Dr M Ali Hamza
If an airplane took off a dozen times only to crash each time, the only logical conclusion would be that the aircraft needs a fundamental redesign. Similarly, Pakistan’s economy has crashed 23 times in the last 75 years, each time requiring a bailout from the International Monetary Fund (IMF). It wasn’t always this way. In the 1980s, Pakistan was richer in per capita terms than India, China, and Bangladesh. Today, however, Pakistan is the poorest among them, with a recent GDP growth estimate of only 2%, barely enough to keep up with population growth.
Currently, Pakistan is facing an economic crisis fuelled by high global oil prices, rising agricultural imports, and economic mismanagement. In April 2023, Pakistan’s year-on-year inflation hit a record 36.5%, the highest increase in nearly 60 years. It is evident that Pakistan has become dependent on IMF bailouts, yet these bailouts seem unable to address the root problems. The cycle is always the same: Pakistan runs out of dollars, seeks an IMF bailout, and receives it on conditions such as privatizing state-owned enterprises, implementing austerity measures, and broadening the tax base. None of these conditions resolve the primary issue in Pakistan’s economy—the non-productive nature of its elite. This deep-rooted defect is gradually leading to Pakistan’s demise. Let’s delve into the concept of a non-productive elite to see if this claim holds ground.
A non-productive elite consists of influential individuals or groups who prioritize personal gain and power over public welfare, often engaging in corruption, misleading allocation of resources, compromised execution, and nepotism. Their actions undermine economic growth, social progress, and governance, leading to stagnation and decline in their respective nations. Has it started making sense?
Throughout history, the rise and fall of nations have often been tied to the effectiveness and productivity of their ruling elite. When the elite becomes non-productive, focusing more on personal gain and power consolidation than on the welfare of their nations, the seeds of decline are sown. This phenomenon is not only a relic of the past but continues to manifest in contemporary societies, demonstrating the timeless impact of leadership on national prosperity.
History is filled with such examples. For instance, the decline of the Roman Empire. Indulgence in lavish lifestyles, accumulated vast estates, and exploited the provinces for personal wealthweakened Rome’s political and economic foundations, contributing significantly to its eventual collapse. In late 19th century, China’s Qing Dynasty were more focused on maintaining their luxurious court life than on addressing the growing challenges. The opium trade, facilitated by British merchants, further drained the economy. The ruling elite’s inability to modernize and reform the state led to a series of humiliating defeats to foreign powers, culminating in the fall of the dynasty in the early 20th century.
In contemporary times, Venezuela; once one of the wealthiest countries in South America, has plunged into economic and social chaos over the past two decades. The reason is ruling elite, under both Hugo Chávez and his successor Nicolás Maduro focus on maintaining power at all costs.
Under the leadership of Robert Mugabe, Zimbabwe shifted from being the “breadbasket of Africa” to an economic disaster. Mugabe and his inner circle prioritized land reforms to facilitate political allies. The ruling elite’s failure to prioritize national well-being over personal power and wealth was a key factor in Zimbabwe’s downfall.
In Pakistan, the phenomenon of a non-productive elite contributing to national issues is evident across various sectors. Whether political, military, bureaucratic, or business elites, all seem to function in a non-productive manner.
Pakistan’s political landscape is filled with people who are egocentric, and self-serving. Their deep ties with land mafia and other illicit network enable them for land grabbing, money laundering, and exploitation of resources. This ultimately undermine governance, stall reforms, and erode public trust in political institutions. The Panama Papers leak in 2016 exposed such numerous politicians, including former Prime Minister Nawaz Sharif, for owning offshore companies and properties, raising questions about the sources of their wealth. This kind of corruption diverts resources away from critical areas like education, healthcare, and infrastructure, contributing to economic and social discontent.Moreover, the latest Dubai leaks revealed properties linked to senior political and military officials, highlighting their lack of interest in advancing the nation, but focus on increasing and protecting their personal wealth.
Moreover, the prevalence of dynastic politics in Pakistan is another indicator of a non-productive elite. Major political parties, such as the Pakistan People’s Party (PPP) and the Pakistan Muslim League-Nawaz (PML-N), are dominated by a few families who wield significant influence over the political system. This concentration of power limits political competition and innovation, often leading to policy stagnation and a focus on maintaining familial power rather than addressing the country’s pressing issues.
There is a prevailing perception that the Pakistani military’s extensive economic involvement leads the top brass to prioritize personal financial interests over national economic development. The dominant role in politics and economy is viewed as a non-productive engagement of the military elite.
The bureaucratic elite in Pakistan, has long been criticized for inefficiency and excessive red tape. A local term “BABU”, connotatively meant as arrogant official, is evident in their conduct. The civil service, tasked with delivering public services, often becomes a bottleneck due to bureaucratic inertia, corruption, and a lack of accountability. This inefficiency hampers development projects, discourages foreign investment, and frustrates citizens’ access to essential services. The focus on maintaining status and privileges within the bureaucracy often overshadows the need for effective governance and public service delivery.
The business elite in Pakistan faces accusations of tax evasion, using loopholes to minimize their contributions to the national economy. Furthermore, their monopolistic practices, often aided by connections to political, military, and bureaucratic elites, hinder competition and impede economic advancement. This concentration of economic power restricts broader participation and stifles overall growth.
While elite capture may seem a typical aspect of a capitalist financial structure, the real concern lies in the investment choices of this elite group. Their capital is often directed toward less productive activities, such as real estate, speculative ventures, and luxury imports, rather than more productive sectors like industrial development. This misallocation of resources hampers national growth by diverting funds from sectors that generate jobs and provide widespread economic benefits.
The pattern is clear; when the elite of a nation become non-productive, focusing on self-interest and invest on less productive activities, the consequences are often catastrophic.For any nation to thrive, it requires anelite/ leadershipwithin all institutions, that strives for self-actualization rather than merely fulfilling the lower-level needs outlined in Maslow’s Hierarchy. It is imperative for people of Pakistan to hold their leaders accountable, ensuring that they remain productive and aligned with the nation’s long-term interests. Only through such vigilance can the tragic patterns of history be broken, securing a prosperous and stable future.
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