Between current socioeconomic issues and historical precedents
Citizens’ attitudes towards an economy and the extent of government intervention are the outcome of ongoing socioeconomic issues and historical pressures. Consequently, every nation has a distinct outlook and perspective regarding the economy and the government’s role in that economy. Where Americans perceive their government with a certain amount distrust, Scandinavians lie on the opposite end of the spectrum, trusting their government to look after their wellbeing. The contradiction between these views may be seen as a result of historical developments.
Opinions on what the government’s role ought to be range from complete privatisation of a government to hard-core socialism where the government holds supreme responsibility for its citizens’ wellbeing. Where Norwegians might find it perfectly normal to receive a year’s supply of pampers and clothes from the government at the time of a child’s birth, Americans, on the other hand, might find it downright irksome.
As a matter of simplicity, consider that each country has a majority point of view regarding the economy and the government’s role in that economy, that if a person were randomly chosen, their point of view would nearly mirror that of the majority, the economic individual for that country. Consider the economic individual of Pakistan; where does he or she stand on the economic spectrum and what are their perceptions regarding the Pakistani economy and the ideal extent of government intervention in the economy?
By and large, Pakistan’s citizenry seems to have entrenched socialist tendencies. While the private sector has gained in prominence in the past decades, the prevailing view is one where the government is largely responsible for the wellbeing of its citizens. For Pakistan’s citizens free universal healthcare and education are basic government interventions. There is an understanding and consequent demand that these two services are part of citizens’ basic rights.
Pakistan’s socialist tendencies, however, tend to go much farther than just the provision of quality health and education, which, unfortunately, is often not received. General media discourse during periods of high energy prices tends to revolve around ‘providing relief to the masses’. If one views the media as a producer of consumption goods, one might surmise that this view is an aggregation of the majority point of view. There is a perception amongst segments of Pakistan’s citizens that increases in fuel prices, for example, are engineered by the government and that reducing fuel prices is simply a matter of political will and the government enforcing its writ on oil companies.
In cases where there is better understanding of petrol pricing mechanisms, the prevalent view revolves around providing subsidies to bring down fuel prices to pre-hike periods.
This point of view extends beyond fuel prices of course. This cognitive process can be applied to rents, prices of consumer goods, electricity, gas and onto other mass consumption goods. There is a perception that the government has the power to simply pass edicts enforcing price controls over a range of goods and products.
These opinions are rooted in historically large governments that have existed in the subcontinent and Pakistan. For a country where the private sector’s dominance is a recent phenomenon, the state’s role in the economy was nearly ubiquitous in nature. Until recently, the Pakistani state exercised a pervasive degree of control over its citizens’ economic lives. Nearly everything required permission from the government. Ranging from the purchase of a car to buying sugar to importing raw materials for a factory, everything required a state license or some sort of state issued permit. This mechanism of control that was thankfully dismantled by Zulfikar Bhutto.
Moreover, there is an economic angle to the demand for price controls. Low-income groups, which comprise the majority of Pakistan’s citizenry, simply do not have the resources to cope with large fluctuations in the price of goods, leading them to demand an imposition of price controls in order to smooth out consumption.
With the government having performed that function in the past and still doing so in the present, sugar and flour price subsidies as a case in point, there is a tendency to expand the net of subsidies in one’s mind. The thinking goes, if flour and sugar prices can be fixed and subsidised, why can the government not do the same for fuel, rent and electricity? A valid question, if one approaches the issue from simply the view point of established precedence.
A similar refrain can be heard from agriculturalists during times of shrinking profit margins. Apart from subsidies on agricultural inputs, agriculturalists will often demand that price floors be set on major agricultural crops and that the government buy the crop at that price in order to reduce downside risks and ensure the sale of the crop in question. As is the case with Pakistan’s wheat crop, the procurement of which is guaranteed by the state at a predetermined price level.
Conversations with urban development professionals also shed some light on citizens’ expectations of the state. On the provision of low cost housing, there is a prevalent view that the government could and should legally mandate setting aside of a percentage of land for low-income groups for each parcel of raw land developed by the private sector.
Between these expectations, there is a deep rooted cynicism regarding the state and its ability to take care of its citizens. The cynicism is based, and rightly so, on years of anecdotal evidence collected through one’s life.
At some level, the unwillingness to pay taxes, while a result of regulatory issues, also stems from what is seen by many Pakistanis as the government being an inherently inefficient allocator of financial resources. A pattern of thinking that results in a fair degree of cognitive dissonance. Where the quantum of services demanded is great, the delivery of services is seen with a degree of cynicism.
The flip side of this perception of the all-powerful regulatory state is that in instances where the government might not deserve credit for a particular macroeconomic change, the government can and does claim the change as a policy success. As in the case of the recent fall in oil prices, parts of the government machinery were quick to attribute the domestic fall in petrol prices to government policy.
A major component of the public discourse around trade considers the opening up of the trade regime as a zero-sum game for Pakistani producers. This section naturally prefers protectionist policies in order to save jobs that that section feels will be lost due to a more liberal trade regime.
So where does the Pakistani economic individual lie on the economic spectrum? Demands placed on the state range from universal health care and free education to the subsidy of electricity and other consumer goods whilst at the other end, there is an aversion to financing the state through paying taxes. The fairness of these opinions may be debateable but their roots are lodged in current socioeconomic issues and historical precedents. These opinions belie a firm belief in a socialist state placing Pakistanis firmly to the left of the economic spectrum, somewhere between most European states and socialist South American states such as Venezuela.