A Level Economics: What is a Failed State?

Nadeem Paracha in The Dawn

On YouTube, there are numerous videos on ‘failed states’. Those posted by certain American news outlets almost always describe Russia as a failed or failing state. Similarly, videos produced by Indian media outlets often refer to Pakistan as a failed/failing state. Then there are also some videos produced in China which ‘predict’ the collapse of the American state structure, and many American videos that speak of ‘China’s coming collapse’.

So what is a failed state?

There are various theories about what constitutes state failure, but most political scientists and economists agree on two major symptoms of this failure. The first is when the state loses its ability to establish authority over its territory and citizens, and is unable to protect the country’s sovereignty. Secondly, state failure also constitutes the state’s inability to provide basic necessities to its citizens and when a country’s governing institutions become ineffective.

However, according to foreign policy experts such as the Norwegian Morten Bøås, the application of the term ‘failed state’ is largely political in nature. A country threatened by another country whose state is facing a crisis, often labels it as a failed or failing state. This is why to the US, at the moment, Russia is a ‘failing state’ and to India, so is Pakistan.

Recently, Chinese propaganda has claimed that the US is on the brink of state failure, especially after the ‘backsliding’ that American democracy witnessed during the Trump presidency. It’s politics.

The definition of what constitutes a ‘failed’ or ‘failing’ state may be determined by geopolitical interests, but the internal role of extractive and exclusivist institutions cannot be ignored

But does this mean that there are no failed states at all? There are. Most political scientists agree that Afghanistan, Yemen, Somalia, Syria, DR Congo and Sudan are failed states because state authority in these countries has almost completely collapsed. Outside the confines of areas in which the state does have some authority left, ‘non-state actors’ hold sway. Poverty, political chaos and violence are rampant. There is no presence of a cohesive state here.

Even though one may agree with men such as Bøås that ‘failed state’ is a political term applied for propaganda purposes to justify external armed intervention or to impose economic sanctions, this does not mean that, apart from the more blatant examples of failed states, other countries are entirely safe from becoming another Afghanistan or Somalia.

Most states, even in developed countries, often exhibit some symptoms of state failure. But the symptoms are particularly intense in developing countries, where there is a greater chance of the state failing.

In Pakistan, when Islamist militants had occupied vast swaths of land in the early 2010s, and the state seemed ill-equipped or even reluctant to reestablish its writ in these regions, many voices inside and outside the country warned that Pakistan was heading towards state failure.

The warning was not exaggerated. However, the state too was conscious of this. It finally responded by conducting an unprecedented military operation. Between 2014 and 2017, it was able to oust the militants from areas where they had established parallel governing systems, mostly based on outright terror.

But military action alone against forces challenging the writ of the state is not enough. In the book Why Nations Fail, the economists James A. Robinson and Daron Acemoglu write that nations fail not because they lack abundant natural resources or are located in volatile regions. One of the most prominent reasons that states fail is because of ‘extractive’ political and economic institutions.

Nation states with inclusive institutions prosper because these institutions do not restrict the economic and political participation of all citizens. It does not matter what race or religion a citizen belongs to, they are encouraged to bolster the country’s, and their own, economic ambitions.

Extractive institutions go the other way. Economic and political elites accumulate power and wealth for themselves from those who can’t find a voice or place in the extractive institutions. Pakistan is a parliamentary democracy. But this democracy is largely extractive and exclusivist. Its exclusivist nature is deeper than just ‘elite capture’. This is so because the non-Sunni and non-Muslim communities too are kept at an arm’s length, because they do not adhere to the definition of Islam defined by the Constitution. Some are even outrightly repressed.

A powerful state institution in Pakistan, the military, sees itself above this nature of exclusivity. Yet, from the 1980s onwards, it was the military that further strengthened extractive and exclusivist policies and even used exclusivist forces to meet its own political ambitions. The parliament and a politicised military have both contributed in severely limiting the participation of the diverse talent required to construct robust economic and political institutions.

The continuing extractive policies have now instigated a clash within the extractive elites, both civilian and military. The extractive elites benefitted the most through exclusivist policies. On the other hand, those who are kept out because of their faith, sect, ethnicity or class have been severely marginalised and are just mere spectators of an ongoing tussle for power between the two factions of the extractive forces.

