Floods —inequality and social policy

The current economic situation requires re-envisioning of the economic development doctrine in Pakistan.

Zubair Faisal Abbasi September 28, 2010

The devastation of floods in Pakistan is enormous. It is of catastrophic proportions. Truly representative data is being collected to develop estimates but apparently more than one- fifth of Pakistan is trying to cope itself with the erosion of basic public and private infrastructure. Hundreds of kilometres of roads, tube wells, crops, electricity transmitters, cars, cattle, and carts, houses and schools have been damaged apart from the over 1,500 people dead and 20 million displaced. Moreover, around 400 children are missing while nearly 800,000 people remain stranded in floodwaters.

The estimates of the economic costs of this disaster are also enormous. Apparently, the economy will either show a zero or a paltry two per cent growth which can increase unemployment and poverty. The cost of reconstruction and rehabilitation will cause the economy to run on a higher fiscal deficit of between 6-7 per cent with inflation touching 25 per cent or more during the next couple of years. Economists call such a phenomenon in which the economy melts down and then possibly recovers a ‘V-shaped’ process. However, the point is that the bottom of the possible V-shaped recovery is something which can make or break the state-society relationship and for which the democratic setup has to be very careful.

Practically speaking, disasters do at least three things. First, they challenge the resilience of the social and physical infrastructure of countries. Second, they cause the destruction of both physical and social capital. And third, they provide opportunities to reconstruct the last capital stock. The current floods carry all these three elements. Leaving the engineering and forecasting side of the physical infrastructure aside, it appears that the disaster has unequivocally unearthed vulnerabilities in our social infrastructure.

One set of vulnerabilities has been induced with the deliberate creation of economic, political, and social inequalities. In the name of industrial development, regional, functional, and sectoral inequalities were created which were never properly removed. Such policies fleeced the agriculture and rural development sector without any enviable improvement in the high-productivity industrial sector. The second set of inequalities was dragged in when economic policy was designed on a near-religious belief in the neck-breaking structural adjustment under the Washington Consensus approach. Under the influence of such policies, economic managers of Pakistan are still prepared to scarify socially desirable outcomes of economic growth to the faulty neoliberal logic of efficiency.

Looking at the Gini-coefficient, which is a measure of income inequality amongst individuals, one sees that inequality in rural areas has actually increased over time despite phases of economic growth during the previous regimes. Meanwhile, inequality has also increased among the different regions of the country as well as social groups. Why certain parts of the country were inundated more than others must raise some eyebrows prompting us to think beyond the dictates of hydrology. There is a definite pattern in the political economy of flooding behind it. The current economic situation requires re-envisioning of the economic development doctrine in Pakistan.

In fact, the state needs to seriously rethink the distribution side growth and economic development strategy even more than singularly focusing on combating inflation. The public finance system requires a robust overhaul with emphasis on restructuring taxation and re-distribution.  There is a need to develop a strong and systematic social protection framework instead of relying on the market. The disaster affected people and the country at large needs such corrections otherwise more than a French-revolution-styled revolution, chaos and anarchy might be awaiting us.

Published in The Express Tribune, September 29th, 2010.


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