Arab spring (2)

East meets West on the Giza plateau

   In my last post, I talked about the problems with the basic facts about Egypt.  With this post, I’ll try to nail the canard about a new economically neoliberal Egypt as a consequence of the Arab spring.

  Yes.  Commie Canada sucks and corporate America agrees with this proposition. After reviewing the data maybe we should all pack our bags and move to Egypt especially since Rep. Peter King recently stated that 80% of American mosques are staffed by radical Muslims!  The 2011 index of economic freedom is a joint project of the Heritage Foundation, a right wing think tank and the Wall Street Journal. I set up charts based on their data comparing America, Canada and Egypt for the period spanning the years from 2001 to 2011 for government spending, labour freedom and fiscal freedom. The score is from 0 (worst) to 100(best). Of course remember my caveat about Egyptian data but this is really about American perceptions. The quotes are from the index of economic freedom website.

Fiscal freedom (Egypt 90, Canada 80, US 70):

“Egypt has below-average personal income and corporate tax rates. The top individual and corporate income tax rates are 20 percent. A special tax of 40.55 percent remains in effect for oil, gas, and exploration companies. Other taxes include a property tax and general sales tax (GST) that functions as a value-added tax (VAT). In the most recent year, overall tax revenue as a percentage of GDP was 15.4 percent.”

“Canada has moderate tax rates. The top federal income tax rate is 29 percent, and provincial rates range from 10 percent to 24 percent. The general corporate tax rate was reduced to 18 percent from 19.5 percent as of January 1, 2010, with provincial rates ranging from 10 percent to 16 percent. Other taxes include a value-added tax (VAT) and a property tax. In the most recent year, overall tax revenue as a percentage of GDP was 32.2 percent.”

”U.S. tax rates are burdensome. The top income and corporate tax rates are 35 percent. Other taxes include an estate tax and excise taxes. Additional income, sales, and property taxes are assessed at the state and local levels. In the most recent year, overall tax revenue as a percentage of GDP was 26.9 percent. Should authorities choose not to extend tax cuts enacted in 2001 and 2003, the tax rate on the top individual income bracket will jump to 39.6 percent beginning in 2011, and the top capital gains tax rate will increase from 15 percent to 20 percent.”

  Now that the house is controlled by the Republicans and influenced by the tea party, Americans can look forward to Egyptian style taxes.  Of course that also implies Egyptian style poverty and lifestyles –out with big screen televisions and in with radios if the electricity works. Richard Escrow in the Huffington Post said about Egypt, “Imagine: A government run by and for the rich and powerful. Leaders who lecture others about "sacrifice" and deficits while cutting taxes for corporations and the wealthy. A system so corrupt that rich executives can break the law without fear of being punished. Increasing poverty and hardship even as the stock market rises. And now, a nation caught between a broken political system and a populist movement that could be hijacked by religious extremists at any moment.” Sounds like America? He goes on to say, “Spurred on by the IMF and the World Bank, Egypt eased corporate regulations and began privatizing its bank sector. It lowered individual and corporate tax rates, while at the same time setting new deficit targets for slowed-down government spending. That won praise from Middle Eastern news outlets and corporation-friendly multinational institutions.”

Labour freedom (US 90, Canada 80, Egypt 55):

“U.S. labour regulations are highly flexible. The non-salary cost of employing a worker is low, and the severance payment system is not burdensome. With private-sector union membership steadily shrinking, more union members currently work for the government than for private businesses.”

“Canada’s efficient and flexible labour regulations enhance employment and productivity growth. The non-salary cost of employing a worker is moderate, and dismissing a redundant employee is not burdensome. Rules on work hours are flexible.”

“The impact of the Egyptian government’s new labour code has been limited. The labour market remains rigid, with high non-salary costs of employing workers and restrictions on work hours.”

   The new Egyptian labour law includes new protections for workers such as a 60 day notice of layoffs.  Of course America would never accept such socialist concepts as worker protection or paid leave of absence for maternity situations; however, one can always have room for improvement. One new Republican congressman called for a  review of child labour laws. Now that the illegal aliens are leaving there is a whole new demand for cheap labour

Government spending (Egypt 65, America 55, Canada 53):

“Following the global financial crisis, Egypt adopted a fiscal stimulus package measuring 1.5 percent of GDP. As a result, total government expenditures, including consumption and transfer payments, rose significantly to 34 percent of GDP in the most recent year. The budget deficit is around 7 percent of GDP. Subsidies are widespread in oil, transport, and housing and are poorly targeted in the food sector. Privatization has stalled.”

“In the most recent year, total American government expenditures, including consumption and transfer payments, equalled 38.9 percent of GDP. Spending increases totalled well over $1 trillion in 2009 alone, an increase of more than 20 percent over 2008. Stimulus spending has hurt the fiscal balance and placed federal debt on an unsustainable trajectory. Gross government debt exceeded 90 percent of GDP in 2010.”

