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Friday, 19 July 2013

Author / Source: KAZI ANWARUL MASUD

\Dmocracy so sought after when in many underdeveloped countries millions of people live in abject poverty, children are malnourished, and women have virtually no rights at all while the country practices procedural but not substantive democracy (where they can do everything right on paper and get praise from other democracies while being little more than a monarchy in reality). Is the right to vote once every five years to elect some corrupt politicians (if credence is given to the report by Transparency International Bangladesh) more important than having material advancement in an authoritarian system? Is epistemological value in an abstract system that can assure the right to complain but cannot assure right to food and health can have such overriding importance for the people in low income countries? Were the people of Singapore, Taiwan, and South Korea wrong in acquiescing with authoritarian rule for decades? Are the people of China living in delusion hoping for a democratic set up sometime in the future as China goes forward to claim the title of largest economy of the world? Francis Fukuyama suggests US dollars $10000/- per capita income as the transition point for a stable democracybecause higher income supports a larger middle class, more property ownership, better levels of education and openness to the outside world and  by contrast very poor countries have hard time sustaining democratic institutions. But now regardless of the system of governance the great divergence that Paul Krugman wrote about and lamented for the good old days of great convergence when income disparity between the poor and the rich was tolerable is gone for good. In Conscience of a Liberal Paul Krugman writes “Since the late 1970s the America I knew has unraveled. We’re no longer a middle-class society, in which the benefits of economic growth are widely shared: between 1979 and 2005 the real income of the median household rose only 13 percent, but the income of the richest 0.1% of Americans rose 296 percent”. In another article Krugman added John Maynard Keynes” words written in 1936 that “Classical economics, conquered England as completely as the Holy Inquisition conquered Spain.” And classical economics said that the answer to almost all problems was to let the forces of supply and demand do their job. But classical economics offered neither explanations nor solutions for the Great Depression”. So John Maynard Keynes challenged the market orthodoxy and suggested governmental intervention on occasions to provide people respite from the Hobbesian trait of human nature of plundering capitalism in the sense that human being is by nature selfish and life is “short, nasty and brutish”.
Hobbes believed that the nature of humanity leads people to seek power.  He said that when two or more people want the same thing, they become enemies and attempt to destroy each other.  He called this time when men oppose each other war (Hobbes’ view on human nature and his vision of government. 123 Helpme.com. 14 July 2013).
Keynesian prescription was not to bury capitalism but to rid it of its flaws.  Keynesianism was challenged by Milton Friedman and classical economics got back some of its old glory. According to Paul Krugman if John Keynes was Martin Luther who rebelled against the corrupt papacy then Milton Friedman was Ignatius Loyala, founder of the Jesuits.  In praise of Friedman Krugman wrote “Friedman played three roles in the intellectual life of the twentieth century. There was Friedman the economist’s economist, who wrote technical, more or less apolitical analyses of consumer behavior and inflation. There was Friedman the policy entrepreneur, who spent decades campaigning on behalf of the policy known as monetarism—finally seeing the Federal Reserve and the Bank of England adopt his doctrine at the end of the 1970s, only to abandon it as unworkable a few years later.
Finally, there was Friedman the ideologue, the great popularizer of free-market doctrine”. Friedman dubbed his prescription for cure of the Chilean economy that he suggested  to Chilean military dictator Augusto Pinochet and the results thereof as Miracle in Chile. Friedman stated that “The real miracle in Chile was not that those economic reforms worked so well, but because that’s what Adam Smith said they would do. Chile is by all odds the best economic success story in Latin America today. The real miracle is that a military junta was willing to let them do it.”
Friedman added that the “Chilean economy did very well, but more important, in the end the central government, the military junta, was replaced by a democratic society. So the really important thing about the Chilean business is that free markets did work their way in bringing about a free society.”  Many other economists e.g. Amartya Sen have criticized Friedman’s claim of Chilean miracle that in reality demonstrated the failure of Friedman-style economic liberalism claiming that there was little net economic growth from 1975 to 1982. The question that would be relevant for countries like ours is whether free market economy without governmental monitoring would be appropriate. The most recent Transparency International Bangladesh (TIB) report has identified political parties and the police to be most corrupt. This is a dangerous situation because the people elect politicians to powerful positions and the police are expected to maintain law and order. In an earlier report TIB found majority among members of parliament as corrupt. In such a situation it may be considered whether the most important debate on how the coming elections would be held would produce any useful result for the people who may be asked to jump from frying pan into the fire. Consumers Association of Bangladesh and many other people have accused the government of inaction against syndicates who on different grounds, most of which appear to be unconvincing, have raised prices of essentials beyond the purchasing capacity of the common man. Many suspect corrupt connections exist between politicians, bureaucrats and business men. According to a study by Mehmet Ugur and Nandini Dasgupta (August 2011) Corruption is defined as abuse of public office for private gains by an agent. The agent is appointed to provide public service to a principal (usually a member of the public), who is unable to hold the agent accountable due to high monitoring costs. The corruption data used in the original studies aim to capture practices that include nepotism, job reservations, 'favor-for-favors’, secret party funding, suspiciously close ties between politics and business, bribery of public officials, kickbacks in public procurement, embezzlement of public funds and ‘capture’ of the state by elites and private interests. This finding indicates that corruption is detrimental for low-income countries where faster growth rates are required for catching up and poverty reduction. However, it also contradicts the common belief that corruption is essentially a problem for LICs, where its incidence is high. On the contrary, it was found that corruption is an international problem and that middle-income and developed countries stand to gain more than LICs from reducing the incidence of corruption further. Corruption has negative and significant effects on growth, both directly and indirectly and in both LICs and non-LICs. Therefore, there is a prima facie case for anti-corruption policy interventions in both low-income and other countries. However, the findings of the study also indicate that the economic gains from targeting corruption in low-income countries are likely to remain small if anti-corruption policies are not combined with a wider set of interventions aimed at improving the quality of governance institutions in general. The relatively lower adverse effect of corruption in LICs is highly likely to be due to the multiplicity of institutional weaknesses other than those captured by measures of perceived corruption. Bangladesh is defined by the World Bank as a low income country and corruption is believed to be rampant.
Institutional intervention through Anti-corruption Commission is present. But it is believed that the powers of the ACC are not sufficient to work independently of the government. It is time that the authorities mend their ways and address the concerns of the people that they had promised in their manifesto before the last elections were held.
The writer is a former Secretary and ambassador