Private affluence, public poverty—II

How weak public services are reshaping Pakistan’s social contract

There is a parallel. The State borrows because revenue cannot meet commitments. Families borrow because income cannot meet essential needs. The State is trapped by public debt; citizens are trapped by private debt. The two are connected. When debt servicing consumes a large share of revenue, less remains for schools and hospitals. As those services weaken, families are pushed toward private options and toward borrowing.

Weak public services transfer cost and risk from the State to the household.

The walls between us

As public services weaken, social distance grows. Reading Streeck reminded me of Tim Marshall’s Divided: Why we’re living in an age of walls. Not every wall is at a border. Some surround communities. Others are made of income, education, language, and lifestyle. Gated communities are understandable. People seek security and reliable services. But walls protect, and they also separate. People in different communities use different schools, hospitals, and markets. Their children grow up with little contact across economic lines.

Also read: Private affluence, public poverty—I

Earlier, different classes met in government schools, public universities, common playgrounds, buses, and parks. Lives were not equal, but they intersected. Those common spaces mattered. They helped people see themselves as part of the same city. When groups study, live, and receive care separately, those points of contact disappear. The city remains physically connected but becomes socially divided into islands.

The loss of common services becomes the loss of common citizenship.

From tax state to debt state

This social change connects to Pakistan’s fiscal position. Streeck describes a move from tax state to debt state to consolidation state. A tax state finances itself mainly through revenue. A debt state fills gaps with borrowing. A consolidation state organizes policy around deficits, surpluses, and creditor confidence.

Pakistan shows features of a debt and consolidation state without first building a broad, trusted tax state. Revenue is substantial but the burden is uneven. It relies heavily on indirect taxes, withholding, and sectors already documented. When revenue falls short, the government borrows. As debt servicing rises, more revenue is needed. Broadening the base takes time, data, and political agreement and consequently the State repeatedly returns to those already in the system. The documented taxpayers contribute more while seeing little improvement in the public sphere.

A heavily indebted State answers to two constituencies. Citizens expect services and jobs. Creditors expect discipline and repayment.

Both are legitimate, but they do not always align. It would be too simple to blame lenders alone. The IMF did not create our narrow tax base or weak public enterprises. These are domestic problems built over years. Pakistan turns to lenders when domestic resources cannot meet obligations. Once that happens, lenders gain influence. They may set the size of adjustment. But how the burden is distributed across different economic segments remains our choice.

When the next generation chooses exit

The weakening of common ground has another effect. Among many young people I meet, especially in Karachi, the goal is no longer only to build a future here. It is to leave. For earlier generations, education improved position within Pakistan. For many today, it is a passport out. Migration is not a problem in itself. Overseas Pakistanis contribute through remittances and knowledge. The concern is when leaving is seen as the only reasonable path to security.

The affluent withdraw into private systems. The middle class borrows to access them. The poor remain with weakened public services. The young look elsewhere.

These are not separate trends. They are different responses to the same loss of common ground.

Rebuilding the public domain

Pakistan cannot avoid fiscal discipline. The State cannot immediately provide every service at the desired level. But consolidation should be a means to rebuild capacity, not a permanent state of managing past obligations. Tax policy must connect to public value. Citizens need to see where money goes. Responsibility for services must be clear. Local institutions need both resources and accountability. Above all, public education must again be a credible route for social progress.

The aim is not to end private choice. Families should remain free to choose, and the private sector will continue to play an important role. But reliance on private provision cannot mean that the State retreats from essential services, especially for those who cannot afford private alternatives. The aim is to ensure a child’s future is not determined almost entirely by family income.

Parks, libraries, universities, transport, and cultural spaces are more than services. They are institutions that keep society connected.

Conclusion: restoring common ground

My understanding of Streeck may evolve as I finish the book. But it has already helped me connect things I once treated separately: tax measures, public debt, private education, household borrowing, gated communities, and youth migration. The common thread is the gradual disappearance of shared institutions and shared experience.

For my generation, education was a ladder beyond the circumstances of birth. Today, different ladders exist for different classes. Physical and social walls reduce the spaces where classes meet. The State remains visible through taxation and debt. It is less visible in the services citizens once experienced collectively.

Pakistan’s challenge, therefore, is not just to raise more revenue or manage debt. It is to rebuild the public domain, restore trust in the tax state, and ensure that private affluence does not continue to grow alongside public poverty. That requires recreating common ground where citizens can feel part of the same society and renewing enough hope for the next generation to see a future within it.

(Concluded)

Copyright Business Recorder, 2026