Second, you have not acknowledged the damage that Zia-ul-Haq did to the social fabric of Pakistan. Third, you are completely countering against the founding Father Jinnah. Lastly, anything is possible hypothetically. If India had liberalized its economy in 1980 as opposed to 1998 it's HDI (see graph) would have been much higher but that didn't happen either.

Riaz Haq said...

Singh: "First, that didn't happen. Second, you have not acknowledged the damage that Zia-ul-Haq did to the social fabric of Pakistan. Third, you are completely countering against the founding Father Jinnah. Lastly, anything is possible hypothetically. If India had liberalized its economy in 1980 as opposed to 1998 it's HDI (see graph) would have been much higher but that didn't happen either."

I agree with your assessment of Zia.

As to Jinnah, he himself acknowledged that "there are counterfeit coins in my pocket"

The slope answer was specific to a question as to why 30 years of military rule did not put Pak HDI ahead of India's.

Hopewins said...

Your GDP growth rate graph in maroon. Re-examine it.

Here are the latest data from GOP (see page 2):
http://finance.gov.pk/survey/chapters_14/01_Growth_and_Investment.pdf

Hopewins said...

TRACTOR Production FY 2014

India: 650,000
Pakistan: 30,000

http://paktribune.com/business/news/Only-30000-tractors-likely-to-be-produced-in-FY14-11875.html
http://alturl.com/w4z94

Hmm... 7 times our population, but 21 times our tractor production!

Well? Is our backwardness caused by democracy in Pakistan? Should the Khakis take over and ramp up tractor production to catch up with India? What are your views?

Riaz Haq said...

India today doesn't look quite like the economic dynamo that, just a few years ago, some predicted would overtake China as emerging-markets champion.

But the race looks a lot closer if you account for one key fact: China got a 13-year head start on India in opening its economy and giving companies greater freedom to invest and produce. In exports, capital spending and foreign investment, India today is remarkably similar to China circa 2001.

That should both console and concern India as it gets back on its feet after three years of weak growth and high inflation. Console, since it suggests the country's economy could remain on a China-like trajectory for years to come. But concern, because India's delay could mean that the country has missed out on some big advantages that catalyzed China's boom.

The latter point is especially worth considering given how assiduously India's recently elected prime minister, Narendra Modi, is working to follow the blueprint for China's export- and investment-driven success.

When Chinese President Xi Jinping visits the Indian capital this week he will encounter a recipe for economic revival that ought to look very familiar. Delhi is aiming to boost exports and raise India's share in world trade by 50% over the next five years. "Sell anywhere," Mr. Modi said in an Independence Day exhortation to global business last month. "But manufacture here."

----------

Saon Ray, an economist at the Indian Council for Research on International Economic Relations, says India still has opportunities in the "very high-tech but very niche segments" in which it already has a foothold, such as pharmaceutical development and semiconductor design. (India doesn't manufacture chips, however.)

"It is never too late" to become an industrial hub, Ms. Ray said. "Because the good thing about technology is that it evolves all the time."

Another issue, Mr. Prasad says, is that India today can't boost its exports by weakening its currency. Unlike China and other Asian success stories in the past, India's capital account today is fairly open, and the rupee, for better or worse, moves at the whim of global markets.

Also absent today: easy money from the U.S. Federal Reserve, which many economists say was the driving force behind the emerging-market booms of the 2000s, including China's and India's.

Morgan Stanley economist Chetan Ahya emphasizes the economic advantage of India's young population. In 2000, the median Chinese person was 30 years old. The median Indian person today is 27. Educating India's younger generation and creating enough decent jobs for them will be the key. "Where you peak out depends upon how well you have been able to use the working-age population," Mr. Ahya said.

In that department, however, China's lead over India is even greater. India in 2011 still hadn't achieved the literacy rate that China had in 1990. In terms of the number of years the average adult has spent in school, India in 2013 was comparable to China in 1985. India is similarly decades behind on indicators of health, sanitation and longevity.

http://online.wsj.com/articles/indias-economy-today-much-like-chinas-in-2001-1410730681

Riaz Haq said...

With India's population growth faster than poverty reduction rates, the absolute number of poor in India has gone up 5% since 1990.

Excerpt from the Guardian:

" (British minister of international development) Alexander contrasted the rapid growth in China with India's economic success - highlighting government figures that showed the number of poor people had dropped in the one-party communist state by 70% since 1990 but had risen in the world's biggest democracy by 5%"

http://www.theguardian.com/world/2008/nov/19/britain-aid-to-india-825m

Riaz Haq said...

From Hindustan Times:

Democracy in India is shallow and has failed to provide stability and overall growth for its citizens, Chinese state media said Friday adding that its success in the long-term as a "super power" is a stereotype propagated by the West.

In a scathing editorial, the People's Daily-owned Global Times said democratic institutions have failed to provide equality to its citizens.

Democracy only exists in India in the framework but is empty inside, it added.

"By always defending itself as a democratic nation, India's general election and rule of law can only constitute a well-recognized outer form instead of an inner force, because those democratic institutions have failed to bring about overall stability, equality and well-being to its citizens," the editorial added.

There is criticism it said that votes in India often become an important baton to instruct power players rather than an agreement to guarantee fast and effective progress. "India needs to objectively estimate its democracy," the editorial advised.

Without the ability to lift the nation from poverty, it appears that "democracy" itself is no help to transform India to a great power, it said.

Picking up threads from Indian strategic analyst Bharat Karnad's book, "India's Rise: Why It's Not a Great Power (Yet)", the editorial said there were a number of deficits in India hampering development including "overly bureaucratic system, the ineptitude of local governments and policy infirmities, social and political fragmentation, corruption, and unbelievable poverty."

"Karnad greatly stresses the significance of addressing these deficits, which are the biggest internal factors that are still trapping India's ankles in the quagmire of social development," it said, adding that India should expand its vision to economically co-opt its neighboring countries and politically address security concerns with the Indo-Pacific countries.

But when and where Karnad writes optimistically about India's future, the state media-ran newspaper dismisses it as "familiar positive stereotypes again - if problems are resolved, then a bright future is bound to come. However, in many circumstances, India seems to have put the cart before the horse."

It indicated that "hard power symbols" like military modernisation and "soft power" such films and music are erroneously seen as India's rise.

Incidentally, books that are critical of the authoritarian Communist Party of China are invariably banned in the Communist country.

- See more at: http://www.hindustantimes.com/world-news/indian-democracy-is-shallow-a-failure/article1-1128124.aspx

Riaz Haq said...

