The Pakistani people have doubtless gained ground but the struggle to hold our overlords (and, indeed, ourselves) accountable must continue apace.

The reason for that is probably the extreme complexity of the issue under examination — simply taking a handful of countries and establishing some relationship between their respective levels of corruption and growth doesn’t make sense because there are too many other factors at play. Economists always try to take a ‘partial derivative’, linearised view of the world (ie, all else equal, find a single driving variable), since that’s the most obvious way to decompose a complex issue into aspects that can be studied individually, but there are inevitable limitations to how effective this approach can be at the macro level, where there are dozens of significant variables, with unknown cross-effects that are likely deserving of separate study.

It’s clear that corruption impedes growth and development, indirectly through economically suboptimal allocation of resources and directly through the increased costs it imposes. Beyond that, it’s pretty hard to make any substantial, justifiable statement. Perhaps rather than drilling until some tenuous relationship is established, the focus should be to establish how corruption becomes systemic and what measures can be taken to prevent this from happening. In places like Pakistan where corruption is an everyday occurrence, people simply assume it will continue unimpeded and price it in as a cost of business. We know there it is exacerbated by extreme social inequality, exceptionally poor pay for officials, and a bizarre mindset (particularly in communities like the Memons) that considers bribes a mark of respect and an essential element in building necessary relationships with officials. In short, there’s a significant cultural component to corruption that must not be obscured by the economic aspect.

Of course, once corruption becomes so commonplace that society’s perception of it vacillates between necessary evil and competitive advantage, obvious steps like making examples of a few chosen offenders become useless, and even attempts to tackle the root issues — such as the double-salary schemes offered by the Federal Board of Revenue under reforms agreed with the World Bank — are only marginally effective. Certainly, gimmicky (the National Accountability Bureau is a massive sham) and/or highly focussed measures (the double-salary scheme was only offered to key officials) are a waste of time and not deserving of discussion. Bold steps, applied with commitment and consistency and monitored actively, are needed in order to remove the root causes and steadily (if slowly) rub out corruption. And of course, these steps would need to address each facet of the problem.

One bold step might be to draw the problem out into daylight by legitimising and regularising the bribes officials are already taking in the form of some minimal extra fee; this would be additional remuneration for providing a service. This immediately circumvents the problem of burdening the government with higher payroll and actually encourages efficiency in directing the remuneration to those who have earned it. In an indirect way, it might also go some way in addressing the cultural issues (continuing to pick on Memons — assuming they don’t pay doctors more than their quoted fee, I don’t see why they would feel obliged to push further bribes on officials). Doing this would likely create issues of nepotism in the allocation of official duties and potentially harmful competition between colleagues, but these are straightforward problems with more obvious solutions. The government would simultaneously have to empower citizens to report negligence or incompetence or — more tricky — officials charging in excess of the permitted fee. With sufficient political will and clout to aggressively prosecute citizens and officials who continue to flout the law, maybe we would have a workable system.

(Holy never-ending-sentence-alert, Batman! My brain isn’t working these days…)

(Obligatory disclaimer: I don’t trust Aitzaz Ahsan for a minute.)

Pakistani stocks are cheap and still worth holding in spite of political uncertainty, Merrill Lynch & Co.’s chief Asian strategist Mark Matthews said in an interview yesterday.
…
The country’s shares on average trade at 10 times reported earnings with a dividend yield of 6 percent, Matthews said, citing Merrill Lynch data. That’s compared with “consensus” valuations for Vietnamese stocks of 20 times, he said.

Written by an Oxford contemporary, Vir Sanghvi, the first half is a really fascinating summary of Ms. Bhutto’s personality and her activities at Oxford. The PPP media machine has drilled her resume into our heads — KGS, Harvard, Oxford, President of the Debating Union, one of the youngest PMs ever, first woman leader in a Muslim country — but in my experience it is rare to find first-hand accounts or opinions of what exactly it is that she’s done. For example, I never knew that she had finished at Oxford when she became President, nor that it was after several failed attempts, nor that her debating skills were in fact considered mediocre at best. And where the PPP stops, BBC and CNN happily take over, reminding us how she would ‘hold forth for hours in her native Urdu language to huge, often frenzied crowds’ (no matter the liberties she took with it, and them). All this ignores the biggest fudge of all: that her father, the Original Bhutto, was directly responsible for much of the mayhem and carnage of the 70s.

