The truest portrait of our poverty hangs in no ledger, and that is the first cruelty – that a man may be counted and never seen. Go and stand where he stands: a bent back in a wheat field and a wage that will not rise to meet the back that earns it.
More than a third of our people are bound to the soil, yet the soil yields them a fifth of what the nation keeps; they labour most where they are rewarded least. This is no misfortune fallen from the sky: it is a wrong and it has authors. Those who flee the village are swallowed by the city’s informal crush – the pushcart, the daily wage, the one-room shop – where a man is employed in name and idle in fact and neither his skill ripens nor his wage rises nor his hope survives the year.
The economists have a cold phrase for it: the labour trap. The man is chained to his work and his work is chained to his want. No nation has climbed to plenty that did not first stoop to lift its people from that pit; expose the comfortable to feel what the wretched feel, and the policy would write itself. This is all that development means: a migration out of the trap – from the field to the factory, from the factory to the markets of the world. All the rest is bookkeeping.
Not that we have not tried. We tried many times over and gave such trying a proud name: industrial policy. Since the Bonus Voucher of 1959, every remedy has been swallowed: walls of tariff, rivers of rebate, cheap credit, forgiven taxes, favoured zones. And the harvest? Exports that were a sixth of our wealth are a tenth today: every concession soured into a courtesy; every subsidy hardened into a settled right. Recall the five favoured sectors: for over a decade, textiles, leather, carpets, sports goods and surgical goods were zero-rated by decree – not their exports alone but their every domestic sale, so that a shirt sold on a Lahore afternoon paid no tax, on the fiction that it had been stitched for shipment abroad. The state fed those already fed and called it industrial policy.
The ledgers tell on us. A study in the Quarterly Journal of Economics, reading our own bank records, found that a firm, with at least one well-connected board member, borrowed nearly half more and defaulted twice as often; the favour lived only in public vaults, for private lenders kept no such friends. And the audit of our export rebates returned the cruellest verdict: the factories did not change their goods, only their labels. Where the rebate was higher, the export duly appeared, yet the sum of all our sales never stirred. The subsidy bought no trade; it taught men to chase the tariff instead of the market. And a nation that pays for the clever label will never earn the honest sale.
The disease is bred in the bone. Our instruments were priced by a clerk’s pen. And wherever the state sets a price by hand, the quick of wit arbitrage the gap and lobby to widen it. They were proved upon the firm’s own paper, so pleading always paid better than producing. Build the machine so and any rational merchant will game it; the fault lies not in our makers but in a machine that rewards the hunt for the rent above the hunt for the market. Sow cunning and you reap cunning; sow the market and the market is what will grow.
What, then, is the road we never walked? It is the road of the rule, not the favour; of the written law, not the whispered leave. Its first commandment is a hard confession: let the state do only what the market cannot. And where does the market fail? It fails where investors stand waiting upon one another – none will raise the plant for want of the power line, none will lay the line for want of the plant. That knot asks no subsidy; it asks a table: seat the state and the trade face to face, name every obstacle aloud, set against each a man answerable and a day appointed, and print the minutes for all to read.
The market fails again where a bold merchant ships some untried thing: his alone the loss if he stumbles, but everyone’s the discovery if he wins. Reward that pioneer – yet by open auction, so the firm that asks the least is chosen, the money returns out of success, and the knowledge is made common. The market is a miser with learning, for every master fears the apprentice he trains will be poached; so spread the cost of teaching over all and repay it to those who truly teach. Stand behind the loan, but sell the guarantee by auction, and never cheapen the interest for cheap credit has ever warmed the pockets of the strong. The state cannot make a firm fit to compete; it can only level the ground on which competition grows.
The second law: write the rule first and write it for all alike. Let the terms be graven on the door of every scheme – who meets them enters; and where the room is narrow, let contest decide, never the humour of an officer. The state must not name the winner; let it name the problem, and set the firms to contend for the answer. The state that picks winners breeds courtiers; the state that poses problems breeds competitors.
The third law is the sternest: a list of the forbidden, cut into the stone of statute – no forgiven tax, no fresh wall of tariff, no cheapened credit, no gift of cash, no concession signed in the small hours. This list binds the ruler no less than the merchant, for a favour is not merely begged; it is bestowed, and the bestowing hand knows well the worth of what it gives.
The fourth law is the reckoning: pay after the work and never before, and take for proof no paper the firm itself may write – the customs entry, the digital invoice, the roll of the employed. He who inflates his claim indicts his own return. Give every scheme its sunset: to live again it must bring evidence before the parliament; else let it die unmourned. And publish every rupee and every hand that takes one, each quarter, in the open for a favour done in the dark is by its nature no fair incentive, and daylight is the cheapest constable a state can post.
The fifth law is the watchman: an agency small, expert, and past all buying – scores of the skilled, not armies of scribes – near enough to see the true obstruction, far enough that no whisper can move it. Its whole strength is that it has nothing to hand out and everything to solve.
The whole doctrine folds into one sentence: a policy is honest only when the cheapest way to profit by it is to grow more productive. Any scheme that fills the lawyer, the fixer and the relabeller before it fills the worker is no industrial policy; it is a pension for the well-connected, dressed in the language of the poor.
These dry rules and auctions and lists are, in the end, nothing but the case for that bent back with which we began. The whole aim is this: that the hand which picks the cotton should reach the loom, the loom reach mastery, and mastery reach the markets of the earth. The court hands out favours; the rulebook hands out rights. Nations are not remade by what is given as a favour, but by what is paid as a due.
The writer is a senior bureaucrat based in Islamabad
