Feisal Naqvi

That which works is good

In Uncategorized on June 1, 2017 at 11:46 am

Ten seconds. That’s how long it took Xiaodong Wu, a Chinese mixed martial arts fighter, to beat a bona-fide living legend tai chi master into submission. Watch the fight if you want on YouTube. It’s about as embarrassing as it sounds.

The point to note is that this is no longer the China of old. Yes, the Shaolin monks and their kung fu skills still rule the silver screen. But out in the real world, what wins is not Pai Mei’s five-point-palm exploding heart technique but hard-scrabble mongrel fighting styles which take the best from every discipline.

And it’s not only China and the world of combat which has changed. China is just the most prominent convert to the ethos of capitalism.

But what exactly is the ethos of capitalism? The belief that the invisible hand of a competitive market will guide society to the best of all possible worlds? Gordon Gekko’s famous phrase that “Greed is good”. Hedonism?

So far as I’m concerned, the essence of capitalism is captured in Deng Xiaoping’s famous observation that “It doesn’t matter if a cat is black or white so long as it catches mice.” In simple terms, that which works is good. Or to put it in desi terms, “chalti ka naam gaari”.

This week’s musings about the meaning of capitalism are prompted by ‘Chaos Monkeys’, a book written by a former Facebook employee called Anthony Garcia Marquez. The book is a chronicle of his time in the maelstrom of Silicon Valley.

To be more precise, the book is an account of about five years in the life of Mr Marquez, from 2008 to 2013, starting from his arrival in California and initial employment by an existing company, continuing on to his departure and founding of a new company, the sale of that new company to Twitter and then two years of employment by Facebook.

Before I explain why this book matters, let me first take a moment to deal with the naysayers lining up to tell me that a book about capitalism run amok in California is hardly relevant to the average Pakistan.

To begin with, you – the reader – are not an average Pakistani.

Pakistan has about 200 million people. At present, about 60 percent of them are optimistically considered to be literate. Out of those literate masses, perhaps a million read newspapers in English at least once a week (and that is fantastically optimistic, but bear with me). Out of those English readers, The News claims (cough, cough) a readership of around 120,000.

In short, if you are reading this column (via dead tree or electronically), you are presumptively educated, affluent and interested in Pakistan. Let me further presume that you are interested in the economic development of Pakistan. Hence my conclusion that you should read what Garcia has to say.

Here are the two things that you need to learn from ‘Chaos Monkeys’.

The first point is that Silicon Valley is now the world’s greatest marketplace for ideas. What I mean by that is two very different things. The first is that Silicon Valley is now where you go to find ideas. The second is that Silicon Valley is where you go to sell ideas.

Take a look at Marquez’s journey. After abandoning his quest for a physics PhD at Berkeley, he joined a company called Adchemy which was trying to figure out, like many other companies, how to make money via internet advertising. After two (largely wasted) years at Adchemy, Marquez and two fellow engineers came up with a new idea and put in a pitch for induction at Y Combinator, the premier startup incubator in Silicon Valley and, by definition, the rest of the world.

By the time Marquez and his cohort ‘graduated’ from Y Combinator, had polished their original rough idea into a saleable pitch, had investors lined up and had a working valuation of about $4 million.

Let’s rewind here a bit. Marquez and his two buddies were not the second coming of Sergey Brin and Larry Page, the duo who founded Google. They had not been struck with Newtonesque levels of inspiration. They were just reasonably intelligent people who had lucked into the world’s greatest startup factory and who had then been driven enough to come up with a saleable product. And yet, within a few months of finishing at Y Combinator, they had an offer from Twitter to buy their product for $10 million.

Why doesn’t something like this happen in Pakistan?

Well, you might say, it does happen. Only less frequently.

The only problem with that answer is that it’s bogus. There is a difference between generating electricity via an understanding of electromagnetic theory and waiting to get hit by lightning. Pakistan gets hit by lightning every once in a while. But it doesn’t know how to make sparks fly on a regular basis.

The technical reasons for this sad situation are manifold, starting with the difficulty in creating ‘sweat equity’. But let’s leave the technical reasons aside for a while. The real reason why IT startups remain not just on the fringe in Pakistan, but on the fringes of the fringe, is because we still don’t really respect such entrepreneurs. Our economic wizards remain entranced by a world of five-year plans and miraculously profitable steel mills. They are the tai-chi masters of Pakistan. And they are getting whupped by the MMA fighters of the world.

