• Friday, July 25, 2014

The winning model

Anu Muhammad

THE day of budget declaration is a day of fear for the people in general. There is tension about another wave of price rise, along with the rise of tax burden. This year was no exception. Although there have always been complaints about government's general inefficiency, data shows that they have developed enough skill to increase revenue income, specially by expanding vat net and other taxes. The question remains, who pays and who gains? People are paying increased taxes in many forms but what are they getting in return? Better security? Better access to public education, healthcare, public transport? Clean water, playing field, open spaces? NO.

The model that made the roadmap
In the 1980s neo-liberal model of capitalism started rolling in many countries, including Bangladesh, in the form of implementing structural adjustment programmes prescribed by the World Bank and the International Monetary Fund (IMF). This model got momentum after its 'successful implementation' in Chile, over thousands killed and many more disappeared, under the killer Pinochet regime.
Millton Friedman, the guru of neo-liberal (conservative) economics of Chicago University, served as special adviser to this military dictator. Naomi Klein, in her Shock Doctrine, vividly showed the nature of implementation of this model in different parts of the world that created 'disaster capitalism.' Based on research in different regions for four years, she revealed how war, genocide, occupation, militarisation and privatisation go together to give corporate world a big success.
The neo-liberal model, i.e., orthodox version of 'free market' capitalism, has actually been used as a theoretical tool to rationalise aggressive mode of capital accumulation in the phase of 'late capitalism,' as coined by Ernest Mandel. This model asks for privatising and corporatising everything under (and including) the sun: education, healthcare, water, river, forest ... making everything for market, bringing everything under corporate greed. Public services, state responsibility for providing health care, education, child and mother care, pure drinking water, public transport, security are not recognised as people's rights in this model. People must have money to buy everything they need, as citizens they cannot expect any right!     
Therefore, though we had many changes in governments in Bangladesh in the last few decades, this model kept running with increasing strength. Beneficiaries of this model include multinationals, big business, bureaucrats, consultants, contractors, ministers, MPs, local grabbers.

Money and muscle
It is no wonder that grabbing of public resources and common properties has become a dominant economic activity in the country. Therefore, huge wealth in the form of 'black' money has been generated in the economy. These huge resources are accumulated in a few hands, those who are obviously powerful, well connected to or part of the government, and have blessings from global agencies as well. Illicit money flows from countries like Bangladesh is actually a good thing for global financial industry. A partial figure has recently been exposed by the 'Banks in Switzerland 2013' that said Bangladeshis have US$414 million there -- a 60% increase from the earlier year (Prothom Alo, June 20, 2014). A Washington based think-tank reported that illicit financial flows from Bangladesh reached on average US$ 1.2 billion a year (Dev Kar and Brian Le Blanc, 2013)!       
Sources of this big underground or 'black' economy include: bribing, commissions from different bad deals, over and under invoicing, grabbing of public resources, fraud transfer, sex trade, women and child trafficking, drug business, smuggling, tax evasion, illegal transfer from MLM-Destiny-share market money, usurpation of public money. Well connected persons start with grabbing wealth beyond legal means and end up with multiplying that asset. They dictate politics, law, and government agencies.
The mere size of this accumulated underground money is self explanatory, the logical consequence is its further expansion through similar activities and investment. These produce and reproduce violence, crime, hooliganism and extreme insecurity in the society and environmental destruction.

Government legalising grabbing
The government has decided to identify, “unutilised land of the state-owned entities' for privatization. We have bitter experience of privatisation of the state-owned entities, where in many cases private owners closed down the running state-owned mills, and turned the land into shopping malls or real estate. This latest plan of the government was nothing but to create opportunities for the same encroachers to grab public lands.
Within three days of the declaration of budget for 2014-15, the inter-ministerial committee reviewed the detailed area plan of the Dhaka city and took decision to allow construction of buildings on water bodies and open spaces by changing the area plan. As it is reported, the committee is ready to approve 19 housing plots and projects that include projects of Bashundhara Housing at Badda, Cantonment and Gulshan, Hamid Real Estate and others. Approval for the 19 projects will call for a change in the land use plan, mostly from 'flood flow zone,' 'water body' and 'water retention area' to 'urban residential zone' or 'institutional zone.' (New Age, June 9, 2014)
Privatisation of power and energy sector turned gas and electricity into costly commodities, and increased subsidy for the corporate interest. Consequences include consistent price rise and its devastating effects on the productive sectors of the economy.
After making power sector a lucrative field for a few and a constant pain for the majority people, we are hearing about the government's efforts and commitments at 'prioritising' the sector. It is true that huge amount of public money has already been spent in this sector, government has borrowed money at unprecedented level, allocation in the sector in terms of money has been increased, subsidy has been skyrocketing. But where has this money gone?
Simple answer is: to the black holes. What are these black holes? They are rental and quick-rental power plants, the multinationals, vested interest groups, lobbyists and commission agents. Wrong policy and corruption are draining out a major portion of the public money.
Strengthening mineral resources division, building national capacity for increasing power generation, using efficient mix of renewable and non-renewable energy resources, expanding exploration and extraction activities by the national organisations are the minimum requirements to ensure energy security. But the policy has been the opposite. Therefore, no money was available for doing the most important things. The model asks for borrowing and spending more money to create more burdens!      
In the apparent anarchy, inefficiency, indecision, or sometimes abrupt decisions, careful scrutiny may find a well organised roadmap for the sector. The roadmap is to turn power and energy sector into an open space for big business -- local and global -- at the cost of people and national economy. Erosion of national authority over its own resources and continuous price rise of gas, electricity and oil have really been a success of that roadmap.  
I conclude by citing a letter from Davison Budhoo, a senior economist with the International Monetary Fund (IMF) for more than 12 years. In his 100-plus pages open letter to Michel Camdessus, managing director of the IMF, titled "Enough is Enough" he said: “Today I resigned from the staff of the International Monetary Fund after over 12 years, and after 1000 days of official Fund work in the field, hawking your medicine and your bag of tricks to governments and peoples in Latin America and the Caribbean and Africa. To me resignation is a priceless liberation, for with it I have taken the first big step to that place where I may hope to wash my hands of what in my mind's eye is the blood of millions of poor and starving people.”  

The writer is Professor, Department of Economics, Jahangirnagar University, and Member Secretary, National Committee to protect Oil, Gas, Mineral Resources, Power and Ports.

Published: 12:00 am Friday, June 27, 2014

TAGS: tax Price Hike

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