IN the past two decades that the country has been in the midst of various economic and service delivery crises, nearly all solutions proposed by economists, policy professionals, and even some politicians, have one theme in common: reduce the role of the public sector.

Take the most recent example of rising electricity costs and the cost of living crisis. A consistent demand has been to privatise the distribution companies so that private sector investment and efficiency can be introduced, especially when it comes to reducing transmission and distribution losses.

Another reform suggested is to open the electricity purchase market to private entities, ending the government’s role as the sole buyer. Market dynamics of supply and demand will then determine electricity tariffs, rather than opaque government contracts that private electricity generators are currently offered.

Efforts to minimise the public sector have been at work in other service delivery domains too. Since the mid-1990s, various reforms in the education sector include the adoption of government schools by private entities; the introduction of voucher programmes to allow low-cost private schools to be subsidised by the government; and the outsourcing of teacher training, recruitment and monitoring.

These reforms exist alongside complete space to the private sector to set up loosely regulated fee-paying schools and universities since at least the 1970s.

The basic function of the state in a developing country is to provide welfare to the poorest, something that markets on their own cannot do.

The health sector too has seen a number of privatisation reforms, starting with the outsourcing of basic health units in Punjab to non-profit organisations in the early 2000s and, more recently, the introduction of privatised medical treatments via public health insurance schemes in KP and Punjab. Again, like education, fully private medical facilities and universities have been allowed to function relatively unhindered for several decades.

Given the past performance of government entities, this trend of advocating against the public sector makes sense. Across the country, public sector departments possess low levels of technical and administrative capacity. They are often disproportionately staffed, ruled by generalists with excess manpower in non-integral roles; are plagued by poor and highly politicised recruitment and placement practices; and suffer from high degrees of corruption and rent-extraction.

It would not be an exaggeration to suggest that over the past four decades, the public sector’s primary instinct has been to accumulate more rents and resources for itself, whether that is through salaries and perks or pension revisions or, most egregiously, real estate opportunities.

This decline of the public sector stretches across many years and has been made possible by the malignant efforts of many different actors. These include politicians and political regimes reliant on patronage to get re-elected and attain power; the military establishment that manipulates the political and administrative structures to achieve its own preferred outcomes; and senior public sector employees themselves who have sold out their institutions for private gain.

All of this has been made possible by a political system that is unaccountable to the toiling majority of this country (ie, working-class households), who actually need the most from the state. Poor and marginalised households cannot hold politicians accountable for poor services. Resultantly, the politicians have no incentive to hold bureaucrats accountable for their lack of effort. This pattern is replicated from high-level economic issues (such as energy and taxation) all the way to basic services like water and sanitation.

The dilemma is that while we can agree that the core of the public sector has largely corroded, we also know from the experience of countless countries that sole reliance on private actors to provide public services is a recipe for disaster. The insertion of the profit motive in basic services such as health and education, as well as water, solid waste management, and sanitation, has had disastrous effects for poor and vulnerable citizens.

Similarly, the wholesale embrace of privatisation in energy in some high-income countries, for example, has led to fat profits for energy utilities but high costs and poor services, especially for lower-income households.

The history of the 20th century tells us that where countries have developed, they have done so on the back of public sector performance in key areas of social and economic life. The expansion of education, the development of a national electricity grid, the provision of basic health services, and even the opportunity to transit from one place to another has been made possible first and foremost by efforts of the state.

Pakistan can probably privatise solutions to many of its problems. Selling PIA and the Steel Mills seem like no-brainers. We can also agree on the larger point that the Pakistani state cannot make commodities, nor can it provide complex services. But this does not entail giving up on the idea that the basic function of the state in a developing country is to provide welfare to the poorest of its citizens, something that markets on their own simply cannot do.

Such ideas of public service, national development, and a common ambition of societal uplift were fairly common across the Third World during the mid-20th century. India’s space programme, whose success was celebrated by so many this past month, is a direct consequence of what ideas of public service by the state can achieve.

Despite the elite-captured politics of the early decades after partition, ideas about national development were not alien to Pakistan. A great example is captured by Sadequain’s mural in the main turbine hall at Mangla Dam.

Titled the ‘Saga of Labour’, it is a dedication to the toil of public sector labourers who helped make something as complex as a national grid possible in what was otherwise a very poor country.

As advocacy for privatisation gains traction in these times of crises, it is worth remembering what pro-poor public service has achieved for many countries, and what role it can still play going forward.

The writer teaches politics and sociology at Lums.
X (formerly Twitter): @umairjav

Published in Dawn, September 18th, 2023