Most folks need higher wages to pay the higher prices caused by higher wages.
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CONTENTS:
0 Are Tsunamis Good for the Economy?
By Chris Westley
0 Dismantling the Police Command Structure
By Afzal Shigri
0 FreePakistan News Briefs
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ARE TSUNAMIS GOOD FOR THE ECONOMY?
By Chris Westley
[Christopher Westley teaches economics at Jacksonville State University, USA.]
I didn't think anyone would dare to apply the Bastiat's Broken Window fallacy to the human tragedy that is still playing itself out along the rim of the Indian Ocean, but sadly, faith in economic fallacies is even more common than deadly tsunamis.
That is why I was surprised to hear the Institute for International Economics' C. Fred Bergsten (known affectionately as See Fred) this morning (December 29th) on National Public Radio's Morning Edition explain how this crisis would actually provide long-term benefit to that region of the world.
Bergsten said, Like any disaster, you get negative effects through destroying existing property and people's health, but you do get a burst of new economic activity to replace them, and on balance, that generally turns out to be quite positive. Over time, properties that have been destroyed will be fully replaced, and probably by better and newer substitutes, so at the end of the reconstruction process, the countries will probably be wealthier.
To be fair, Bergsten admitted this disaster is, above all, a human tragedy, but his comments ignore other effects that will result when positive economic growth results from any disaster, whether it occurs due to a matter of policy (wars) or to unanticipated changes in the physical environment (tsunamis). These effects:
* involve forced capital consumption, shifting capital from other uses to those necessitated by the disaster
* ignore the opportunity cost of capital that is being transferred to the disaster sites (costs that should be considered before assuring public radio listeners that the resulting economic activity "generally turns out to be quite positive")
* encourage construction in areas that would likely be less inhabited if construction decisions were left to market forces, which is the same thing that happens when the U.S. Federal Emergency Management Agency continuously finances reconstruction after reconstruction along coastal areas in the U.S. that are regular targets of hurricanes
* legitimize the fallacies that disasters are good for economies, when in fact, while they allow governments to take credit for measured increases in gross domestic product, they reduce the quality of life to most everyone involved
I say most everyone because some groups in the economy clearly benefit, and often this includes firms that depend on government contracts resulting from emergency funding. Firms such as Halliburton or Bechtel may do great work in the private sector, but absent government contracts, these firms would play a much less notorious role in the society because their market power would be based, not on the forced conscription of capital that is taxation, but on voluntary exchanges between buyers and sellers. Politicians also benefit, if only because of the publicity they receive when disbursing other people's money to the disaster sites.
It doesn't have to be this way. Natural disasters are a fact of life, but the evidence is clear that they cause much less destruction than wars (and other fruits of the nation-state). For instance, as horrific as the loss of human life resulting from last week's tsunamis is, it doesn't come close to the loss of innocent human life that has resulted from U.S. intervention in Iraq since the 2003 invasion.
According to a study reported last fall in the British medical journal The Lancet, this number is already well over 100,000. Compared to the innocent civilian deaths resulting from the wars of the 20th century, it is clear that large, bureaucratic nation-states are a greater threat to human life than occasional and inevitable natural disasters.
Indeed, wars are synthetic natural disasters, writ large. As Ludwig von Mises pointed out in Human Action: "Modern war is merciless, it does not spare pregnant women or infants; it is indiscriminate killing and destroying. It does not respect the rights of neutrals. Millions are killed, enslaved, or expelled from the dwelling places in which their ancestors lived for centuries."
He could have been describing much of what is occurring today both in Iraq and along the rim of the Indian Ocean.
It is also clear that the best protection against natural disasters is not an expansion if the public sector on an international basis, but wealth creation. It is no mistake that natural disasters, which are quite equitable in distribution between rich and poor countries, are more devastating to the poor than the rich. 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.
But such development will not occur from state-managed, broken-window-like economic growth extolled by many mainstream economists. War and natural disasters are not good for the economy. The evolution of property rights institutions and the autonomy they engender, as well as free trade and the social cooperation it engenders, are the human race's best long-term insurance against both.
[With due permission from the Ludwig von Mises Institute, Alabama, USA ]
DISMANTLING THE POLICE COMMAND STRUCTURE
By Afzal Shigri
[The writer is a former police inspector-general.]
Destroying the command structure, coupled with the total subservience of the police to the political bosses, will have dreadful results for the country
The state's primary function is to maintain peace and ensure rule of law, which it does through its police force that is vested with coercive powers. But while giving such powers to the police, it is imperative to set up checks that can restrict the exercise of authority within clearly defined parameters, with effective safeguards to protect the rights of the people. As society becomes more complex and crime increasingly organised and well-financed, it becomes vital to establish a strong, well-trained and well-organised police force with an effective command structure, a force that can meet the challenges of organised crime and internal security without encroaching on the rights of the people.
