Visiting Pakistan is an experience punctuated by stark contrasts. You see abject poverty on streets, you meet engineers who are barely getting by and ready to leave the country if the right opportunity arises, and then you see restaurants and malls full of people who seem to be well adjusted to high inflation, spending thousands on food and clothes.
If you want to understand what is wrong with Pakistan’s governance and economy, that is driving this inequality and how it can be improved, you don’t need to look any further than the traffic on Pakistan’s roadways. While city boulevards and the GT Road present an example of chaotic behavior, motorways are a perfect example of how things can be improved, if there is a will.
I got to observe this firsthand during my recent visit to Pakistan, traveling on city roads in Karachi and Lahore, and on both the motorway and GT road for a day trip to Faisalabad from Lahore.
The traffic in Pakistan’s cities is unruly. Driving within your lane and observing traffic rules is not commonly practiced. People constantly zigzag through the lanes and continuously honk, which is largely ignored by others, to get ahead. You can occasionally observe fist fighting between drivers involved in a minor accident, settling the dispute on their own, with a crowd of people surrounding them.
Interestingly, this behavior completely changes once you get on the motorway. Everything is very orderly, people are keeping within their lane and use indicators to change lanes. There is speeding but not more than 10-15 km/h above the limit.
I asked Sanaullah, my rental car driver, why he was not driving on the motorway like he was driving in the city. He said, “Sir, motorway police bohat sakht hai, forun 750 rupai ka chalan ker daiti hai, kissi ko bhi nahi bukhshti, MPAs aur MNAs ko bhi nahi, siwaye fauji aur judge ke” [Translation: Sir, the motorway police is very particular, they will instantly fine you Rs. 750. They don’t care who you are – even MNAs and MPAs are fined. Only army officers and members of the judiciary get away with anything here.] He also told me stories of major accidents he had observed. We arrived in Faisalabad in 2 hours, covering about 200 kilometers.
After a few hours stay in Faisalabad, we started our journey back to Lahore. However, this time Sanaullah insisted that we take the GT Road. The distance is 50 kilometers shorter, and he promised it will take the same 2 hours to get back. Even though Google was telling me it will take 3 hours, I went along with his decision, mainly because I wanted to experience traveling on the GT road also, which I had not done in a long time.
The GT Road is an odd mix of highway and city driving. There you can at least drive pretty quickly for 15 -20 minutes with sparse traffic. Sanaullah was routinely doing 140 km/h on those stretches. As soon as you hit a small town or city, you are back to chaos. It also became clear to me why Sanaullah wanted to take the GT Road. He thought he could save on fuel because of the shorter distance, but more importantly, he could drive the way he wanted to without being caught by the police. He even tried to avoid paying tolls by taking a side lane using some ministry’s sticker on his windshield.
After an hour and a half of driving, and only having made it halfway through as predicted by Google, it occurred to me that Pakistan’s economy is like driving on the GT Road. Everything goes through smoothly for a few years but soon it hits the chaos of the import and export imbalance, and everything comes to almost a complete halt. The managers of the economy, like Sanaullah, then just try to get over that slowdown by either avoiding the situation or paying tolls (IMF programs, refinancing), and as soon as the traffic clears, they are back to their old ways, knowing full well that they will soon hit another crisis, just like the city traffic on the GT Road. They are unwilling to make data driven decisions and make fundamental changes. They spend more energy on their shortcuts instead of taking the longer but faster route. They somehow don’t understand that the progress is not just how far you have to go, but also how fast can you get there – safely.
Defining proper policies and enforcing them are the only way to curb the elite capture that caused $17.4 billion worth of damage to the economy in 2017-18 per a UNDP report.
The city and GT Road traffic analogy is a microcosm of governance, administration, and politics in Pakistan. Almost no one cares about the rules as there is no enforcement. Pakistan’s politicians hail mostly from the elite class and are educated from foreign institutions, and display the same behavior as the people fist fighting after a road accident by settling scores on the streets while being observed by a large crowd in jalsay, jaloos, Long Marches, and dharnas; instead of using the proper forum defined by the constitution to resolve issues. They want to avoid paying the toll of democratic struggle and continue to scheme with the establishment to get to power, grinding the country’s gears and plaguing it with instability.
