The Wintry Economics of the Arab Spring

Most of the coverage of the turmoil in Egypt and Syria (the latter of which has decreased in proportion to an increase in coverage of the former) focuses on political, religious, and social factors. These are all obviously important. But once you read David P. Goldman‘s op-ed in the Wall Street Journal about the economic underpinnings of the Arab revolutions, you may see things differently. A few key excerpts:

Sometimes economies can’t be fixed after decades of statist misdirection, and the people simply get up and go. Since the debt crisis of the 1980s, 10 million poor Mexicans—victims of a post-revolutionary policy that kept rural Mexicans trapped on government-owned collective farms—have migrated to the United States. Today, Egyptians and Syrians face economic problems much worse than Mexico’s, but there is nowhere for them to go. Half a century of socialist mismanagement has left the two Arab states unable to meet the basic needs of their people, with economies so damaged that they may be past the point of recovery in our lifetimes.

This is the crucial background to understanding the state failure in Egypt and civil war in Syria. It may not be within America’s power to reverse their free falls; the best scenario for the U.S. is to manage the chaos as best it can.

And:

Egyptians are ill-prepared for the modern world economy. Forty-five percent are illiterate. Nearly all married Egyptian women suffer genital mutilation. One-third of marriages are between cousins, a hallmark of tribal society. Only half of the 51 million Egyptians between the ages of 15 and 64 are counted in the government’s measure of the labor force. If Egypt counted its people the way the U.S. does, its unemployment rate would be well over 40% instead of the official 13% rate. Nearly one-third of college-age Egyptians register for university but only half graduate, and few who do are qualified for employment in the 21st century.

And:

Assad‘s belated attempt to reverse course [with his water-management program] triggered the current political crisis, the economist Paul Rivlin wrote in a March 2011 report for Tel Aviv University’s Moshe Dayan Center: “By 2007, 12.3 percent of the population lived in extreme poverty and the poverty rate had reached 33 percent. Since then, poverty rates have risen still further. In early 2008, fuel subsidies were abolished and, as a result, the price of diesel fuel tripled overnight. Consequently, during the year the price of basic foodstuffs rose sharply and was further exacerbated by the drought. In 2009, the global financial crisis reduced the volume of remittances coming into Syria.”

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  1. Mack says:

    Hidden due to low comment rating. Click here to see.

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  2. Eric M. Jones. says:

    “…Sometimes economies can’t be fixed after decades of statist misdirection…” And your proof is?

    I claim history is replete with examples of societal and economic revisions. It takes courage and conviction and all too often, AK47′s, but I don’t give up hope.

    Listen to This American Life and the story of how Brazil solved it’s runaway inflation problem. “The Lie That Saved Brazil.” in:
    http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money

    I think giving up on royalty and religions is a good start.

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    • Mike B says:

      Inflation isn’t a “ruined economy”. Germany suffered a bout of hyper-inflation, but then turned around and trounced its neighbors in a World War, got blown up then recovered to trounce its neighbors again with the EU. What matters aren’t the bare economic facts and figures, its the human capitol, institutions and culture. This is why countries suffer from resource curses even if said resources buoy the economy.

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  3. basil says:

    Please post sources for your numbers… Statistics seem overly exaggerated from UNESCO statistics (illiteracy) I’ve recently read

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  4. Ray says:

    Perhaps off-topic, but can someone explain how the epidemic of genital mutilation among married women affects Egypt’s ability to participate in the modern world economy? (Just to be clear I consider genital mutilation a crime and find the situation horrific; I just don’t see what bearing it has on the topic at hand.)

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    • Ryan says:

      I’m sorry I can’t give you a reference for this. It seems to be ubiquitous wherever development is discussed, but I cannot find a quote quickly. However, seeing to the health, education, and particularly freedom (which can lead to the other two) of women in a society is widely regarded as a good move for the economy. These mutilations are taken as a (attention grabbing) sign that a society could improve in this area.

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    • Mike B says:

      It’s a proxy for a woman’s ability to participate in the economy. An economy with half its potential work and innovation force sidelined is practically unsustainable in the modern era.

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      • Ray says:

        How does genital mutilation equate to not being able to participate in the economy?

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  5. Clancy says:

    Development Economics is hard, and the WSJ Op-ed page is ON IT!

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  6. TexCIS says:

    You use these terms to explain why the economies of Mexico, Egypt, and Syria are so bad . . . “statist misdirection” and “socialist mismanagement”. Those are one and the same.

    Would you please say it LOUDER? Statism and socialism don’t help the poor, they ruin economies and make them worse off!

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  7. antiquarian says:

    the very notion that Syrians are ill prepared for the “modern world economy” over looks their preparedness for such a post-modern one in which their understanding of politics enables them to quickly (perhaps even immediately) grasp the true value of equality for all that science offers. I do hope the winter of their discontent quickly transitions into a bright future grounded upon such principles of which we, despite our differences, do share in common.

    Goldstein (with thanks to Max Weber , 2013).

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  8. Mike B says:

    Puts new meaning to “it’s the economy stupid.”

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