STRIKING AT THE ROOT:

Now For An Arab Economic Revolution (Saifedean Ammous, 4/04/11, Project Syndicate)

Government officials and their cronies did not necessarily engage in straightforward theft or pillaging. Through innocuous-sounding government “supervision” and “regulation” – and under the guidance of the major international financial institutions – ruling elites managed to run entire sectors of the economy as personal fiefdoms. While this pattern of official behavior is reprehensible, the real disaster is that it destroyed Arabs’ economic productivity and initiative.

This economic totalitarianism has been legitimated by government charity. Arab elites have been engaged in a false embrace of economic reforms for decades, with countless ministerial shuffles, five-year plans, and elaborate World Bank and International Monetary Fund programs. But all these reforms involve government handouts or government-created jobs and opportunities; rarely do they involve removing the government’s grip over people’s lives. By framing the debate on reform as being about the type of handouts, governments evade tackling the real problem: their control of economic activity.

State handouts can be reliably financed only by controlling the economy’s productive sectors. But in the Arab world, as everywhere else, this leads to theft, corruption, uncompetitive monopolies, a stifling of enterprise, and, eventually and inevitably, to decline and decay. The toppled Tunisian and Egyptian regimes spent decades providing handouts while denying citizens economic freedom.

As Arabs confront far-reaching change, they must not be distracted into fruitless debates about the right types of government support for citizens. What is needed is a root and branch transformation of the way that economic activity is carried out in all Arab nations.

Arab countries need to become places where people can create their own productive jobs, pursue their own opportunities, provide for themselves, and determine their own future. This freedom obviates the need for the charity of those in power, and more importantly, takes away from them the excuse for maintaining their iron grip over the economic lives of their citizens.

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