The architecture of unaccountability—I

Why institutions survive failure

Pakistan has long blamed economic failure on corruption, weak implementation, political instability and scarce resources. Governments change, lenders prescribe reforms, committees report and organisations are renamed, yet the system endures. What if institutions are simply following their incentives?

Douglass North observed in his Nobel lecture that “institutions form the incentive structure of a society”. Officials preserve discretion when judgment is risky; firms seek privilege when it pays more than efficiency; and institutions resist reform when they can shift the cost of failure.

For a civil servant, even a sound decision can invite an audit, investigation or political controversy. Inaction may be safer: circulate the file, seek another opinion, form a committee and pass the problem to a successor. No decision means no identifiable failure—and perhaps a clean promotion record.

Meanwhile, patronage may bring advancement. The system can reward corruption and indecision while penalising independent judgment. This indicts the incentives, not every civil servant, but explains how paralysis can coexist with career success.

Delayed investment, unresolved contracts and lost opportunities rarely affect performance reviews. Reform must protect lawful, good-faith decisions while penalising corruption, negligence and unreasonable delay. A poor outcome is not misconduct; refusing to decide is not costless.

Mancur Olson’s The Logic of Collective Action explains why concentrated beneficiaries organise more effectively than millions who share dispersed costs. A preferential tariff or protected market can yield large gains for a small group, giving it every reason to lobby; each consumer bears too little of the cost to resist.

The winners mobilise; the public pays. Policy makes lobbying more attractive than investment in technology, productivity and skills, while every exemption turns administrative discretion into a commercial asset.

Public enterprises and utilities show the result. Persistent losses bring subsidies, tariff adjustments, debt restructuring and new committees. Legitimate public-service subsidies should be transparent and separated from avoidable inefficiency; otherwise, failure becomes financially sustainable.

A ministry sets policy, a regulator determines cost recovery, a utility implements instructions and another body monitors results. When failure occurs, responsibility circulates while the costs appear in bills, taxes, borrowing and lost services. Consumers pay; future taxpayers inherit the liabilities.

Education shows institutional self-preservation at its most damaging. Schools open, exams proceed and universities award degrees, but credentials cannot replace literacy, numeracy, scientific reasoning and useful skills. World Bank estimates show a severe foundational-learning crisis, while universities too often reward expansion and publication counts over graduate capability.

Artificial intelligence raises the stakes: countries with strong analytical and technical skills will gain productivity; those without them will fall further behind. An education system that rewards certificates over competence reproduces the bureaucracy’s weaknesses.

In Why Nations Fail, Daron Acemoglu and James A. Robinson explain why institutions serving powerful groups persist despite wider costs. Pakistan changes organisational charts without redistributing power: corporatisation without autonomous boards, regulation without independence and digitisation without less discretion.

The test is not how many committees meet or reports appear, but whether institutions deliver and decision-makers bear responsibility. Pakistan’s tragedy is that failure can coexist with institutional survival, career advancement and expanding authority.

The divide between authority and economic purpose is starkest in our cities. Sprawl consumes land as roads, commercial plots and concrete replace parks, trees and green belts. Development authorities announce schemes and roads but face little accountability for access to jobs, schools and markets. The city becomes an inventory of plots, not a network of productive relationships.

The Planning Commission’s Framework for Economic Growth, approved by the National Economic Council in May 2011, urged a shift from project-led spending to productivity, competitive markets, institutional reform and creative cities. It advocated mixed-use zoning, density, vertical expansion and connectivity. Fifteen years later, sprawling housing schemes and visible road projects still dominate because land-development incentives remain intact.

In Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier (2011), Edward Glaeser describes cities as “proximity, density, closeness”. Jane Jacobs, in The Economy of Cities (1969), likewise links development to diverse, interacting urban activity. Zoning that suppresses mixed uses and height while enabling endless expansion sacrifices these benefits.

The World Bank reports that, during the period covered by its Pakistan Country Climate and Development Report, the average Pakistani city expanded by 6.8 percent a year while its population grew by 1.9 percent. Uncontrolled low-density growth raises infrastructure and travel costs and consumes farmland. Productive cities need appropriate vertical development, infill, reliable mass transit, mixed uses and protected green space.

The institutional question is simple: who profits from converting peripheral land, who approves it and who pays for roads, utilities, congestion and environmental damage? Municipal governance should be judged by access to opportunity, affordable housing, mobility and public space—not acreage covered in concrete.

Infrastructure choices reveal the same incentives. Roads and underpasses are easy to inaugurate; bus networks, well-maintained schools and reliable water systems are not, though they may deliver greater returns. Our September 26 article, “Pakistan Cannot Underpass Its Way to Prosperity”, questioned Islamabad’s succession of underpasses, including Shaheen Chowk and Kashmir Chowk. Every project should answer three questions: who benefits, who pays and what alternative is displaced?

The question sharpened on October 6, when the government laid the foundation-stone for the Kashmir Chowk underpass, reportedly at a cost of about Rs1.4 billion. Authorities say it will ease congestion, but appraisal should also assess effects on buses and pedestrians, induced traffic, maintenance costs and nearby land values. A ribbon-cutting is not a cost-benefit analysis.

When public roads raise peripheral property values, landowners and developers may capture the gains while the public funds longer utility networks and loses farmland or green space. This is Olson’s concentrated-benefits, dispersed-costs problem in concrete form. Government must disclose beneficiaries and compare alternatives.

Planning that rewards sprawl, encroaches on green areas and equates vehicle speed with progress works against these principles. Pakistan needs well-serviced, walkable density—not concrete without commerce.

(To be continued on saturday)

Copyright Business Recorder, 2026