Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.
-Frédéric Bastiat (1801–50)
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CONTENTS:
0 Government-Enhanced Disaster
By Timothy D. Terrell
0 BookReview: Loosing the Wealth of Health
By Mohammad Asim Butt
0 FreePakistan News Briefs ============================================================================
GOVERNMENT-ENHANCED DISASTER
By Timothy D. Terrell
[Timothy Terrell is assistant professor of economics at Wofford College and an adjunct scholar of the Ludwig von Mises Institute, USA.]
As of this writing, the death toll from the south Asian tsunami has reached 120,000, with concerns that disease may claim tens of thousands more. The countries affected include some of the poorest in the world, and as the tragedy unfolds, the economic loss promises to be devastating.
Many have noticed that poorer nations are more severely affected by natural cataclysms than developed nations. Earthquakes, tropical cyclones, tsunamis, and flooding strike the wealthiest as well as the poorest nations, but the loss of life can be much higher where income is low.
In December, 2003, 30,000 people were killed in Bam, Iran, as an earthquake destroyed eighty percent of the buildings in the city. Thirteen years earlier, 40,000 people were killed by an earthquake in Gilan, Iran. In 1998, Honduras and Nicaragua, Hurricane Mitch killed at least 10,000 people.
In Bangladesh, according to a 2001 UN report, chronic typhoons and flooding have killed over a half million people in the period from 1970 to 1998. Over the same period, 1.2 million died from drought-induced famine in Ethiopia. Many other poor nations have suffered similar catastrophes in recent years.
According to the United Nations Development Programme, while only 11 percent of people exposed to natural hazards live in poor countries, they account for more than 53 percent of the total number of deaths. From 1980 to 2000, North Korea had the highest annual per capital death rate from disasters, followed by Mozambique, Armenia, Sudan, and Ethiopia.[1] These are also among the very poorest nations in the world.
This correlation between poverty and natural disaster seems to hold up not only with a cross-section of nations, but also over time. As nations become wealthier, their losses of human life from natural calamities tend to fall.
The 1906 San Francisco earthquake (and the subsequent fire) killed at least 3,000 people out of a population of about 400,000. The 1994 quake in the same area killed only 60, out of a population that had almost doubled. Over 8,000 people in the Galveston, Texas area died in the hurricane of 1900, but hurricane Andrew's 1992 path through a much more heavily populated Florida killed only 40 people.
Barun Mitra, president of the Liberty Institute in New Delhi, India, observed that deaths in India have seen a similar trend: "A strong tropical storm in the Indian subcontinent, in the nineteenth century and even in the twentieth century, could leave tens of thousands dead. Nevertheless, the annual death toll from floods in countries like India has been falling, from tens of thousands in the earlier decades to a couple of thousand today."[2]
Countries that experience economic growth are putting themselves in a better position to reduce the number of deaths that result from natural cataclysms, and the clearest way to produce that economic growth is to allow people to interact in the marketplace without government intrusion. Expanding the role of the state, even with well-intended disaster-prevention programs, diminishes the economic growth that would most effectively reduce death rates.
To most people, shrinking the state to prevent disaster is counterintuitive. After earthquakes or typhoons, there is pressure for stronger or more well- enforced building codes, and after tsunamis the government is called upon to produce better warning systems. Yet the usual quest for mandatory technological improvements and government-provided prevention systems can reduce disaster preparedness. This is because resources are limited-acquiring more of one thing requires giving up something else. Mandating earthquake- proof technology for new construction means more expensive structures, so that more people, not fewer, are living in housing that is unsound, badly located, and otherwise lower-quality.
Regulation to put technological fixes into place takes away from other contributors to disaster mitigation. Requiring stronger structures means that people cannot devote as many resources to improving communication (to find out in advance about coming disaster), transportation (to get away from approaching calamity), medical care (to keep injuries from turning into deaths, or to treat post-disaster diseases), and so on. In fact, any government mandate is likely to overemphasize some fraction of disaster mitigation, rather than allow people to choose for themselves the appropriate
mix. Government funding of tsunami warning systems, for example, may require such an investment in communications networks that medical care or transportation are underfunded. Trying to fund all of these elements of mitigation through the state implies such high taxation that the incentive to produce is reduced, and economic growth is stunted. In fact, more resources going toward disaster mitigation of any type means giving up other things that contribute to long life and well-being: a better diet, education, freedom from crime, safer workplaces, and family and religious obligations.