This need gave birth to the civil police that operates amongst the citizens but can also perform in military mode to deal with violators of laws, whether organised gangs, militant organisations or large scale disorder. Time and again, the police in Pakistan have been accused of failing to do this, and branded corrupt, inefficient and politicised. The bane of policing in Pakistan has been a fractured command with a disorganised, ill-equipped, demoralised and highly politicised police force.
The Police Order 2002 was a genuine attempt to address inter alia the problem of strengthening the internal organisation of police so that it could grow into a cohesive and effective force. The law provided necessary administrative powers to the police officers and put in place an effective command structure. It also ensured security of tenure to the officers in key field assignments. Along with these improved administrative powers, the role of police was redefined, making it more service-oriented. Stringent checks were built into the system to protect the people's rights. The police relationship with the political leadership was crafted and fine-tuned along with external checks to prevent political interference. It was hoped that with time, the law would be further improved and the Pakistan police, like their British counterparts would be able to proudly claim that to "act on behalf of the people as a whole" and not the government in power.
Unfortunately, this law was never implemented. The provincial governments created all kinds of impediments to frustrate the creation of an institution that would check their unfettered powers. They unleashed negative propaganda and created an impression that the new law gave vast powers to police that should be curtailed. No one was prepared to talk about the obvious: that police powers vis-a-vis the public flow from the Criminal Procedure Code and other penal laws, not the Police Law that is essentially a law to manage and regulate the police force.
The provinces were agitated at the idea of an independent police force that would refuse to let itself be used to intimidate and victimise political opponents, and would only function within the bounds of law; they wanted a pliant and docile police command that would carry out orders unquestioningly - whether to remove hoardings in the name of Islam, arrest and harassment of opposition politicians, to disrupt opposition parties public gatherings or to interfere in elections. Under intense pressure from the provinces, in the name of police reform, the National Reconstruction Bureau set about destroying a law drafted for the creation of a clean and neutral police force. Massive amendments have been incorporated in the Police Order 2002 that in addition to institutionalising political interference in policing, have also struck at the command structure. According to the amendments, the political executive is to record the Annual Performance Evaluation Report (PER) of the key field officer, the District Police Officer (DPO). This provision violates all basic principles of management and makes the immediate supervisory officers irrelevant.
This amendment and the apparently innocuous definition of the word 'direction' and its linkage with article 155 of Police Order, authorises almost everyone to prosecute police officers for misconducts essentially departmental in nature. A rule that was meant to maintain discipline in force now exposes the police to departmental action by authorities outside the command structure. The new ordinance has thus created a new equation in the governance in the provinces, resulting in developments that will have a far-reaching impact on the law enforcement machinery.
The reporting officer of the DPO is the Zila Nazim, a politician. He records the annual Performance Evaluation Report (PER) of the DPO relating to all police functions including management of force, investigation and prosecution of cases for which the DPO is not responsible to him under the law. Under Article 33, the Zila Nazim is not qualified to comment on the professional aspects of policing; this can be done only by someone with the requisite training, education and experience of commanding a force.
The first counter-signing officer is not the DPO's immediate supervisory officer but the Provincial Police Officer (PPO) who cannot be possibly aware of the functioning of the officer in the field since he sits in the Provincial Capital. Thus his report cannot truly reflect a correct assessment of the officer's performance. This practice also dismantles the command structure by eliminating the Regional Police Officer (RPO) as a reporting office of the DPO and creates an anomalous situation as all other officers in the district are under the command of the RPO. The new amendment has thus created an internal conflict situation within a disciplined force, seriously impairing its capacity to deal with any grave law and order situation, maintaining internal security or confronting terrorism.
The second countersigning officer is the Chief Minister who again is a politician and seems to be keen to control the DPO by personally recording his PER. There seems to be no other explanation than the temptation of directly controlling the front line officer in the field who can be useful in suppressing the voice of dissent. With a Zila Nazim and the CM from the same political party, the PPO will also lose his relevance as commander of the force. The DPO, who now can only be posted with the CM's approval, will listen to the political bosses and not his superiors; he will willingly carry out even their illegal orders confident in the knowledge that a politicised Police Complaint Authority will protect him.
The format of the DPO's PER is different from that of other officers with whom he will be considered for promotion. How will the selection board make a comparison for promotions with two different formats of report writing?
The government, instead of moving towards a progressive and modern law, has embarked on reversing the provisions that depoliticise police. Its amendments are even worse than the 1861 Police Act, harking back to the Subadari System introduced by Sher Shah Suri in the sixteenth century that was meant to protect and enhance the power of the ruler.