Every Aussie who takes an interest in such matters knows how a country goes from being undeveloped to developed. We've been watching our neighbours do the trick for years. It's called export-oriented growth.
It's all about building a big manufacturing sector. You encourage under-employed rural workers to move to the city and take jobs in factories.
Because your one big economic advantage is an abundant supply of cheap labour, you start by concentrating on making low-cost, simple, labour-intensive items such as textiles, clothing and footwear.
Since the locals don't have much capacity to buy this stuff, you concentrate on exporting it. Foreigners will lap it up because to them it's so cheap.

As the plan works and the country's income rises, you plough a fair bit back into raising the education level of your workers, which allows you to move to making more elaborate goods and to paying higher wages. You're on the way to being a developed country.
Over the decades we've seen a succession of countries climb this ladder: Japan, Hong Kong, South Korea, Taiwan, China and now even Vietnam and Bangladesh at the bottom. It's like pass-the-parcel: as each country's labour gets too expensive to be used to produce low-value thongs and T-shirts, some poorer country takes over and starts the climb to prosperity.
That's the way it's always done. Except for one country: India. Its economy started growing strongly in the 1990s and now it's the world's third-biggest (provided you measure it correctly, allowing for differences in purchasing power).
India has got this far without building a big, export-oriented manufacturing sector. It's done something that's probably unique: skipped the manufacturing stage and gone straight to the rich-country stage, in which most growth in jobs and production comes from services.
The Indians have done it by being so good with software and other information and communications technology and the things that hang off it, such as call centres. It's a big export earner.
It's an impressive effort, and there's no reason a developing country shouldn't have a big tech sector.
But, even so, the experts are saying India would be a lot better off if it had a bigger, more vibrant manufacturing sector, employing a lot more people who, by Indian standards, would be on good wages. This is a key theme in the Organisation for Economic Co-operation and Development's report on the Indian economy, issued this week.
The report offers suggestions on what could be done to encourage the growth of manufacturing, which go a fair way towards explaining why manufacturing never really got going the way it did in other "emerging market economies".
First, some basic facts. India has a population of 1250 million and before long it will overtake China's. About 29 per cent of the population is younger than 15.
Manufacturing accounts for only 13 per cent of India's gross domestic product, which is low compared with the other BRIICS emerging economies Brazil, Russia, Indonesia and China, but not South Africa.
Indian manufacturing probably accounts for a slightly smaller share of its total employment. Huh? It's normally the other way round. You'd expect it to be quite labour intensive. But despite abundant, low-skilled and relatively cheap labour, Indian manufacturing is surprisingly capital and skill intensive, the report says.
Almost two-thirds of manufacturing employment is in companies with fewer than 10 employees. That compares with Brazil's 9 per cent. This tells us the sector's many small firms mean it isn't exploiting its potential economies of scale.


Read more: http://www.smh.com.au/business/comment-and-analysis/india-developing-despite-ignoring-manufacturing-sector-20141121-11r4xo.html

http://www.oecd.org/economy/economic-survey-india.htm

Mayraj said...

"George Friedman, Founder and Chairman of Stratfor, or what is called by many "private/shadow CIA" for its well known connections and close cooperation with the CIA, gave a very interesting speech to the Chicago Council of Foreign Affairs on subject Europe: Destined for Conflict? in February of this year.
This speech came after another interesting interview where he admits that the overthrow of Yanukovych was "the most blatant coup in history" and among other things the American "payback" for Russian involvement in Syria. "

"I very much respect Friedman for his straight-talk and honesty on how the United States should maintain the role of global hegemon. In his speech he cut out all the nonsense and deceiving buzzwords like "spreading democracy and freedom", "promoting human rights" and also gibberish propaganda talk about "bad Russia", and "Putin, the bloodthirsty invader and dictator". He is the only honest spokesman of the Empire.
He recognizes that Russia has legitimate interest for its sphere of influence. However, he doesn't hide that US is trying to geopolitically defeat and humiliate Russia and limit its sphere of influence.
Even though I fundamentally disagree with him about genuine American national and geopolitical interest in decades to come, his realpolitik gives us unique insight. "



http://russia-insider.com/en/2015/03/16/4571

Stratfor Chairman Straight-Talking: US Policy Is Driven by Imperative to Stop Coalition between Germany and Russia
George Friedman, Founder and Chairman of Stratfor ("shadow CIA"), in a must watch video, openly declares that the primordial interest of the US over the centuries has been to to stop an alliance between Russia and Germany.

http://www.sprottmoney.com/news/u-s-begs-russia-to-remain-in-swift-the-one-bank-fails-again-bullion-bulls-canada-sprott-money-news?mw_aref=7b5b8659dfa071b4c7d0a95a56259dec

U.S. Begs Russia to Remain in ‘SWIFT’

http://blogs.wsj.com/chinarealtime/2015/03/19/an-influential-voice-slams-u-s-handling-of-new-china-led-infrastructure-bank/

An Influential Voice Slams U.S. Handling of New China-Led Infrastructure Bank

http://www.commondreams.org/views/2015/03/19/going-along-donkey-long-elephants-are-worse

Going Along with the Donkey as Long as the Elephants are Worse



"4. The Rise of the National Security State as the Fourth Branch of Government
One “branch” of government is, however, visibly on the rise and rapidly gaining independence from just about any kind of oversight. Its ability to enact its wishes with almost no opposition in Washington is a striking feature of our moment. But while the symptoms of this process are regularly reported, the overall phenomenon -- the creation of a de facto fourth branch of government -- gets remarkably little attention. "


http://www.commondreams.org/views/2015/03/19/new-deplorable-american-order

The New (Deplorable) American Order
1% Elections, The Privatization of the State, a Fourth Branch of Government, and the Demobilization of "We the People"

Riaz Haq said...

Pakistan’s army has taken the almost unheard of step of publicly shaming two retired generals for misusing funds, in a move many army-watchers applauded as a significant attempt by the country’s top general to clean up corruption in the all-powerful institution.

The two officers were punished for making disastrous investments totalling £25m through the National Logistics Cell (NLC), an army-run transport company which is part of a vast military commercial empire including property developments, cement plants and manufacturing interests.

In a statement late on Wednesday night the army said the former director general of the NLC, a retired major general called Khalid Zahir Akhter, had been dismissed from service and stripped of his rank, medals and pension.

Meanwhile, Muhammad Afzal Muzaffar, a retired lieutenant general, was given a lighter disciplinary measure of “severe displeasure”.

