'The Big Con: How the Consulting Industry has Infantilised Government' Mariana Mazzucato Economics Professor UCL

 

Pakistan needs a "Deus Ex Machina"*

Ashraf Jehangir Qazi in The Dawn

WHAT is happening to Pakistan? Anyone interested in the question knows the answer. Who is to blame? Opinions differ.

However, there is broad agreement on the cast of culprits: political leaders; political parties; political institutions; non-political institutions; the security and intelligence establishment and its institutions; the civil services; comprehensive corruption; the dysfunctional state of the economy caught in a permanent debt trap and outrageous inequality; complete external dependency and a consequent lack of policy independence; a general lack of education and a scientific outlook; the media contributing to an uninformed, partially informed and misinformed public opinion; the deliberate misuse of religious fervour to obscure the true teachings of our faith; an obsolete social structure preserved by a voracious and unaccountable power structure; a judiciary that demands but does not command universal respect; uncontrollable population growth; irreversible climate change; a forever threat of nuclear annihilation, a security environment that challenges rational resource allocations; palliatives presented as solutions, etc.

We are taught that one should neither hate nor act in anger. This is true as far as persons are concerned. But actions that deliberately undermine the welfare of a whole people can and must be hated. When they threaten the survival of a nation and render its dreams and aspirations impossible they must be confronted by the elemental force of rejection.

If, instead, political observers and commentators couch their opinions in euphemistic and safely coded language they become complicit in the perpetration of a national crime. They convey a pathetic message of resignation, surrender and betrayal. There comes a time when Faiz Ahmad Faiz has to give way to Habib Jalib. Either Quaid-i-Azam was much mistaken or we are all complicit in insulting his memory and murdering his legacy. We prefer, however, to slander the father of our country instead of becoming the citizens it required.

We are today, accordingly, reduced to being spectators of a daily goon or puppet show in the guise of a morality play — without any wit, humour or goodwill. There are no good guys in the unfolding drama of our national tragedy.

The Baloch are killed. Their killers are martyred. When one political character attributes unspeakable and unforgiveable crimes and misdemeanors to his rival we know he speaks the truth. When his rival returns the charges redoubled we know he too speaks the truth. They are of course transparent partners in a single, massive and lethal crime against the people and the country.

So what else is new? What should be new is the realisation that we who are aware and do nothing are just as guilty. If one can live with this realisation so be it. If not, we need to do what we can and without delay. The chances are we won’t. The chances are we have already lost our country. Unless…

Another wasted year of political posturing by rupee multibillionaires representing their victims beckons. While the US contemplates a climate emergency, Pakistan is beset by an existential emergency that commands no contemplation. All the challenges confronting Pakistan will be ignored. Technocratic servants of the elite will continue to spin fairy tales about stabilisation and progress invisible to the eye of the uninitiated. They will be well compensated for dressing their employers in the finery of their analyses and assessments. Other servants or experts will do much the same in their own spheres. The people must learn to eliminate the word ‘sarkar’ from their political dictionary if they are to stand any chance against the forces arrayed against them.

When a country’s ‘leadership’ fails to address fundamental existential issues at home it can have no external policy to speak of. The rest of the world sees this and refuses to take its foreign policy seriously, however well articulated and reasoned it may be. Pakistan has itself become a major stumbling block to the success of its principal foreign policy issue: a principled, peaceful and lasting settlement of the Kashmir dispute with India that is primarily and ascertainably acceptable to the Kashmiri people.

The Kashmiri people cannot defeat India although they have so far heroically denied it the victory it strives for. Pakistan cannot defeat India although its nuclear deterrence capability limits India’s military options. A diplomatic stalemate maximises the suffering of the Kashmiri people. The world is aware of India’s perfidy in Kashmir but is simply not inclined to back a failed or failing Pakistan against the gigantic market and strategic value of what will soon be the world’s most populous country. China, for obvious reasons will continue to back Pakistan against India, while increasingly worried about Pakistan’s inability to learn anything from the amazing experience of its most reliable friend.

The US sees Pakistan as a resentful puppet ruled by dependent elites who will do its bidding even it undermines the confidence of China in Pakistan’s resilience and strategic value.

In Afghanistan, Pakistan backs the Taliban which backs the TTP which perpetrated the massacre of schoolchildren and teachers in the Army Public School on Dec 16, 2014. The army today engages with the TTP, which is essentially a Pakistani branch party of the Afghan Taliban, while refusing to engage with the Pashtun Tahaffuz Movement of Manzoor Pashteen which is a Pakistani movement because of its protests against the bombing of Waziristan.

Pakistan has practically no support among the Afghan political intelligentsia, particularly the educated youth who are the future of the country. India has the field to itself.

