Private affluence, public poverty—I

How weak public services are reshaping Pakistan’s social contract

I have recently been reading Wolfgang Streeck’s ‘How will capitalism end? Essays on a failing system’. I have not yet finished the book, so this is not a review. It is a reflection on ideas that stayed with me, and on how closely they relate to changes I have witnessed in Pakistan over time.

My reading is also shaped by my work as a tax professional. For more than two decades, I have followed Pakistan’s budgets, examined Finance Bills, and tracked the direction of taxation policy.

Every year, the discussion is familiar. We talk about the fiscal deficit, revenue targets, public debt, and the additional taxes needed to meet financing needs. Then we move to details: which rate has increased, which exemption has been withdrawn, and which group will bear a greater burden.

These discussions are necessary. But after repeating the exercise year after year, one feels that individual amendments are only parts of a larger story. Tax revenue targets rise, but so do expenditure and debt. New measures are introduced, yet citizens continue to complain about education, healthcare, roads, water, and transport.

The tax system is growing more complex. The link between taxation and everyday public life grows harder to see. Streeck compelled me to look at this from a wider angle.

One of his key ideas is that capitalism is not only an economic system. It is also a social order. It shapes institutions, relationships, and the way different sections of society live with one another. Drawing on Weber, Streeck reminds us that economic behaviour cannot be understood through money and incentives alone.

We must also understand why certain choices appear reasonable in the circumstances people face.

From citizens to customers

A parent choosing a private school; a patient going to a private hospital; a household installing solar panels; a family moving into a gated community.

Each decision may be sensible for that family. But when the same choices are followed or aspired to across society, they change the relationship between citizens and the State. This is close to Streeck’s idea of citizens becoming customers.

Instead of receiving common services as members of society, people purchase private substitutes according to ability to pay. That creates the feeling of paying twice: first through various taxes and levies; and then again for schooling, medical care, security, water, maintenance, and electricity backup.

The question becomes simple: what is the connection between the taxes paid by a citizen and the services he receives from the State?

The clearest example of this shift is education. It is the one public service through which a society tells its citizens that birth should not determine destiny.

When public education works, it does more than teach children. It creates common classrooms, common aspirations, and a shared belief that effort can change one’s place in life. When it weakens, families do not stop seeking education. They simply begin to purchase it privately, according to what they can afford.

The education ladder and its weakening

I belong to a generation for whom government education was not seen as a last resort. Most of us went to government schools, then government colleges, and many to state universities.

Quality varied. But these institutions provided a common route. A student from a modest household could sit in the same classroom as someone from a more comfortable family. Homes might differ, but the school created common ground. Education was a ladder. It gave people a chance to move beyond the circumstances into which they were born.

My observations come from living half my life in Rawalpindi and Islamabad, and the latter half in Karachi.

Conditions differ across cities and provinces. But in the city where I now live, the pattern has clearly shifted. For the middle and upper-middle class private schooling is now the norm. Government schools are increasingly seen as for those who cannot afford an alternative.

The difference is not just the syllabus. A child in an expensive private school gets more English, technology, public speaking, and networks. Another attends a low-cost private school of uneven quality.

A third depends on an overstretched government school. By university or the job market, they may hold similar degrees. But they do not start from the same place. When the quality of education depends heavily on family income, the trap becomes harder to break. Education ceases to be a ladder between classes and becomes a means of passing inequality to the next generation. This is not an argument against private schools.

Parents must choose what is best for their children. The concern is the collective result. As stronger families exit public education, their interest in improving it weakens. Public schools increasingly serve those with fewer resources and less influence. Poor quality pushes more families out, leading to further decline.

What begins as reasonable family decisions becomes a cycle of institutional decline.

Living around the State

The same pattern appears in health, energy, water, and security. Those who can afford private hospitals reduce dependence on public facilities. Those who can afford solar or generators work around the electricity system. In Karachi, households arrange water through tankers or boring. Housing societies provide their own security and waste collection.

The better-off citizen does not live without the State. But such citizens learn to live around it. The State remains as tax collector and regulator, while core services are increasingly arranged privately.

This is visible in Karachi. It is a center of commerce, yet residents struggle with roads, drainage, water, and transport. Expensive vehicles move on broken roads. Modern buildings sit beside weak public infrastructure. Governance is fragmented across federal, provincial, municipal, and cantonment authorities.

The citizen often does not know who is responsible for a road or a sewer line. The experience is simple. Taxes are paid to multiple institutions. Accountability is hard to find.

Streeck’s idea of a weakening public domain fit here. Private homes improve while public roads decline. Private schools grow while government schools struggle. Households invest in their own water and power while common systems weaken.

The more public systems weaken, the more private arrangements become the way better-off citizens live around the State.

When weak services create private debt

Private alternatives are not used only by the affluent. Education and health are so essential that even low-income families try to access them privately. A parent borrows for school fees. A medical emergency forces a family to use savings or take a loan. Weak public services become a source of private indebtedness.

A household already managing rent, food, and bills adds school fees and loan repayments. Formal loans carry high costs. Informal borrowing brings uncertain terms and social pressure. The household enters a debt trap.

(To be continued)

Copyright Business Recorder, 2026