Tuesday, 31 December 2013

Should we think Judicial Reform

Should we think Judicial Reform

Justice Iftikhar Choudhry will have a place in Pakistan history for giving us judicial independence. What we now have to achieve is a working judiciary. For that we should start thinking seriously of judicial reform.   

All of us have personal stories of a justice delayed, justice denied and justice sold. Many of us hesitate to approach the judiciary settling out of court for a song.

Every person has many such stories of long delayed justice. Cases are pending in some cases for decades. Decisions are given without regard to economic consequences. Decisions on economic matters are given without being informed by economic analysis at a cost to the economy.

Judicial reform has been restricted to increasing judges’ perks, compensation and pension and that too for mainly the superior judiciary. Nothing tangible has been done to ensure timely and fair justice.

Perhaps it is time that initiate a discussion on how our strong independent judiciary can deliver speedy justice that cannot be bought, that never has to take more than one oath, which no dictator can easily manipulate. I can think of many such proposals.

Why do cases remain in court for decades? Those of us who are in court find it so strange that hearings are scheduled after months and then continuances given on trivialities like a lawyer not showing up, or claiming not to be ready, or claiming to have a cold. In many advanced countries, a case once scheduled, continuances are not easily given and it is heard to conclusion at a good pace with limited intervals if any. Why can this not be done here?

Judges can easily be incentivized top clear their calendars very easily! Instead of giving them hefty salaries and perks, let the system offer them bonuses for speedy and good justice. Let us say we give a high court judge about Rs. 0.5 million a month in salary with no perks. But put up a Prize of say Rs 20 million annually if he clears his calendar of cases that have been pending more than 3 years. The bonus could be adjusted downwards by the proportion of cases left over. Thus if only 30 % of such cases were left over he gets only about Rs. 0.67 million.  Penalties for older cases could also be built in. For example, if cases over 5 years remain pending the bonus could be lessened by the percentage of calendar containing such cases.

Should we worry about the quality of judgments with such a bonus schemes? This is a problem that can also be taken care of by setting up a watchdog body where a bunch of researchers are funded to review judgments ex post for their quality. This would place pressure on judges to be careful in doling out justice. 

Reforms in developing countries often forget human resource management. Any reform that does not prioritize talent attraction and management will be a failure. With cash payments, no perks, performance based-bonuses, rigorous training and results monitoring a good system can be developed that would attract and challenge talent.

The system could similarly be configured for lower courts. Funding for such a system could come from court fees and awards for damages and recovery of court expenses. 

Rights of appeal should and frivolous litigation should be severely penalized. With a good legal basis for punishing frivolous litigation ample fines would accrue to fund justice. Or at least such laws would free up courts for taking up serious issues.

There is every reason to allow specialized courts to be developed. Our current era of specialization should reflect on our judiciary as well. Financial transactions could be handled by specialized courts as could property rights cases. Cases involving economic policy issues could be heard by some special courts where there could be serious economic analysts assisting judges or even serving as judges.

The right of appeal too needs to be seriously reviewed and must stop somewhere and not be merely used to delay justice. Most transaction law should stop in the high court allowing the
Supreme Court to specialize in constitutional and fundamental right issues.

Training and retreats should be held by the judicial academy selectively for all levels of the judiciary to reflect on the state of justice periodically. I see no reason why the Supreme Court should not annually hold a retreat to review judicial work including theirs over the year.

Economists have long recognized the importance of the legal and judicial framework for the economy. We have also seen the impact of judgments that have not been informed by economic analysis. Judicial reforms of the kind I am suggesting will have deep ramification for our economic prospects. It is important that this should become the subject of discussion in our country. Possibly then it will be taken seriously by the government and the judges.  

Thursday, 26 December 2013

Program on civil service reform

Wednesday, 18 December 2013

On failure: reply to Bilal Lakhani

On Failure!

Bilal Lakhani wrote a poignant and painful piece on how we failed our forefathers. 

