Following the 2008 elections to the first Constituent Assembly, the Speaker Subhash Nemwang told the donors, in no uncertain terms, that constitution writing in Nepal would pursue a unique, “homegrown” approach. While Nemwang managed to evade the pesky donors, he also prompted a certain torpor to set in. Most of the donors took his diktat as an excuse to lie back and think of England, as it were.
“A rising tide lifts all boats,” US President John F. Kennedy famously said in a 1963 speech defending the rights of his fishing constituents in New England to federal subsidies. Economists still parrot the expression, somewhat out of the original context, to illustrate the argument that free markets promote upward mobility and the rise of a powerful middleclass. Kennedy’s imagery is so vivid that even recent critics of free market inequality adapt the same phrase: “A rising tide lifts only the yachts”.
In Nepal, there is very little evidence to suggest that free market policies adopted after 1990 contributed to the rise of anything close to a strong middleclass. But yes, we certainly have seen the rise of the “middlemen”.
Joseph Schumpeter, the legendary Austrian-born US political economist, popularised the term “creative destruction” to describe how innovation and growth replace the old with the new. I would like to believe Schumpeter borrowed the termfrom ancient Hindu philosophy and the supreme holy trinity where Lord Shiva figures simultaneously as fearful and auspicious. Lord Shiva also represents creative destruction, his body covered in ashes denoting impermanence and his trident signifying equilibrium.
For a society that worships Shiva and prizes the Temple of Pashupati Nath, one of the Lord’s most revered sanctuaries, I find it quite ironic that Nepalis should tolerate and sometimes even idolise the omnipresence of syndicates and cartels – the antithesis of creative destruction; “conspirators against the public”, to borrow the words of Adam Smith, another legendary economist.
Moreover, for a society as hardwired as ours to chest-thumping nationalism, I am intrigued by how rarely we debate who actually owns our economy, and to what effect.
In 2017, DFID, the British aid agency, commissioned a study to try to understand who calls the shots in the Nepali markets. For all its limitations, the findings confirm a perilously high concentration of wealth and power in the hands of a small number of “business houses”. More alarmingly, in my view, having climbed into bed with an extractive political class, together they have erected high barriers to entry, spawned distortionary policies, and perpetuated predatory practices well beyond what would be considered acceptable in any democracy that is still finding its feet.
Cartels have flourished across all sectors of the Nepali economy. As a consequence of political pandering to the baser transactional instincts of special interest groups, the state has all but abdicated its regulatory obligations in most sectors. This has brought disrepute to market liberalism and perhaps explains why the Nepali public, peeved at having always to settle for the short end of the stick, has pivoted toward a mixed-market model, now enshrined as a constitutional aspiration.
But far worse could follow in our newfound affection for the “mixed model”. Nepal has a peculiar habit of cherry-picking the worst features in any given choice. No one should be surprised if our economic managers attempt to meld crony capitalism with statist coercion in our model of the mixed economy.
The long and short of it is that the world is not holding its breath for Nepal. While our neighbours all cruise the high waves of the Asian Century, Nepal, sadly, has missed the boat.
So, Nepal grew its economy 50 times over in the last 50 years, in nominal US dollar terms. We built up our human capital along the way too, quite respectably according to many universal tallies. But, for a population size that ranks 49th in the world, we still rank 102nd in the size of our economy and 156th in terms of GDP per capita among the world’s 211 countries and sovereign territories usually listed in the global count.
One can always quibble about the veracity and the precision of the numbers; the timelines; the correlation between population size, productivity and growth; or the cross-country comparisons in human development outcomes.
But the question I would ask is: where then is the qualitative, feel-good factor underlying our “progress”? Where are the high quality public assets; the communities of world-class scientific and academic minds; the SME disrupters and the cornerstones of manufacturing; the cutting-edge innovators, the uniquely Nepali brands, the venturepreneurs and the start-ups; the money managers who trade lawfully across global markets; the sportspeople who star with international clubs; the international celebrities of Nepali literature, art and cinema; or the multi-millionaire philanthropists who pay it forward? Where are our points of entry into international diplomacy and global soft power?
