Mother of all corruption

Business Recorder

ARTICLE: Sugar scandal. Atta crisis. Petrol emergency. And many more such outrageous market manipulations are in the offing. All are the result of an unregulated free market economy (FME) that we have been practicing for the last nearly 40 years. Indeed, FME is the real mother of all corruption in the country. Not only Pakistan but almost the entire not-so-rich and the poor countries have suffered horrendously from this system. Whatever wealth the middle income countries had held in the 1970s went to the rich ones during this period as if sucked in by a magnetic pull.

In rich and in not so rich countries alike, the ruling elites had promised that neoliberal policies would lead to faster economic growth, and that the benefits would trickle down so that everyone, including the poorest, would be better off. To get there, though, workers would have to accept lower wages, and all citizens would have to accept cutbacks in important government programmes. Remember the IMF conditionalities?

Well, after 40 years, the numbers are in: growth has slowed, and the fruits of that growth went overwhelmingly to a very few at the top. As wages stagnated and the stock market soared, income and wealth flowed up, rather than trickling down.

This had had a disastrous effect on the prices of essential food items which simply soared out of the reach of the poor and even the middle classes in the developing countries.

Regular price monitoring by a highly credible civil society organization-Free and Fair Election Network (FAFEN)-started in late April has exposed the inherent weaknesses in the government policies framed to enforce price stabilization efforts, a contradiction in terms as in the profit devouring FME there is no concept of prices stabilization.

FAFEN’s Weekly Market Monitor is an initiative to complement the government’s efforts in lessening the economic burden of COVID-19 pandemic on citizens. The Monitor comprises the survey of 15 essential commodities’ official and market prices in 48 districts – 21 in Punjab, 12 in KP, 11 in Sindh and four in Balochistan.

FAFEN’s price monitoring report dated April 29 is an eye opener: Despite no wide-scale shortage of essential commodities reported in the country, sporadic incidents of lax enforcement of officially notified prices, and unavailability of government rate lists compromise the government’s resolve to ensure basic provisions to citizens at affordable rates.

The FAFEN report maintains that the provincial governments need to reinforce the existing market monitoring mechanisms at district level to ensure that citizens are not fleeced under the garb of lockdown. Unavailability of official rate lists remains a major issue in several districts of Balochistan, Khyber Pakhtunkhwa (KP), and Sindh.

FAFEN’s market survey suggests that the disruptions in flour supply due to restrictions on inter-province movement of wheat affected the prices in wholesale market in various districts. In Punjab, the flour prices were as high as Rs 830 in Gujranwala and Sialkot against the official price of Rs 805 for a 20 -kilogram bag. In Sindh, a 20-kilogram wheat bag was sold at Rs 1,000 in wholesale markets of Kashmore, Jacobabad and Dadu against an official price of around Rs 900. Similar was the situation in Khuzdar and Dera Bugti where a 20-kilogram flour bag was sold at Rs 1,000. In Khyber Pakhtunkhwa, the highest flour price for a 20-kilogram bag was Rs 975 in Lower Kohistan while the province had an official price around Rs 800.

Official sugar prices oscillated between Rs 70 and Rs 83 in Punjab. FAFEN observer from Bahawalpur noted markets charging Rs 10 above officially notified per kilogram price of sugar in the district, which is the highest difference between official and wholesale price in the province. Similarly, Sindh reported official sugar prices varying between Rs. 64 in Karachi and Rs 70 in Kashmore. The highest difference between official and wholesale price was reported Rs. 9 from Tando Muhammad Khan. Observers from KP reported that sugar was sold at Rs 85 in Abbottabad and Lower Dir while its official prices remained between Rs 70 and Rs 81 in the province. Balochistan markets also fared the same with highest wholesale price of Rs 85 reported from Khuzdar and Kohlu.

The last price monitoring report conducted by FAFEN on June 17, 2020 has found the consumers hit the hardest by official indifference to soaring prices:

Onion was sold above officially notified price in 38 percent of the observed areas. Potato was sold Rs20 above official rate in Panjgur. Tomato was sold at a rate which was Rs27 more than the official price in Muzaffargarh. The highest difference of Rs173 was observed in chicken prices in Swabi. Official rates of wheat flour and sugar were not accessible in 42 percent and 40 percent of the surveyed districts, respectively. Official prices of pulses moong, masoor, mash and chana were missing in nearly 11 percent of observed areas. Official meat prices were missing in 18 percent of the areas and poultry prices in 33 percent of the surveyed districts.

The countrywide price situation of essential food items and their fluctuations monitored by FAFEN has been quoted in detail here to bring forth the real crisis the country is facing due mainly to our unquestioned faith in free market economy (FME).

Based on the principles of neoliberal economics the unadulterated FME has given rise to rampant hoarding, black-marketing and smuggling in the country.

A state that cannot provide essential food items to its poorest section of population at prices within the reach of this section is believed universally to have no right to be called a responsible state or for that matter a state at all.

Indeed, the essential basic responsibility of a state worth its name is to provide to all its citizens affordable two square meals a day, affordable quality education, affordable quality health cover, affordable transport, affordable housing and a reasonable law and order cover.

In fact, the periodic elections that are held in a democratic setup provide even the most destitute among the voting age population an opportunity to judge the performance of an outgoing government and the claims of those that are staking their claims for the next government.

However, the FME has caused so much of inequality in the country that a handful of vested interest groups now hold the whip-hand and use the accumulated unearned wealth to buy votes to perpetuate their political hegemony to plunder the national wealth sucking even the last drop of blood of the country’s poorest of the poor.

In the process, a select group of beneficiaries of FME has emerged in the country which has, according to eminent economist, Dr Hafeez A Pasha, a former Finance Minister, virtually captured (Growth and On equality in Pakistan) the state itself. This privileged group includes the feudal class, the military, the trading community, the exporters, the multinational companies, the power sector, the banks, urban property owners and developers, parliamentarians, capital market players and senior bureaucrats.

There are many reasons why the current economic scenario is so gloomy. But one that has really made it almost impossible for the country to break out of the economic rut it finds itself in today is the elite capture of the economy that is being perpetuated by the FME.

Those who voted for Imran Khan-led PTI in the last election are perhaps the most disillusioned lot in the country today as against their expectations ‘clean man’ Khan’s campaign against corruption has seemingly failed to yield the desired results. But then what these disillusioned PTI voters seem to have failed to recognize is, no matter how sincere the ruler is in his efforts to root out corruption, he would continue to fail in his mission if he continues, at the same time, to abide by the principles of FME.

Indeed, to make even a simple dent in our corruption ridden society it is imperative that we first abandon the FME system replacing it with what is called the mixed economic system by bringing in the public sector in a big way.

But the question is, is PM Khan prepared to take this necessary first step towards eradicating corruption from society – abandon FME?

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