Let me now get back to the second half of Marquez’s book – his time at Facebook. Remember how I mentioned that Pakistan has perhaps a million newspaper readers (in English). Well, Facebook has 25 million users in Pakistan. The question is: how did it get there?

The short answer is that the people at Facebook try everything that works and they try it maniacally. ‘Make an impact’. ‘Fortune favours the bold’. ‘Move fast and break things’. Those were the exhortations that Mark Zuckerberg had pasted all over the Facebook campus.

Here in Pakistan, we don’t have exhortations posted on our walls. But if we did, the most likely candidate for a national slogan would be the Noori song, “Hore vi neevan ho”.

This is a country obsessed with avoiding risk. We obsess and we obsess and we then obsess some more about the one theoretical option that might, just possibly, in some ideal world have produced an optimal result.

Unfortunately, the old saying that “the best is the enemy of the good” remains as true today as it was yesterday. If you know that tomorrow      you will be judged and possibly punished with reference to some theoretical ideal, you will not take any risks. Instead, you will lay out all your requirements for the ideal and entirely unrealistic result in triplicate and when no action is taken, you will report to your bureaucratic superiors that nothing could be done about the fact that nothing was done.

We cannot afford to continue this way. If we do not embrace risk and if we do not accept the occasional misfire, we will continue to inch along at the petty pace we have mastered. We will continue with our elegant tai chi. And we will continue getting hammered into submission within seconds.

This column appeared in The News on 31 May 2017.

The age of consent

In Uncategorized on June 1, 2017 at 11:44 am

In April 2014, the Sindh Assembly passed a law which made marriage to a female under the age of 18 punishable by up to three years months in prison. Previously, the bar had been set at 16 by the Child Marriages Restraint Act, 1929.

The new law was greeted with much fanfare by Pakistan’s fast-dwindling band of       jiyalas. And why not? Here was a law which was purportedly modern, feminist and progressive – all in one go. ZAB would have been proud of the law and so would BB. The law even followed in the hallowed steps of the Quaid. In September 1929, he had responded to criticism of his support for the 1929 Act by saying “If my constituency is so backward as to disapprove of a measure like this then I say the clearest duty on my part would be to say to my constituency, ‘you had better ask somebody else to represent you.”

Soon after the passage of the Sindh Act, I was asked by the Karachi-based parents of a runaway girl to help recover their daughter. According to them, she was 15 and was now living in Lahore with somebody she had supposedly married. And indeed, that was the position taken in response to the habeas petition filed by me.

The first thing I learned after filing that petition was that the Child Marriages Restraint Act, 1929 (not to mention the Sindh version of 2014) is a sham. It does not make child marriages illegal. Instead, Shariah law prescribes that every post-puberty female is competent to marry. Since the personal law of the Muslims of Pakistan is the Shariah (as per the Shariah Act of 1939), the net result is that the marriage of even a ten-year-old girl is valid (so long as she has hit puberty) but her husband is liable to go to jail.

In the first round of litigation, I got nowhere. The judge in question told me bluntly that since an apparently valid    nikah   had been presented and since the girl was admittedly of age as per Islamic law, I had no case. When I persisted with the argument that the girl was from Sindh and that the Sindh Assembly had recently raised the age of consent to 18, he responded by saying, “Mein aap kay qanoon ko manoon ya apni shariat ko?”

On appeal, the bench was more sympathetic. Thanks to assistance and guidance from my learned friend Shan Gul, then (as now) the dishevelled life of the advocate general’s office, we managed to get the bench to order that the girl be produced in court.

On the next date, her parents and I went to court with high expectations. Then the young lady appeared. She was dressed very proudly in her finest clothes, looked as if she was 21 years old, and visibly pregnant. She confidently told the court that she had married of her own consent, that she was happy and that she wanted to be with her husband. Case dismissed again.

This time at least I had no complaints. Given that the young lady was pregnant and clearly exercising her own will, no point would have been served by throwing her husband in jail.

But what about instances where the marriage isn’t quite so ostensibly happy. Does a 15-year-old runaway pregnant girl really have any option except to tell all and sundry that she has found true love? Don’t we have an age of consent limitation on marriage precisely because the sentiments of 15-year-olds are not to be trusted?