These absurdities are the direct result of the state of the state in Pakistan. Unless this state of affairs is addressed, foreign policy, indeed all other aspects of national policy, will not be able to develop coherence and credibility. This is all too clear to political observers in Pakistan. But they are by and large easily resigned to the prospect that this state of affairs will not be addressed — and that they will themselves be complicit in this dereliction of duty, citizenship and patriotism. Unless we await a deus ex machina.

* Deus ex Machina - an unexpected power or event saving a seemingly hopeless situation, especially as a contrived plot device in a play or novel.

The failure of liberal democracy and the rise of China’s way

Eric Li in The Economist

ALARM BELLS are ringing about the state of democracy. Freedom House proclaims the “global decline in democracy has accelerated” and that even in America it has “declined significantly”. Much of the weakening is happening in countries that are aligned with America, according to research by the V-Dem Institute in Sweden. Larry Diamond, a political sociologist, argues that the “democratic recession” has reached a “crisis”, intensified by the pandemic. There are many diagnoses. Francis Fukuyama, a political scientist, believes the American government is captured by elites and the public is divided by cultural identities. And then there are those who always reach for the easy answer, blaming China and Russia.

On the other side of the spectrum, democracy’s sceptics are enjoying a moment of Schadenfreude. Russia’s foreign minister, Sergei Lavrov, recently criticised the West’s failed attempts to “enforce democracy” on other countries whose cultures were ill fitted for such political systems and called on them to stop. Kishore Mahbubani, a Singaporean diplomat and scholar, believes America has in some ways “all the attributes of a failed state.” A decade ago even I weighed in, arguing that China’s model is superior to the West—a smug way of saying democracy is doomed.

Yet these pronouncements miss the mark because they share a flawed definition of democracy. To be more precise, they mistakenly equate liberalism with democracy, thereby rendering liberal democracy the only form of democratic governance. This is wrong.

In 1992, at the end of the cold war and beginning of a golden era for liberal democracy’s universalisation, Lord Bhikhu Parekh, a political theorist, wrote in an essay, “The Cultural Particularity of Liberal Democracy”, that “liberal democracy is liberalised democracy: that is, democracy defined and structured within the limits set by liberalism.” This combination, he noted, was crystallised around the 18th century in Europe and was widely championed in practice by the West only after the second world war as a way of opposing the Soviet Union. Democracy itself, in its earliest Western incarnation in ancient Greece, long preceded liberalism.

Moreover, in combination, liberalism was the dominant partner and democracy was subjugated. In fact, liberalism was hostile to democracy. The development of liberal institutions over the past two to three centuries has in many ways consisted of attempts at limiting the power of democracy. If we are to be historically accurate and intellectually honest, we need to recognise that liberal democracy is but one kind of democracy.

During the European Enlightenment, liberal thinkers such as Locke, Montesquieu and Mill proposed revolutionary ideas about how human societies should be governed based on the tenets of liberalism, such as the individual as the fundamental unit of society, the sanctity of private property and the primacy of procedural rule of law. Most modern liberal political institutions were developed with these ideas—representative government based on elections, separation of powers, freedom of the press, an independent judiciary and so on. They are fundamental to America’s constitution and to most other liberal societies.

But at the same time, many liberal forefathers also recognised that the goal of liberal institutions is to deliver happiness to the people. If that outcome is not met, procedures must be changed. According to Mill, even access to voting could be curtailed, say, if a citizen were illiterate.

Liberal democracy had enormous successes, notably in the second half of the 20th century. During that period, liberal democratic countries delivered unprecedented prosperity to their people—so much so that many countries, including China, sought to emulate many of the West’s practices, such as market economics. However when groups like Freedom House and V-Dem rank countries on their levels of democracy, it in essence measures countries on how closely they follow liberal institutional procedures. When people say democracy is receding in many countries, they really mean liberalism is in trouble.

Why is liberalism in bad shape? The reason is that in many places it seems to be failing its junior partner—democracy. Liberal democracy is in crisis mode because so many of these countries face severe problems: persistent inequality, political corruption, collapse of social cohesion, lack of trust in government and elite institutions, and incompetent government. In short, liberalism has been failing to deliver democratic outcomes.

In the Soviet Union there was a popular joke: “We pretend to work, they pretend to pay us.” In many liberal societies, people can turn that around: “We pretend to vote, they pretend to govern.” At this rate, the word “liberal” may soon no longer deserve to be followed by “democracy”.

A broader view of governance

The world needs a better and more inclusive way of evaluating democracy. Defining and measuring democracy by liberal procedures is way too narrow—historically, conceptually and under contemporary conditions. In ancient Greece, when democracy was first practised in the West, democratic politics was rather illiberal. There was no concept of individual or minority rights. That was why Plato and Aristotle—no democrats, both—criticised its majoritarian nature. Elections were not the only way of selecting leaders. Sortition—choosing leaders by lottery—was widely practised and fit Aristotle’s definition of democracy.