In the latter half of the article, the author considers — from a very pronounced Indian point-of-view — Ms. Bhutto’s political achievements. His view is that she was never bogged down by ideology or principle, but was simply an opportunist looking to gain her father’s approval and history’s good graces. It’s a little simplistic, but given how oligarchical Pakistani politics is, with its shroud of secrecy and the power derived from being in-the-know, it’s not surprising that this is what the rest of the world sees. Unfortunately here the article begins to devolve into a vague rant on Pakistan’s politics, as they pertain to India.

The last few days have forced a closer examination of where we as a nation are. Mr. Sanghvi’s article, and others like it, paint a bleak picture far removed from the optimism that Mr. Musharraf and his erstwhile PM, Shaukat Aziz, display. In the course of his rule, the Pakistani economy has thrived by all metrics (the most popular being the stock market) and in some ways the cause of democracy has been furthered (namely by the institution of more effective local government); I’m willing to accept these as facts and won’t dispute them. The flip side, however, is equally clear. Exports and imports have increased apace, so that improvements in the former do not constitute a clear gain in and of themselves. Our external debt has increased from $34bn to $42bn at a time when Nigeria and Argentina have completely paid back equivalent loans. Our power and water planning remain in the doldrums, with serious electricity shortfalls predicted from 2009 on (by serious, I mean that industry will suffer as well). And any improvements in government have been offset by official backing of suspect parties such as the PML-Q, the JUI and most egregiously, the MQM.

In summary, Mr. Musharraf’s economic and political capital is finished. And it’s easy to argue that in clinging to power so determinedly, he has severely drained Pakistan’s as well. Any gains we made from sidling up to the US after 9/11 have been wasted. The monetary handouts that Mr. Sanghvi speaks of and that will forever be held over our heads were mostly loans at slightly preferential rates, not grants; Mr. Musharraf accepted them indiscriminately and used them to buy the economic improvements that he now touts. The formulaic ham-handedness with which economic resources and policy have been apportioned means that service industries such as banking are the cornerstone of this economic growth, which is worrying because history has shown these tertiary industries are byproducts of a thriving economy and not the other way around and also because banking in particular is well-recognised as an opportunistic trade that offers no guarantees and certainly no loyalty, personal or patriotic. This holds doubly for the stock market, which (for crying out loud!) is characterised by its fickleness and speculation. (I’m trying to find a link to an article I read where, after the 4.7% dip on Monday, an analyst said he expects the market will recover since the KSE is known to undergo such fluctuations.)

Simultaneously, the constant association of Pakistan’s name with that of the Taleban (created by Pakistan), Islamofascist terrorists (educated in Pakistan), Al Qaeda (directed from within Pakistan) and Osama (sheltered by Pakistan), means that our reputation — that ‘immortal part’ of us, as Cassio would have put it — has been shattered in a limelight we have invited and directed ourselves. Mr. Musharraf has said that the US would have bombed Pakistan if he had acted differently, but that does not excuse the fact that the aftermath has been grossly mismanaged, with Mr. Musharraf trying to leverage the danger of militancy to win support both externally and internally, all the while oblivious of the damage to Pakistan. Equally, it’s amazing that Mr. Musharraf hasn’t realised that the White House has been using Pakistan as a shield for their own missteps, particularly to distract the American people from the fact that the Taleban and Al Qaeda are monsters of their own making.

Ultimately though, my biggest worry is that Ms. Bhutto’s assassination might go down in history as Pakistan’s Martin Luther King moment. As Mr. Sanghvi’s meandering article concludes, this so-called champion of democracy was a dynast in her own party and her political achievements were few — and certainly outweighed by the charges levelled against her. We can ill-afford to be championed by such ideological lightweights.

At the end of the day, Benazir’s death is a tragedy in the way that the death of any Pakistani — any human — is a tragedy. And unwarranted praise is only as wrong as unfair vilification.

Inna lillahi wa inna ilaihi rajioon.