That brings me to my next point. It is wrong, repeat wrong, to say that the age of consent in Pakistan is 18 or 16 or whatever. The age of consent for females in Pakistan is puberty (defined as the onset of menstruation). As already noted, the men who marry underage girls are liable to be punished. But the marriages those girls contract are valid. This is true not only of Sindh but of all the other provinces as well (including Punjab, where the penalties for underage marriage were increased in 2015).

In earlier times, the puberty standard set by Shariah was not quite so problematic because the average age of puberty for females fell somewhere around 16 to 18 years. As per one study, the average age of puberty for American girls in 1860 was 16.6 years. Presumably, the average age of puberty for non-Americans in earlier ages was much the same.

The problem now is that due to modern advances in diet and health, the average age of puberty is continuously falling all across the world. Today, the average age of puberty for white girls in the United States is 10 years. For black girls, the average age of puberty is 9 years.

The phrase to note here is ‘average age’. That means significant numbers of young girls are hitting puberty at ages less than the ‘average age’. In other words, an eight-year-old girl who has hit puberty is not a medical freak; she is just slightly ahead of the curve.

In legal terms, Pakistan has two choices. The first is to let the status quo stay as it is and hope that not too many underage girls get destroyed. But as per Unicef, 3 percent of all girls are married by the age of 15 and 21 percent by the age of 18. That’s a lot of destroyed lives to ignore.

The second option is to actually outlaw child marriages. Like Pakistan, India inherited the Child Marriage Restraint Act of 1929. But unlike Pakistan, India has taken the next step. In 2006, India introduced the Prohibition of Child Marriage Act which declares all marriages to underage girls to be invalid. It doesn’t matter now if the girl consents, if her parents’ consent or if she’s pregnant. All marriages in which the girl is under the age of 16 are invalid.

Can Pakistan adopt the same route taken by India? Well, the Council of Islamic Ideology doesn’t think so. In November 2014, the CII gave a series of rulings declaring that any attempt to limit child marriage to an age other than puberty would be invalid and unIslamic. The rulings were met with great derision on social media but nonetheless prompted the PML-N to withdraw a bill in the National Assembly which would have increased the age of marriage to 18 (rather than 16).

But the question remains: if Shariah law is unambiguously to the effect that the age of consent is puberty, then any law which fixes a different age is self-evidently unIslamic. Equally self-evidently, we have laws in Pakistan which penalise underage marriages (but which, as noted above, don’t actually invalidate the marriage itself). What then is the state to do?

The liberal answer to the question is to ignore the CII and to proceed full steam ahead. In an ideal world, that is certainly what I would support. But we don’t live in an ideal world, certainly not from a liberal perspective. What we live in is a world with many different perspectives, all of which demand respect. What we also live in is a world with many competing political considerations. I hope I live to see the day when child marriages are effectively prohibited. But I don’t think it’s going to be tomorrow.

This column appeared in The News on 17 May 2017.

Arbitration: a lost cause?

In Uncategorized on May 15, 2017 at 4:06 am

It is common cause between lawyers, judges and most of Pakistan that our legal system is broken. And yet nothing ever happens to change that fact. Why is this so? I recently had occasion to examine this issue at a recent conference held at LUMS titled somewhat provocatively, “Arbitration in Pakistan: A lost cause?”

Speaker after speaker made uncontroversial points: the 1940 Arbitration Act is a useless, obsolete statute and needs to be replaced; our courts need to stop seeing arbitration as a bumptious rival and instead encourage the development of alternate dispute resolution strategies; the development of arbitration in Pakistan requires not just a new law but arbitral institutions along the lines of the London Court of International Arbitration (LCIA) and the Singapore International Arbitration Center (SIAC).

If I may be forgiven for regurgitating my talk at the conference, I made basically two points. The first point was that Pakistan is not going to be a hot destination on the international arbitration roadmap for a long time to come: in simple terms, we are not a big enough market for anybody to care. And yes, CPEC is bringing in a lot of money to Pakistan but that deal flow is all emanating from one source. We need to worry first about fixing the domestic arbitration ecosystem and then worry about the international arbitration scene.

The second point though was, I think, more interesting. My question was to ask why nobody cares about commercial arbitration in Pakistan.

