John Wall, World Bank’s country director, made a controversial observation in his article “Poverty in Pakistan”, appearing in The News of 10th July, 2006. He stated that poverty is an ethical and not a statistical concept. Is this a just a statement or is it the deliberate forerunner of a strategy to cover Pakistan’s failing efforts in the fight against poverty, especially when a crucial election is in the offing? During the recent past certain questionable things have occurred relating to poverty and the management of the economy. The country’s Chief Economist was removed because he disagreed with the poverty figures announced by the government; in his view poverty was higher than government claims. John Wall has entered the controversy unnecessarily by questioning the methodology for measuring poverty; thus signifying support for one party to this dispute. His observation has other implications which are discussed here.
At Page 124 of the Pakistan Poverty Reduction Strategy, “Accelerating Economic Growth and Reducing Poverty: The Road Ahead”, defines the methodology for measuring poverty. Wall confused the issue by discussing methodological difficulties. It led him to conclude that it is not clear whether poverty head count had dropped by 10.6% or by 5%; I don’t want to be over critical but I think it is wrong for Wall to say that he is unsure about the size of poverty reduction during the last 3 years? It is wrong because poverty reduction measures do specify the reduction that will be brought about. It is important because millions of livelihoods are adversely affected by lower reduction of poverty. It is wrong because Pakistan is already committed to the Millennium Development Goal 1, which binds her to halve the population living on or below the poverty line by 2015. If the measurement is put into doubt, then what are we speaking about? It is wrong because it absolves the government from fulfilling its obligation whole heartedly under the MDG. It provides a justification for not doing enough. Without firm numbers how can the rate of progress be measured? How can you evaluate what is happening to millions of dollar of foreign assistance earmarked for poverty assistance? How will you judge the performance of government? Therefore, it does matter what the exact poverty headcount is. That is why I think Wall ought to have reflected upon the consequences of his remarks. One would have wished for a higher degree of commitment.
Secondly, I agree that poverty is an ethical issue to the extent that its presence is evil and a violation of human rights. By using the premise that poverty is an ethical concept one should then logically speak of its moral aspects and not derive conclusions relating to its prevalence rate; these are two different categories and cannot be compared. I think Pakistan is slipping in battling the problem; the next steps in poverty alleviation strategy are hard and difficult. They have become even more so because of the following;
– The macro economic instruments to reduce poverty and improve livelihoods are not being used for the benefit of poor to the extent possible. Instead very powerful cartels have entered the inner sanctum of policy making to manipulate government for personal and elitist benefits.
– The higher prices of essential commodities are threatening the poor while the deteriorating level of social services has multiplied their miseries.
– Reliance on indirect taxation to generate resources has increased the cost of living for the poor which has been made worse by rising inflation. Poor public sector educational delivery and absence of vocational training has further dwindled the hopes of many millions.
– Last year Rs. 35 billions were earned by the government through petroleum price manipulation with the poor picking up a greater share of the burden. Prior to that Rs. 35 billion of military pensions were transferred to the civilian budget further reducing budgetary space for the poor.
– The recent shenanigans about the stock market, purchase of rail cars and Boeing 777’s at inflated prices show how badly the responsibility to the poor is fulfilled.
– The degenerating regulatory structure at the district level involving police and irrigation management further increases the burden on the poor and make their lives insecure.
– Non pro-poor expenditures is being booked against poverty expenditures to comply with the 4.5% of GDP investment ratio made compulsory under the law.
– Technic-centric solutions based on privatization have become the bane of the poor and increased the cost of water and sanitation in urban areas.
– Many areas in NWFP have remained without electricity during the hot summer months, which has been the cause of many deaths. A large area still remains without electricity.
– Growth has taken place but accumulated by the top quintile and most of it has been invested abroad without the trickle down effect within Pakistan.
– State lands have been allotted to influentials instead of distribution amongst the landless peasants.
– Blatant conspicuous consumption at exorbitant state expense is evident.
I think these are the areas which need to be addressed for poverty reduction. It will test our commitment, and reform will be difficult. It is also problematic for multi-lateral and bi-lateral partners of Pakistan to be harsh with the government, especially in the context of support to the United States in the war on terrorism. It would be safe to conclude that in a sense, Pakistan’s support in the war on terrorism is preventing good governance for the benefit of the poor. Sometimes, one wonders in despair, whether we are headed towards becoming another Liberia or Sierra Leone? I would argue that although we exhibit some of the signs in that genre, but the direction of change in Pakistan’s economy and governance is more on the lines of Chile or Argentina in the 1970’s.
It is obvious that correcting the above malaise calls for a moral crusade against bad governance and the lack of compassion for the poor. Poverty is measurable and is being continuously measured on a regular basis around the world, without any ethical dilemmas! At times such as these, the least one expects from friends is cold level headed advice – that is an ethical responsibility for the friends of Pakistan. Let us stick to the definition of poverty already provided and take the tough decisions needed to reduce poverty. Failure will result in wasted lives and early deaths for many thousands; that I think is the real ethical and moral issue in Pakistan today, not the methodology of poverty measurement, that already stood determined.