Hafiz Pasha adds to the World Bank count commercial banks, urban real estate developers and parliamentarians. Last year, the PTI government’s spokesperson on economy blamed the Charter of Democracy signed in 2006 for laying the foundation for the elite capture! His guestimate was of a thousand families out of the 30 million Pakistani families, just about the number of MNAs and MPAs who captured most of the state resources. An important omission in these counts are the emerging conglomerates of business/private universities/media houses.
Tax expenditures are, however, not the only route to elite capture. Public expenditure, especially on development, is as important. The elites influence development process to force their own priorities and appropriate public resources for private gain. Such captures fall under the definition of corruption. The areas of moulding public policies and regulatory framework to the advantage of the elites were not covered either in the seminar. Research indicates that community-based development and decentralisation of power and authority are also prone to elite capture. A study in India shows how elite capture takes place at the lowest tier of rural local government.
Short of a revolution, how do societies deal with the elite capture? Counter-elite or capture-elite approaches are said to be too disruptive. A flexible combination of counter-elite and co-opt-elite approaches may deal with excessive rents, but runs the risk of gradual re-capture by the elite. Academically, it is not established whether elite capture is the result of government failure, market failure or both. But it is well-understood that elite capture is the main reason of vast disparities in income distribution. It would be interesting to watch how the next budget deals with these dilemmas. Might I say that the return of wealth and inheritance taxes and the end of a significant amount of tax expenditures will be enough of a leap forward.
Published in The Express Tribune, April 5th, 2019.
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