Globalization Pushing Towards Diseased PakistanBy Shaukat Masood Zafar • Mar 6th, 2012 • Category: Politics • 4 Comments
Globalization is not new but in recent years it has become the subject of an impassioned debate. Karl Marx had predicted that the relentless search for markets will alter older social structures. As he put it “all that is solid will melt”. That prediction is going to be proven to be true in the today’s scenario.
The policy of the government is to make Pakistan a private sector-driven economy where the government will only regulate. But privatization in Pakistan has been proved to be very controversial. It has generated strong debates in Pakistan where it is perceived to have more negative impact. Although it is an efficient way of promoting competition and enhancing growth, yet it has been experienced that it makes the poor poorer by increasing unemployment and reducing access of the poor to basic goods and services through increase in prices. The vast majority of people are worse off now than before. In Pakistan, there have been several protests by unions that are opposed to the proposed sell-off of the public sector entities because of the fear of losing their jobs. Apart from the fear of job losses, many workers argue that the sale of public enterprises to either foreign owners or domestic investors is an infringement on their rights as Pakistanis. Today`s financial and food crises are the result of the same policies of deregulation and have supplemented each other.
Privatization accompanying mass retrenchment has clearly shown that it is not human development-oriented. It may cut costs – making things worse. Capitalist system has proved responsible for hunger, unemployment, wars, economic loot and plunder and proliferation of weapons. Today, the food system in Pakistan no longer responds to the nutritional needs of people, nor to sustainable production based on respect for the environment, but is based on a model rooted in a capitalist logic of seeking the maximum profit, optimization of costs and exploitation of the labor force in each of its productive sectors. Price hike, unemployment and poverty are increasing with each passing day and it has become difficult for the workers to arrange even two square meals for their families.
The direct negative impact of privatization had been that about 600000 workers lost their jobs. Labour patron have been changed the privatization has pushed flood of informal sector. No labour laws have been imposed in informal sector. According to the Privatisation Ordinance 2000, the purpose of privatization is poverty alleviation and retiring foreign debts. During privatization regime in Pakistan, these two purposes have not been accomplished. An other problem is that the process of selling off of these national companies and assets remained vague and resulted in huge corruption; a massive 1550 Billion Rupees ($23.84 billions) corruption took place during Musharraf-Shoukat Aziz privatization push, an amount that was sufficient to discharge the entire debt liability of Pakistan. When privatization started in 1991, the foreign debt was $23.323 billion. Now, in 2012, it has gone up to $62 billion. While internal debts are on ever increase, have been doubled during these four years PPP regime. Poverty has increased to a level all times high. The companies and national assets that were created with much sweat and blood of the people of this country are being sold at very cheap prices to politically-connected groups. Privatization is nothing more than mercantilism – the opportunity for ruling elite and their cronies to gain control of the public purse, a dominant social theme, making the realization of elite command-and-control goals even more achievable. It’s not what it appears to be.
Corruption, non-transparent privatization and black economy are leading Pakistan to more economic troubles. People have lost faith in the institutions of the country; political-security situation has been deteriorated by the growing social tension and economic crisis. There has never been a phenomenon of accountability in privatization process. The emergence of rich-corrupt people and their supremacy on national structure has made it easier for global institutions to launch their agenda. By this real democracy cannot grow. The state officials are busy in implementing the programs of IMF to privatize all utility services. Thus, citizens have to bear the consequences because of the policies made for foreign profiteers.
Privatization drive by the government of Pakistan has put several question marks over whether selling off these valuable government-owned enterprises are the right thing to do for the country. The government still insists that privatizing these large government-owned companies helps the growth of the private sector and is in line with rules of a free market economy, which is quite contrary to the previous experience in Pakistan. The government also maintains that the money it raises by selling these assets is invested in other sectors which need attention; everyone is aware of the real objects behind such like privatization. Rampant Globalization and Privatization in Pakistan accelerated in the PPP government which saw the results of price hike, unemployment and monopolization of economy in Pakistan thus loosing its remaining social basis among the working class of Pakistan coupled with lack of electricity and other infrastructural constraints, lack of proper government support and regulation, burdensome bureaucracy and corruption, runaway import from outside which has made Pakistani manufacturers unable to compete with cheap, low-quality foreign goods have all contributed to the sluggish and extremely slow growth of private sector economy.
Food security is threatened by free trade policies that dictate food be produced for trade rather than domestic consumption. Instead of reforming public healthcare, education, other and other services and their delivery, globalization has resulted in the rapid privatization and the decline of government facilities which served poor citizens. Common goods such as water, seeds, land, which for centuries have belonged to communities, have been privatized, robbed from the people and converted into exchange currency at the mercy of the “highest bidder”. At the same time, in recent years the prices of the products that are part of our food basket have not stopped rising. In the period 2008-2012, the price of milk, onions, sunflower oil, chicken etc. have been escalated by 100 to 300 percent, and this has been the trend for most foods. The situation of acute food shortages exists in a context of a systemic crisis of capitalism with multiple facets: economic, ecological, social, food, energy and so on. Capitalist system is fast losing its ground not only in Pakistan but throughout the world. The working class today has awakened even in USA, Europe and Middle East and they are struggling to bring about a socialist revolution throughout the world.