Both had been recalled back into service so they could be tried under military law.

“It is a major development because the military is perceived a sacred cow not subject to any accountability,” said Talat Masood, a retired lieutenant general. “It shows the changes that are taking place under General Sharif.”

Raheel Sharif was appointed as chief of army staff in 2013, a role considered to be at the tip of power in a country where the military controls a swath of the economy and calls the shots on many areas of policy nominally managed by civilian politicians.

Under Sharif’s predecessor, Ashfaq Kayani, an army investigation into the NLC case had been allowed to gather dust years after it was first exposed in 2009 by a parliamentary accounts committee.

A former official at the National Accountability Bureau, an anti-corruption watchdog, said Kayani had “intervened on several occasions” in the case.

By contrast Sharif had “instructed to dispose of the case on fast track for want of justice and transparency”, according to an army statement.

The reinvestigation ordered by Sharif found the two officers and one civilian “were indeed responsible for making incorrect decisions of investments in violation of NLC rules and regulations thereby causing losses to the organisation”.

According to an earlier inquiry the NLC piled up huge loses after using money borrowed from banks to invest in risky stocks between 2004-8.

Syed Adil Gilani, head of Transparency International Pakistan, an anti-corruption group, said the army normally keeps internal probes into senior officers secret to preserve morale at a time troops are engaged in bloody counterinsurgency operations against militant groups.

He said the army believes terrorism cannot be thwarted without steps being taken against the country’s vast criminal economy, which includes rampant “land grabbing” by property speculators.

“This is a signal to the civilians that they also need to tackle corruption or otherwise terrorism cannot be eliminated,” he said.

Sharif has also been credited with allowing investigations to proceed against an alleged £3m fraud committed by Elysium Holdings, a company owned by one of General Kayani’s brothers, which is accused of illegally selling certificates for allotments to build houses on land near Islamabad that it did not in fact own.

“No one would touch Kayani’s brothers unless the army chief OKs it,” said Hasan Askari Rizvi, a Lahore based political analyst. “[Sharif] wants to deal with issues that have become so public that they are damaging the image of the army.”

In line with many other analysts, Rizvi credits Shaif with making significant changes during his tenure, particularly his decision in June 2014 to finally send troops into the Taliban sanctuary of North Waziristan, despite opposition from civilian politicians.

http://www.theguardian.com/world/2015/aug/06/pakistan-army-shames-generals-misusing-funds

Riaz Haq said...

Like oil painting or Olympic spirit, democracy exists in large part as a function of its announced demise. We know that there are artists happily wielding palettes, and committed amateur high-jumpers out there, and so there must likewise be unconflicted democrats, eager servants of the popular will.

But you wouldn’t know it from the reigning political discourse, which throbs with dire warnings about parliamentary puppetry, centralized power in staff offices, and election campaigns run entirely on spin and prevarication, nowadays known by the bland euphemism of “media lines.”

Like any sane political theorist observing the passing scene, I have issued such warnings myself. South of the border, the U.S. Supreme Court’s Citizens United decision, which equates money with political speech, seemed to most critics a crowning dunce cap on a broken system. Presidential elections are now nearly continuous circuses of irrelevant bickering fronting for backroom financial interests.

In that spirit, the best insight current Republican front-runner Donald Trump has so far delivered is that, in the spirit of the current arrangement, he, too, is a speechifying mannequin backed by a self-interested billionaire. In his case, though, the candidate and the bag-man are the same person.

In Canada, which we must now call, courtesy of Scott Walker and Game of Thrones, the Land Beyond the Wall, the most glaring offence to democratic ideals is not actually a bumptious PMO or magic e-mails written in invisible ink. It is, instead, the antiquated first-past-the-post electoral scheme that forever dooms us to non-representative government. It’s bad enough that MPs are subject to party discipline that melts all backbones; it’s worse that those MPs might represent only a third of the voters in their ridings. The King Beyond the Wall rules because he can.

All of this is standard stuff, repeated and ignored in routine cycles. But there are new voices in the chorus of democratic lament, and their message is different.

Not many people outside of Silicon Valley circles knew the name Peter Thiel before he and other members of the so-called PayPal Mafia came to media prominence in the wake of 2008’s Great Recession. Still less well known than fellow space-travel advocate Elon Musk or face-of-Facebook Mark Zuckerberg, Mr. Thiel is the philosopher of the group. He studied the subject in college, as he likes to remind people, and his success in startups has given him an oracular confidence denied lesser mortals.

In college and on Wall Street, he said, there was an emergent digital-economy hierarchy. The higher-IQ conservatives, surveying the shambles of contemporary America, escaped into “heroic drinking,” but the highest-IQ libertarians “had fewer hangups about positive law and escaped not only to alcohol but beyond it.” Liberals and social democrats, drunk or otherwise, do not figure in the pecking order.


These new libertarians, reflecting on their massive brains and the works of Ayn Rand, offered a new critique of the democratic experiment. “I no longer believe that freedom and democracy are compatible,” Mr. Thiel wrote in a 2009 “personal statement” for the conservative Cato Institute. “Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women – two constituencies that are notoriously tough for libertarians – have rendered the notion of ‘capitalist democracy’ into an oxymoron.”

To Mr. Thiel’s dismay, his positive proposals – interplanetary emigration, undersea development and paying people to quit college – were overshadowed by denunciations of his views on giving welfare recipients and women the vote. Fools! They will be crushed by the forces of freedom! A clearer flavour of Mr. Thiel’s philosophy is sounded in his favourite quotation, cribbed from Knute Rockne or maybe Vince Lombardi: “Show me a good loser and I’ll show you a loser.”


http://www.theglobeandmail.com/globe-debate/has-democracy-outlived-its-promise/article26227392/

Riaz Haq said...

#Pakistan’s army: Hail to the chief. Military riding wave of popularity http://econ.st/1iO4tnF via @TheEconomist

THE image of a mustachioed man with peaked cap and a chest full of medals is becoming hard to avoid in Pakistan. It is splashed across the posters of a politician competing in a by-election in the eastern city of Lahore. It looms large on giant billboards in the port city of Karachi, apparently paid for by adoring citizens. And it is a rare day when Pakistan’s chief of army staff is not pictured on a newspaper front page. He has even entered the colourful repertoire of artists who decorate the nation’s trucks and rickshaws.

