July 9, 2013
By Bryan Riley
Egypt has a new president. But as the people of Egypt have already learned, a new president does not necessarily mean better policies. For decades, Egypt’s political leaders have denied their people economic freedom—and it has cost the citizens dearly.
According to the 2013 Index of Economic Freedom economic freedom in Egypt is below par—both globally and even within the Middle East region. Indeed, Egyptians enjoy less economic freedom today than they had 10 years ago. Currently, the Index ranks Egypt just 125th among all countries in terms of economic freedom.
Egypt ranks especially low in the areas of government corruption and protection of property rights. These two indicators are powerful predictors of success for developing economies, and they touch directly on everyday life. While those controlling the levers of power may change, corruption remains a constant in Egypt. Middle East expert Paul Sullivan recently noted, “Getting a job for a young man or woman is near impossible unless you have contacts with certain groups. That used to be the moneyed class. Now it’s people connected to the regime at the moment.”
The situation in Egypt is bad, and the need for change has been building for decades. The country never fully recovered from the policies of Arab Socialist Union leader Gamal Abdel Nasser. Nasser’s successor, Anwar Sadat, created the National Democratic Party (NDP). Under the presidency of Hasni Mubarak, the NDP was a member of the “Socialist International” group of political parties from 1989 until the 2011 revolution. President Mubarak’s government – like many governments around the world — seemed more interested in giving people handouts than giving them freedom.
President Mohamed Morsi inherited a mess, but he failed to implement the economic reforms necessary to boost freedom and opportunity. Instead, he maintained costly interventionist policies. In 2011, Heritage Foundation scholar Kim Holmes mapped out a blueprint for an Egyptian economic renaissance:
Egypt needs root-and-branch reform of its economic and judicial institutions: Getting rid of rigid controls of the labor force; getting the government out of the business of controlling commodities pricing; making it easier to start a business; cleaning up the judiciary and protecting the sanctity of contracts; reducing government spending; and lowering taxes to boost private initiative and job creation.
Had President Morsi followed those recommendations, things might have worked out better for him. Instead, he failed to provide Egyptians with any significant economic freedom and wrecked the country’s economy.
Lack of freedom unleashed the forces that eventually led to unrest in Egypt. Tunisian street vendor Mohamed Bouazizi unleashed the Arab Spring by protesting against his personal lack of freedom.
Mohamed’s father died when he was three years old.When his stepfather became ill, Mohamed quit school to support his family by selling fruits and vegetables on the streets. Paying bribes to government officials was a routine part of doing business. After he was unable to pay a bribe and officials confiscated Mohamed’s property, he reached the breaking point. Mohamed set himself on fire. With that horrific episode, the Arab Spring movement was born.
When Mohamed’s brother was asked what his brother might have hoped his sacrifice would mean to the Arab world, he reportedly replied, “That the poor also have the right to buy and sell.”
That hope would come as no surprise to Nobel prize–winning economist Milton Friedman. After all, it was Friedman who observed years earlier:
In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history, are where they have had capitalism and largely free trade. If you want to know where the masses are worse off, worst off, it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear, that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by the free-enterprise system.
How many years must people in Egypt wait for opportunity to blossom in to their country? The answer, quite simply, is until they’re allowed to be free.
-Bryan Riley is a Jay Van Andel Senior Policy Analyst in Trade Policy at The Heritage Foundation.
First moved by the McClatchy-Tribune news wire
Jay Van Andel Senior Policy Analyst in Trade Policy
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