People don't need the state to tell them that if their houses were more soundly built, or built on higher ground, they would have less to fear from disaster. As Lew Rockwell quipped recently, "nothing strikes me as more absurd than the assumption that only government cares if your own house can withstand an earthquake or tornado. The people who live there, the banks, the insurers, the builders—none of them have any interest in solid construction and so the regulators have to be involved. That's the theory anyway, and it is ridiculous."[3]
The market, if allowed to function, can provide the transportation and communication infrastructure that is needed to mitigate disaster. Barun Mitra noted that government regulation and monopolization, apart from reducing broader economic growth, can hinder pre-calamity warnings and the rescue and relief efforts afterward:
Poor policies adopted by poorer countries have extracted a particularly heavy price. State monopoly over meteorological information has meant that there is no incentive to disseminate the information in a useful manner. Restrictions on channels of communication and state monopolies have discredited these channels to the extent that many people discount the information merely because it comes over nationalized broadcasting media. Restrictionsm on access to technology mean that even those who could have found the information from independent sources do not find it easy to do so. After the calamity, the thin spread of the channels of communication and technology means that few of these channels survive the disaster. This leads to a situation where even weeks after the disaster many of the affected areas remain cut off, without any relief or protection.[4]
When the state is granted the money and power to prevent disaster, the state will look after itself first, not the people it is supposedly protecting. Just as post-disaster tax dollars are regularly misallocated, the state's disaster prevention dollars will be diverted into political pork barrels and high-profile but ineffective projects.
As Chris Westley recently noted on Mises.org , "It is…clear that the best protection against natural disasters is not an expansion of the public sector on an international basis, but wealth creation. …The establishment of a thriving private sector in Sri Lanka, India, and Indonesia is crucial for a quality of life to develop there that can withstand earthquakes and their aftermath as well as does the California coast." Well said. What southern Asia needs now, in the aftermath of this tragedy, is for the government to get out of the way of economic growth.
[With due permission from the Ludwig von Mises Institute, Alabama, USA ]
BOOKREVIEW: LOOSING THE WEALTH OF HEALTH
[Pakistan's National Health Policy: Quest for a vision by Dr. Talib Lashari, Publisher: The Network Publications, 40-A, Ramzan Plaza, G-9 Markaz, Islamabad, Price: Rs150]
Reviewed by Mohammad Asim Butt
Dr Talib Lashari shows that the theory of centralisation of health policy has not proved successful in achieving the targets in Pakistan
From development point of view, the term 'health' has a different
connotation from the one that is commonly perceived. It is much more than just health caring system. It encompasses economic, political, environmental and social conditions. In a complex society as ours, things have become more interlinked and dependent on each other, making it both conceptually and practically impossible to look at such an issue in isolation.
A person cannot be healthy if he is poor, unemployed, andilliterate, living in a politically instable system or in a society where women are not empowered. Therefore, issues like poverty, unemployment, political instability, illiteracy and women incarceration are some of the issues, which need to be properly tackled if health system in a given society is to be stated satisfactory. A national health policy is a document, which is supposed to cover all these areas.
Shedding light on different aspects of Pakistan's 'health policy', Dr Talib Lashari in his recently published research Pakistan's National Health Policy:
Quest for a Vision quotes Bjorkman. While discussing health policies in Pakistan thoroughly in his lectures in 1986 and 1988 Bjorkman
noted, "Pakistan still lacks an unambiguous health policy."
The failure of successive national governments in Pakistan to develop any compact and comprehensive health policy, is due to various factors, which other than the fragmented urban health services and problems related to public expenditure, also include "issues related to development projects like overlapping, gaps in planning and implementation, vertical programmes, dependency of provinces on federal government for funding, which delays the
projects; problems and imbalance in human resources; lack of regulation of private sector; problems with planning process; issue of access; and poor community involvement."