The ‘anti-military’ riots on May 9 and 10 were an example of one extractive group trying to push back the other. So, the crisis of the state that Pakistan is facing today is also about a crisis within elite groups. A new election alone won’t resolve the crisis. Pakistan’s democracy is still navigated by an exclusivist constitution, which can actually deepen the crisis.

I believe, alarmed by such a possibility, the military is contemplating a Hobbesian route. In his highly influential book The Leviathan, the 17th century British philosopher Thomas Hobbes posited that, in exchange for getting protection from violence, war, chaos, poverty and crime, the citizens are required to delegate a large degree of power to a sovereign state.

The exchange may also require the citizens to relinquish certain rights, so that the sovereign can work freely to guarantee the economic and political security of the citizens without any hindrance.

Indeed, this is clearly an authoritarian view, but Hobbes does warn the sovereign that the failure to do so is likely to cause state failure. On May 9 and 10, the extractive faction that the military was once the architect of, tried to usurp power by rationalising its actions as ‘pro-democracy’ and supported by ‘civil society’.

I believe that, even if and when electoral democracy returns, the Hobbesian route will continue to be taken, because the military is now convinced that anything else is bound to put the state on the brink of failure.

Barack Obama - Fighting Back Against Disinformation

 

Is the game up for China’s much emulated growth model?

Jayati Ghosh in The Guardian



Illustration by Robert G Fresson



Whatever happened to emerging markets? Brics, Mints, whatever global investors call them: For a while it appeared as if countries such as Brazil, India and Turkey had secure and buoyant futures, regardless of the travails of advanced economies. There was much trumpeting of their advantages, such as the demographic bulges producing young populations. Few asked about the nature of the growth, or whether it could last. The euphoria spread, leading to large private-capital inflows that pushed up asset prices in these countries.

That already seems a long time ago, as investor opinion has done yet another volte face. Investors who were slow to read the tea leaves during the boom times have now taken fright. In just 13 months, capital outflows from these countries have crossed $1tn. Stock markets have tanked across countries as distant and diverse as Malaysia, India, South Africa and Brazil; currencies have depreciated; and bond issues are slowing down, with fewer takers.

For a change, this is not being driven by policy in the developed world. Unlike the “taper tantrum” unleashed in mid-2013 by Ben Bernanke, the then US Federal Reserve chairman – when he simply announced the possibility of reducing the massive liquidity stimulus that was being provided in the US – the current skittishness in emerging markets is the fallout of what is happening in China. This is hugely important, not just because of China’s major role in global trade, but because it signifies the end of a particular growth strategy that many other countries were trying to emulate.

The recent travails of China’s economy are well known by now: falling real estate prices put paid to the construction boom, and the subsequent bursting of the stock market bubble was hamfistedly controlled through official measures. But these current difficulties are the outcome of earlier economic strategies that were widely celebrated, when the going was good.

From the early 1990s China adopted an export-led strategy that delivered continuously increasing shares of the world market, fed by relatively low wages and very high rates of investment, enabling massive increases in infrastructure. It led to big increases in inequality and even bigger environmental problems, but the strategy seemed to work – until 2008-09, when exports were hit by the global financial crisis.

Yet even then, China, India and other large emerging markets continued to grow. The talk at the time was that they were already “decoupled” from the west. In reality, China (and much of developing Asia) had simply shifted to a different engine of growth without abandoning the focus on exports. The Chinese authorities could have generated more domestic demand by stimulating consumption through rising wage shares of national income, but this would have threatened their export-driven model. Instead they put their faith in even more accumulation to keep growth rates buoyant.

So the “recovery package” in China essentially encouraged more investment, which was already nearly half of GDP. Provincial governments and public sector enterprises were encouraged to borrow heavily and invest in infrastructure, construction and more production capacity. To utilise the excess capacity, a real estate and construction boom was instigated, fed by lending from public sector banks as well as “shadow banking” activities winked at by regulators. Total debt in China increased fourfold between 2007 and 2014, and the debt-GDP ratio nearly doubled to more than over 280%.

