in the Alleviation of Extreme Poverty
DR MUHAMMAD SHOAIB
SUDDLE QPM PSP
Director General
Bureau of Police Research & Development
Ministry of Interior
Government of Pakistan
Islamabad
Tel: (92-51) 9202963 Fax: 9215502
Email: suddle@acpf. org
Poverty is a complex - multicausal - phenomenon, and its alleviation multifactorial in scope. "A study of the causes of poverty is the study of the causes of the degradation of a large part of mankind," said Alfred Marshall in his famous Principles of Economics.
Poverty entails unemployment, underemployment or inadequate level of compensation for the employee. A poor person either does not have enough to eat or cannot afford nourishing food. He either does not have access to clean water or drinks contaminated water. He is without a proper home, and his children are uneducated. He does not have healthcare facilities, lives in unhygienic environment, and is almost always burdened with a large family.
In his monumental study Asian Drama: An Inquiry into the Poverty of Nations, Gunnar Myrdal says poverty is both the cause and consequence of a "soft state." John Kenneth Galbraith echoes the same conclusion in his book: The Nature of Mass Poverty when he says:
Cause and consequence are equally interchangeable in the common assertion that poverty is the result of ineffective, erratic, corrupt or otherwise inadequate government.
The World Bank report: Attacking Poverty released only last month elaborately talks about 1.2 billion or 20 percent of the world's population living in extreme poverty. More significantly, about 40 percent of the world's absolutely poor live in South Asia. "While the world's population increases by 2 billion in the next 25 years, the number of the poor in South Asia will multiply and create a horror scenario," says the report. The region, therefore, needs special attention from the world, in addition to redoubling its own efforts to fight poverty.
Attacking Poverty also refers to the widening gulf between the poor and the rich countries: the average income in 20 of the richest countries is 37 times the average of the poorest 20 countries - a gap that has doubled in the last 40 years. Counting the paucity of resources as the principal handicap in tackling poverty, the report discusses in detail corruption and bad governance as major factors responsible for increasing poverty in the third world.
In Pakistan, poverty increased during 1990s as compared to 1950s and 1970s, says John Wall, the World Bank's current Director for Pakistan. This view is in concord with the officially held position on the subject. The number of people living below the poverty line (representing income that can provide daily intake of 2250 calories per person) increased from 17.8 million in 1987-88 to 43.9 million in 1998-99 (Economic Survey 1999-2000). In other words, the proportion of poverty-stricken populace increased from 17.3 percent to 32.6 percent during this period.
"Poverty is the parent of revolution and crime," said Aristotle 3,000 years ago. Although most present-day criminologists would regard Aristotle's poverty-crime ambit as a serious overstatement, they all tend to agree that role of poverty in crime causation is not altogether negligible and that attacking poverty is attacking crime. In this paper, however, our principal concern is what role an efficient and effective criminal justice system plays in alleviating poverty.
Crime is a problem whose impact on economic, social, and cultural development, both nationally and internationally, is difficult to overemphasise. Its extraordinary cost to the state (and, therefore, to taxpayers) runs into billions of dollars annually, and so is the public expenditure on agencies dealing with the aftermath of crime. In the UK, for instance, about ￡3.5 billion of property was recorded by the police as stolen through burglary or theft offences in 1993, while the public expenditure on the criminal justice system in 1993/4 was ￡9.4 billion. This compared with ￡37.7 billion on health, ￡22.8 billion on defence and ￡30.4 billion on education.
In Pakistan - like elsewhere - crime imposes huge costs on victims, families of offenders and society as a whole. According to official figures, direct financial loss incurred by victims of burglary, theft or other crimes against property exceeded Rs 4 billion during 1999. The actual loss, however, may be at least twice as much, as the official data in this regard is notoriously unreliable.
Then there is also the indirect cost of crime: victims and the wider public suffer opportunity costs when resources are used which would otherwise be available for other purposes, including alleviation of extreme poverty. Opportunity costs to victims include time and effort spent in getting the criminal cases processed by the criminal justice system or receiving treatment for injury sustained, together with resultant loss of income. Individual victims may also suffer bodily and/or emotional harm and the resultant deterioration in quality of life. The main types of opportunity costs borne by the society at large are expenditure on criminal justice system, resources used for the treatment of victims of personal injury and losses suffered through insurance and compensation. It is however to be noted that while some opportunity costs are difficult to quantify (e.g. public and private expenditure on crime prevention), others (e.g. costs of economic crime) are not available in a readily accessible form.