In the contemporary West, populist movements from the right and socialist activism on the left seem to be, at least in part, attempts to hold liberalism accountable for not delivering on outcomes. Looking at democracy anew is no easy task and will no doubt take a lot of work and debate. But I venture to propose a common-sense idea: let’s measure democracy not by procedures but by outcomes.

Democracy’s normative goal must be to deliver satisfaction to a vast majority of people over a long period. What good are elections if they keep producing poor leaders with the public stuck in perpetual cycles of “elect and regret”? What good is an independent judiciary if it only protects the rich? What good is separation of powers if it is captured by special interests to block necessary reforms? What good is freedom of the press, or freedom of speech for that matter, if it corrodes societies with division and dysfunction? What good are individual rights if they result in millions of avoidable deaths, as has happened in many liberal democracies during the pandemic?

In its attempt to challenge a rising China, America’s president, Joe Biden, frames this competition as a starkly ideological dichotomy of democracy versus autocracy. With that in mind, the administration is hosting a gathering of democracies on December 9th and 10th, to which some 110 countries or regions invited. A review shows that these 111 places (with the US included) consist of around 56% of the world’s population but had cumulative covid-19 deaths of 4.2m, which is 82% of the world’s total. More glaringly, the three countries with the highest deaths are the host country (780,000), which boasts of being the oldest democracy, Brazil (615,000) and India (470,000), which relishes being the largest democracy.

As for the seeming target of the gathering, China, it has 1.4bn people and just 5,697 deaths from covid-19.

Some may object that this was because China restricted freedoms more than “democracies”. But what kind of democracy would sacrifice millions of lives for some individuals’ freedom not to wear masks? It is precisely in this way that liberal democracy is failing its citizens.

Perhaps it is possible to develop a set of measurements that show which countries are generating more democratic outcomes. How satisfied are most people with their countries’ leadership and directions? How cohesive is society? Are people living better than before? Are people optimistic about their future? Is society as a whole investing enough to ensure the well-being of future generations? Beyond the narrow and procedural-centric liberal definition of democracy, outcomes must be taken into consideration when we define and evaluate democracies.

I would suggest that when it comes to outcomes, China doesn’t score so badly. The country has its problems—inequality, corruption and environmental degradation to name a few. But the government has been tackling them aggressively.

This is probably why a vast majority of Chinese people tell pollsters that they are generally satisfied with how the country is being governed. Can we at least now entertain the idea that China is generating more productive and democratic outcomes for its people and, measured by these concrete results, its political system is more democratic than that of the United States, albeit different, at the moment?

Abraham Lincoln characterised democracy in the most eloquent layman’s term: government of the people, by the people, for the people. I dare say that the current Chinese government outperforms America on all three. Chinese people overwhelmingly believe their government belongs to them and they live in a democracy; and it is a fact that a vast majority of China’s political leaders come from ordinary backgrounds. Quite to the contrary, many Americans seem to believe that their government is captured by monied interests and formed by an elite oligarchy. As for the last part, “for the people”, China is way ahead on outcomes.

The world needs greater diversity in the concept of democracy that is both historically truer (because democracy was not always liberal) and practically more beneficial. Many developing countries have seen their economic growth stagnate. They need to be unshackled from the ideological rigidity of the liberal doctrine and to experiment with their own ways of realising their democratic potential. New perspectives and measurements might help liberal societies as well.

Decoupling liberal democracy

For too long, liberalism has monopolised the concept of democracy and liberals have taken their democratic credentials for granted. This may be one cause for why many liberal governments are failing to deliver democratic outcomes for their people. Being measured not on procedures but on actual performance may be just the spur for liberal countries to implement much-needed reforms. If liberal governments could again deliver more democratic outcomes, so much the better for the world.

This perspective, on the need to judge democracy by its outcomes, is rarely discussed in global debates over governance. Liberal societies champion diversity in just about everything except for diversity in models of democracy, even at a conceptual level. But the reality is that the history of democratic aspirations and practices has been immensely rich and diverse. Besides Athenian democracy being decidedly not liberal, there were centuries of democratic ideals and institutional practices in China’s Confucian tradition—also not liberal. At this point in time, the world is certainly in need of more democratic experiments.

I am not attempting to advocate any particular form of democracy, and certainly am not making a case for majoritarian or direct democracy—which China is definitely not. Rather, I am proposing to broaden and pluralise both the definition and measurements of democracy. China’s current socialist democracy is surely a model worthy of study given the country’s obvious successes.

The American foreign-policy thinker Anne-Marie Slaughter recently argued that the United States should “accept at least the possibility that other forms of government could be better.” She further suggested, as a new measure of governance, that people evaluate which countries are doing a good job at achieving the United Nations’ Sustainable Development Goals.

