Good governance is good politics

This article is written to pay tribute to the late M. A. Zuberi who believed in sound economic policies and strong management and implementation of these policies for the benefit of the majority of the population.
Pakistan has been facing a unique and difficult dilemma for quite some time. Government leaders of the day are unhappy that they are unable to deliver upon the commitments they had made to the electorate at the time of the elections. These leaders complain that the policy formulation is weak, Policy-Performance Gap is widening every day, and implementation of decisions almost non-existent. The bureaucrats are unhappy that they are not allowed to do their job because of interference by the politicians. The citizens and society are highly disenchanted and dissatisfied as they are unable to access basic services the state has to provide to each citizen - Security of life and property, administration of justice, education, healthcare, water, sanitation, infrastructure, electricity, gas, prices stability etc. Consequently, credibility of each successive government is eroding rapidly among the public at large creating trust deficit in the political leadership and democratic form of governance.
If each crisis that Pakistan is facing today - energy shortages, low tax revenues, losses of public enterprises, corruption, poor law and order, arms, drug smuggling, non-availability of land, housing and transport - is carefully dissected and examined, the root cause will be found in governance deficit and institutional decay. Civil services have lost their dynamism, vigour and sense of mission. Parliament is not properly exercising the vigilance over the Executive Branch and holding them accountable for results, the court system is overloaded and congested with millions of cases lingering on for long periods of time. Institutions of restraint such as the Elections Commission, Auditor General of Pakistan, Public Services Commissions etc. have become controversial.
Nepotism, Favoritism and corruption have become entrenched social norms. Trust and social capital, on the other hand which play a positive role are eroding rapidly. Social polarization of 'US' versus 'THEY' has become part of our norms reinforcing tendencies of adversity, confrontation and hostility.
At the same time, the rising numbers of educated middle class and growing urbanization, the intrusion of electronic and social media in the daily life, the demonstration effect emanating from a globalized economy have raised the expectations of the society. The gap between the rising expectations of the masses and the weakening capacity of the state institutions to meet these expectations is widening every day.
It is often asked if current economic ills have been diagnosed and we know what needs to be done, why doesn't action take place? The reason is the inherent disjuncture between the political risks a ruling party is willing to take and the accrual of economic rewards through prudent economic management that will take care of these economic ills. This asymmetry between the incurrence of the costs and the appropriation of benefits lies at the heart of the non-reformist stance of democratically elected governments. Prudent economic management requires control on public expenditures, raising unpopular taxes, removing subsidies, stripping off public sector corporations, restraining non-productive job creation in the government departments/ agencies, tackling corruption and waste and appointing the right person to the right job. The rewards of this prudence will appear in the form of reduction in fiscal deficit, lower inflation, monetary and exchange rate stability, resurgence of growth and decline in indebtedness.
These economic rewards, however, would be spread widely and diffused over a large segment of population - not necessarily among the supporters of the ruling parties that have taken unpopular decisions to set the economy on the right path. As a matter of fact some of the supporters of the ruling party or coalition may actually be deprived of their privileges and pelf as a result of these reforms.
What are the immediate political risks? In a constituency-based electoral system, the sitting elected representative has to satisfy the expectations of the people at the local level. These people are least concerned with larger macroeconomic issues but are preoccupied with their own bread and butter issues. They want roads, electricity, drinking water, schools, clinics, cooking gas in their areas, whether these are economically justified or not. They want subsidies on irrigation water, electricity, gas, seeds, fertilizer and tractors. They want jobs for their sons and daughters and do not care if the latter are qualified for the position or not.
The aggregation of these local demands at the national level creates a catastrophe for the fiscal and macroeconomic situation. The public sector is overstaffed to accommodate the constituents' demands. Subsidies are administered without any targeting and wreck fiscal accounts. Development expenditure on unviable projects and at inflated contract prices is made liberally, forcing the government to borrow while funds are siphoned off as kickbacks, commissions, payoffs by the politicians to build the war chest for election expenses.
Further, when jobs are dispensed on the basis of connections or money rather than merit, performance is unlikely to be stellar. If the SHO, tehsildar, Irrigation SDO, teachers and other officials are posted at the recommendation of the local member of assembly, they have no choice but to oblige him and his supporters and harass and harm his opponents. It doesn't matter if the law and order situation deteriorates, crime rises, revenue collection declines, water is wasted as long as the authority of the elected politician is asserted in his constituency.
It may appear at the first sight that the compulsions of political expediency are at loggerheads with the dictates of good governance and prudent economic management. This is true in the short run but not in the longer term.
