The Corrupt Soil of Egypt

The unrest in Egypt is widely seen as wildfire ignited by the collapse of the Tunisian government, and the ouster of its President, who actually took office several years after the embattled Egyptian dictator Hosni Mubarak.  Wildfires spread most quickly among dry and dead trees.  What made the barren political soil of Cairo so ripe for a conflagration?

Obviously the Egyptians are unhappy with the authoritarian politics of their President-for-Life, who many have come to hate on a personal level.  Sham elections and a state-controlled media have left the populace no outlet for the energy of dissent, which has built to explosive levels under pressure.  Many observers believe a key factor is the wretched economy.  We’ve all heard the tales of Egyptian university graduates counting themselves lucky to find employment as housekeepers, while a massive underclass struggles to survive on a few dollars per day.

The Egyptian economy, however, has been doing fairly well by global standards.  Their Gross Domestic Product grew by a little over 5% last year.  According to the CIA Factbook, their unemployment rate is roughly comparable to America’s, standing at 9.7% for 2010.

The economic complaints of the Egyptian populace are a result of political corruption.  Mubarak’s Egypt practices “crony capitalism” on a vast scale.

A May 2010 report by Cam McGrath of the IPS news service describes how Egyptians use the word kosa to describe “someone in a position of power who can open doors to gainful employment.”  An impoverished Egyptian explained, “There are no good jobs unless you know a cabinet minister, or pay off a high-ranking official.  That’s the way it’s always been in Egypt.”

The report goes on to say that “nepotism is a glaring facet of the Egyptian workforce… nowhere is it more apparent than in the bloated public sector, where landing a job often has more to do with who you know than your career qualifications.”  Transparency International, a German watchdog group, adds that “temporary employment has been abused by some officials who use it as a back door to hire their relatives and acquaintances.”  The Egyptian government employs more than a third of its labor force.

Bribery is rampant, especially since low-level civil service jobs don’t pay very well.  At the highest levels, Egyptian politicians and their top cronies rake in staggering fortunes.  The IPS notes a scandal from 2005 in which it was discovered the editor of the state-run newspaper Al-Ahram was making half a million dollars per year, plus “millions in benefits and kickbacks,” while the paper itself was losing money, and most of its employees earned the very minimal “minimum wage.”

The Egyptian government has been “privatizing” some state industries in recent years, but this largely consisted of selling them at fire-sale prices to favored cronies.  The corruption in the program was so severe that public protests broke out, and privatization was suspended last summer.  The Mubarak government hasn’t exactly fallen all over itself to prosecute these corrupt arrangements when they are exposed.

A March 2010 article from Reuters suggested that “Egypt’s calcified politics has long been judged an asset in a turbulent region,” with global investors growing nervous as the end of Mubarak’s reign approached without a clear successor in sight.  They apparently never gave much credibility to the idea of Mubarak’s son Gamal succeeding him.  Gamal, by the way, is another fellow who isn’t shy about using his political position to line his pockets.

The Egyptian stock market went nuts last March when the 82-year-old President went in for gall bladder surgery, because the vaunted “stability” of his authoritarian regime was compromised – which makes it all the more interesting that the U.S. State Department has apparently done so little to prepare for an Egypt without Mubarak.

The problem with Egypt’s brand of “calcified” and corrupt politics is that it gives the dictator and his inner circle control over the billions poured into the economy by foreign investors.  Egypt’s unemployment rate may be similar to ours, but there’s an important difference: it’s the same people who remain unemployed forever, frozen out of a corrupt system where prosperity requires political influence.  Americans tend to flow between income levels, with the fortunes of individuals rising and falling throughout a long lifetime.  In a command economy, the people on the outs stay down and out.  There is nothing dynamic about an economy where public-sector “partners” are needed to “open the doors to gainful employment.”

Sadly, even as they have drawn close to ridding themselves of Hosni Mubarak, the Egyptian people walk on soil that has been poisoned against the flowering of true liberty, because liberty absolutely requires the private ownership of capital, and Mubarak’s corruption has taught them to distrust it. 

Many of the protesters have told international media that they want a government that will give them jobs and take care of their needs.  They are crawling from the sarcophagus of Mubarak’s mummified economy… into the iron maiden of statism that awaits them.  If the ugly realities of global politics require us to support authoritarian rules who deal the cards for a lifetime, we should at least use our influence to make sure they’re running a clean game.