The apotheosis of General Raheel Sharif (pictured, wearing beret) makes it harder than ever for his unrelated namesake, Nawaz Sharif, who is prime minister, to claw back powers from an army that has directly and indirectly controlled Pakistan for most of its history. Nawaz Sharif’s election victory in 2013 resulted in the country’s first transfer of power from one civilian government to another. But the extent of his authority is debatable: the army is reasserting itself.

This marks quite a turnaround for an institution that eight years ago was so unpopular that off-duty soldiers in the most restive areas were advised not to wear their uniforms in public. The long rule of General Pervez Musharraf, a coup-maker, had seriously tarnished the army’s prestige. A particular setback was the violence unleashed in central Islamabad in 2007 when General Musharraf decided to clear out a pro-Taliban mosque in the heart of the city. The army was humiliated in 2011 when the public discovered Osama bin Laden had been hiding next to the country’s officer-training school and that American special forces had been able to penetrate deep into Pakistan to kill him.

Today the army is riding high, buoyed by an improvement in security following a decision in June 2014 to launch an all-out campaign against the Pakistani Taliban. Many credit General Sharif with taking the initiative. Operation Zarb-e-Azb has seen key towns in the former Taliban sanctuary of North Waziristan retaken by the state. Militants have been hunted down elsewhere, particularly in Karachi, which had been a major centre of Taliban activity. All this work has helped cut militant violence by nearly half in the last nine months, according to the Pakistan Institute of Peace Studies, a think-tank in Islamabad.

At the same time the army has been waging a public-relations war, promoting General Sharif as a star. The media dutifully report on his every visit to the front lines and publish photographs of every honour-guard he inspects during his numerous overseas trips.

That General Sharif should receive more than usual publicity is understandable given the country remains mired in a bloody internal conflict. On September 18th 13 Taliban suicide-fighters fought their way into a residential compound of Pakistan’s air force near the city of Peshawar and killed 29 people. Sustaining public support for a war against Islamist militants is tricky given that many on the religious right sympathise with the Taliban’s goal of a strict sharia state and often avoid condemning their means of achieving it.

Riaz Haq said...

Half the Kids in This Part of #India Are Stunted due to malnutrition, open defecation. #DigitalIndia #Modi #BJP http://nyti.ms/1RJtCeD

India is a vigorous democracy that has sent an orbiter to Mars. Yet its children are more likely to starve than children in far poorer nations in Africa.

In a remarkable failure of democracy, India is the epicenter of global malnutrition: 39 percent of Indian children are stunted from poor nutrition, according to government figures (other estimates are higher). Stunting is worse in India than in Burkina Faso or Haiti, worse than in Bangladesh or North Korea.

“The average woman in India ends pregnancy weighing less than the average woman in sub-Saharan Africa begins pregnancy,” Coffey writes in the Proceedings of the National Academy of Sciences.

The upshot is that many children are malnourished in the uterus and never recover.

The second new theory is poor sanitation, particularly open defecation. About half of Indians defecate outside without using toilets. The result is that children pick up parasites and chronic infections that impair the ability of the intestines to absorb nutrients — and 117,000 Indian children die each year from diarrhea, according to Unicef.

That may explain an anomaly: Infant mortality is lower for Indian Muslims than for Hindus, even though Muslims are poorer. One reason may be that Muslim villagers are more likely to use outhouses.

This is a life-or-death matter. Governments invest in tanks and fighter aircraft to defend their people, when the greater threat to their citizens comes from their own poop.

Still, few recognize the risk. Worldwide, far more people have access to mobile phones than to toilets. That’s because phones are seen as the higher priority. In the villages that Austin and I visited, villagers routinely had mobile phones, but very few had outhouses. Even fewer used them: It’s easy for aid groups to build latrines, harder to get people to use them.

Riaz Haq said...

Reformer-in-chief: In conversation with Dr Ishrat Husain

http://herald.dawn.com/news/1153435

Ali. How do you compare the economic policies of different civilian and military regimes in the recent past?

Husain. I would say 2000–2002, when we had a cabinet of technocrats, was the best period of economic management in Pakistan’s history. It was during that period that all the tough reforms – including those in the structure and administration of taxes – were introduced. The period between 2003 and 2006 was reasonably good because the momentum for growth had been created earlier. International confidence in Pakistan’s economy was high and the Foreign Direct Investment flows were at their peak.

The turning point came in 2007, with the announcement of elections, judicial issues and the Lal Masjid episode. In 2008, there was tension between Musharraf and the army on the one hand, and the new civilian government on the other. The government in power between 2008 and 2013 did not pay much attention to economic management. It changed five finance ministers and five governors of the central bank. When the ship is in turbulent waters, you need strong hands on the wheel to bring it to shore safely. We had an economy in trouble between 2008 and 2013 but there was no one minding the store. That created a lot of problems. We did not even implement conditionalities of the International Monetary Fund loan programme.

The current government at least has a very clearly designated steward of the economy. You may disagree with him, but at least we all know somebody is minding the store.

Ali. Why can’t we catch tax evaders?

Husain. When Abdullah Yusuf was heading the Federal Board of Revenue (FBR), tax administration was doing well. The moment the government removed him, the whole process turned topsy-turvy.

Also read: Altaf Hussain: Politics on mute

Let me give you a very specific example. The FBR had a merit-based selection process for key postings in the customs and income tax departments. Those selected were given double the usual salary. As a result of this policy, very good people were selected as regional tax officers and they started generating additional revenues.

The new government came in 2008, and the FBR officials who were not hired for those posts went to politicians and said that they were being treated unfairly. The government doubled the salaries of all the officials irrespective of their merit or performance and the old culture was restored. If the merit-based, performance-related evaluation process and compensation system was allowed to continue, I can tell you things would have improved.

Riaz Haq said...

Via @NPR: Phillip Reeve on train ride thru #Pakistan finds the Army is very popular in the country.

http://www.npr.org/2016/11/23/503108897/after-27-hours-our-train-ride-through-pakistan-ends-in-karachi

REEVES: Glacier - that's the Siachen Glacier, the world's highest battlefield. It's a giant sweep of ice and snow nearly 20,000 feet up in the Himalayan Mountains. A standoff between the Pakistani and Indian armies has been going on there for more than 30 years. There's been intermittent fighting. But the real killers are the weather and the altitude. Life up there is very harsh, says Ali.

ALI: (Through interpreter) There's very little oxygen. Breathing is difficult, and you never feel like eating. There are many hardships.

REEVES: Extreme cold and also avalanches have claimed many hundreds of lives over the years. Ali worries about frostbite.

ALI: (Through interpreter) You can get frostbite on the ear, on the nose, on the fingers. If you get it on any part of the body, then it must be amputated, as there's no cure.

