Monday, January 31, 2011

The Economics of Egypt

Zachary Karabell reports:

The mass movement engulfing Egypt exposes a fact that has been hiding in plain sight: In a decade during which China has brought more people out of poverty at a faster rate than ever in human history, in a period of time where economic reform has been sweeping the world from Brazil to Indonesia, Egypt has missed out.

A decade ago, IBM ran a series of commercials featuring its global reach. One included a fisherman sailing on the Nile, tapping into a wireless network. It was an enticing image—and almost completely fictional. Few countries have been less integrated into the global economy.

The country ranks 137 in the world in per-capita income (just behind Tonga and ahead of Kirbati), with a population in the top 20. And while GDP growth for the past few years has been respectable, averaging 4%-5% save for 2009 (when all countries suffered), even that is at best middle of the pack in a period where the more competitive dynamic nations have been surging ahead.
Egypt has long been famous for crony inefficiency. Yet Hosni Mubarak was graced with nearly $2 billion in annual U.S. aid, another $5 billion from dues from the Suez Canal, and $10 billion in tourism...

[The assassinated Anwar] Sadat's most lasting legacy for Egypt may have been his brief attempt to liberalize the economy (the Infitah) and open the country to the world. While President Mubarak gave lip service to that economic opening, for much of the subsequent three decades Egypt's economy has been locked in a system that stifles economic activity and innovation as surely as it does political expression...

 Mr. Mubarak seemed to realize that the complete absence of economic reform wasn't tenable. He watched as China surged ahead without loosening the control of the state over political life...

Meanwhile, China ignored the dialectic in the West—which placed political opening at the top of societal imperatives—and plunged into an experiment of hypercharged economic development without political change. Its phenomenal success to date is impossible to refute, just as its future course is impossible to predict....

What allows China to thrive for now (and Brazil and India and Indonesia, among many others) is that its citizens believe they have some control over their material lives and a chance to turn their dreams and ambitions into reality. They have an outlet for their passions that is not determined for them, and an increasing degree of economic freedom.

The young in Egypt—two-thirds of the population is under the age of 30—believe that they have no future, and in many ways they are correct. Under Mr. Mubarak, their food and housing is subsidized and they are placed in jobs or left in unemployed limbo, not starving but without any hope of anything but years of numbing sameness.

1 comment:

  1. That is what is in store for Amerika...Numbing sameness. That is what the little Democracy Parasites want.