Cover Story

Elite Bargain

In a republic with weak institutional and regulatory control on checks and balances in state governance, the ‘One Percent Republic,’ mainly represents the fraternity of the upper crust.

By Farhat Ali | January 2023

The term ‘One Percent Rule,’ by its very nature, represents a global system where financial predators control the resources of society and override state sovereignty.

The slogan ‘One percent vs. the 99 percent’ is a rallying cry primarily against the billionaire class, which has snuffed the youth out of chances for social mobility as increasing numbers of young people are suffocated by rising debts and costs of living. In USA, Donald Trump and the democratic socialist Bernie Sanders capitalised on the wave of immense anger against the neoliberal status quo in the US which faces a crisis of legitimacy. Recently, US President Joe Biden acknowledged that the neoliberal model has failed, an acknowledgment that came after imposing four decades of relentless market fundamentalism across the world.

Change of few faces at the top is irrelevant to the fact that a vast majority of humanity remains excluded from the planet’s resources. There is no exact blueprint on how to defeat the logic of neoliberalism, which is practically an iniquitous political approach that intrinsically favours unbridled, free-market capitalism at the cost of deregulation coupled with sizeable reduction in government spending.

In contrast, in a republic with weak institutional and regulatory control on checks and balances in state governance, the ‘One Percent Republic’ mainly represents the fraternity of the upper crust of the civil-military bureaucracy, the custodians of law, judicial and constitutional supremacy, the long-standing political dynasties, parliamentarians and legislatures, business and trade mafias. In such an ideal setup devoid of any accountability, transparency or check and balance mechanisms, all of them are glued together under the one point of agenda of plunder, waste and exploitation of state resources at the expense of the public at large. Pakistan regrettably falls under this category.

The old-boy network of the elite provides a candid view of the fragile political economy of the country. Soon after the country’s creation in 1947, the elites struck a bargain for their own benefits and long-term interests. More’s the pity, the deal has endured until today despite conflicts and disagreements among the members of the elite classes.

A recent report by the United Nations Development Programme (UNDP) quantifies these privileges and the inequality spawned by the elite bargain. The report analyses the privileges enjoyed by landed elites, capitalists, traders and top brass of the military, compared with the severe neglect of lower classes via low social expenditures. This includes tax holidays and evasions, subsidies and privilege to buy inputs at lower prices or sell their own outputs at higher than market prices due to compliant state laws and preferential access to land, capital and services.

Conservative estimates show that the privileges add up annually to nearly Rs. 370 billion for landed elites, Rs. 725bn for the corporate sector, Rs. 600bn for traders and Rs. 250bn for military elites. This is a sum of nearly Rs. 2 trillion annually for a tiny sliver of the population. In marked contrast, Pakistan spent only around Rs. 1.3tr annually in recent years on education, health and other social expenditures to cater to the needs of its masses. Even a chunk of this is siphoned off by the rich.

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