The Economic Roots of Egypt’s Revolt

Zachary Karabell, at the Wall Street Journal, spells out the economic aspects of the ongoing revolt in Egypt.

He writes, (bold emphasis mine)

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, so he could buy off a considerable portion of the 80 million Egyptians...

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.

These realities alone don't cause revolution. Many countries are poor and quiet. But Egypt has had all the marks of a tinderbox. The future could bring worse, with radical regimes or chaos. But for millions who have concluded that their dreams for a better life would expire unfulfilled, nothing could be worse than the present.

My comments:

1. The welfare state strips out the self-worthiness or self esteem of people, as the public’s sense of achievement from trade and production has been limited to a few. Web connectivity may have reinforced this perception and incited for this seemingly widespread clamor for political change.

2. Since economics drive politics, the imbalances from a closed system or state (crony) capitalism eventually gets vented on politics. What is unsustainable won’t last.

3. Political systems built around the industrial age (Second Wave) are feeling the strains of the transition towards the information age (Third Wave)

Today the elites can no longer predict the outcomes of their actions. The political systems through which they operate are so antiquated and creaky, so outraced by events that even when closely “controlled” by the elites for their own benefit, the results often backfire.

This does not mean, one hastens to add, that the power lost by the elites has accrued to the rest of society. Power is not transferred; it is increasingly randomized, so that no one knows from moment to moment who is responsible for what, who has real (as distinct from nominal) authority, or how long that authority will last. In this seething semi-anarchy, ordinary people grow bitterly cynical not merely about their own “representatives” but—more ominously—about the very possibility of being represented at all.

From the underrated but highly prescient author Alvin Toffler in his 1990 book The Third Wave.