Thursday, July 18, 2013

Egypt's Unfantastic Economic Policy

Dr. Doom looms
Based on early indications, the vision of the economic "Fantastic Four" in Egypt's new cabinet is no better than that of predecessor governments. Their priorities lie squarely on finding scotch-taped solutions to an economy that instead requires radical structural change

Subsidizing bread instead of flour (inviting further state intrusions), centralized targeting of commodity levels (might work in the military, does not work in a market economy), seeking out billions in aid and concessionary loans to finance an unsustainable and distorted fuel market (which will not be made any more sustainable by cracking down on smuggling), setting a national minimum wage (which won't be enforced and anyway fails to address chronic unemployment and underemployment) and promising to support domestic industry by simply providing better physical security (as opposed to a streamlined bureaucracy, functioning infrastructure and non-corrupted legal and business environment), will not cut it. The politicized decision to put the IMF loan package on the back burner furthers the sense that this government has no real economic agenda

Merely not being the Muslim Brotherhood is not an economic policy. Fantastic and revolutionary this is not.  

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