To elaborate, commercial arbitration is essentially a service for businessmen, the idea being to provide swift, speedy and private resolution of disputes to people who know the value of a dollar (or a rupee, as the case may be). That is why commercial arbitration practices are not just associated with the great commercial centres of the world (London, Paris, Hong Kong) but are actually driven by the chambers of commerce of those locations. Dubai’s domestic arbitration center, for example, is based in and hosted by the Dubai Chamber of Commerce. Similarly, the ICC rules used in international commercial arbitration are the rules of the “International Chamber of Commerce.” But if you talk to local businessmen about arbitration, their view – to the extent they have one – is that arbitration is a waste of time and not their headache.

Here is the conundrum: in the formal sense, commercial contracts are often unenforceable in Pakistan. If you lend money to somebody in Pakistan, you can forget about getting it back. The situation is slightly better if you’re a bank, but not much. And if somebody reneges on a commercial contract and you want damages, you’re out of luck.

Before I proceed, let me reiterate the words “in the formal sense.” It is certainly possible to recover money from recalcitrant debtors through “alternative” means. Indeed, many political parties (not to mention groups like the TTP) make a side living by settling legal disputes in an ad hoc manner. There are also institutions like the Faisalabad yarn market which enforce contracts through the power of social disapproval and blacklisting of defaulters. But what I am talking about is “formal” adjudication by a court. And in that formal sense, going to court is quite often a waste of time.

So, here’s the question: why don’t Pakistani businessmen care about this? Why are they not screaming about the fact that many of their contracts are not worth the paper they’re written on? Self-evidently, our business leaders are neither dumb nor ignorant? Why don’t they care then?

Let me present two answers, the first is practical and the second is historical.

At the practical level, the short answer is that arbitration doesn’t free you from our dysfunctional judicial system: at best, it speeds up the process of getting a decree. Unfortunately, as observed by the Privy Council back in 1872, the problems of a litigant in India begin when he has a decree. Going through the added hassle and expense of commercial arbitration only to find yourself back at the start line in a civil court is therefore like taking the motorway for ten minutes before being forced to get out of your car and hike up a hill. Or as one of my clients put it to me, “why should I go to arbitration if I’m going to wind up before a civil judge anyways? Why add one round of litigation?”

The historical argument is more intriguing. To begin with, the apathy is neither constant nor universal. The Karachi Cotton Association, for example, had a set of arbitration rules which remained widely used till the middle of the 1980s. More generally, chambers of commerce are not silent bodies. Instead, elections to the various chambers of commerce are heavily contested affairs in which local businesses are deeply invested.

One hypothesis is that this strangely silent business class is a consequence of our misadventures with nationalisation. Think of it this way: ZAB’s actions wiped out not just the famous 22 families but most large scale private enterprise in Pakistan. The enterprises that were left were not just smaller but they were also less sophisticated. Above all, what these enterprises understood in the very marrow of their bones was that it was not a good idea to become too publicly visible, because as noted by a traveler to the court of the Emperor Jahangir, “There are very many private men in cities and towns . . . that are very rich: but it is not safe for them that are so, so to appear, lest that they should be used as fill’d sponges.”

And so our business communities survived their pruning, both recent and old, by turning inwards and by avoiding the state. The average trader therefore regards the instrumentalities of the state with fear and loathing. It is standard practice for columnists and pundits to bemoan Pakistan’s pitifully small number of tax payers. It is not standard practice for people to ask why this mistrust runs so deep and what can be done to overcome it.

Let me try and pull together the skeins of my various arguments. Commercial arbitration has never properly taken off in Pakistan because it requires a certain degree of formal interaction between the business sector and the state. In order for that formal interaction to take place, the business community itself has to be both organised and confident enough of its place in the political structure and to be willing to negotiate with the state in order to protect its interests. At the same time, the various institutions of the state also have to be willing to delegate responsibility on to the business community and trust the business community with some degree of power.

For the last few decades, both aspects have been missing. The business community had withdrawn itself from formal politics and the state itself had become grossly overgrown. At the same time, there are encouraging signs on both fronts. For example, the business community seems to have enough confidence in the rule of law to get involved in politics (witness, for example, the rise of Jahangir Tareen and his bankrolling of the PTI). And at least the Lahore High Court level, there is a new group of commercially saving jurists pushing hard to develop alternate dispute resolution strategies, particularly arbitration. Let’s see now what the future brings.

This column appeared in The News on 3 May 2017