Studying the analytical review by Dr Lashari of different health policies by various governments in Pakistan, one eventually comes to the conclusion that what these initiatives lack was nothing else than government's will to institutionalise and regularise the process of the drafting of policies.
The important thing in this regard is the historical fact that this situation has been the same since pre-partition era. The Bhore Committee's voluminous report, published in March 1946, deploring the health situation in this part of the world, emphasised the integration of health with development, and set elimination of unemployment, improvement in agriculture and industrial production, the development of village roads and rural communications, and
suitable housing, sanitation and clean drinking water as most vital tasks for the enhancement of health of a nation. But its recommendations have never been materialised by any government.
Right from the first five year plan (1955-60), to the Peoples Health Scheme of 1972, Alternate Peoples Health Scheme by PMA (Pakistan Medical Association), the Health Policies of 1990, 1997 and 2001, which Dr Lashari discusses in his book, it is evident that they were made on ad hoc basis and never implemented seriously. This is why none of the above policies bear the expected fruition. Even now, the government does not seem committed enough to make serious efforts to bring about any significant change in the health sector.
Pakistan was ranked 144 out of 175 on Human Development Index (HDI) in 2003. Though in the previous year, it leapfrogged to 138 but the picture is far from satisfactory and the negligence on the part of government has left the healthcare system in shambles.
To understand the policymaking process, Dr Lashari explains the hierarchical steps involved in the policy-drafting mechanism. He tries to explore the linkages with all stakeholders to understand the complete nitty gritty including personnel representing ministries and other related government departments, international organisations like World Bank, WHO etc, leading NGOs, and pharmaceutical industry.
Deploring the irrationality of the decision-making process regarding health policy in Pakistan, Talib writes: "This is due to three reasons: health does not get priority in overall decision-making process, health expenditures hardly differ from previous budget; within the health sector, there is no proper use of minimal resources; and decision-making takes place in isolated manner without including all stakeholders, ie, legislatures and civil society, etc."
Lack of continuity of policies, lack of community participation, lack of government initiatives to bring the private health sector in the mainstream of health care, lack of good governance and "lack of necessary skills and interest on the part of some of the stakeholders, which include public representative; and NGOs", are some of the other factors, which contribute negatively in that whole saga.
The book concludes with some very useful and feasible recommendations. Much emphasis is laid on the decentralisation of health policy process. Looking at the history of health initiatives taken by different governments in Pakistan, it is not difficult to understand that the theory of centralisation of health policy has not proved successful in achieving the targets. Especially after
the introduction of Devolution Plan in 2001 in the country, it seems
appropriate to decentralise the whole process and involve districts directly in the implementation of health initiatives while residing policy formulation with the federal government.
Another considerable step is about the establishment of 'National Commission on Health and Development', which will provide assistance while making health policies. Dr Lashari writes: "Ministry of Health should be the co-ordinating agency, while other ministries and organisations related to health and development may be represented along with civil society; medical associations; and private health sector."
Role of the civil society organisations is also very important in this regard. They can be very helpful to the policymakers through their policy- related research and advocacy activities. Private sector resources can also be utilised to bring about a positive change in the health arena in the country. The private sector needs to be regulated so that the irrational use of drugs and other ills can be eliminated.
However, the primal step, which needs to be taken urgently is to change the traditional governmental perception on health. No development is possible without improving health of a nation. The development is defined as a process, which is supposed to contribute in raising the life standards of people. Development further depends on economic, political and social conditions and unless these are improved, the analysis of societal health will be counted below the graph. [Courtesy The News]
FreePakistan News-Briefs
OUTRAGEOUS INJUSTICE
[Editorial The News]
Who will compensate Afzal Haider for the seventeen lost years of his life spent in prison on over a dozen trumped up charges framed at the behest of a disgruntled police officer? The charges against Haider ranged from dacoity to possession of illegal explosives and ammunition, to murder. Acquitted in each case (his last acquittal was granted in 2003), his painfully long stay in prison was prolonged by over two years because the police did not deliver his
release orders to the prison. In fact, they claimed to find no record of his acquittal, finally obtained from the jail's record room.