However, when a system is based on the rule of law, everyone’s behavior suddenly changes because they know they will have to pay a price for breaking the law, either monetary, or by personal and physical sanctions to their property.
There would still be some, as Sanaullah pointed out, who think of themselves as above every law, but they end up damaging themselves and the country due to their reckless behavior.
For any economy to grow fast, it must follow rules and policies that are enforced strictly. Without that, the GDP only grows by 3-4% on average instead of 6-7%. Defining proper policies and enforcing them are the only way to curb the elite capture that caused $17.4 billion worth of damage to the economy in 2017-18 per a UNDP report. That number is probably much larger by now.
Pakistan must move to the rule of law to reform governance and economy. While some reforms for improving governance have been suggested previously, the necessary conditions for these or other reforms to work is the top-down enforcement of laws and ethical codes. Similarly, the economic reforms must start from the top – from the ruling elites.
How do you do that when its not in the interest of ruling elite to give up their benefits for the sake of the country? Political parties are conflicted between their elite patrons and the voters, and cannot make difficult decisions. They also lack the capability and competence to define and carry-out the reforms. The military leadership is compromised between their constitutional role and business interests. And the bureaucracy and judges are used to their perks and privileges, and are not motivated to improve their performance.
Since those in the government cannot reform themselves, they are compromised in their drive to take actions against tax evaders, corporations, large landowners, traders, retailers, and others who are causing this $17.4 billion’s worth damage to the economy. When government officials themselves are engaging in cash transactions for their private purchases to avoid GST and investing in real estate to launder their ill-gotten black money, they won’t change policies and enforce them on the corporations, agriculturists, and various mafias.
What is the solution then? There is a need for a charter of economy, but given the current political situation, it is unlikely that all political parties can decide and adhere to one. A technocratic setup, as has been suggested by some, is not a solution either as Pakistan can ill afford to go through another experiment which is unconstitutional and most likely won’t be able to fix these issues.
Pakistan should seriously consider an empowered National Economic Council (NEC), consisting of leading economists who understand Pakistan’s issues well.
Maybe Pakistan should learn from the experiences with the IMF and other donor agencies which set financial reform targets and force the country to comply. Maybe its time to setup an internal IMF – or a motorway police for the economy – defining the policies with the power to enforce them.
Pakistan should seriously consider an empowered National Economic Council (NEC), consisting of leading economists who understand Pakistan’s issues well. This council can be under the president, who represents the state, and have members recommended by all relevant stakeholders – political parties, military, and provincial assemblies, businesses. The council should not have more than 10-12 members, as very large committees spend more time debating than making decisions. The Prime Minister’s Office can still have its economic advisors, but their focus should be on executing the policies laid down by the NEC.
The recommended reforms and policies by this council should be binding for all stakeholders and any modification should require a 2/3rd majority approval from a joint session of the full parliament. This council can define 5-year plans, set short-term reform targets every 6 months, and issue a report every 6 months scoring federal and provincial governments performance against the targets. This approach will not only result in the continuation and evolution of reform policies, but will also provide an unbiased view of governments’ performance.
As a first step, the council can come up with a Charter of Economy and a short-term reform package for the next 3 and 6 months, which the current government and the care takers can execute before the next elections. Since the current government will be following a reform policy mandated by this council, they may avoid political fall-out during the next elections. This will also give political parties time to come up with their own 5-year roadmap for the economy, so they have a meaningful debate in the joint session of the parliament when the council’s recommendations are presented after the elections.
Every country that has turned around has relied on its experts to bring about the change. Pakistan also has examples such as the motorway police, where professionals, when empowered, do wonders for their areas of responsibility. It’s time to bring together professional Pakistani economists from all over the world and empower them to reform the economy.