As regards the cost of Pakistan's
criminal justice system, it currently accounts for about Rs 30
billion annually: This year budget for police is Rs 18.3 billion.
Another 5.9 billion is earmarked for Civil Armed Forces, excluding
Frontier Constabulary for which Rs 1.1 billion is budgeted for
2000-2001. And the outlay for judiciary, prosecution and prison
services is around Rs 4 billion.
Studies in the West reveal that economic crime (e.g. tax evasion,
bribery, corruption, securities frauds, bankruptcy fraud, over/under-invoicing
of foreign trade, etc.) costs roughly ten times as much as all
'ordinary' crime put together. The situation as it affects Less
Developed Countries is worse, because in real terms, losses to
countries whose subsistence and economic development are already
precarious are more serious - dollar for dollar - than are in
the developed world.
According to Human Development in South Asia: 1999 Report, tax evasion alone costs Pakistan Rs 152 billion annually. This amount is more than twice the country's current public sector expenditure on education, and more than ten times the total outlay on health sector. "As much as 50% of the total urban income goes unreported," says the report. No wonder that in 1999-2000, black money amounting to Rs 120 billion was voluntarily declared under the amnesty scheme announced by the Government.
It is estimated that about Rs 100 billion are lost annually through corruption. "Pakistanis are having $30-100 billion of ill-gotten money abroad," maintains the Chairman of National Accountability Bureau. This means that up to three times the entire foreign debt of Pakistan is stashed in overseas banks. The Bureau claims to have successfully recovered over Rs 40 billion from corrupt public officials and loan defaulters in the past less than a year.
The Auditor General of Pakistan
recently shocked the nation when in his report for the year 1998-99
he revealed that financial irregularities amounting to Rs 58
billion had
been detected during the audit of public accounts for the year.
Only last month the Public Accounts Committee referred a case
pertaining to Pakistan Steel to the Federal Investigation Agency
for a thorough probe, terming it "an example of unprecedented
loot and plunder" involving Rs 12 billion of taxpayer money.
It is clear that crime poses a serious development challenge. It undermines democracy and good governance by subverting institutional capacity of government. Public confidence in vital state institutions is eroded, as procedures are disregarded, resources are siphoned off, and officials get away for flouting rule of law.
White-collar crime, along with narcotics, is the form of crime that produces not only the most serious distortions in economic development, but also the most serious threats to social development. Public investment is diverted away from education and health into capital projects where bribes and kickbacks are more plentiful. Drug trafficking, a multi-billion dollar enterprise, lowers integrity of the entire criminal justice system, as also compliance with investigative, prosecutorial, judicial and prison standards.
In quantitative terms, Mauro's analysis of 94 countries suggests that a reduction in corruption of 2.38 points on his 10-point scale would increase a country's annual investment by 4 percent of GDP, and would increase annual growth of GDP per capita by 0.5 percent. Relative contribution that decline in other economic offences may make is yet to be quantified.
No government can afford the multi-billion-revenue loss, year in and year out. Moreover, since opportunities to commit economic offences differ among perpetrators (both actual and potential) and benefit principally the - relatively - more advantaged, the realization of distributional or equity goals becomes seriously impaired. In other words, in addition to the colossal economic effects, the criminal justice system's failure to control crime damages the social fabric, creating distrust of the government, and undermining the people's belief in the fairness and universality of Law.
This brief overview amply demonstrates how an efficient and effective criminal justice system can contribute towards generating - potentially huge - funds for economic, social and political development.
Improving criminal justice system entails efforts to improve both the detection and the sanctioning of criminal acts. Better detection requires measures to improve the quality of policing while better sanctioning involves strengthening prosecutorial and judicial processes. It also involves improving transparency and access to information; and, above all, establishing rule of law.
International co-operation, especially
in combating economic and high-tech crimes, offers an effective
avenue for mobilizing and sustaining domestic efforts to upgrade
criminal justice services. Technical assistance from donor organizations,
international bodies such as the United Nations, and international
NGOs such as Asia Crime Prevention Foundation can enable ill-equipped
officials to address criminal justice issues, as also contribute
to increasing their resolve to initiate positive change. Conferences,
seminars and workshops also offer an effective venue for sharing
knowledge and expertise about crime-related matters and generating
practical strategies for reducing the impact of crime, both nationally
and internationally.
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