We now know that these debt-driven bubbles end in tears. The property boom began to subside in early 2014, and real estate prices have been stagnant or falling ever since. Chinese investors then shifted to the stock market, which began to sizzle – once again actively encouraged by the Chinese government. The crash that followed has been contained only because the government pulled out all the stops to prevent further falls.

All this comes in the midst of an overall slowdown in China’s economy. Exports fell by around 8% in the year to July. Manufacturing output is falling, and jobs are being shed. Construction activity has almost halted, especially in the proliferating “ghost towns” dotted around the country. Stimulus measures such as interest rate cuts don’t seem to be working. So the recent devaluation of the yuan– which has been dressed up as a “market-friendly” measure – is clearly intended to help revive the economy.

But it will not really help. Demand from the advanced countries – still the driver of Chinese exports and indirectly of exports of other developing countries – will stay sluggish. Meanwhile, China’s slowdown infects other emerging markets across the world as its imports fall even faster than its exports and its currency moves translate into capital outflows in other countries.

The pain is felt by commodity producers and intermediate manufacturers from Brazil to Nigeria and Thailand, with the worst impacts in Asia, where China was the hub of an export-oriented production network. Many of these economies are experiencing collapses of their own property and financial asset bubbles, with negative effects on domestic demand. The febrile behaviour of global finance is making things worse.

This is not the end of the emerging markets, but is – or should be – the end of this growth model. Relying only on exports or debt-driven bubbles to deliver rapid growth cannot work for long. And when the game is finally up, there can be severe political fallout. For developing countries to truly “emerge”, a more inclusive strategy is essential.

Benaud - the wise old king

Gideon Haigh in Cricinfo

If we don't remember him as an elite legspinner, a thinking captain or one of cricket's true professionals, it's because of the phenomenal work he has done as a commentator, writer and observer

If Arlott was the voice of cricket, Benaud was the face © Getty Images



"Did you ever play cricket for Australia, Mr Benaud?" In his On Reflection, Richie Benaud recalls being asked this humbling question by a "fair-haired, angelic little lad of about 12", one of a group of six autograph seekers who accosted him at the SCG "one December evening in 1982".

"Now what do you do?" Benaud writes. "Cry or laugh? I did neither but merely said yes, I had played up to 1963, which was going to be well before he was born. 'Oh,' he said. 'That's great. I thought you were just a television commentator on cricket.'" Autograph in hand, the boy "scampered away with a 'thank you' thrown over his shoulder".

It is a familiar anecdotal scenario: past player confronted by dwindling renown. But the Benaud version is very Benaudesque. There is the amused self-mockery, the precise observation, the authenticating detail: he offers a date, the number of boys and a description of the appearance of his interlocutor, whose age is cautiously approximated.

In his story Benaud indulges the boy's solecism, realising that it arises not merely from youthful innocence but from the fact that "he had never seen me in cricket gear, and knew me only as the man who did the cricket on Channel 9". Then he segues into several pages of discussion of the changed nature of the cricket audience, ending with a self-disclosing identification. "Some would say such a question of that kind showed lack of respect or knowledge. Not a bit of it… what it did was show an inquiring mind and I'm all in favour of inquiring minds among our young sportsmen. Perhaps that is because I had an inquiring mind when I came into first-class cricket but was not necessarily allowed to exercise it in the same way as young players are now."

I like this passage; droll, reasoned and thoughtful, it tells us much about cricket's most admired and pervasive post-war personality. It is the voice, as Greg Manning phrased it inWisden Australia, of commentary's "wise old king". It betrays, too, the difficulty in assessing him: in some respects Benaud's abiding ubiquity in England and Australia inhibits appreciation of the totality of his achievements.

In fact, Benaud would rank among Test cricket's elite legspinners and captains if he had never uttered or written a word about the game. His apprenticeship was lengthy - thanks partly to the prolongation of Ian Johnson's career by his tenure as Australian captain - and Benaud's first 27 Tests encompassed only 73 wickets at 28.90 and 868 runs at 28.66.