These are but a few sample trophies that constitute pride of place among societies that made a parallel or even later start than us in the modern age. One could enumerate a lonely handful of promising Nepali unicorns, but will they alone suffice to constitute a critical mass to stamp our national identity on the rest of the 21st Century?
Why do the loudest advertisements in our newspapers only tout education and employment abroad; short-term “consultancies” with the donor agencies and the NGOs, or job vacancies for salespeople for foreign-made goods and spare parts? Why does the Henly Passport Index 2019 rank the strength of our Nepali passport 101 among 107 indexed, subjecting us to vagabond, hillbilly status in the eyes of immigration officers around the world? Why are our NRs denominated credit cards not worth the plastic they are embossed on anywhere beyond Nepal and India?
One could ask a million more questions like these, associated with our swelling but sorely unmet middle-class aspirations of democracy and its institutions.
If things were really looking up, why then is yet another Nepali sister or brother forced to emigrate and walk into the unknown every 8 seconds? Why, as citizens of Nepal, have we become so comfortably numb as not to be outraged by these and similar questions around institutional failures anymore?
Rather, in the contemporary era, we have renounced our economic aspirations to the mercy of others. So much so that the language of development is now alien and the currency is foreign. This murkiness has allowed our “development partners”, who have commanded the loudest voice in matters concerning our choices, to confabulate failure with success and to escape accountability time and again. We have allowed our “private sector” to take the money and run.
But self-starting societies around the world, some even in our proximity, have demonstrated that economic miracles can be engineered in one generation or less if governments invest in fortifying their institutions. They have proven that there are savvy short-cuts to progress and the late-comers to economic development in the modern-era need not trudge the same long and winding road.
By comparison, Nepal’s development story would read like an assiduously promoted fiction, mis-told by the development donor and the recipient alike for self-serving purposes. This story demands a rewriting where apples are compared with oranges, and not with apples again. We must go against the grain to be honest to ourselves.
Many of the problems I belabour in this book are not peculiar to Nepal. Democracies are under siege in many parts of the world today. It was all the rage among western scholars even up until not too long ago to lecture us about the fissures and fault-lines in our society. Now they all scratch their heads to explain new waves of chauvinism and xenophobia in their own countries – a.k.a., “nationalistic populism” – the highest in 80 years in the so-called developed world, according to some surveys.
Until fifteen years ago, many of us were convinced that we had hit a nadir; a point of no return on the slow road to Year Zero. Nothing short of a miracle explains how we managed to step back from the brink, bruised but not broken. Negotiation and compromise are the lifeblood of democracy and a little overkill was probably justified to help us make it through the night. Not many societies can say that today. Certainly not in the so-called “free world”.
What is there not to be hopeful about then?
Alas, in Nepal, the fact remains that politics has always been about the means and never about the ends. Politics is a cash-cow more than it is a calling. Its purpose has never been “to make citizens happy” as Aristotle would have us believe many eons ago.
Our practice of politics treats the economy as an afterthought and development as a chore. When they matter, they feature as jingles fancily dressed up to warrant the extraction of more rents, or to enlarge patronage networks: Bikaasko Mool Phutau; Aphno Gau Aphai Banau; Bisheshwor Sanga Garibi Niwaran; Naya Nepal; Sambriddha Nepal, Sukhi Nepali, et al. Panchayat, Socialist, Marxist or Maoist, this habit has always been the hardest to break.
The road ahead is strewn with banana peels and booby traps if we allow the short-term trading of favours to forever smoke and mirror the true purpose of politics, at its core: determining how, as a society, we might collectively prosper. We will have learnt nothing if we incessantly waffle on this count, for that will only send us back to the starting line again, possibly even at greater speed and at a much higher cost.
Real peace is more than just the absence of war. And given all that Nepal so perilously survived and so recently, one would think that our political class would keep things honest and level with citizens rather than arrogate itself to public office for purposes of vainglorious pontification. Should we not be staving off the next possible conflict? Or should we be stoking one? Is it our national fate to constantly drift, generation past generation?
Disappointment is a dangerous emotion and the consequences of thwarted expectations could be ruinous.