The other day in our Public Finance class we were analysing the annual financial statements of the Pakistan International Airlines (PIA) that a thought struck me. The thought made me giggle and my imagination floated my mind away from the seminar discussion which I regretted greatly afterwards. I regretted because Public Finance, or anything to do with quantitative analysis for that matter, is not really my core speciality. But, I have to contend with the course as it is one of the core requirements of the degree and I have no other option.
Anyways, back to PIA and the much debated on-going privatisation effort by the federal government. The government, as well as the people who favour privatisation of PIA, have two basic premises; one is the inefficiency of the state airliner and the other is the massive burden on taxpayers’ pockets its colossal financial losses have caused. Well, to that extent no one will argue that something really needs to be done about the airliner and that something needs to happen quickly. However, does that necessarily mean that privatisation is the only answer to the problems of the 84.64% state-owned organisation1? This is a question scholars and experts of governance, public policy, and economics need to answer.
Yes – is the easy answer, but is that the right answer? That is arguable.
The question is obviously tricky and there is no simple solution to it as the problem statement implies several other questions and involves many stakeholders to be considered such as the International Monetary Fund (IMF), the country’s economy, the Finance Minister, and according to some a banker who must not be named here.
But, I am not here to discuss the vices and virtues of privatisation of PIA. I am here to discuss a thought that occurred to me during the class I referred to earlier.
There is a tendency in Public Management discourse that finds privatisation as a one size fits all solution for inefficient state-owned enterprises (SOEs) which are a burden on economic resources. While I am not a professed opponent of free market economy and private enterprise, I find the idea that every inefficient state-owned enterprise needs to be privatised indigestible at the least.
In a developing country which is oblivious to social welfare and good governance, employment and job security is no less than a blessing. Let us take an example of another state-owned airliner; the Qatar Airways – an efficient, profitable and promising international airline. I often ask myself why PIA cannot be provided with a good management team that can transform the company around and make it something like Qatar Airways or even better? After all, it was once one of the best airlines in the world. What went wrong and who allowed it to happen?
The failure of PIA is not just failure of a state-owned enterprise; it is a reflection of the endemic bad governance, corruption and nepotism in every layer of the state itself.
If inefficiency and burden on taxpayers are good causes for privatisation of a huge national asset, the greatest inefficient state organisations in Pakistan which are a burden on taxpayers’ pockets are the federal and provincial governments; the legislatures, the cabinets and their leaders. All these governments are perennially inefficient, ineffective and have absolutely no clue about good governance. Why not we start thinking about privatising the government itself?
I think that private citizens will be better off running the state machinery. They are already responsible for their own welfare, for their so-called representatives have no idea of their actual problems and how to solve them. After all, it is the common citizens who are the real stakeholders of the state but who are utterly neglected when national priorities and “national interest” are defined.
- Source: PIA Annual Report 2014