Economic Growth will Lead to Democracy
By Nayyer Ali, July 2003
One of the chronic debates Pakistanis have is whether Pakistan should even be a democracy at its current stage. While the vast majority of Pakistanis want democracy eventually, they are divided between those who want political change, and those who want economic development. Should Pakistan focus on getting its economic house in order, or its political house? The supporters of democracy say that only democracy can lead to economic vitality. However, that has not been the uniform experience of the rest of the Third World (most successful Third World countries were authoritarian during their phase of rapid growth), and even in South Asia, neither Pakistan nor India have performed terribly well under democratic governments.
Economic growth can be hampered by too much democracy as governments satisfy populist urges for subsidies and other handouts that bust budgets and lower growth rates. Narrow special interests hijack the process, obtaining favorable import restrictions, government contracts, and other goodies that distort the economy further. A democratic government is too weak to force necessary but painful policy changes, and demagogues accuse the government of hurting the ‘common man’ when needed changes occur. This is a typical response of workers in government-owned firms that are listed for privatization.
The absolute worst happens when the government is in the hands of a corrupt elite that use their elected positions to loot the country, while manipulating the media and parroting populist nonsense about food, clothing, and shelter to keep their hold on the voters. Pakistanis have had experience with such sort, who ended up providing very little food, clothing, or shelter.
As someone who believes that economic growth is the priority, this is not to downplay my own desire that Pakistan be a fully functioning democracy. But that goal will be achieved most readily through a strong and vibrant economy based on free-market principles and limited government role.
The backbone of a functional democracy is a strong middle class with an interest in running the state in a manner that promotes prosperity and stability for themselves. They are the teachers, doctors, lawyers, engineers and other professionals, but the real nucleus of this group are the small business owners, and the mid-level managers and the skilled well-paid workers in large businesses. Democracy fully takes roots when these groups reach a critical mass. So policies that promote the growth of these groups will accelerate the social forces that support and maintain a real democracy. It is these people that fill out the rank and file of real political parties, and that can provide the campaign contributions that support their reach for power.
To promote the creation of this class of people, the government must pursue sound economic policies that lead to rapid growth. The present government is doing that quite well, and their economic policies are improving the chances of democracy taking real roots in Pakistan. In particular, there must be a strong business class that is independent of the government. If the business class for the most part works for government-owned enterprises, then their interests are primarily to see that their government jobs are protected, and they will certainly not take on the role of an opposition to the government. The privatization of large government enterprises transforms these managers and workers from government employees into free citizens who then have a stake in the success of the economy and the effectiveness of the government.
Privatization in Pakistan is not just about laying the
groundwork for a more successful economy, or for a reduction in government
subsidies to loss-making power companies. It will fundamentally increase the
social base of democracy, from the top managers to the lowest worker. They will
no longer see the government as the guarantor of their jobs and the object of
their allegiance. This private middle class will value stability, both in social
policy and foreign policy, and vigorous economic growth that enhances its own
prosperity. They will have little tolerance for corruption and mismanagement,
and they couldn’t be fooled as easily by demagogues with catchy slogans. They
will be free to enter the political life of the country, and middle class city
dwellers, unlike the illiterate farmers, will view running the country as their
birthright. This is how real democracy came to South Korea and Taiwan, and this
will happen in Pakistan too.