 

“For Canada in the most recent year, total government expenditures, including consumption and transfer payments, held steady at 39.7 percent of GDP. Privatization is widespread, and the government encourages competition even in sectors formerly operated by government or in privately owned monopolies. With a lower debt-to-GDP ratio, Canada was well positioned to finance a significant stimulus plan in the wake of the global downturn.”

   Again Egypt leads with government spending but they better get their act together with the privatization. If America stops that stimulus craziness and listens to Paul Ryan hope to see a big improvement in this area.  Canada is a lost cause but what can you expect from socialist Canukistan.

Arab Spring (1)

Myself in Saggara, Egypt

  I thought that I would do some posts on the so called Arab Spring because the general press commentary as expressed in the New York Times, the self proclaimed newspaper of record, seems to parrot the official government pronouncements and policy guidelines rather than the true state of affairs.   Intelligent, reflective readers deserve better.  The current situation in Egypt is a good place to start and first thing is to put the “news” in context.

  The NYT opinion is Egypt is on the verge of becoming some sort of neoliberal, western economy with its attendant democratization. The real question is whether it is a positive thing for the Egyptian people considering that the former president Mubarak’s neoliberal policies (the most progressive in the Middle East) had already led to a situation in which many Egyptians had a daily income of approximately $2 and even medical doctors were receiving about $3 daily.  A lot of the current news in the mass media is a conflation of the American political elite’s view of a positive outcome with Egypt’s needs. The Huffington Post on January 29, 2011 had an article titled “Why Egypt matters: Implications of the Protests.”  The commentary’s purported concerns were 1) strong US ally, 2) Israel Palestine peace treaty, 3) Islamist influence, 4) business concerns and 5) regional implications. The important thing is that probably everything you know about Egypt is either wrong or inaccurate. From an article in the Guardian:



 

The quaintly named Central Agency for Public Mobilisation and Statistics (or Capmas) was established by presidential decree in 1964 as Egypt's "official source for the collection of data and statistical information, and its preparation, processing and dissemination". Capmas is in charge of "providing all the state bodies, organizations, universities, research centres and in development [sic] and evaluation processes with the information that can help them to make informed decisions". In effect, this gives the Egyptian state a monopoly on statistics, and for 30 years (at least) Capmas has been headed not by professional statisticians but by a succession of major-generals from the military.

  Brian Whitaker in an article in the Guardian on Oct.25, 2010 stated, “Imagine trying to govern a country that lacks adequate statistics about economic activity, healthcare, crime, education, urban development and environmental pollution. Imagine a country that relies heavily on agriculture, and yet has produced no data on the quality of cultivable land since the 1970s.” The information gap in Egypt runs very deep. According to the report "Information Gaps in Egyptian Statistics and the Quality of Basic Data," released by the Egyptian Cabinet Information and Decision Support Center, no reliable data exist on Egypt's population; with some government studies claiming there are as few as 80 million and others estimating it at 85 million. The World Bank, for instance, claims that Egypt's population is 83 million, while the United Nations World Health Organization puts it at just under 77 million. When I was travelling in the Nile delta, I saw obscene variations in wealth between people living by the side of the road in hovels and palatial estates of the rich while the official UN statistics stated that the wealth inequality in Egypt was much less than in America.

From my bus travelling in the Nile delta

  With respect to the specific economic circumstances of their citizens as redacted in this blog:

“With regards to the economy, the report (Information Gaps in Egyptian Statistics and the Quality of Basic Data) highlights the absence of data on manpower, income, and expenditures, as well as small-sized projects operated by less than ten individuals. In a grave indication of the incongruity here, these businesses constitute the primary providers of job opportunities.  The economy also suffers a data shortage on work quality and payment averages, the study says. Budget figures for energy consumption, according to the study, are not specific.  Moreover, industrial activity statistics are insufficient, the study reveals, while also highlighting a shortage in prospective estimates on monopolistic practices.

Informational failures in determining the rates, reasons, sorts, and the legality of foreign migration, as well as the numbers of expatriates abroad and their locations are also endemic. Internal Immigration totals as well as patterns and motivations also continue undetected.

The report says that, although the tourism sector represents a principal source of national revenue, the country neither possesses statistics on the reasons for tourist visits, nor their approval rates. It also points to a shortage of data on domestic tourism.”

  In the end, the regime was screwed by its own lack of data. On Nov.1,2010 Walid Kazziha, a political scientist at the American University in Cairo said that” not all sectors in Egypt suffered from information deficiency ... The security apparatus seems to be very aware and alert. I don't think we're going to have a 9/11 in Egypt.” No. Just a regime change.

Myself playing 'Lawrence of Arabia' in the Sahara desert