REEVES: Ali's in good spirits today. He's heading home on our train to his wife to begin one month's leave. He set off from the mountains four days ago and still has one more day of travel. Ali's 24 and a sepoy. That's the same as a private. He signed up for the Pakistani military at 17 but didn't want to.

ALI: (Through interpreter) I joined because my father ordered me.

REEVES: Ali says he really wanted to be in the Navy. But now, he's gotten used to the army and the tough conditions.

ALI: (Through interpreter) Despite all that, I now enjoy it.

REEVES: People on our train seem to treat Ali with much respect. Pakistanis we've met on this journey are profoundly disillusioned with their government yet strongly approve of their army. Their nation's spent roughly half of its history and some of its darkest years under military dictatorship, yet some Pakistanis say they'd be happy to get rid of their elected civilian government and be ruled by generals again. Zaman Saeed's an anti-narcotics official and a passenger on this train.

ZAMAN SAEED: (Through interpreter) It would be better. Pakistan would improve.

REEVES: Saeed would like the military to run the country, but just for a few years.

SAEED: (Through interpreter) They should spend three years sorting out all crocodiles who commit corruption and destroy Pakistan. After that, there's no harm restoring democracy.

REEVES: Pakistanis tend to revere their military because they believe it's done a great job reducing violence in recent years by driving the Pakistani Taliban out of the mountains bordering Afghanistan and going after militant outfits in Karachi. The army's harsh tactics cause deep resentment in some areas, though, like Balochistan province, where there's a separatist insurgency.

But we're traveling through Pakistan's heartland - the provinces of Punjab and Sindh. Here, the army has many fans. And a sharp surge in tensions with the old foe, India, seems to be making the military even more popular. Twenty-seven hours after setting out, we're arriving.

The outskirts of Karachi look pretty shabby - lots of slums, narrow alleys, lots of trash on the ground, motorbikes trying to squeeze their way down these tiny lanes, animals, washing hanging out, lots of little kids wandering about.

(SOUNDBITE OF TRAIN BRAKING)

REEVES: Our train draws in. This is the giant metropolis, the port city that makes most of the money that fuels Pakistan's economy.

There we are - Karachi.

The platform's crowded with porters in long, dark-green robes, carrying baggage on their heads. That conversation on the train about an army takeover has left me wanting to learn more. Could Pakistan's military really rule again one day? I get a cab to the Karachi Press Club. The club has a history of challenging dictators. It doesn't allow anyone in military uniform through its doors.

Riaz Haq said...

The dark side of #Indian politics: Why many Indian #politicians have a #criminal record. #India http://econ.st/2kt1dSo via @TheEconomist

When Crime Pays: Money and Muscle in Indian Politics. By Milan Vaishnav. Yale University Press; 410 pages; $40. To be published in Britain in March; £25.

ALL politicians are crooks. At least, that is what a lot of people think in a lot of countries. One assumes it is a reproach. But not in India. Indian politicians who have been charged with or convicted of serious misdeeds are three times as likely to win parliamentary elections as those who have not. In “When Crime Pays: Money and Muscle in Indian Politics” Milan Vaishnav of the Carnegie Endowment for International Peace meticulously tracks the remarkable political success of India’s accused murderers, blackmailers, thieves and kidnappers. Having been a symptom of India’s dysfunctional politics, the felons are metastasising into its cause.

Sadly, this is not a book about some small, shady corner of Indian politics: 34% of the members of parliament (MPs) in the Lok Sabha (lower house) have criminal charges filed against them; and the figure is rising (see chart). Some of the raps are peccadillos, such as rioting or unlawful assembly—par for the course in India’s raucous local politics. But over a fifth of MPs are in the dock for serious crimes, often facing reams of charges for anything from theft to intimidation and worse. (Because the Indian judicial system has a backlog of 31m cases, even serious crimes can take a decade or more to try, so few politicians have been convicted.) One can walk just about the whole way from Mumbai to Kolkata without stepping foot outside a constituency whose MP isn’t facing a charge.

Mr Vaishnav dissects both the reasons why the goons want to get elected and why the electorate seems to be so fond of them. Their desire for office is relatively new. After independence in 1947 thugs used to bribe politicians to stay out of trouble and to secure lucrative state concessions such as mining rights. It helped that candidates from the dominant Congress party were sure to win a seat and then stay there. From the 1980s, as Congress started to fade as a political force, bribing its local representative became less of a sure thing for local crooks. So in the same way that a carmaker might start manufacturing its own tyres if it finds that outside suppliers are unreliable, Mr Vaishnav argues that the dons promoted themselves into holding office, thus providing their own political cover.

What is more surprising is that the supply of willing criminals-cum-politicians was met with eager demand from voters. Over the past three general elections, a candidate with a rap sheet of serious charges has had an 18% chance of winning his or her race, compared with 6% for a “clean” rival. Mr Vaishnav dispels the conventional wisdom that crooks win because they can get voters to focus on caste or some other sectarian allegiance, thus overlooking their criminality.

As so often happens in India, poverty plays a part. India is almost unique in having adopted universal suffrage while it was still very poor. The upshot has been that underdeveloped institutions fail to deliver what citizens vote for. Getting the state to perform its most basic functions—building a school, disbursing a subsidy, repaving a road—is a job that can require banging a few heads together. Sometimes literally. Who better to represent needy constituents in these tricky situations than someone who “knows how to get things done”? If the system doesn’t work for you, a thuggish MP can be a powerful ally.

Political parties, along with woefully inadequate campaign-finance rules, have helped the rise of the thug-candidate. Campaigns are hugely expensive. Voters need to be wooed with goodies—anything from hooch to jewels, bikes, bricks and straight-up cash will do. Criminals fill party coffers rather than drain them, and so are tolerated.

Riaz Haq said...

Arvind Subramanian, economic adviser to Narendra #Modi: #India will catch up with #China in 20 or 30 years" https://www.ft.com/content/6aa3ec6a-3013-11e7-9555-23ef563ecf9a via @FT

One of India’s most important economists on globalisation and how he expects the country to catch up ‘with China in 20 or 30 years’


Arvind Subramanian owes both his job and his plush New Delhi residence to the same man: India’s prime minister Narendra Modi, who hired him as the government’s chief economic adviser in 2014. Subramanian hurriedly departed from his role at a US think-tank and moved back home to work in the finance department, only to find himself lodged temporarily in a humdrum guest house. “The finance minister was very sweet,” he says. “He rang the housing minister, and said, ‘I want him to get a very nice house.’ ”


Subramanian now lives in New Moti Bagh: a leafy estate in the heart of the capital, where grace-and-favour bungalows are granted only to elite civil servants, making it arguably the most powerful neighbourhood in India. “This place has been called the new Forbidden City,” he says, in reference to the walled imperial palace in Beijing, the heart of Chinese government for five centuries. India’s equivalent is less forbidding: a compound of 116 white bungalows and 10 apartment blocks nestled amid pleasant parks, through which the resident officials, judges and military top brass go for their morning walks.