Then, as Johnnie Moyes put it, came seniority and skipperhood: "Often in life and in cricket we see the man who has true substance in him burst forth into stardom when his walk-on part is changed for one demanding personality and a degree of leadership. I believe that this is what happened to Benaud." In his next 23 Tests, Benaud attained the peak of proficiency - 131 wickets at 22.66 and 830 runs at 28.62, until a shoulder injury in May 1961 impaired his effectiveness.

Australia did not lose a series under Benaud's leadership, although he was defined by his deportment as much as his deeds. Usually bareheaded, and with shirt open as wide as propriety permitted, he was a colourful, communicative antidote to an austere, tight-lipped era. Jack Fingleton likened Benaud to Jean Borotra, the "Bounding Basque of Biarritz" over whom tennis audiences had swooned in the 1920s. Wisden settled for describing him as "the most popular captain of any overseas team to come to Great Britain".

One of Benaud's legacies is the demonstrative celebration of wickets and catches, which was a conspicuous aspect of his teams' communal spirit and is today de rigeur. Another is a string of astute, astringent books, including Way of Cricket (1960) and A Tale of Two Tests (1962), which are among the best books written by a cricketer during his career. "In public relations to benefit the game," Ray Robinson decided, "Benaud was so far ahead of his predecessors that race-glasses would have been needed to see who was at the head of the others."

Benaud's reputation as a gambling captain has probably been overstated. On the contrary he was tirelessly fastidious in his planning, endlessly solicitous of his players and inclusive in his decision-making. Benaud receives less credit than he deserves for intuiting that "11 heads are better than one" where captaincy is concerned; what is commonplace now was not so in his time. In some respects his management model paralleled the "human relations school" in organisational psychology, inspired by Douglas McGregor's The Human Side of Enterprise(1960). Certainly Benaud's theory that "cricketers are intelligent people and must be treated as such", and his belief in "an elastic but realistic sense of self-discipline" could be transliterations of McGregor to a sporting context.

Ian Meckiff defined Benaud as "a professional in an amateur era", a succinct formulation that may partly explain the ease with which he has assimilated the professional present. For if a quality distinguishes his commentary, it is that he calls the game he is watching, not one he once watched or played in. When Simon Katich was awarded his baggy green at Headingley in 2001, it was Benaud whom Steve Waugh invited to undertake the duty.

The forgotten legspinner © PA Photos


Benaud's progressive attitude to the game's commercialisation - sponsorship, TV, the one-day game - may also spring partly from his upbringing. In On Reflection he tells how his father, Lou, a gifted legspinner, had his cricket ambitions curtailed when he was posted to the country as a schoolteacher for 12 years. Benaud describes two vows his father took: "If… there were any sons in his family he would make sure they had a chance [to make a cricket career] and there would be no more schoolteachers in the Benaud family."

At an early stage of his first-class career, too, Benaud lost his job with an accounting firm that "couldn't afford to pay the six pounds a week which would have been my due". He criticised the poor rewards for the cricketers of his time, claiming they were "not substantial enough" and that "some players… made nothing out of tours". He contended as far back as 1960 that "cricket is now a business".

Those views obtained active expression when he aligned with World Series Cricket - it "ran alongside my ideas about Australian cricketers currently being paid far too little and having virtually no input into the game in Australia". Benaud's contribution to Kerry Packer's venture, both as consultant and commentator, was inestimable: to the organisation he brought cricket knowhow, to the product he applied a patina of respectability. Changes were wrought in cricket over two years that would have taken decades under the game's existing institutions, and Benaud was essentially their frontman.

In lending Packer his reputation Benaud ended up serving his own. John Arlott has been garlanded as the voice of cricket; Benaud is indisputably the face of it, in both hemispheres, over generations. If one was to be critical it may be that Benaud has been too much the apologist for modern cricket, too much the Dr Pangloss. It is, after all, difficult to act as an impartial critic of the entertainment package one is involved in selling.

Professionalism, meanwhile, has not been an unmixed blessing: what is match-fixing but professional sport in extremis, the cricketer selling his services to the highest bidder in the sporting free market? Yet Benaud is one of very few certifiably unique individuals in cricket history. From time to time one hears mooted "the next Benaud"; one also knows that this cannot be.