It is a great idea. And the broader point needs to be amplified: end liberalism’s monopoly on democracy—and let more forms of democracy flourish.

Too big to jail: why the crackdowns on dodgy finance have been so ineffective

Despite so many government promises, we’ve ended up with inadequate laws and toothless regulation. The Pandora papers show why urgent action is needed writes Prem Sikka in The Guardian

'HSBC admitted “criminal conduct” and was fined a record $1.9bn and signed a deferred prosecution agreement.’ Photograph: Lim Huey Teng/Reuters
Wed 6 Oct 2021 11.00 BST


The Pandora papers data leak has once again highlighted the predatory practices of the world’s political and financial elites – enriching themselves by looting the public purse, or exploiting laws which they themselves helped to establish.

Aabout $3.6tn (£2.6tn) of the proceeds from bribery, embezzlement, money laundering, tax evasion and cronyism are laundered each year, undermining the social fabric of nations across the globe.

It is not the first time that tax avoidance, bribery, corruption, money-laundering and a lack of transparency have been exposed. The Panama papers, the Paradise papers, the HSBC leaks, the Jersey leaks, the FinCEN files, the Bahamas leaks and others have provided abundant evidence of dodgy financial dealings. The UK finance industry – aided by armies of accountants, lawyers and finance experts – is central to this trade, yet little has changed since those first revelations emerged.

The inertia is institutionalised because the political system is available for hire to people with fat wallets. Financial contributions to political parties create an atmosphere where scrutiny, and unwelcome laws, are discouraged. As Mohamed Amersi, who funded Boris Johnson’s campaign to become prime minister and whose financial dealings were revealed this week, puts it: “You get access, you get invitations, you get privileged relationships, if you are part of the setup.”

Further, parliament’s register of members’ financial interests shows that too many MPs and lords are on the payroll of corporations, including some engaged in illicit financial flows. The inevitable outcome is poor laws and a lack of regulation.

In 2018, the government launched the national economic crime centre to tackle high-level fraud and money laundering. The centre has yet to prosecute a single case – even though there is plenty of evidence of wrongdoing. In some cases, banks may even have forged customer signatures on court documents used to repossess homes and recover debts.

The 2017 Criminal Finances Act introduced the offence of failure to prevent the facilitation of tax evasion. No corporate body has been prosecuted. Little has been done to shackle the tax abuses industry dominated by big accounting firms even though, on some occasions, judges have declared their avoidance schemes to be unlawful. Despite the potential loss of huge amounts of tax revenues, no major firm has been investigated, fined or prosecuted. On the contrary, they continue to advise government departments, and sometimes receive lucrative government contracts.

The 2010 Bribery Act introduced the offence of “failure to prevent bribery”, to enable regulators to sue corporations for corrupt practices. The Crown Prosecution Service has secured just one conviction. The under-resourced Serious Fraud Office has secured just one conviction after the company itself pleaded guilty. Separately, Standard Chartered Bank, Rolls-Royce and four other companies were effectively let off with a deferred prosecution agreement.

The UK political system excels at cover-ups and protects wrongdoers. In 2012, a US Senate committee documented HSBC’s involvement in money laundering. The bank admitted “criminal conduct” and was fined a record $1.9bn and signed a deferred prosecution agreement. Yet though HSBC was supervised by the Bank of England and the Financial Services Authority, there was no UK investigation.

Later, a letter emerged from the then chancellor George Osborne, along with correspondence from the governor of the Bank of England and the Financial Services Authority, urging the US authorities to go easy on HSBC as it was too big to jail. There was no ministerial statement in the UK parliament to explain the cover-up.

The Bank of Commerce and Credit International (BCCI) was closed by the Bank of England in 1991. It was the biggest banking fraud of the 20th century, yet the then Conservative government did not order an independent investigation. Through US investigations I became aware of a secret document codenamed the Sandstorm Report. Using freedom of information laws I requested a copy: the government refused. After five and half years of litigation, judges ordered the UK government to release a copy to me. It shows that the government has been protecting individuals, including dead ones, connected with al-Qaida, Saudi intelligence, royal families in the Middle East, smuggling, murder, financial crimes and other nefarious practices.

I recently raised the HSBC and BCCI cover-ups in the House of Lords. The minister did not respond.

The UK remains a favourite destination for dirty money because the political and regulatory system is ineffective. An independent public inquiry into the finance industry is long overdue, but even if one were granted it would be hard to be optimistic: it seems our law enforcement agencies have been captured by corporations. The revelation that the City of London police fraud investigation unit is now funded by Lloyds Bank – an organisation severely criticised by the all-party parliamentary group on fair business banking for its role in the unresolved frauds at HBOS – does not inspire any confidence. Will it take another financial crash to generate enough political pressure to change the system?