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.”