Subramanian is sitting in the spacious living room of his own six-bedroom, two-storey home, dressed in a white linen shirt, black jeans and brown leather loafers. At 57, he looks trim and speaks with rapid, Tigger-ish energy. Outside, the mid-afternoon sunshine is falling on his front garden, whose verges are filled with lush green shrubs.

The house resembles a colonial-era bungalow, with a roof terrace on the second floor and two sets of servants’ quarters at the rear. It is actually newer than it looks, he says: the entire area was rebuilt about a decade ago, hence the “new” in New Moti Bagh. Though spartan when he arrived — “there was maybe a wooden bed, a cabinet, but basically nothing else” — the interior is now pleasantly decorated with furniture he and his wife Parul shipped back from Washington DC, including a series of Impressionist-style paintings by his elderly father, a retired civil servant.

----------------------



Subramanian admits he has learnt to watch his step on delicate topics, in public at least, giving an example of debates about protecting cows, which some conservative Hindus consider sacred. “I was asked for my views on the beef ban in Mumbai and said jokingly that if I speak on this I’ll probably lose my job — and that went on the front page of The Indian Express,” he recalls. “In that case I was told to be a bit more careful.”


-------------------

Modi’s support for globalisation is deeper than most people realise, he adds, a flip side of the fact that India is now a much more open economy than commonly acknowledged. The country’s future growth is not without challenges, however. “We have this whole ambivalence about the private sector which we’ve never really overcome,” he says. Yet he remains bullish, claiming that he expects India to catch up with China “within the next 20 or 30 years or so”.

This will happen even as globalisation is set to slow down somewhat, he argues, albeit only compared with the unusually rapid growth in trade seen during the 2000s. “‘Hyper-globalisation is dead, long live globalisation,’ is how I like to put it,” he says. “If you look crudely at the postwar period, 80 per cent of globalisation is driven by technology, 20 per cent by policy. And that 80 per cent, you can’t stop.”

Riaz Haq said...

Meet 'The Brothers' (Dulles Brothers) Who Shaped U.S. Policy, Inside And Out

Stephen Kinzer on NPR Radio

http://www.npr.org/2013/10/16/234752747/meet-the-brothers-who-shaped-u-s-policy-inside-and-out


On the Dulles' ability to overthrow regimes in Iran and Guatemala but not in Cuba or Vietnam

They were able to succeed [at regime change] in Iran and Guatemala because those were democratic societies, they were open societies. They had free press; there were all kinds of independent organizations; there were professional groups; there were labor unions; there were student groups; there were religious organizations. When you have an open society, it's very easy for covert operatives to penetrate that society and corrupt it.

Actually, one of the people who happened to be in Guatemala at the time of the coup there was the young Argentine physician Che Guevara. Later on, Che Guevara made his way to Mexico and met Fidel Castro. Castro asked him, "What happened in Guatemala?" He was fascinated; they spent long hours talking about it, and Che Guevara reported to him ... "The CIA was able to succeed because this was an open society." It was at that moment that they decided, "If we take over in Cuba, we can't allow democracy. We have to have a dictatorship. No free press, no independent organizations, because otherwise the CIA will come in and overthrow us." In fact, Castro made a speech after taking power with [Guatemalan President Jacobo] Árbenz sitting right next to him and said, "Cuba will not be like Guatemala."

Now, [Vietnamese Communist leader] Ho Chi Minh was not establishing an open society ... the fact is, he had a dictatorship, he had a closed, tyrannical society, and that made it much more difficult for the CIA to operate. So we find this irony that if [Prime Minister of Iran Mohammad] Mossadegh and Árbenz had been the tyrants that the Dulles brothers portrayed them as being, the Dulles brothers wouldn't have been able to overthrow them. But the fact that they were democrats committed to open society made their countries vulnerable to intervention in ways that Vietnam and particular North Vietnam then were not.

On how things might have been different had the Dulles brothers not intervened

It's quite possible, even likely, had the Dulles brothers not been [in Vietnam] or had acted differently, there never would've been an American involvement in Vietnam at the cost of a million lives and more than 50,000 Americans. Guatemala wouldn't have suffered 200,000 dead over a period of 35 years in the civil war that broke out after they intervened in Guatemala and destroyed democracy there. Iran fell under royal dictatorship and then more than 30 years of fundamentalist religious rule as a result of the Dulles brothers' operations. Had they not intervened in Iran we might've had a thriving democracy in the heart of the Muslim Middle East. ...

So you look around the world and you see these horrific situations that still continue to shake the world, and you can trace so many of them back to the Dulles brothers.

Riaz Haq said...

Here's part 1 of democracy vs dictatorship debate between Ali H. Cemendtaur and Riaz Haq in Urdu on this subject:

https://youtu.be/JNZoWsdGtgQ

Riaz Haq said...

Burying Dar-nomics. #Pakistan #PMLN #PPP #Corruption #Taxes #Exports #Industry #Economy Sakib Sherani

https://www.dawn.com/news/1352190

Here is a snapshot of PML-N’s economic policies in numbers.

On top of these new taxation measures, the government has been withholding refunds of businesses of around Rs150bn to Rs200bn while collecting advance tax to bolster its revenue performance under the IMF programme. Measures such as the foregoing in particular, including the levying of sales tax of up to 52pc on high speed diesel, a main stay input for the entire economy, have been particularly damaging for industry.

In terms of borrowing, the government’s debt-accumulation since 2013 has pushed up total public debt from nearly Rs14.5 trillion in FY13 to around Rs21.5tr by June 2017 — adding Rs7tr in just four years. More worryingly, the PML-N government has contracted new foreign loans of nearly $40bn in four years, an unprecedented amount, pushing total public external debt outstanding in net terms (after repayments), from $51bn in June 2013 to $62bn at the end of March 2017.

Under the third leg of economic policy under Mr Dar, the exchange rate has appreciated 26pc in real effective terms since December 2013 — hurting exports while giving a boost to all manner of imports including non-essential consumer and luxury items. In addition, the overvalued exchange rate has acted as a spur to capital flight from the country.

