Floods: inequality and social protection

DAWN: Economic and Business Weakly | Monday 20, 2010
By Zubair Faisal Abbasi

THE devastation caused by the floods is enormous and of catastrophic proportions.

A truly representative data is still being collected but apparently more than one-fifth of the country is bracing itself with the erosion of basic public and private infrastructure.

Hundreds of kilometres of roads, railway lines, tube wells, crops, electricity transmitters, bridges, cars, cattle, and carts, houses and schools have been damaged apart from 1500 persons dead and 20 million displaced. Around 400 children are missing while nearly eight hundred thousand people remain stranded in flood waters.

The economic cost of the disaster is enormous. Apparently, the economy having lost around $43 billion will either show a zero or a paltry one to two per cent growth with increase in unemployment and poverty. The reconstruction and rehabilitation cost will lead to a higher fiscal deficit (6-7 per cent ) with inflation rising over the next couple of years.

Economists call such a phenomena in which the economy melts down and then possibly recovers as V-shaped process. However, the point is that the bottom of the possible V-shaped recovery is something which can make or break the state-society relationship for which the democratic set-up has to be very careful. The catch lies in here.

Practically speaking, disasters do at least three things: First, they challenge the resilience of social and physical infrastructure. Second, they cause destruction of both physical and social capital, and the third, they provide opportunities to reconstruct the lost capital stock. The current floods carry all these three elements. Leaving the engineering and forecasting side of the physical infrastructure aside, it appears that the disaster has unequivocally unearthed vulnerabilities in the social and economic infrastructure.

One set of vulnerabilities have been induced with deliberate creation of economic, political, and social inequalities. In the name of industrial development, regional, functional, and sectoral inequalities were created which were never removed in an effective way. Such policies helped fleece the agriculture and rural development sector without any enviable improvement in high-productivity industrial sector. The second set of inequalities was dragged in when economic policy was designed on a near-religious belief in neck-breaking liberalisation.

Under the influence of such policies, economic managers are still prepared to scarify socially desirable outcomes of economic growth to the faulty neo-liberal logic of efficiency. As a result, many equality-enhancing programmes have never been given a serious thought let alone a consistent development and execution.

Looking at the gini-coefficient data which is a measure of income inequality amongst individuals, one sees that inequality in rural areas has actually increased. From being 0.31 in 1979 this indicators stood at 0.40 for the rural areas in 1998-99. Interestingly it was 0.27 in 1969-70.

Making situation worse off in the social sense, inequality has also increased amongst the different regions of the country as well as social groups. This type of inequality has somehow created a situation in which identity politics has gained momentum and played its role in laying foundations for militancy.

Much of the macro-economic pictures painted in the past are at best craftsmanship of enlightened hypocrisies. Why certain parts of the country were inundated more than others must raise some eyebrows prompting us to think beyond the dictates of hydrology. There is a definite pattern in the political economy of flooding behind it. It is apparent that the current economic situation requires re-envisioning of economic development doctrine.

In fact, the state needs to seriously rethink the distribution side of growth and economic development strategy even more than singularly focusing on inflation-targeting. The public finance system requires a robust overhaul with emphasis on restructuring the taxation system. The institutions of the state must rethink that the market does not always know the best about human welfare but a well-coordinated public action helps. We must be aware that markets must be governed to create jobs.

In addition, there is a need to develop a strong and systematic social protection framework as well, a framework which enables people to access health, education, and basic incomes so that they can enjoy freedom to move on the ladder of social hierarchy with respect. These basic enabling factors actually ensure durable democracy with citizens having enlightened understanding of issues of national importance.

The disaster affected people and the country at large need such corrections, otherwise a spiral of socio-political upheavals may follow.

Source: http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/in-paper-magazine/economic-and-business/floods-inequality-and-social-protection-090