In the short run, the proposed reforms attack the existing system based on patronage, loyalty, connections, mutually benefitting bargains and deals and narrow personal and parochial interests. The new system lays down merit, hard work, ethical behavior and reward for performance as the underlying principles. The ordinary politician who has to face his constituency would not be able to place his supporters in lucrative governments jobs, award juicy contracts to them, get officers loyal to him appointed as DC, SP, Tehsildar and SHO. From his viewpoint these reforms are an anathema because he loses all the levers of control which he exercises through this patronage system. The fierce resistance by the elected MNAs and MPAs sparked by their fear of losing their privileges, power and pelf immediately as a result of these reforms is the primary reason as to why no government has bitten the bullet and implemented the long term structural reforms agenda.
In the long run, the critical test for the political leadership is to consider whether in 2018, the economic situation would look attractive enough that the people would vote them back to power. Leaving aside voters in some traditional rural areas -- where biradari and kinships, tribal affiliations and landlord-peasant relations dominate -- the younger population, that forms a considerable size of the electorate, will be the new element in the equation. The new census, if held today, will show that the urban constituencies will account for at least 40-50 percent of the total votes. The preferences of the urban voters are driven by performance and delivery and not on affiliations. The ruling parties can keep these younger educated urban voters contented and happy if they are able to provide them jobs, essential food at affordable rates, clean drinking water, healthcare facilities and education to their families. Security of life and property and providing an expeditious and inexpensive justice system would remain a challenge but is a must.
To fulfill these aspirations of the voters, Pakistan needs good governance, sound economic policies and management. A pragmatic and smart leadership would realize that by creating jobs in the public sector for few of their loyal supporters and saddling the exchequer with financial burden, the fiscal deficit would be amplified. For each job only one person is obliged by the politician, while 99 other potential or actual supporters, who do not get that job, are disappointed. The politicians end up with the worst of both the worlds. They not only alienate the majority for the sake of a few, but also unwittingly contribute to the problems of fiscal deficit, debt and inflation. The leaders would also be confronted with the reality that the lives and the property of common citizens cannot be preserved when policemen are appointed not on their suitability for the job but on the recommendations or sifarish and political connections. Electricity, gas or water cannot become available to consumers and businesses when these services are heavily subsidised across the board, poorly managed and theft and pilferage are rampant with the active connivance of the politicians. Government will be unable to balance its books when taxable private incomes or dutiable goods are left out of the tax net either because of corrupt officials or the interference of his political followers in the postings and transfers and coming to the rescue of tax evaders. The ambitions to lay down large infrastructure projects such as Motorways, Metros would be faced with financing shortfalls or increased indebtedness if resource mobilization at all tiers of the government-Federal, Provincial and Local-is not assigned priority.
Growth, poverty reduction, employment creation, low inflation and investment will gain strength if there is a positive market sentiment and a general upbeat mood among consumers and businesses. In other words, the investors and businesses have confidence in the foresight and capabilities of policy makers and the leadership. As a result of this confidence, investors will sense a positive return on their future investment and expand or build a new capacity for goods and services. This heightened economic activity will create jobs, reduce unemployment, add to purchasing power and thus raise aggregate demand. It will naturally boost growth rates and result in more taxes because of higher incomes, filling in the fiscal gap. If the investors perceive that the economic policy direction is right and tough political decisions are being taken to set the economy on the correct path they would not hesitate in taking the decisions to expand or invest. Increased Investment, in turn, leads to growth, poverty reduction, job creation and price stability.
Higher growth will also allow the salaries of public servants to be revised upwards and development spending on energy, transport, infrastructure, education and health can be accelerated as additional resources become available because of this boost in level of economic activity. Shortages and supply bottlenecks in the energy sector -- that cripple the economy and create disaffection among the people -would be eased, lowering the costs of doing business, making Pakistani goods competitive in the international markets and cooling tempers of the households. Looking at the successes of the domestic investors, foreign investors will also bring in capital, know-how and technology. This scenario would create conducive conditions for the political parties in power in 2018 to appeal to the electorate with this record of performance and their chances for victory would become bright. Public memories are short. They will not recall the 2013 and 2014 when they faced energy shortages, inflation, unemployment and difficult law and order situation. In 2018, they will see the bright lights, humming factories and stable prices.
How can this virtuous cycle replace the current vicious cycle?
The answer lies in the sagacity and wisdom of our collective leadership. An economic compact on the lines of the Charter of Democracy should be agreed upon by all the major political parties. The compact should have some basic underlying principles that are non-controvertible. These are:
Policy decisions would be based on considerations of "what is good for the majority rather than for me and my supporters", appointments to key positions would be based on merit rather than connections and loyalty, tax evaders would be penalised instead of being condoned, law enforcing agencies would be free from political interference and those indulging in corruption, waste and self-enrichment would be taken to task.
A healthy and vibrant economy is what the country needs. That is possible only when Good governance is practiced. There is a lot of truth in the saying that "good governance is good politics".