The destruction of command structure of a modern police force and its total subservience to the political bosses will have dreadful results for the country. There is a need for an open debate by all stakeholders before this law is presented before the National Assembly. The members of the parliament owe it to the people of this country to consider the horrible outcome of these provisions. They should not allow this Ordinance to be enacted as a law. Otherwise they may also find themselves at the receiving end of an all-powerful SHO supported by his DPO and the executive. [Courtesy The News]
FreePakistan News-Briefs
ADVANTAGES OF WTO
The main advantages of WTO membership for developing countries like Pakistan are that without negotiating individually with each of 147 WTO members our exports are entitled to non-discriminatory treatment in all these countries. Therefore: exports of Pakistani goods and services (i) will be charged the lowest (MFN) import duty rate in all member countries under most favoured nation (MFN) principle. (ii)
will be subject to the same procedures, standards or other treatment as accorded to exports of other members (MFN) principle. (iii) will be subject to same procedures, standards or other treatment as accorded to similar domestic products and services after Pakistani products/services have complied with import requirements and entered the domestic market of a WTO member country (National treatment principle). [Ministry of Commerce, Government of Pakistan]
LOW PRICED CAR STILL A DREAM
The low priced family car continued to be a dream for country’s lower middle families for yet another year as auto part vendors while playing in the hands of car assemblers have maneuvered to stop emphatic import of used or new car in country.
PROPOSALS ON PRIVATE SECTOR SHIPS SHORTLY
The Federal Minister for Ports and Shipping has said that the federal committee on induction of privately owned vessels in shipping will submit its recommendation shortly.
PRIVATE SECTOR TO HELP PUBLIC VARSITIES
Twenty-five MoUs were signed between eight public universities and industrial firms on December 31, 2004, in Lahore. This cooperation will help make higher education more objective and prepare technical manpower for the future. The major beneficiary of this ambitious program is the Lahore Campus of the University of Engineering and Technology which would get one million dollars from a company, SPEL, to upgrade its laboratories in three years besides $1.2 million software for training in computer designing and engineering.
GOV TO PROMOTE PRIVATE SECTOR
The Punjab Chief Minister has said that in order to strengthen industrial sector, a new management system has been introduced under which private sector will be directly involved in the administrative affairs of industrial sector.
PENSION BILL SURPASSING ALL OTHER ALLOCATIONS
The Pay and pension Committee has warned that the pension bill would surpass all other allocations of the national budget if not rationalized. Besides other factors, it is said that increase in life expectancy in Pakistan is adding up pension liabilities for the government. The official pension bill has in particular increased enormously during the last several years. The federal and provincial governments are said to be exposed to an unquantified and a continuing liability of pension. It is being recommended to the government that there is no option left but to abandon the pension scheme.
RAISE IN MINISTERS’ SALARIES CHALLENGED
A lawyer from Lahore has filed a petition in the Lahore High Court challenging the raise in the salaries of federal ministers, state ministers and advisors. The petition states that Pakistan is a poor country and could not bear the huge burden; therefore, the recent raise in salaries should be declared illegal.
MPAs DEMAND EXEMPTION FROM TOLL TAX
The Punjab Minister of Communication and Works has assured the Punjab Assembly that the government would ask the National Highway Authority officials to exempt the parliamentarians from paying toll tax at National Highways like military officials.
EMPOWERING THE PRESIDENT AND THE SPEAKER
The president and the speaker National Assembly are being given unprecedented powers to suspend, and stop salaries and allowances of unruly MPs of the National Assembly. Massive changes in at least 292 rules of procedures and conduct of the National Assembly have been finalized by an 18-member special committee. According to changes in the rules, the president can now use these sweeping powers to suspend the rowdy MPs particularly during the address to the joint sitting. He can also stop their salaries if he identifies MPs creating trouble during his speech to the joint sitting and can give their names to the speaker to suspend them.
WB WANTS DISTRICT GOVs EMPOWERMENT
The World Bank has identified “incomplete devolution” as one of the major problems hampering the government’s service delivery and rendering the bureaucracy inefficient. It suggested to the government of Pakistan that there is an immediate need to introduce district service to give the district governments their own bureaucracy which should be independent of external influences. It says that the federal government has been told to do a lot more to improve the efficiency of the official machinery.
NADRA CLEARANCE FOR PHONE CONNECTIONS
Prior verification of National Database and Registration Authority will be needed for new cellular phone and land phone connections. The decision would be implemented from February 1, 2005.
NADRA CELL PHONE VERIFICATION CREATES STIR
At a time when mobile phone has become a necessity and cellular sector is making splash in the country, a recent announce by the government regarding verification of intending mobile customers, has created a lot of confusion among all the stakeholders.
COMPANIES TO FACE ACTION FOR RELEASING CARS WITHOUT NTN
The government will take action against companies that help release cars to lessees of cars without the submission of National Tax Number.
COMPANIES REGISTRATION WITH SECP JUMPS
A total of 2,591 companies were registered with the Securities and Exchange Commission of Pakistan during CY04, denoting a 47 % year-on-year increase, compared to 1,766 companies registered during CY03.
