Visible Fist And The Budget Matrix
By Anu Muhammad
20 June, 2007
Countercurrents.orgSeven days before the declaration of the Bangladesh budget 2007-8, on May 31, the World Bank (WB) approved 200 million dollars in policy-based lending under the fourth Development Support Credit to `bolster reform in Bangladesh that is now being carried out by the present interim administration'. This was due much before but released just a week ago of new budget declaration. The bank's press release on the day clarified, `The Government's recent initiatives on corporatisation of three nationalized banks - Sonali, Agrani and Janata - and expediting the process of the privatisation of Rupali Bank have impressed the Bank...' It also observed that Bangladesh has eliminated trade-related quantitative restrictions on imports, and reduced the average nominal rate of protection from 29 per cent in fiscal year 2002 to 24 per cent in fiscal year 2007, and also 'steps towards more privatization and rising prices of petroleum and power also impressed the lender'.
II
It is widely believed that we are living in a world of free market economy, where everybody makes her/his own choices as sovereign. Inequality of power and opportunities amongst classes/ groups/ gender/ nations are denied in the model. Taking this model as a shield we are asked to move towards development and freedom by making people more unprotected and increasingly vulnerable. Poor Adam Smith and Francois Quesnay or even Alfred Marshall dreamed about invisible hand that would make economy rationale and efficient and also ensure equity. However, everybody realizes, not always admits though, that free market economy is a myth. Even Adam Smith in his later days asked governments to take steps against injustice, and to take responsibility for public goods like health, education. In today's world, what really exists is monopoly or oligopoly market. High concentration of resources and power is the rule of the day. Very few dominate the market, price and also the governments. In countries like Bangladesh we find them as monster, instead of feeling invisible hand we always confront visible fist of corporates and World Bank et al as their lobbyists.
Closure of manufacturing units, hostile programmes for jute and textiles and also machine industries, grabbing of natural resources by monopoly plunderers, privatization of banks, rising prices of fuels, marginalizing public health and education were a result of direct assault of global fist, not an act of invisible hand. Through the reform programmes under structural adjustment programmes (SAP) and later under PRSP Bangladesh has taken this path. This budget happily endorsed the same. PRSP makes visible fist of international agencies much stronger by its arrangements.
Therefore, we have,
-Economy with distorted market and oligopoly control.
-World bank et al with viceroy status and visible fists.
- The state, reluctant to its own industrial potential, hostile to state owned enterprises, not concerned about people's interest, unwilling to assert its own sovereignty when facing global lords.
- A 'civil society', compatible with World Bankian philosophy; and,
- The people, working hard to protect their livelihoods, confronting hostile state, policies, with regular insecurities and lack of supports and opportunities.
III
Given such a context, when I was listening budget speech of the finance adviser of the interim government of Bangladesh I did not expect any new turn, although the government had promised to make a break with the past and start a new by defeating old system of corruption and plunder. The government had the opportunities to make the break. But that break necessarily needs a break in policy framework and also commitment to the people rather than obligation to global lords or corporate groups.
It was interesting to see finance adviser referring a study from the World Bank where it was found that 'conditions in doing business is far better in Bangladesh than many other countries including India and China.' I was curious, and found the details in the internet. It was a ranking done by the World Bank in 2005 and 2006 as usual with many assumptions. In their ranking Bangladesh stands at 88 in 2006 (81 in 2005), where China 93 and India 134. Both these countries are now considered global power, more industrialized, and are having big investments in Bangladesh. What does it mean? What does the Bank's ranking of ease to do business show? Does it show that there is a free license for global corporate in Bangladesh to do whatever they like that is not possible in India and China? It seems so.
The year when World Bank did their latest work on the study (2006) and found Bangladesh as better place to invest compared to India and China, the country was then positioned number one in corruption in the world by Transparency International. The corrupt local mafia and commission agents of international grabbers were together dominating the power structure. While India was taking new steps to give boost in jute and textile industry, Bangladesh chose to take steps to weaken or destroy these high potential sectors. While India and China were asserting their authority over energy resources Bangladesh was trying to give that off to global corporates. This contrast goes well with World Bank and ADB's regional strategy for development or in their words 'poverty alleviating' reform programmes.
The ranking of the bank shows a direct correlation between two variables, corrupt regime and ease to do business. With this result, one can conclude that corruption, inefficiency, dismantling of productive units and grabbing of common property is good for creating business environment. Is it compatible with the Bank's style of work? Yes, it is. Although we hear hue and cry from the World Bank about corruption, global evidences show that the bank always feels good with corrupt regimes, their 'good guys' have always been corrupt and persons with no self respect and no integrity. Moreover, there are studies which reveal high corrupt practices of World Bank officials. We understand that the institution could not survive without corrupt governments, specially officials and consultants. This has always been the case, because governments those are committed to its own people would not buy most of their projects. It is not therefore surprising to see increasing number of countries those could successfully assert their authority over their lives and resources started disassociating with the World Bank and the International Monetary Fund.