After 1988, the public enterprises, which had grown too large, began to suffer from fundamental problems of defective capital structures, excessive bureaucratic control and political intervention, gross incompetence and blatant corruption. With the deep internal crises that included high rates of inflation and unemployment, external debt obligations and foreign exchange misalignment, Pakistan was strongly advised by the worldwide lending agencies, particularly the IMF and the World Bank, to divest their public enterprises as one of the conditions for economic assistance. It was in fact a form of economic exploitation. Structural Adjustment Programs imposed by the IMF required the government to cutback on food and healthcare subsidies, increasing the burdens already shouldered by the poor people and their families. The food crisis situation seen in 2007-2008, with a sharp increase in basic food prices highlights the extreme vulnerability of the current agricultural and food model after reforms. The WTO policies forced developing countries including Pakistan to eliminate tariffs on imports, end protection for and subsidies to small producers and open their borders to the products of transnational corporations while the markets of the U.S and the West remained highly protected. These “development” policies driven by IMF and the World Bank with the blessing of our governments ended up with a local and sustainable production system being replaced by a model of intensive industrial food production subject to capitalist interests, that have led to current situation of crisis and food insecurity.
Developing countries were promised a new regime that would allow them to sell their goods and trade their way out of poverty through undistorted market openness. This required generous market access by the rich for the products of the poor, and also reduction-cum-elimination of market-distorting producer and export subsidies, with the resulting dumping of the rich world’s produce on world markets.
Nonetheless, globalization has become painful, rather than controversial, to the developing world. It has produced increasing global economic interdependence through the growing volume and variety of cross-border flows of finance, investment, goods, and services. Inequality among, and within, nations, has widened. Assets and incomes are more concentrated. Wage shares have fallen while profit shares have risen. Capital mobility alongside labor immobility has reduced the bargaining power of organized labor. The rise in unemployment of the workforce, with more and more people working in the informal sector, have generated an excess supply of labor and depressed real wages. By far the worst consequence of globalization is the up-tick in human and sex- trafficking as thousands of women has gone missing while looking for much needed employment far away from the safety nets of their families and communities.
Globalization has spurred inequality - both in the wealthiest countries as well as the developing world. China and India compete globally, yet only a fraction of their citizens prosper. Increasing inequality between rural and urban populations, and between coastal and inland areas in China, could have disastrous consequences in the event of political transition. Pakistan has had almost zero growth during the past 4 years in context of increasing population. Like other third world nations Pakistan followed advice from wealthy nations and World Bank consultants on issues ranging from privatization to development, but millions of people suffer from poverty. Ironically, the wealthiest people benefit from the source of cheap labor. Western policies reinforce the growing divide between rich and poor.
Problem is that the rich countries want access to poor countries’ resources, markets, and labor forces at the lowest possible price. Some rich countries were open to implementing deep cuts in agricultural subsidies, but resisted opening their markets, others wanted the reverse. In countries like India, farmer suicide has been a terrible human cost and a political problem for India’s state and central governments for some time, as well as a threat to rural development. Protecting farmers’ needs, therefore, is essential for social stability as well as the political survival of governments in the developing world.
The global food crisis is benefiting only the multinationals that monopolize each one of the links in the chain of production, processing and distribution of food. Indeed the economic benefits for the major seed, fertilizer, marketing and processing multinationals in the food area and the retail distribution chains have increased incessantly. It is a global agro-industrial complex, supported by public funds, international cooperation and international agricultural “development” policies. During 2007-12 the multinationals dealing in seed, fertilizer, and food items saw profits grow by average 60 to 95 percent annually. The big commercial distributors also boosted their margins. The agribusiness multinationals and the retail distribution companies deepened their control of the productive chain, especially through the direct trading of agricultural production, with the aim of reducing procurement costs and guaranteeing profits. The seed industry is closely linked to that of pesticides. The bigger seed companies also dominate the pesticides sector and, frequently, the development and marketing of both products is done together. But in the pesticide industry monopoly is even higher and the ten multinationals control 84 per cent of the global market.
Pakistan has the potential to develop and become a modern Muslim welfare state without getting any debt or aid because it has human and natural resources in abundance. But the potential of people and their attempts to build a strong democratic society have been obstructed by the puppet regimes. Without any iota of doubt we are in debt and poverty crisis partly due to the policies of International Monetary Fund (IMF) and the World Bank. Structural Adjustment Policies were imposed by the IMF to ensure debt repayment and economic restructuring. But the way it happened has required Pakistan to reduce spending on things like health, education and development, while debt repayment and other economic policies have been made the priority. We should adopt practices that have been carried out for centuries and have guaranteed food security for broad sections of the population through diversification of crops, care of the land, the use of water, the creation of local markets and community food systems. The restoration of agriculture into the hands of the peasantry will allow us to ensure universal access to food. Governments should support small-scale and sustainable production. Faced with neo-liberal policies it is necessary to generate mechanisms of intervention and regulation to stabilize market prices, control imports, set quotas, prohibit dumping and at times of over production create specific reserves for times of food shortage.
It is high time the government review its privatization and globalization policies. Privatization Commission should be dissolved and the decision to privatize Public utilities and other entities should be rescinded. The essential services providing entities must remain in state control. However we have experienced in Pakistan, the supremacy of the CEOs in public corporations has brought in many problems of recklessness and lack of transparency giving rise to financial crashes in those entities which needs to be properly regulated. Public appointments require the highest standards of propriety, involving impartiality, integrity and objectivity, in relation to the stewardship of public funds and the oversight and management of all related activities. Instead of privatization these entities need to be restructured. Before entering into the process of restructuring, to properly regulate the appointments process of CEOs and other executives an Independent Appointments Commission delegated with statutory responsibility for making these appointments, be established to provide an independent and transparent appointment process for public appointments, based on the principle of selection on merit. Further, a major change in economic policy is required to decrease the comparison of debt to gross domestic product (GDP). For overall growth, economic, social and institutional reforms are required before it is too late.