Bangladesh has resources. But what is missing is a political class that is supposed to transform the country into a citizen state. What we now need is a bunch of drivers who can steer the wheel of the country with creativity and accountability. The essence of Bangladeshis is free-mindedness and a free society. Unfortunately, the ruling elite tend to forget it, Rashed Al Mahmud Titumir, chairman of Unnayan Onneshan, tells Jasim Uddin in an interview with New Age
New Age: The ruling Awami League and its partners are claiming these days that economic development is more important than political democracy. Do you agree?
Rashed Al Mahmud Titumir: Putting economic development against political democracy is fallacious. This illusory proposition is backed neither by solid theoretical foundation nor by empirical validation. The current arguments in global literature on the relationship between political democracy and economic development attempt at understanding the countries which have become successful and the countries that are called so-called ‘failed states’ or ‘fragile states’ to find out determinants of the acceleration or deceleration of transition from low- to middle- and to high-income status.
If one looks at the empirical literature one would find that the countries that have progressed particularly after World War II have exhibited a particular form of the rule of law or rule by law. This is very much the case with East Asia, South East Asia or the countries that have exhibited the degree of development.
This is also true for Bangladesh. In 1990–2014, our economic performance and social development outcomes vis-à-vis similar countries have risen strongly. These 20 years also mark the rotation of power amongst the two major parties in the post-military junta and authoritarian period. So, firstly, if someone tries to argue that one has better leverage over the other, it will be erroneous. Secondly, the literature says that non-economic factors also have a huge influence on economic outcome, which means that institutions matter. If the institutions start to fracture in a country, there are problems in maintaining the rate of development. For example, the level of investment picks up at a level and then gets caught up in inertia to remain stagnant or to decelerate in the absence of institutions. This aggravates the situation as the fragility of institutions escalates. There are plenty of examples in Bangladesh which show that reduced business confidence results in slower investment. The conspicuous example is the case of the banking sector or financial institutions of the capital market where lack of prudence and discipline, in some cases, resulted in the plundering of people’s wealth which has to be repaid through oblique process in the name of recapitalisation of state-owned banks.
Institution is an important factor in ensuring growth while it is important to have sound economic fundamentals. The effectiveness of institution can be ensured through political settlement or, in simpler terms, distribution of power in a given society. But Bangladesh is being run, like other post-colonial countries, by intermediate classes composed of university- and college-educated petty bourgeois and well-off farmers who are interested only in securing wealth by any means. The forces require a system to continue the primitive accumulation of capital and for this they have to hold onto power. So the political class, the different shades of bureaucracy and the business class in most cases come together to secure their wealth by means of using or abusing their power. The particular form of materialist incentives of primitive accumulation of resources through the use of power and coercion has led to a system of clientalist networks in Bangladesh.
The never-ending urge for primitive accumulation of capital that requires clinging to power has led to a coterie of ruling elite to justify this process by ‘inventing’ this sugarcoated unfounded conjecture. The main political economy questions the crisis that is being formed in the post-colonial independent state and the primitive accumulation strategies pursued by different political parties in their struggle for capture and sustenance of power and material benefits.
New Age: Why do you think the Awami League, which has fought for political democracy in the past, has now resolved for development without democracy?
Rashed Al Mahmud Titumir: This is an excellent question that hints at the whole process of nation-building. If we go back for a while to remember the bloody birth of Bangladesh, we will find that people fought for three core principles, namely human dignity, equality and social justice, which were enshrined in the declaration of independence. Witnessing disparity between the then East Pakistan and West Pakistan, people wanted justice and equality and to have a country where everyone would have fundamental rights like the freedom of expression, mobilisation and social justice in terms of economic liberation. The Awami League, which at that time led the liberation war, has to subscribe to those ideas. Now, why should a party that led the liberation war succumb to this current condition? These can be understood with an exposure to three areas. Firstly, the prevailing type of political settlement dictates to have the power concentrated by a particular party. Secondly, intermediate classes, which rallied behind the party, are constantly in search for securing wealth. Thirdly, these two linked phenomena result in the alienation between the party in power and people at large and in excessive dependence on the coercive apparatuses of the state. This form of alienation is fortified because we do not have a citizen state ensuring citizen’s freedom, civil liberty and socio- economic rights. Over the years, through the actions of the successive regimes, the aspirations of the war of liberation have been supplanted by a completely different kind of aspiration, which is acquiring wealth by means of power abuse.
The fundamental question is: do we have a citizen state encompassing at least three things, such as, a functioning judiciary, an effective parliament and a bureaucracy to implement the political mandate given through an election by the people so that the government in power can act as a representative of the people for the people and by the people? The motive of the ruling elite is to have a centralised state with the concentration of power. The system is authoritarian and cannot withstand even muted dissent and public scrutiny. Such process harbours mutually rewarding clientalist resource-dependent networks of politicians, businessmen, bureaucrats and law-enforcers at different layers — grass roots, regional, and national. In unison, they bleed the public exchequer dry in the absence of citizen’s rights and functioning democracy.
Thus, there are little actions on the fair process of electing representatives, the checks and balances by lawmakers over the executives, and the organisation conducting the elections — to shift away from the all-encompassing tendency of concentrating power. Never in Bangladesh has the local government had minimum apparatus such as rule-making bodies, the police, and the bureaucracy to provide basic services. Furthermore, the central executive sacks the elected representatives. There is also a form of nervousness in the sense that if there is no power how they will secure and maintain wealth. This blame also goes back to the major political parties in opposition as they had not been able to steer a democratic movement for ensuring functional democracy in place. They had also been engaged in primitive accumulation. This accumulation of wealth does not allow them to struggle for democracy.
