It is misfortune of the highest order that one can’t live outside the international financial system but, when integrated into this system, one has to bear the vicissitudes which come from the high-level plunder of American rulers. Because the pressure that has befallen on the world economy is indeed the outcome of American follies. America is being crushed under the weight of its debts. Its total GDP and its debts are now almost equal. The balance between national debt and national output has now become difficult to maintain as the near-impasse on the debt ceiling issue in the Congress proves.
The US could’ve avoided its woeful credit ratings dip. That is what President Obama wanted. He thought that by taxing the rich, the imbalance between debt and GDP could be addressed. But the Republican Party, the safeguard of the interests of capitalists, refused to be a ‘party’ to this; the debt ceiling either could not have been raised without the Republican vote. When President Obama warned of the dangerous corollaries of raising the debt ceiling, then the leaders of the GOP countered that the government should cut spending on public services i.e. health and other such services should be sacrificed to deal with this fiscal imbalance. This obviously meant more misery for the common American which in turn meant more misery for the Obama re-election chances. Since Obama couldn’t have jeopardised his re-election, he had to agree to raise the debt ceiling. Consequently, the sink in America’s credit rating had a seismic effect and the global financial system saw consequent ups and downs. The stocks markets started to plunge instantaneously. This is just the beginning. The world’s leading experts are at a loss to assess what will happen next. Whoever one asks scratches their head and pleads ignorance.
With the reeling librations of the dollar, all the countries that have their forex reserves in the dollar are now at the brink. China has the highest amount of foreign exchange in the damned dollar. Only China has the kind of moolah that the Americans hope to get after raising their debt ceiling. It’s to the tune of almost 3 trillion dollars. If China so wants, it can save the US. But why would China do that? America is already indebted to many countries and all the countries that have lent that money and have amassed dollars will have to face the consequences of the dollar dip.
Another fault of the capitalist system lies at the heart of America’ current predicament: the rich don’t pay up. They are loath to have their profits and their reserves of wealth taxed. They are ready to jeopardise the entire nation but not ready to part with a portion of their dear wealth. This arrogance and greed of the stooge class is the nub of the American problem and Pakistan’ financial woes too. The ethos of the capitalist system is this voracity for wealth (the profit motive, of course) on which this system flourishes and seeks to maintain the high prices of basic necessities which entails the common man’s suffering. The American situation has spun out of control precisely because of governmental spending spiralling out of hand and the rich not coughing up their due an dour situation is much the same. But our problem is exacerbated by the fact that we neither have the ability nor inclination to utilise our resources.
Today, when countries previously considered prosperous in the capitalist system are in quite a fix but still manage to lend us money are astounded when looking at the airs and graces of our rulers. The capitalist bloc has been in trouble for quite a while now. The trouble is spreading and the country to now face riots after Greece in Europe is Britain. Britain doles out a lot of aid to us. But British representative are bowled over by the ways of our ruling elite. For instance, a British minister visited Pakistan to negotiate matters regarding the dispensation of aid travelled economy. Britain has long ordained its officials, even if they be ministers, to travel economy of journeys longer than five hours. The minister who came to our country to give us aid travelled economy. But when he was returning, he was amazed to see that the official of our country asking for aid was travelling first class.
Another such interesting incident took place during these negotiations. When the British officials were stressing austerity and cutting strings during these negotiations, they were told that the salaries of government officials in Pakistan were being raised by 50 percent. The British reps were gobsmacked and replied that there has been a freeze on salary increases in Britain for the last three years. Their valid contention: ‘We’ve frozen our countries’ officials’ salaries to give money to you so you can splurge them on salary increases for your officials!’
All IFIs, including the IMF, and the countries that give us loans have a common demand of us: to try to expand our tax net. The amount of people who give tax with respect to their income is embarrassingly low. We can judge this from the fact that the Latin American country, Guatemala, that has a total population of 70 lakhs has a greater number of taxpayers than us and its not even a ‘developed’ country. Whereas we pay no heed to the insistence of all international financial agencies to raise the number of taxpayers.
If we take corruption into account, most experts say with certainty that if all the money collected from taxpayers ends up in the exchequer rather than in the pockets of corrupt officials in entirety, then the budget could actually turn out a profit rather than being in deficit. And if all the people are taxed according to their income, we could have ample funds available for development projects and we won’t need to take loans from other countries. But our capitalist class and our rulers have forged an unholy alliance and their terrifying combine has left the common man hapless. The prices of basic commodities are determined by hoarders and profiteers. They can raise prices whenever and however they want and loot the poor public.
Even the real target in our tax system are the poor. If a direct tax is levied, only those with high incomes are targeted. Whereas the indirect tax has to be paid even by the poorest of the poor. From tea to clothing, he has to pay the tax on his every purchase. The poor man pays a much greater proportion of his income in the form of tax. Similarly, the subsidy intended to help the poor benefits the well-to-do and wealthy. One who pays an electricity bill of Rs 500 gets a mere subsidy of Rs 25 whereas one who pays a bill of 50,000 gets a subsidy of Rs 2500. The point being that the government is taking from the poor and giving to the rich in every manner. This is the distinctive feature of the capitalist system.
But who thinks of such trivialities in our country? In this system, this mad rush to make money and then more money is never-ending. The participants in this race of avarice will trample over the corpses of the poor, unwashed masses and keep moving forward. We, too, are doing the same. Because that’s all we can…
The writer is one of Pakistan’s most widely read columnists.