The unfortunate man may have stayed on in prison for another 17 years, had it not been for the efforts of a non-government organisation that aims to provide justice and fundamental rights to those in need, regardless of religion, gender, caste or creed.
Maqboolur Rehman, a lawyer who heads the Karachi branch of a global NGO, the World Reforms Commission, has made it his mission to ferret out such cases. As he explained on television, he has also got freed other such prisoners. Mohammad Saeed, in prison unjustly for over 30 years, has lost his mental balance (he is currently under WRC care
undergoing psychiatric treatment). Another prisoner held without being convicted, Zulfiqar, was in jail for 14 years before being freed. Even if guilty of the crimes they were charged with, these men had still served at least the maximum sentence of life imprisonment (14 years).
It is not just a question of financial compensation to one or two or four innocent men. No one can give them back that time, their lost youth, and loss of family life - Haider's one-time fiancÈ is now married to someone else. The problem is that there are many more such people, men and women, in our prisons, languishing for lack of legal aid, lack of bail money, complicated legal procedures and police non-cooperation in facilitating court hearings and providing bail and release orders promptly. There are obviously, as legal aid experts have been pointing out for years, glaring lacunae in Pakistan's legal system that allow such travesties of justice to take place. If just one organisation has in a few months found so many cases of prisoners who shouldn't have been in prison in the first place in Pakistan's largest, most developed city, the situation in the rural areas can only be imagined.
WORLD BANK CREDIT FOR BANKING SECTOR DEVELOPMENT
The World Bank has approved a US$100 million credit and a US$200 million loan to support Pakistan's ongoing efforts at improving its banking sector. According to John Wall, World Bank's Country Director for Pakistan, "The banking sector has undergone fundamental changes through a three phased reform program. The reforms managed to address the root cause of the sector's problems and achieved a complete turnaround in the environment for banking in the country. With the privatization of two of the three Nationalized Commercial Banks, which accounted for nearly 25 percent of the system and sale of Allied Bank Limited, nearly 80 percent of the country's banking sector assets are now in private hands." The proposed Banking Sector
Development Policy Project supports the completion of the third phase of the reform process initiated by the government in the last decade. It will support the government towards improving sector governance and transparency through the privatization of the United (UBL), Habib (HBL) and Allied Bank (ABL). It will also support the development of an effective regulatory and supervisory capacity at the State Bank of Pakistan (SBP) through changes in banking regulations; enhancing transparency through greater public disclosure; and preventing possible use of the banking system for money laundering.
BANKS TO GET APPROVAL FOR FOREIGN TRANSACTIONS
The State Bank of Pakistan has said that it had been made mandatory for all commercial banks and Development Financial Institutions (DFIs) to get “specific approval or exemption” of central bank by these banks outside the country for amounts greater than US$250,000.
SUBSIDIARIES NOT TO DEAL IN PARENT COMPANY SHARES
The State Bank of Pakistan has directed subsidiaries and brokerage houses funded by commercial banks and Development Financial Institutions not to undertake on their own or on behalf of their clients, business or shares or securities issued by their parent companies.
ANALYSTS FEAR REVERSAL OF ECONOMIC CYCLE
Economic analysts have urged the State Bank of Pakistan to check the consumer loan portfolio of individual banks, which if not done, could reverse economic cycle. They say any unexpected shocks in three or four year’s time can create serious credit quality issues with some commercial banks; and, that the SBP should strike a balance between investment that is going into the productive sectors of the economy viz agriculture and manufacturing, as against credit
expansion in shape of consumer loans (16 % of the total credit disbursement) which is fueling lavish spending thus pushing up the inflationary pressures.
STATE BANK’S CIRCULAR CHALLENGED IN THE COURT
A lawyer has filed a petition before the Lahore High Court challenging a circular of State Bank of Pakistan regarding new guidelines on writing-off of bad loans. He submitted that 800 people had their loans written of after the circular issued.