New Age: How do you evaluate the ‘development’ taking place under the present political regime? Are the people at large getting significantly benefited from the development model, if there is any, the incumbents are following?
Rashed Al Mahmud Titumir: The concept of development is varied and it can be understood differently. But for the sake of the argument, we will reduce it to the level of economic growth and social development. We will take into consideration the modest economic growth over the last decades in Bangladesh irrespective of regimes. The economic growth and investment in recent years are, however, hovering around 6 per cent and about 29 per cent respectively. The question is: will we remain satisfied with this 6 per cent growth or do we need to enhance it further to 8–10 per cent? Economic growth in Bangladesh is mostly consumption-based which can also otherwise be called ‘auto-pilot rate of growth’. The underemployed people in rural areas, who either migrated to cities or abroad to fuel the consumption through sending remittances, largely contributed to the Bangladesh’s economic growth. Consumption is one of the four elements of GDP and others are investment, government spending, and the net of export and import.
We need to have an active state to facilitate movement towards a higher path of growth. The country needs the right kind of fiscal, regulatory and policy incentives for manufacturers to expedite such process. The government needs to increase investment for providing physical and socio-economic infrastructures for such sectors as health and education for steering the growth. But in recent years, we observe that there has been a reduction in budgetary spending for these sectors. This has a huge bearing on the supply of knowledge, skills and innovation required for moving towards much propagated middle-income country. This is a common knowledge that paucity of physical infrastructure, such as roads, gas and electricity, has also halted our investment. The growth in real sector — agriculture, manufacturing and services — has decelerated and the rate of growth in export is also falling. No creative public policy is in sight to expand and diversify the industrial sector to reduce its reliance on one or two sectors, such as the ready-made garments or pharmaceuticals.
Bangladesh should also have a closure to zero unemployment as there are no unemployment benefits and the country is also not a welfare state. But the latest labour force survey shows that there has been an increase in unemployment rate with the highest chunk of unemployed population is youth, and of which the educated youth holds the major share. Most of the employment has concentrated in informal sector, resulting in dispossessions of workers’ rights. Employment in formal sector has declined.
There is also inequality in terms of income, rural-urban population and male-female relationship. Though there are discussions among the policy circles about the rural-urban, gender and income inequality, there is hardly any discussion on the rich-poor divide. The wealth inequality was either precipitated by means of inheritance, which not only creates an unequal society, but also harbours a culture in which work and efforts are discouraged. There is no policy regime to address the wealth inequality. For example, there is neither any inheritance tax nor proactive public policy regime to tackle wealth inequality. Actions like providing housing loan at affordable terms and conditions suiting to their income and marinating a decent living standard to the first time buyers or low-income groups would have reduced wealth inequality.
The rate of poverty has been declining over the years. What the policymakers are not talking about is that the rate of decline has slowed down in recent years than the decades of the 1980s and the 1990s.
The demographic transition has many implications in terms of changes in the age-structure. The rise in 15–59 age range includes both secondary and tertiary students as well as economically active workers. For potential tertiary students, the pressure on existing teaching and training facilities will increase. For the increasing population destined to be the labour force, the main challenge is to accelerate creation of jobs. But we observe a jobless growth. Ageing is another inevitable ‘downstream’ consequence of fertility decline. At present, there is neither universal pension scheme nor social security system in the country. The existing social safety net programmes suffer from misallocation, fraud and corruption. Taking the advantage of the second demographic dividend will require policies to promote both individual savings and the creation of a sovereign wealth fund to ensure pension as the population ages. Do we see them on our horizon?
There are tall talks about low tax-GDP ratio, but nothing is clear about the tax-benefit culture. People will be interested to pay tax if they are provided with basic services. Tax is a system of accountability of the government. There is a statistical regularity — the higher the government is accountable and provides basic services, the higher the generation of taxes. The tax system is still also highly regressive as the biggest portion of taxes comes from indirect taxes such as VAT, which is imposed, irrespective of the level of income. What we observe in recent years is that the rate of growth in total revenue is declining and the budgetary target of revenue generation is being missed.
New Age: Is a meaningful economic development possible without people’s democracy?
Rashed Al Mahmud Titumir: This is a very important question. This goes back to the initial idea of social contract where citizens and the state have a contract which is normally epitomised by the constitution of a country. Unfortunately, in our constitution there are talks about many rights, but these are not enforceable. Firstly, we need to have a political settlement which is interested and mandated to transform the state into a citizen state for a meaningful development process by also recognising that we are a multinational nation state. In doing so, what a state requires is to have a legislative process that is completely accountable to the people who have elected them. We find it missing on both terms. Secondly, in order to reflect the people’s mandate, we need a functioning government to deliver goods to people. We see no semblance of a government at the local level. At the minimum, a government must have a form of rule making or legislative body, a force to secure life and liberty, a bureaucracy for collection of revenue and delivery of services — all of which are absent in the local government system in the country. It is, therefore, natural that without a functioning social contract, people-centric development remains elusive.
New Age: How do you think Bangladesh can combine democracy and development?
Rashed Al Mahmud Titumir: I am an optimist. Bangladesh was established as a country by shedding our own blood. Bangladeshi people are resilient as they have proved against any natural disaster. They have enormous entrepreneurial capacity. People do not want to live on charity. We have resources. But what is missing is a political class that is supposed to transform the country into a citizen state. What we now need is a bunch of drivers who can steer the wheel of the country with creativity and accountability. The essence of Bangladeshi people is free-mindedness and a free society. Unfortunately, the ruling elite tend to forget it.