Moral hazard on steroids

When political leaders of any stripe go beyond the limits set by constitutions and law, they are acting immorally.


William B Milam September 10, 2014

It should not be a source of pride for Pakistanis that, despite all the other bad news competing for public attention, Pakistan is keeping pace. The Imran/Qadri march on, and occupation of, downtown Islamabad and the violence that ensued, has drawn frequent reports, and much comment and speculation. The specter of a destabilised Pakistan has loomed large in some of the pundits’ minds. More to the point, probably, many of these pundits fear that increased instability will again bring the country again, directly or indirectly, under the thumb of the military (and recent revelations that some former Army leaders may have inspired the march raise even more alarms.) These fears have galvanised anxiety among Washington’s ‘whither Pakistan’ pessimists who wonder once again whether an already weak state will become weaker and its ability govern will decline at an increasing rate. These are far-reaching questions, if perhaps a bit hyperbolic.

Of course, a more unstable Pakistan, or one more under control of the of the military, would increase concern for a successful denouement in Afghanistan after the drawdown of Nato forces, given the widespread perception, whether true or not,  that Pakistani policy toward Afghanistan after the drawdown is inscrutable at best or unreliable at worst. But more importantly, I suspect that worry about Pakistan derives from the firmly-held belief that it is a geopolitically strategic state in a geopolitically important region, and that instability, or worse control by hostile elements, would be deleterious to regional and Western interests.

The actions of the PTI and PAT lend weight to this worry. While I would think that the constitutional right to demonstrate peacefully against the current government for its failure to govern seriously over its 15 or so months in power is warranted, both Imran and Qadri seem to have as, their only objective, its unseating by means that are, at the very least, constitutionally questionable. If they are, indeed, just another kind of proxy for some retired and active generals (who may have grown up with the idea of using proxies to do their dirty work) then it has been a shameful, but deadly, farce and should finish their leaders as national political forces.

But the most worrisome aspect of this political bubble in Islamabad to my mind is that having again raised the specter of state failure, the current government will simply double down on the geopolitical significance of the country it governs. Using this significance to avoid hard choices has been the name of the game in Pakistan politics for perhaps 40 years. Civilian governments use it to live beyond their means, avoid economic reform, and share the economic rents that power brings. Military governments use it for those reasons, and to get away with their continual choking of real democracy. It is the same syndrome as the “too big to fail” mindset that gripped the major international banks which verged on failure in the 1980s and were rescued by the Western governments and international financial institutions, and repeated their folly (as did the governments and institutions of the West) when their financial systems crashed in 2008, and in the Eurozone crisis of 2010-2012.

I write here of the phenomenon called, generically, “moral hazard.” It is not new, having been discussed as far back as the 17th century, and commonly used by economists from the 19th century on to mean the (probably) unconscious incentive to go beyond prudent limits when it is clear that others will have to foot the bill. In the cases cited above, the taxpayers of Western developed countries picked up the tab for the banks’ excesses. Thus, there is no immorality in the modern use of the term ‘moral  hazard’ as the word ‘moral’ just implies stupidity — and greed. But in these countries there is redress through their democratic systems — dissatisfied taxpayers can vote in governments that will (and did) crack down on financial institutions.

But as one of my friends pointed out recently in another journal, moral hazard also goes beyond economics, to politics. When political leaders of any stripe go beyond the limits set by constitutions and law, when they take measures solely to ensure their perpetuation in office, or (in contrast) to get into office by short cuts, and when for the same reasons they override accountability and weaken instead of strengthening the institutions that promote and preserve democracy, they are acting immorally because they are acting consciously — while, at the same time, limiting the means of redress by crippling democracy.

Published in The Express Tribune, September 11th, 2014.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.

COMMENTS (4)

OK | 9 years ago | Reply

Demanding the PMs resignation is an appropriate step. How can we say that this will not be positive for democracy? Does it send a message that the PM is accountable for his/her misteps and to the country's citizens? Yes.

Does it provide the foundation for a hostile takeover in the futrue? Maybe- that is debatable. It all depends on what sort of messaging is done. Currently the messaging by the govt is that this will provide the foundation for a hostile takeover in the future. Why not just accept that every one of your tenures has been marked by abject failure and you have not learned how to govern effectively and quit?? That will send a clear message to future generations of politicians that they are accountable to its constituents and the govt to its citizens! But ofcourse why would they do that? Why admit your failing (we as a nation never do anyways, so it makes it acceptable not to)? The first step towards strengthening the system is admitting your failings (and not blaming generals or previous govts) and improving upon them. In the med-long term, removing people within the system and at the top is part of the strengthening process. So now get to work and as a first and immediate step make people accountable to the laws that are already there...and this includes judges who take bribes and politicians who have taken kickbacks, misused state resources etc. How about an affirmative action like law for minorities? How about an education system that produces self thinking, morally upright individuals who promote a pluralistic society (ofcourse you will have outliers...but does doesnt mean that you dont try to make such a system)? Start making the system work (which doesnt suit your purpose) or go to Saudi Arabia. Because anything else doesnt suit humanity.

Ranjha | 9 years ago | Reply

both Imran and Qadri seem to have as, their only objective, its unseating by means that are, at the very least, constitutionally questionable

American dude, tell me is mass rigging and then a brutal cover up constitutional? Was throwing British tea in Boston Harbour constitutional?

If you can't say anything right, it is better to avoid spewing balderdash and piffle!

VIEW MORE COMMENTS
Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