There Is No Democracy Movement In Egypt

There is no democracy movement in Egypt.  A handful of Facebook twenty-somethings in Cairo backed by the Muslim Brotherhood brought Mubarak down not because the mass of Egyptians want to vote, but because they want better jobs.  Ordinary Egyptians do not think about or understand or desire democracy.  They can't support their families because of the crushing weight of a corrupt bureaucracy that squeezes them at every turn.  They want a modern economy, and they don't have one.

They are right to care more about jobs than voting, wiser than our legacy media's pundits swooning over their own visions of Egypt's beautiful democratic future.  Prosperity and freedom are not things an election can bring the people of Egypt.  Prosperity and freedom can be achieved only by a constitutional republic, like the one our founding fathers established, that limits government power and enables a free-enterprise system.   

For many in the Democratic Party, property rights are seen as selfish impediments to fairness.  In reality, without property rights, you have no life, or liberty, or pursuit of happiness.  If we want to share our secret of success with Egypt, elections won't change a thing.  Rule of law -- especially with regards to property rights -- is more fundamental.

 

The challenge of bringing freedom to Egypt will succeed or fall on economic reform.  The problem is this: in the Middle East, there is no economy -- only family.  The third-world failure to achieve modernity is basic: you can't trust anyone outside your family.  Non-Western countries lack the Judeo-Christian ethic to treat your brother as yourself, enshrined in our political system as equal protection before the law.  In lands where family rules, laws do not protect you.  No one is equal.  It's all about connections and corruption.

 

 

In an economy where family rules, "success" is a favor handed out to cousins and clan allies, not something individuals earn.  Like the family itself, an economy based on family connections is static.  You get a job only because of whom you know, not because of what you can do.  Once in a job, no work is necessary.  If your family has access to government jobs, you have the bonanza of extorting bribes and passing out the loot within your own clan.

 

 

 

Free enterprise is the only economic system in the world that builds prosperity and gives the gift of freedom.  The capitalist system requires cultural norms and laws that regulate business fairly and with a light hand.  A modern economy requires contracts, loans, and property laws or there is no way to grow a business beyond the handshake level, no point in amassing wealth that can be confiscated in the blink of an eye.  But laws without the underlying values of equal protection and freedom become a curse.

 

This is why sixty percent of the Egyptian economy is a "black economy," outside the law.  In 2004, a one-thousand-page report on the Egyptian economy was prepared for the then-finance minister by the Institute for Liberty and Democracy based in Lima, paid for by our government through U.S. aid.  One problem they found is the heavy hand of statism: 6 million people worked for the Egyptian government versus 7 million in the private sector.   The key finding was that both were overshadowed by the 9.6 million Egyptians who worked in the "extra-legal sector."  Ninety percent of Egyptians "own" property without legal title to it.  The value of the extralegal assets, both business and real property, was thirty times more than the market value of legal companies on the Cairo Stock Exchange.

 

 

Egyptian families stay in the black economy because of the heavy hand of bureaucracy and corruption.  According to the Institute of Liberty and Democracy's report, to open a small bakery legally takes five hundred days.  To get legal title to your land takes ten years.  To open a business, the red tape winds through 56 different government agencies, with the attendant inspectors holding their hands out for bribes.

 

The Institute for Liberty estimated that Egyptians hold $400 billion in assets without protection of law.  This is "dead capital."  Without law, you can't have partnerships, joint stock companies, corporations.  You can't use your property as collateral for loans.  You can't grow to a size to enjoy economy of scale.  As a result, Egyptian businesses are stunted.  As Hernando de Soto, president of the Institute for Liberty, explains, black economy businesses employ relatives.  These are the only people they can trust.  They are trapped in a pre-modern world of scarcity.

When you have almost a third of your workforce on the government tit, there is no motivation for the government to get off the backs of the productive citizens.  In America,  under Obama's expansion of government and shrinkage of the private sector the share has grw to 17% of Americans in 2010, according to Gallup.  The greater the size of the government, the smaller the private sector.  We are going in the wrong direction and suffering for it.
The Egyptian bureaucracy is like some horrible slime mold suffocating everything in its path.  Ordinary Egyptians without powerful family connections can't lift themselves up.  They can never give a better life to their children.

That is why they are exploding in anger on the streets.  In Egypt, as in America, it's the economy, stupid.

