At some level, the politics of structural adjustment play out alike, whether here or in advanced industrial countries. Let me share three themes in particular that we’ve seen in Pakistan over the decades that I’ve also noticed coming into the debates in America.
The first is how powerful vested interests easily find takers to carry their flag in the public battles that characterise tax reform. Small and determined minorities can hold the entire economy hostage simply by refusing to budge and preventing the passage of key legislation. Look at the example of the MQM during the effort to pass the reformed general sales tax at the end of 2010, or the influence of the Punjab shopkeeper associations over Nawaz Sharif and his party men on the same issue.
For all the craziness, the Tea Party fringe in America is in fact fronting for very powerful vested interests who do not wish to pay up if they don’t have to. To beat these interests, it is necessary to unmask them, to show their face to the public. Look past the specific words and the mouths from which such words coming, to the puppeteers behind the show. Our successive leaderships have not been able to do this because they share the same puppeteers and if they don’t, they prefer to compete with each other for the puppeteer’s favours rather than move to end the racket.
The second major similarity is in how a fiscal stimulus ends up being appropriated by the rich. Austerity for the masses and stimulus for the rich gets you riots in the streets like the ones in London. “We’re taking our taxes back,” one rioter was quoted as saying. When people see the government shelling out billions to rich and powerful interests by rescuing the banks, they’re not very likely to give a sympathetic hearing to calls for austerity and taxes.
Look for instance at how bank loan write-offs get dragged into the debate on tax reform here. The story gets cast something like this: ‘The government writes-off billions of rupees of loans for sugar mill barons and companies run by sons of politicians, but all that the poor get is taxes and inflation.’ It’s a powerful and compelling story and, in many instances, it’s also true. How do you argue the systemic importance of deficit reduction against a simple and powerful story of this sort?
Third and perhaps most importantly, you’ve got to have a bad guy, a villain, an archetypal representation of the ‘all that ails us’ variety. In America, the conservative establishment has built two villains for itself, and spent generations flogging them in public.
For the fiscal conservatives the villain is big government, bloated and ineffectual, coddling a worthless rabble of an underclass — often portrayed in racist language to add to the villainy of it all — strangling the innovative spirit of adventure and enterprise that has animated America and made it the master of the world’s destiny. For the cultural conservatives the villain is gays, embodying all the sins of indulgence that are dragging America down. The reformers have no villain, no bad guy, and therefore they have no story that anybody wants to hear. In Pakistan, for instance, the opponents of reform have a villain, and it’s name is ‘corruption.’ “End corruption first, then ask the people for taxes” declared Ahsan Iqbal of the PML-N once in a television programme with me. And with that simple phrase, that magic bullet, I knew he had the viewers. No amount of explaining the complexities and urgency of tax reform would work after that.
So here’s the lesson from Pakistan about how reform efforts fail more often than not. Reforms that require mass participation like in the case of taxation cannot succeed if the masses do not understand why they are being asked to participate and cannot empathise with the system that the reformer claims he or she is trying to rescue. To get this understanding, you’ve got to wrap the whole effort up inside a story and personify the elements of the story. Failure to do this will mean that the optics of the whole affair will always be controlled by the opposition, which will hold the effort hostage simply because it doesn’t have to own the consequences of failure.
Published in The Express Tribune, August 18th, 2011.