His questioning has been visited by abuse and derision. He has been accused of being unpatriotic, pessimistic and even worse un-Pakistani. I share the pain of youth crying out for answers.

Pakistani youth like youth everywhere wants to achieve, compete, and prove themselves worthy of being global citizens. Unfortunately, they find that channels, forums and institutions to foster their ambitions missing. 

Bilal is correct, raising questions asking for a debate is not condemning Pakistan. The strength of advanced societies is their ability to foster debate even on uncomfortable issues. The long and emotional debate on civil rights did much to mend the race problem in the US. Critics from within like Noam Chomsky, Bertrand Russell, Jean-Paul Sartre, and Emile Zola have evolved society in a better direction. Such thinking should be fostered and intelligently debated. 

Pakistan reacts emotionally to the word “failure”. So let us stay away from it. But no one can say we have no problems with terrorism, poor governance, corruption, crony capitalism, violence, sectarianism, poverty and many, many other social and economic problems. Any one growing up in this environment is likely to feel sad and lose hope. 

What do we offer youth? Ill though out inventive packages where they have to show guarantors and invest money in highly risky environment with a high cost of doing business. Surely that is window dressing. 

What does youth need? The Greeks had it figured out. Why can’t we? Youth is full of vitality. They need to compete. They need challenges: the Golden Fleece, 7 labors etc. They do not want handouts. They want to show themselves worthy. 

Following the Greeks today in the world, youth is offered many more challenges not just in sports but in academics, entrepreneurship, trading etc.  Examples of Bill Gates, Steve Jobs etc. are well known.  These young adventurers gave us so much. How did that happen? It was a combination of first rate universities, generously endowed by both state and business, an open society which cherished eccentricity, a vibrant, agile market and dense, diverse cities. 

Gone are the days of rigid hierarchical societies where age and rank was respected. In all countries the average age of leaders in all fields from academics to presidents is dropping. Obama had become president when he was 47. 

The key word here is “merit”. Modern day society has mimicked ancient Greece and Rome again and rediscovered merit. Whether you compete in a tournament or in the market place or even in a corporation, age and family do not matter. Ability and merit is all that counts.

Modern society is also much flatter than traditional society. Protocol and hierarchies have been discovered to be shields against merit and ideas. There talented young people do not have to waste their youth waiting to grow old, lose their vitality to be heard or given responsibility.  

What frustrates youth here is the lack of opening which a merit and competition allows. Government dominates market and society stifling merit and all good things. Government is organized for power and privilege and not merit and service delivery. It is hierarchical and totally no merit. All it can do is offer youth these ill-thought out non-workable incentive schemes. 

The poor quality of governance has also created a rent seeking private sector that is opposed to merit and competition. Here monopolies hide behind SROs and government enforced cartels. Here entrepreneurship is made well-nigh impossible.  

We need a large and long reform effort to restructure and reform government, private sector and society.  The Framework for Economic Growth at the Planning Commission developed the beginnings of such a reform effort in 2011. It envisaged reform of for quality governance, vibrant markets, creative cities and youthful communities. Sooner rather than later we should start taking such reform seriously so that the reform to bring merit and competition into the system is put in place.

Reform efforts in most countries follow ideas that thought leaders have developed and debated. Most societies have forums such as think tanks, research universities, and professional associations that facilitate discussion and debate on the future. These are generously funded by the government and the private sector.  Why both these would rent seeking agencies fund change here? We have seen their unimaginative, hierarchical attempts at development and progress which have only laid the foundation for fundamentalism. 

Unfortunately, our leadership both government and private sector would rather spend all their time getting GSP+ rather than engage in domestic reform. Their priority is to preserve the current stifling system.

Perhaps Bilal you can help galvanize a debate on reform. It is long overdue!