BAN RELAXED ON LUXURY VEHICLES FOR VVIPs
The Prime Minister has to relax existing ban on the purchase of new vehicles to induct the fresh fleet of 30 Mercedez Benz and 20 Land Cruisers being purchased by the government for ruling elite costing the national exchequer billion of rupees.
RS.40,000 RAISE IN MINISTERS PAY AND ALLOWANCE
The Prime Minister has approved an increase of Rs.35,000 to 40,000 in the salaries and house rent allowance of federal ministers and ministers of state. It may be noted that as an “ad hoc relief” 15 % increase in the salaries of ministers has already been notified this month whereas the major raise in the house rent allowance will be announced soon.
MILLIONS TO BE SPENT ON MPs
Modern gym facilities are being planned at a cost of millions of rupees for 450 male and female parliamentarians at the Parliament Lodges from the taxpayers’ money for keeping them fit and healthy. The Capital Development Authority has been directed to immediately prepare a feasibility report. The decision to establish these expensive fitness centers was taken last month in a meeting of the House and Library Committee of the National Assembly.
GOV EMPLOYEE PAY AND PENSION REFORMS SOON
The Pay and Pension Committee will present its recommendations to the government by mid-April 2005 aiming at solving the problems such as low wages, skill-gap and wrong in the civil structure, and a growing burden of pensions particularly military pensions. The existing pension structure is only constraining fiscal space further. The wage bill of the military along with the pensions has also ballooned up. The government wage bill has been growing rapidly in the 1990s – by 15 % per year in nominal terms in the federal government and nearly 20 % per year in the provinces. This rapid growth was mostly accounted for by an automatic progression of staff salaries upward through annual increments that were part of the salary structure and also due to adjustment in some allowances.
PTA TO GRILL CELL PHONE COMPANIES
The Pakistan Telecommunication Authority is launching a campaign against poor service of mobile phone companies from the last week of January. The PTA, telecommunication sector regulatory body, intends to check the quality of service of the cell phone companies, particularly about call connecting errors, service congestions, false messaging, excessive and unjustified billing because of false messaging and frequent call-drops.
SENATE BODY WANTS OGRA TO FIX OIL PRICES
The Senate Standing Committee on Petroleum and Natural Resources expressed the view that the issue of fixing the price of petroleum products should be handled by the Oil and Gas Regulatory Authority. Presently, the Oil Companies’ Advisory Committee is authorized to review, fix and notify the Ex- Depot sales price of petroleum products on fortnightly basis in accordance with an approved pricing formula.
PRIVATE COMPANIES OFFERING LOW CALL RATES
According to a news item based on the comparison of tariffs , the Pakistan Telecommunication Company Limited (a state entity) as failed to attract subscribers by minimizing the call rates while the private sector companies have offered 70 % low rates on NWD calls and 50% less rates on international calls as compared with the PTCL.
PRIVATE SECTOR TO SET UP AGRI MARKETS
The Chief Minister of the Punjab province has said that private sector would be allowed to set up markets of agricultural production and a new law would be introduced in this regard.
PRIVATE HOUSING SCHEMES’ RULES APPROVED
The Punjab government has approved “Punjab Province Site Development Schemes (Regulation) Rules, 2005, to regulate the functions of private housing schemes.
PSMA ANGRY OVER DUTY FREE SUGAR IMPORT
The Pakistan Sugar Mills Association has strongly criticized government’s decision of allowing duty free import of another 50,000 tons raw sugar and termed it anti-industry, anti-growers and anti-consumers decision.
AN EXAMPLE OF PRIVATE-PUBLIC PARTNERSHIP
The Pakistan Tanners Association and the University of Veterinary and Animal Sciences, Lahore, a public sector institution, have signed a memorandum of understanding for cooperation in scientific research, training and technology in the field of leather industry.
WASTE COLLECTION OF THREE TOWNS PRIVATIZED IN LAHORE
The City District government of Lahore has privatized the solid waste management of three towns in the phase one of decentralizing the waste management system of the city and awarded a contract to a private company Waste Busters for Rs.4.3 million.