IV
The matrix of revenue income and government expenditure disclose state's selection of classes from where it wants to extract resources and the classes and groups to whom it wants to deliver. In Bangladesh the tax system is clearly biased towards the rich who are invisible in tax documents. Through a process of primitive capital accumulation thousands of billionaires were born in the last few decades but they are non-existent in tax administration's documents. We see luxurious cars in the street but those do not exist in papers, so these people do not pay taxes. More than 80 per cent of tax revenue comes from indirect taxes. Poorer pay relatively more taxes than the rich. In the current financial arrangements import bias is clear, relative tax burden on manufacturing has been increased compared to finished goods. Reconditioned cars are given support at the cost of computers, raw materials and machineries.
Governments always put emphasis on raising tax-GDP ratio by increasing load over the majority. Now time has come for the people to estimate tax-service ratio, that means, counting services provided by the government in exchange of taxes that people pay. When the state makes retreat from responsibility to protect food security, energy security, and social security and from providing education and medical care why people continue to accept tax burdens? Why people continue to pay taxes to be water logged or to be killed because of development projects?
V
During last few months hundreds of thousands people were thrown to below poverty level by a zeal operation of evicting 'unauthorised' small businesses. Governments in our country always give sermon to the people, 'this is market economy, we cannot guarantee you the job, and find your job yourselves'. People do find their jobs, they do a Herculean job to assimilate everything they have to open a small thing to survive. They pay taxes whom they face as the owner and law-enforcing agency. On one fine morning, government forces arrive there not to extend support but to destroy their tiny things. They cry, government forces laugh loud with their victory over unarmed weak poor women, men and children.
The previous BNP led government got the highest appreciation from the World Bank when they closed down Adamjee Jute Mills, the largest one in the world that made hundreds of thousand people jobless overnight. When children of the schools were crying over closed doors of their schools with their parents crying on the closed doors of mills, government and international agencies were exchanging greetings. At the same time, costly cars, BMW Porsche, got tax exemption by taka 35-45 lakh each. These happened to be some instances of 'poverty alleviation initiatives'.
Governments change, policies continue. In the last few months' additional arrangements for further closure of other jute mills got a clear shape, leaving thousands of people to face fresh joblessness and unbearable insecurity.
After all these steps towards poverty- creation, government expressed its firmness to work for poverty alleviation. Many consultants and poverty business NGO groups seem happy to hear from finance adviser that 57 per cent of total budget is devoted to poverty alleviation. Obviously, they will get the pie, not the poor. This seems to be the never-ending process. These are arithmetic to fool the people; these are jokes to the devastated hard working but poor children and old, women and men. These are all stories of social safety net programmes, programmes for rehabilitation after destruction, programmes for giving cetamol after sending to ICU. This is Pareto optimality; make improvements without changing in the grabbing scenario.
We have been hearing commitments about poverty alleviation for long, large part of budget are shown in poverty alleviation programmes every year. Nevertheless, not without reason, we find 60 million people under income poverty level, 120 million people under human poverty. Inequality rises in a linear way. Our think tanks are not at all interested to make study the causes of this blunder, most probably because they do not get funds for that.
VI
Like previous year we have another annual development programme (ADP) with nearly 50 percent projected foreign loans and grants. Looking back to our experiences with similar development projects one can hardly be optimistic. Preparation of big ADP with foreign loans and grants in many projects witness phases of gap between commitment and disbursement, formal and informal conditional ties, rush of consultants, lobbying of local-foreign corporates to get big pie of the project money, spending of project money to make policy makers happy trips abroad, problems of implementation of real things, surfacing of hidden agenda. All these together make a mess in project implementation. Nevertheless consultants, bureaucrats, supplier of goods benefited.
In our experiences, rate of implementation never goes beyond 50 per cent till March April of financial year. That shows on the one hand inability of the implementation agencies and irrelevance of the projects considering preparation. That raises the question why year after year people are overloaded with the projects those are not implement able although these projects are always portrayed as the necessity for accepting conditional ties and unwarranted intervention in many areas.
VII
In the name of resource constraint, budget of this year continues to be blind to the need of the energy sector. Asia Energy with blood in its hands is still walking in corridors of policymakers' offices. While Tata is waiting Mittal has entered with its ugly records in Kazakhstan (Sunday Times, 11 June 2007). All are glued to the huge profit possibility from gas and coal in this country. Projects look good for these companies but dangerous for the country considering energy security, land, environment and peoples livelihoods. All these things are proceeding with the logic of resource constraint.
But what about our compensation money with Chevron of the US and NIKO of Canada, that sum equals to about 50 per cent of country's total ADP, twice that of net foreign loans and grants? Why all finance ministers/advisers are blind to that potential resources that is more than enough to build, develop a strong energy foundation of the country? The thin allocation in the present budget to mineral resource division again reflects government's unwillingness to do minimum efforts to build own capability to ensure authority over national resources, explore and make best possible utilization after ensuring energy security. That certainly makes global lords and local allies happy.
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