Saturday, 14 December 2013

For Growth Planning and Reform Commission must be Independent and Professional

I congratulate Ahsan Iqbal for adding the reform component to the Planning Commission. I wanted to do that but my good friend Hafeez Shaikh did not believe in reform. But Mr Iqbal must no go forward and reform the PC. I would like to put forward my thoughts for discussion as I believe reform without wide discussion is useless.
If we want growth we must develop a planning process along the same lines of the SBP. This would mean an independent Planning Commission enshrined in law with a technocratic leadership. There should be no minister of Planning; the FM should only be in charge of the MOF. DCPC should be a tenured technocrat with a rank equivalent to a federal minister. DCPC must be a part of all high level decision-making bodies to present the considerations of long term growth and development. The PC should report directly to the PM. Subjects of the PC that are replicated in the MOF such as Poverty, reform and PSRP should be either dissolved or merged in the PC.
Members to be professionals and handpicked by the members collectively with no review from establishment division. PC HRM and salary scales should be decided on a market basis in line with the SBP. Like the SBP there should be no secretary of the PC or right of establishment division to disrupt through unexpected transfers.
Plans should be clearly studied owned and amended by the cabinet and all the line ministries though another consultation. All projects, policies and programs, domestic and donor-delivered should be aligned with planning documents. The onus should be placed on all stakeholders to align themselves with Plans.
Any new growth plans should be made through a long and open consultation process in which agencies must wholeheartedly participate. This will happen if the government backs this discipline fully. All policies and reforms must be aligned with the Plan and should pass through the Planning process before submission to a higher forum.
Planning processes and coordination mechanisms—policy, plan and program consultations-- must be respected by all agencies at all levels. Cabinet and ECC should not allow these to be bypassed.
Cabinet must empower the PC to initiate work on the results based management system that is the centerpiece of the FEG through periodic meetings to facilitate the process.
The PC must be empowered again through a cabinet process to lead the work on economic reform on behalf of cabinet. This will involve in consultation with concerned agencies, identification of reform initiatives through the results framework. Then through detailed collaboration with concerned agencies, reform initiatives must be broken into benchmarks and measures with time lines for achieving them. MOF Would be involved on working out the financing requirements of the reform and the linkage between reform and disbursements.  
Reports on these reforms, timelines and financing requirements in collaboration with MOF and other agencies to cabinets for approval of reform process. Monitoring the reform for cabinet and periodically reporting to cabinet on the reform.  In this manner PC will play the role of a “reform buddy” for the agency in need of reform and a ‘reform monitor’ for cabinet.
For better donor coordination EAD must be merged with the PC. The current fragmented approach has impeded the emergence of domestic longer term development agenda. We must have a coherent and unified approach and for that EAD must be a part of the planning process.   
Eventually budgetary processes should be changed to allow maintenance and smaller projects to move into regular budgets. Only very few large projects will be reviewed and monitored by special procedures that will be developed for handling and implementing them. 
The dichotomy of division and commission which is seriously impeding the work of managing growth must be removed. Currently all professional staff is in a division which is managed by a Secretary, Additional Secretary and a Joint Secretary, none of which are appointed by the DCPC or with input of any member. This leads to several problems making PC very inefficient.
The turnover in these controlling positions—Secretary, Additional Secretary and a Joint Secretary—is very high. At each change, the work of the PC is thrown off balance as these appointees are from service groups that have little background in economic policy and reform thinking. 
In addition, there is always a tension between the members and the Admin staff of the division—Secretary, Additional Secretary and a Joint Secretary. The technical staff too is deeply frustrated because they are beholden to non-specialists and cannot even be considered on merit to occupy serious decision-making positions in the PC.
Because the secretary controls resources and because the work of economic policy and reform is slowed down. Through the control of the administration—Secretary, Additional Secretary and a Joint Secretary—and the centralization of resources, the PSDP and the PC are subject to undue political influence. This seriously affects the way the PSDP is used. Public investment in the country is rendered seriously ineffective through this political influence. 
 PC must be run as a commission by its Deputy Chairman and its members. The Deputy Chairman must be a professional appointed on tenure the same as the SBP governor. He in collaboration with his members through a search process must find the best people on the country for members and they must all have tenured appointments. No agency should be allowed to appoint members over the heads of the PC. The portfolios of members must change with each new “Framework of Economic Growth”. Currently, I suggest we must have members for the following areas, Public Service delivery, Regulation, Reform, Energy and Water, Production, Social development, Education, technology and research, Chief Economist and Economic Policy, Inter Provincial Coordination, All provincial planning chiefs, 4 prominent academics or from NGOs as associate non-resident members, 2 prominent members of society. 