SANITATION OF ROADS TO BE PRIVATIZED IN LAHORE
The City District government of Lahore has decided to hand over the
sanitation of 67 important city roads to private sector. The Nazim
(Administrator) of the city said that it would reduce financial burden on the Solid Waste Management department.
GOV NOTIFIES BODY ON PRIVATE SCHOOLS
The government of Punjab has notified a committee that was first constituted four months earlier to regulate the affairs of private schools.
FOREIGN COMPANIES IN RUN FOR PTCL
The Privatization Commission has received 14 expressions of interest for acquiring 26 % shares of Pakistan Telecommunication Company Limited with management control. The PTCL is one of the most profitable state-owned companies, with almost 4.4 million fixed lines in service and Pakistan Telecommunication Mobile Company (Ufone) and Paknet are its wholly owned subsidiaries. The 14 prospective PTCL buyers includes Emirtes Telecommunication, UAE; Singapore Telecommunications Limited (SingTel), Singapore; Mobile Telecommunications Co., Kuwait; MTN International (Pty) Ltd., South Africa; Saudi Oger Limited, Saudi Arabia; China Mobile Communication Company, China; Millicom Int’l, Saudi Telecom, Saudi Arabia; Telecom Malaysia, Malaysia; and others.
GOV TO PURSUE PRIVATIZATIONS AND STRUCTURAL REFORMS
The Prime Minister while speaking at the World Economic Forum, Davos, has said that his country should achieve 7 % target of growth, up from the last year, and promised to pursue privatizations and structural reforms. He said, “nothing is taboo” in terms of privatizations.
GOV TO INCREASE MINIMUM WAGES
The Federal Minister for Manpower and Overseas Pakistanis has said that the government would increase the minimum wages of the unskilled workers with consultation of all the stakeholders.
NWFP ASSEMBLY RESISTS PESCO PRIVATIZATION
The North Western Frontier Province Assemby once again reiterated its commitment to oppose and resist the privatization of Peshawar Electric Supply Company and asked the federal government to hand it over to the provincial government under article 157 of the Constitution.
NEW TAXATION SYSTEM IN THE OFFING
The Chairman Central Board of Revenue has taken vital decisions to introduce the most modern taxation system which will be announced o the eve of next federal budget. In the new system, 12 regional offices will be set up in various cities; customs duty will remain unchanged; traders, industrialists, importers and exporters will get a common registration number instead of the present national tax number. After its introduction, there will be separate heads of taxpayers’ registration, audit, legal and processing sections and
the departments of sales tax, income tax and central excise will be
converged. Under the new system, the national ID card number of a citizen will also be the number of his tax registration. In addition to this, the mechanism common audit will also be introduced to facilitate industrialists, traders, importers, exporters, and shopkeepers.
PUNJAB TO INTRODUCE NEW TAXATION SYSTEM
The Punjab government is planning to introduce a new taxation system in the province from new financial year. The main thrust of the new system would be on replacing present decades old system of local collection of taxes by city governments of Punjab province. The system aims at ensuring that the new local governments after April 2005 elections could be financed maximum from their self-generated revenues thus it would help in reducing the provincial deficit.
TAX DEPARTMENT TO WITHDRAW CASES
More than 10,000 cases against taxpayers will soon be dropped as the same were framed on frivolous charges.
CBR ASKS CUSTOMS NOT TO HARASS PILGRIMS
The Chairman Central Board of Revenue has asked the authorities to “fear God," withdraw staff from the arrival lines of jajis (pilgrims) and stop torturing them.” He has strictly prohibited checking of incoming hajis by customs authorities at the airports.
OFFICIAL SURVEY: UNEMPLOYMENT RATE REDUCED
The officially conducted Labor Force Survey claims a reduction in
unemployment from 8.3 % in 2001-02 to 7.7 % in 2003-04 due to availability of more jobs to women. The data shows that overall unemployment rate has decreased due to steeper decline in women’s unemployment (16.5 vs 12.8 %) vis- à-vis that of men (6.7 vs 6.6%).
A BRIBE TO THE PRESS IN PAKISTAN
The Ministry of Information and Technology has approved a project of worth Rs.34.5 million to provide computers and internet facilities to all major press clubs of the country.