A combination of unaddressed structural challenges from the past, and Mr Dar’s policy framework since 2013, has resulted in Pakistan’s export sector (manufactured goods) shrinking to 6.9pc of GDP from around 14pc in the mid-2000s.

So the first order of business for the new PML-N prime minister should be to undo the punishing taxation burden on industry imposed by Mr Dar’s policies, and to rectify the policy framework in ways that will boost industry, in particular exports, in the long run. With Pakistan no more sleepwalking into a balance of payments crisis but sliding into one (even with international oil prices at around $50!), the government’s policy space and options are becoming limited. It, or its successor, will need to begin talking to the IMF for a new loan programme sooner rather than later, which will curtail freedom of movement for introducing industry- and investment-friendly policies.

However, some immediate concrete policy measures to reduce the cost of doing business in the country (on the taxation side), combined with a strong signal that the PML-N government is moving away from Mr Dar’s damaging economic policies, will be welcome as well as hopeful news for Pakistani industry.

Tailpiece: Thank God for the PPP government in Sindh! In a huge service to real democracy, its uninterrupted misrule since 2008 has buried some apologetic myths forwarded since the July 28 Supreme Court ruling to ‘defend’ the pathetic non-performance of political governments.

With the military commanding the heights in foreign and security policy, and not in terms of economic governance, it cannot be blamed if Thari children die each year due to lack of medicines in public hospitals, or if roads in Larkana are in a shambles, or there are heaps of uncollected garbage in Karachi. With around Rs2,100bn transferred to Sindh from the centre since 2013 under the National Finance Commission awards, in addition to the nearly Rs200bn tax collected by Sindh itself over this period, the issue is not even of money.

It boils down to corruption pure and simple. Large-scale, pervasive and systemic corruption has been widely documented as the undoing of many resource-rich but underdeveloped countries, particularly in Africa, which have no civil-military imbalances to worry about. Regular, ongoing attempts to shift the blame from bad governance and grand corruption (political sleaze) to tensions in civil-military relations are disingenuous as well as a disservice.

Riaz Haq said...

How to Get Away With Murder in Small-Town #India? #bribe #vote #caste #politics #democracy #justice #misogyny

https://www.nytimes.com/2017/08/19/world/asia/murder-small-town-india.html

PEEPLI KHERA, India — On my last week in India, I went to say goodbye to Jahiruddin Mewati, the chief of a small village where I had made a dozen or so reporting trips.

Jahiruddin and I were not precisely friends, but we had spent many hours talking over the years, mostly about local politics. I found him entirely without scruples but candid. He suspected my motives but found me entertaining, in the way that a talking dog might be entertaining, without regard for the particulars of what I said.

Jahiruddin, though uneducated, was an adept politician, fresh from winning a hard-fought local election. During our conversations, he would often break into rousing, patriotic speeches about truth and justice, thumping the plastic table in emphasis and making it jump. The effect was somewhat tarnished by his Tourette’s syndrome, which caused him to interject the word “penis” at regular intervals.

He was frank about the dirty aspects of his job. He occupied a post reserved for women from lower castes, but no one pretended this was any more than a sham; his wife’s name appeared on the ballot, but the face on the poster was his.

Nearly everything he did in local government was transactional, driven by the desire to secure the votes of minuscule family and caste groups. The funny thing was, it seemed to be working pretty well.

-----------------------

Geeta’s husband — a slight man named Mukesh — stood above Geeta, who was slumped on the side of a rope cot, and brought the stick down on her head several more times. She died on the spot.

What bothered Anjum, she said, was that the police had been contacted about the killing but almost immediately closed their investigation, releasing Mukesh after a few hours.

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This was not because he (Jaheeruddin Mewati) believed that Geeta deserved to die or that her husband deserved to escape punishment. It was something more practical. Mukesh’s extended family controlled 150 votes; Jahiruddin had won his last election by 91. A murder case would have been a blot on their caste, and by brokering the cover-up, he had performed a particularly valuable service to a key vote bank. It might help him win re-election someday.

“In India, there is no vote in the name of development,” he said. “In India, there is no vote in the name of doing something good. The vote is in the name of caste, family, community. And then 10 percent of people will say, ‘He did something good for me.’”

Rashid A. said...

How to get away with murder in Small-Town India
By Ellen Barry
New York Times

This is the reality of life in rural small town India. I am sure it is not much different in rural Pakistan.

What is striking is the way Ellen Barry writes, almost like painting a picture with her computer keyboard. Besides the main theme of her essay, details of life in small town India come through her writings.

Here is what I think is the summary of her article:

“In India, there is no vote in the name of development,” he said. “In India, there is no vote in the name of doing something good. The vote is in the name of caste, family, community. And then 10 percent of people will say, ‘He did something good for me.’”

It had not been easy, he said. The police had demanded a large bribe from Mukesh’s family. The hardest part, he said, was persuading the victim’s mother to withdraw the charges.

The mother was a day laborer, a tiny, dark-skinned woman who worked on a construction site, carrying cement mix back and forth all day in a basket on her head. She had never been addressed by a policeman until the day of her daughter’s death, let alone a village chief. But she was angry when they saw the state of her daughter’s body. Mukesh had hit the girl so hard, her relatives said, that they could see her skull through the parted skin of her scalp.

Jahiruddin said he had worked on the mother for five hours before she relented.

“They were totally adamant — they said, ‘We will not allow this compromise to happen.’ They would not budge. They sent the girl’s body for post-mortem,” he said.

Sometimes it seemed that the European legal system, with its liberal emphasis on individual rights, had settled only lightly on a country fixated on the rights of groups. Political leaders have driven this deeper into the culture: Equality, in India, is equality among groups. Justice is group justice."


https://mobile.nytimes.com/2017/08/19/world/asia/murder-small-town-india.html?emc=edit_ta_20170819&nl=top-stories&nlid=33577333&ref=cta&referer=

Riaz Haq said...

Rashid:" This is the reality of life in rural small town India. I am sure it is not much different in rural Pakistan. ....What is striking is the way Ellen Barry writes, almost like painting a picture with her computer keyboard. Besides the main theme of her essay, details of life in small town India come through her writings."


This NY Times story is useful in understanding what democracy, accountability and rule of law really mean in poor backward former British colonies like India and Pakistan

Rashid A. said...

Agree with you, Riaz Sahib.

The theory of democracy is people exercising their free will. Poverty, caste, social customs can severely compromise that idealized version. It is bastardization of that ideal.

