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*Originally posted by Minerva: *
An interesting read by S.M. Naseem. I thought I should add it to this thread.
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Democracy and development
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Thanks to Minerva for starting a constructive discussion. Yes I went through Mr. Naseem's article. Unfortunately he ends up giving vague statements like:
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*by S.M. Naseem: *
If Musharraf were undertaking serious economic and social reforms, and was taking the country forward, I would support him, notwithstanding his denial of 'democracy' to the people.
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What does he mean by economic reforms here? We definitely need to read and learn from Amritia Sen, Zakaria, and Hernandes Desoto, but the solution to Pakistan’s economic vows lies in Pakistan and not in Bharat.
Talking about Pak’s economy, there happens to be two schools of thought. The first that says social development comes first while the other claims that economic development leads the way.
There is a third school of thought that may prefer an emphasis on both social and economic development at the same time. This one however results in a very complicated model with uncontrollable variables (means it is simply a mess).
I tend to go with economic development as the front-runner and deserving the highest priority.
Coming back to Pakistan, we are being inundated with examples from China, Bharat, and the Asian tigers. Unfortunately no single example will work for Pakistan. In fact we ought to have a very homegrown set of policies to address the current situation and then a separate set of policies to guide the next 5-10 and then 20-30 years.
Labor-heavy (that's my term) countries like Pakistan have to capitalize on their biggest resource which happens to be ........ "people". How do you use your people depends on two factors:
- Internal
- External
Today I'll touch the "internal factor". The single-most importanct internal factor is "Tax system".
You see, Tax system is to economy like traffic lights are to the traffic. You increase taxes and that is a red light. You decrease taxes and that's a green light.
If you see an economy that is totally messed up, it simply means that there are too many chowks (intersections) with no synchronization between the lights. The result is a deadlocked traffic on the roads and totally messed up businesses.
So in order to free up the road system, we have to remove many chowks and then synchronize the green lights for the remaining few.
Let me give you guys an example of ancient chowks and absence of synchronized and functioning traffic lights. 90% of Pakistan survives on agricultural economy. The tax system for this large group of people is 200 years or even older. The taxman for this system is called "Patwari" that happens to be a grade 5-7 officer. He is the King, God, and Allah all combined in one, for the rural economy. He is the land record holder and he is the tax-assessor and he is the tax collector. In the age of GPS navigation systems, he still uses sheets of latha (white cotton cloth) for drawing maps. His tax registers are even more archaic.
The result is a terrible set of taxes and tax collection like Abiana (water tax), Malia (income tax), ashtam-tax (stamp tax for property sale) etc. The government puts negative taxes (subsidies) to help farmers with the purchase of essentials items such as: fertilizers, farm-machinery, pesticides, and seeds etc. Another form of negative taxes is the "guaranteed purchase price" of essentials like wheat, sugarcane, Basmati, and cotton.
Such a system has practically killed the agri-growth and hampered industrialization of big farms. It has also generated the worst possible forms of corruption and tax cheating. Our food processing facilities are way limited while tones of wheat and rice gets destroyed in government run storage.
Our educated elite instead of enriching this agri-economy is hell bent on following leftie commies. The result is a antagonistic relationship (read clash) between land owners and the urban class.
Urban class is also suffering from the poor tax system based on a Hodge podge of socialist ideals and down right corrupt practices. The government controls the prices while businessmen openly use monopolistic methods of price gouging and hoarding.
Urban taxes are even in worse shape. A horrible combination of excise, sales, property taxes with almost negligible collection of income taxes is destroying the very core of the business.
Most of the taxes collected in this horrible way end up in the coffers of the federal government. States then line up at the federal treasury and beg for their share. This results in disrespect of states and a strong anti-federal feeling.
Mix this bad tax regulation and collection with a low sense of "stability" and the result is a never ending chaos that we usually blame it on the West in general and USA in particular.
Coming down to demo-crazy vs. army government, Pak-people prefer the later as it provides a greater sense of "stability" as compared to the politikos. Most of these politikos were downright communists like Bhatto and BB. The ones on the other side of spectrum were non-existent until Nawaz Sharif came along. Unfortunately Nawaz got entangled in financial mismanagement a la "Raiwind estate", "sugar sales to Bharat", and McDonalds.
So dear guppies fix the tax system, and use military for "stability". This is like fixing the road system with fewer but functioning and synchronized traffic lights. Then see how good things come to Pakistan.
I'll cover external factors in the next post. Ramzan takes the priority over other brain-teasing exercises.
Best wishes for Ramzan.