Updated 11:50 AM EST removing disputed statistic for government employment in the US

There is no democracy movement in Egypt.  A handful of Facebook twenty-somethings in Cairo backed by the Muslim Brotherhood brought Mubarak down not because the mass of Egyptians want to vote, but because they want better jobs.  Ordinary Egyptians do not think about or understand or desire democracy.  They can't support their families because of the crushing weight of a corrupt bureaucracy that squeezes them at every turn.  They want a modern economy, and they don't have one.

They are right to care more about jobs than voting, wiser than our legacy media's pundits swooning over their own visions of Egypt's beautiful democratic future.  Prosperity and freedom are not things an election can bring the people of Egypt.  Prosperity and freedom can be achieved only by a constitutional republic, like the one our founding fathers established, that limits government power and enables a free-enterprise system.   

For many in the Democratic Party, property rights are seen as selfish impediments to fairness.  In reality, without property rights, you have no life, or liberty, or pursuit of happiness.  If we want to share our secret of success with Egypt, elections won't change a thing.  Rule of law -- especially with regards to property rights -- is more fundamental.

 

The challenge of bringing freedom to Egypt will succeed or fall on economic reform.  The problem is this: in the Middle East, there is no economy -- only family.  The third-world failure to achieve modernity is basic: you can't trust anyone outside your family.  Non-Western countries lack the Judeo-Christian ethic to treat your brother as yourself, enshrined in our political system as equal protection before the law.  In lands where family rules, laws do not protect you.  No one is equal.  It's all about connections and corruption.

 

 

In an economy where family rules, "success" is a favor handed out to cousins and clan allies, not something individuals earn.  Like the family itself, an economy based on family connections is static.  You get a job only because of whom you know, not because of what you can do.  Once in a job, no work is necessary.  If your family has access to government jobs, you have the bonanza of extorting bribes and passing out the loot within your own clan.

 

 

 

Free enterprise is the only economic system in the world that builds prosperity and gives the gift of freedom.  The capitalist system requires cultural norms and laws that regulate business fairly and with a light hand.  A modern economy requires contracts, loans, and property laws or there is no way to grow a business beyond the handshake level, no point in amassing wealth that can be confiscated in the blink of an eye.  But laws without the underlying values of equal protection and freedom become a curse.

 

This is why sixty percent of the Egyptian economy is a "black economy," outside the law.  In 2004, a one-thousand-page report on the Egyptian economy was prepared for the then-finance minister by the Institute for Liberty and Democracy based in Lima, paid for by our government through U.S. aid.  One problem they found is the heavy hand of statism: 6 million people worked for the Egyptian government versus 7 million in the private sector.   The key finding was that both were overshadowed by the 9.6 million Egyptians who worked in the "extra-legal sector."  Ninety percent of Egyptians "own" property without legal title to it.  The value of the extralegal assets, both business and real property, was thirty times more than the market value of legal companies on the Cairo Stock Exchange.

 

 

Egyptian families stay in the black economy because of the heavy hand of bureaucracy and corruption.  According to the Institute of Liberty and Democracy's report, to open a small bakery legally takes five hundred days.  To get legal title to your land takes ten years.  To open a business, the red tape winds through 56 different government agencies, with the attendant inspectors holding their hands out for bribes.

 

The Institute for Liberty estimated that Egyptians hold $400 billion in assets without protection of law.  This is "dead capital."  Without law, you can't have partnerships, joint stock companies, corporations.  You can't use your property as collateral for loans.  You can't grow to a size to enjoy economy of scale.  As a result, Egyptian businesses are stunted.  As Hernando de Soto, president of the Institute for Liberty, explains, black economy businesses employ relatives.  These are the only people they can trust.  They are trapped in a pre-modern world of scarcity.

When you have almost a third of your workforce on the government tit, there is no motivation for the government to get off the backs of the productive citizens.  In America,  under Obama's expansion of government and shrinkage of the private sector the share has grw to 17% of Americans in 2010, according to Gallup.  The greater the size of the government, the smaller the private sector.  We are going in the wrong direction and suffering for it.
The Egyptian bureaucracy is like some horrible slime mold suffocating everything in its path.  Ordinary Egyptians without powerful family connections can't lift themselves up.  They can never give a better life to their children.

That is why they are exploding in anger on the streets.  In Egypt, as in America, it's the economy, stupid.

Updated 11:50 AM EST removing disputed statistic for government employment in the US