But then you ask, what is a better system? And you are left with no option but to say it is better to remove those debilitating factors- poverty, and ignorance.

Riaz Haq said...

Rashid: " But then you ask, what is a better system? And you are left with no option but to say it is better to remove those debilitating factors- poverty, and ignorance."

Yes, I agree.

But how do you remove "debilitating factors" like poverty and ignorance to pave the way for ideal democracy?

The only good example I see in Asia is one offered by Asian Tigers.

Asian Tiger dictators brought prosperity and democracy followed.

http://www.riazhaq.com/2013/12/asian-tiger-dictators-brought.html?m=1

Riaz Haq said...

Uzair Baloch spills the beans about #PPP top leaders' corruption & backing of #crime, violence in #Karachi #Pakistan

https://tribune.com.pk/story/1526890/uzair-baloch-spills-beans/

In his confessional statement, dated April 29, 2016, Uzair testified that he joined a gang led by Abdul Rehman alias Rehman Dakait in 2003 and was incarcerated in the Central Jail, Karachi where he was appointed incharge of the prisoners belonging to the Pakistan Peoples Party (PPP) on the recommendation of then jail superintendent Nusrat Mangan and PPP leader Faisal Raza Abedi.

In the statement available with The Express Tribune, Uzair disclosed that he assumed full-fledged command of the gang after Dakait was killed in an encounter in 2008 and formed an ‘armed terrorist’ group under the name of the Peoples Aman Committee (PAC) and became its chairperson.

He confessed to have collected Rs20 million extortion from different persons and departments every month, adding that the fisheries department would pay Rs2 million.

He also disclosed that PPP MNA Faryal Talpur, sister of party co-chairperson Asif Ali Zardari, was given Rs10 million extortion every month. According to the alleged gangster, Dr Saeed Baloch and Nisar Morai were posted to the fisheries department on his recommendation.

“I maintained a friendly relationship with the [then] Karachi Capital City Police Officer Waseem Ahmed, SSP Farooq Awan and his brother Shahadat Awan [a lawyer and currently posted as prosecutor general of Sindh],” Uzair disclosed, adding he had done several favours for them, including helping Farooq and Shahadat encroach land in Malir. He also got Farooq to collect Rs150,000 to Rs200,000 in extortion every month.

The incarcerated gangster disclosed that on the insistence of Senator Yousuf Baloch he met the then chief minister Qaim Ali Shah and Talpur and asked them to get the head money and cases against him withdrawn, which was eventually done by Talpur and Zardari.


In his statement, Uzair disclosed that after the Karachi operation was intensified he was called through Qadir Patel and Senator Yousuf by Talpur to her Defence residence, where Sharjeel Inam Memon and Morai were also present. According to him, Talpur discussed various issues the including Lyari gang war, and offered to hide his personal arms and explosives and have Sharjeel and Morai handle his financial affairs and Yousuf and Patel handle affairs in Lyari if he wanted to flee the country.

He testified to have done various illegal works for the party, including helping Patel encroach land and providing 500 jobs to criminals on Yousuf’s insistence. He also admitted to have helped Owais Muzaffar Tapi, Zardari’s foster brother, illegally occupy 14 sugar mills that were later purchased at lower prices.

Uzair also claimed to have sent 20 of his men to harass residents around Bilawal House on Zardari’s instructions and force them to sell 30 to 40 bungalows to Zardari at lower prices. The gangster said he came to know about a plan to kill him while in police custody, so he pleaded to have his custody transferred to the Rangers.

The former Lyari kingpin had also requested complete protection, apprehending that he and his family members could be killed after these revelations, as he expected revenge from Zardari and other politicians he named in his statement.

Riaz Haq said...

Most citizens support military rule in the world's largest democracy
A majority of Indians support military rule, according to a new Pew Research Center survey
Citizens want a stronger hand on the country's long-standing problems of corruption and economic inequality, experts explained

https://www.cnbc.com/2017/11/19/more-indians-support-military-rule-pew-research-center.html

India, the world's largest democracy, is showing an appetite for military rule — a potential indicator that the country's nationalist politics are evolving.

A majority of Indians, 53 percent, support military rule, according to a Pew Research Center survey released last week. India is one of only four countries that has a majority in favor of a military government, the American think tank said. Vietnam, Indonesia, and South Africa are the other three.

At least 55 percent of Indians also back a governing system "in which a strong leader can make decisions without interference from parliament or the courts," the survey added, noting that support for autocratic rule is higher in India than in any other nation surveyed.

Since its first election in 1952 following the end of British colonial rule, the South Asian nation has become a multiparty government with a parliamentary system and a commitment to free elections. But like many democracies around the world, its citizens are increasingly leaning toward a leader with authoritarian tendencies.

From President Donald Trump to Turkish Prime Minister Recep Tayyip Erdogan to Philippine President Rodrigo Duterte, the revival of the strongman leader has been a defining trend of global politics in recent years. Indian Prime Minister Narendra Modi, who remains immensely popular at home, is no different with his hard-line stance on corruption and security.

Supporters of Modi's ruling Bharatiya Janata Party (BJP) and urban dwellers "are significantly more likely" to support military rule than backers of the opposition Congress party and rural residents, the Pew Research Center survey showed.

Given India's high levels of corruption, there's a perception that recent tough measures such as demonetization have made sense, so the public now wants a stronger hand on hot-button issues such as economic inequality as well as law and order, explained Tony Nash, founder and CEO of data analytics firm Complete Intelligence.

Riaz Haq said...

Asian-Pacific publics generally back rule by experts, particularly people in Vietnam (67%), India (65%) and the Philippines (62%). Only Australians are notably wary: 57% say it would be a bad way to govern, and only 41% support governance by experts.

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In Asia, 55% of Indians, 52% of Indonesians and 50% of Filipinos favor autocracy. Such support is particularly intense in India, where 27% very strongly back a strong leader.

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Notably, roughly half of both Indians (53%) and South Africans (52%), who live in nations that often hold themselves up as democratic exemplars for their regions, say military rule would be a good thing for their countries. But in these societies, older people (those ages 50 and older) are the least supportive of the army running the country, and they are the ones who either personally experienced the struggle to establish democratic rule or are the immediate descendants of those democratic pioneers. In South Africa, blacks (55%) more than whites (38%) also favor the military making governance decisions.

http://www.pewglobal.org/2017/10/16/democracy-widely-supported-little-backing-for-rule-by-strong-leader-or-military/