A Swiss fantasy

Perhaps one of the worst attributes of modern Pakistani political discourse is virtually an absolute lack of a sense of proportion and a cavalier attitude towards accuracy — and plausibility — of numbers. One of the most outrageous numbers being thrown around these days is that the Pakistani elite has somehow stashed $200 billion in illicit money in private banks in Switzerland. This is the sort of outlandish theory that would have made the Russian Tsar’s secret police proud.



Let us put this number in context. Pakistan’s GDP last year — the total value of all goods and services produced in Pakistan in that year — was $231 billion. The total amount of tax collection last year was roughly $20 billion. How believable is it that the total amount of ill-gotten wealth stashed in Switzerland alone is nearly equal to the entirety of Pakistan’s economic production and ten times that of its tax collection? Does this at all sound logical?

The Swiss ambassador to Pakistan has politely expressed his puzzlement as to where this number comes from, because the Swiss government is certainly not aware of its origins. The Swiss central bank publishes numbers every year that list how much money in its banking system is owned by foreign citizens and it breaks down the numbers by citizenship. The latest available number for Pakistan is roughly equal to $1.3 billion. How much of that is legal or illegal wealth is not known, but that number does not sound like a lot. To put it in context, that number would not even cover six months of electricity subsidies in Pakistan.

What disturbs us much more than the lunacy of the number is the thinking behind it: that somehow Pakistan’s economic problems can magically vanish if we could just manage to procure an obscenely large sum of money from abroad. This kind of thinking ignores that kind of sclerotic institutions that make wealth generation from within the country so difficult. Pakistan is not poor because rich countries have not given it more aid or because our elite have stashed all the money in Swiss banks. We are poor because we stifle creativity, opportunity and economic freedom through poorly designed institutions. If we can fix those, we will not miss any money that has been siphoned away in banks abroad, no matter how big or small.

Published in The Express Tribune, August 28^th, 2014.