Thursday, 12 December 2013

Why are appointments in Pakistan so badly made?

People are totally confused about the economy. One way of looking at the economy is that it is the aggregate of all economic decisions taken in a time period. If the government is run on archaic principles with poor decision-making, don’t expect great outcomes for the economy.
The process of human resource management in the government is at the heart of the slow growth in our economy. Think about it. Let me give you some food for thought.

All appointments in Pakistan’s public sector are highly centralized. The refrain is that we cannot trust appointments to be decentralized for there will be poor quality appointments and possible corruption. Hence the rationale for secretaries and bureaucrats to be on all governing bodies of public sector enterprises, including universitiesthink-tank’s and other non-profits. Meanwhile the principle accounting officer of all these bodies remains the secretary who does meddle and vitiate the authority of the board and the CEO.

The result is that we have a system of diffused responsibilities so that no clear goals or business plans in any agency or organization.

Why do we cling to this system when the results have been atrocious? No I am not exaggerating. The results have been atrocious. Public sector enterprises have been badly managed and are bleeding at over Rs. 500 billion rupees annually; universities and all educational institutions continue to be poorly managed; and most government nonprofits as well as regulatory agencies are treated as parking lots for retired bureaucrats.

All board and all senior appointments everywhere are made directly by the PM. Positions lie empty for months even years.  Files are sent to PM offices where they wait for months and all manner of bureaucrats’ advice on those appointments and even then most often a poor outcome emerges. Politics and other motives then contaminate this appointment process.
Then there is the fiction of all positions must be advertised and interviewed. Who will conduct the interview the secretaries. It is not surprising that all advertisements produce no serious appointments. Serious professionals do not want to be treated poorly, subjected to an interview by non-professionals, wait to hear the PM office for months, and more than likely learn that some retired bureaucrat was preferred. And if you do get the appointment, you will never have independent charge since the secretary and all manner of people will interfere. And of course the PM has arbitrary authority to fire you at will.
Then there is the fiction of salary. A big deal is made out of the MP1. It is all told about Rs. 3.5 lacs which is just about the rental value of the house that most grade 21 and 22 bureaucrats get. And of course these MP1s have no right to a plot which all the bureaucrats get. Not to mention the myriads of other perks as well as lucrative board appointments.
To add insult to injury, MP1s have contracts of 2 years which have to be approved/extended by bureaucrats—a committee of secretaries headed by the Finance Secretary. Often MP1s are waiting for approval for months without salary. And often they leave with many months’ salary owed to them.
The fiction in all countries is that we serve at the whims of the chief executive. But in reality that is not true. Obama cannot fire people at will or transfer them from Utah to Nebraska on whim.Recall when his administration was being set up there was a panel of staffers who were “recommending” serious candidates and if commentators are to be believed, Obama had limited say in the process.
And some appointments the chief executive does not even get into. Prime among these are vice chancellors and professors which are appointed through systems in academia without involving government or its functionaries. PSEs should be run like any company by their boards and held accountable to their bottom-line.
It is time that the human resource management (HRM) in government was taken seriously. The fiction of PM making all appointments may be kept but the PM must not get involved in more than choosing his ministers.  The rest of the system has to be developed such that serious professional can be brought in and not be totally subservient to secretaries. Indeed the secretaries grip over the system needs to be loosened.  
Better HRM is the key to development and we must learnt that. US has led the world by developing an HRM system that attracts the best talent from all over. They are ready to pass a new immigration bill primarily for this purpose. Our archaic system must change!
Can we expect good outcomes from a system that is so poorly managed?