Tuesday, April 1, 2008

Fixing Egypt's Economy

Egypt has a problem. Well it has a lot of problems. Coming up with solutions is a major challenge, and something that nobody is prepared to do. Unfortunately, between the corrupt government and the apathetic society, it doesn’t look like things are going to change anytime soon. Maybe I should step in and give some advice.

I have a proposal. The service sector in Egypt is massive, by far the largest sector in the economy. This includes both private and public services. The biggest problem I see with the Egyptian economy is the cyclical dilemma of government employment. Millions of people are unnecessarily employed in one of the largest government bureaucracies in the world. To improve the economy, the government needs massive downsizing in employment. But of course this would send millions of people into the streets without jobs and no means of supporting their families. Egypt is stuck.

So how can the government make use of its people? As I write this, thousands of Egyptian men are standing on street corners “providing security” and “directing traffic” (a.k.a. drinking tea). The doorman at my apartment is “making my life easier” with his kind and professional services (a.k.a. drinking tea that he paid for with my monthly “tip”).

This isn’t what I would call efficient use of labor. If we assume that economic value is held in labor and services, then what Egypt needs is an economy in which people provide real labor and real services. That isn’t happening right now.

This is my proposal. The Egyptian government should put its employees to work by adopting a series of public works projects similar to what the WPA did in the Great Depression. Cairo is a disgusting mess of a city, a great armpit of the world. Trash is everywhere. Buildings are dirty. Infrastructure is insufficient. The list could go on and on. So why doesn’t the government put its employees to work on these problems. Instead of paying people to stand around, pay them to clean up trash and manage a massive public clean-up campaign. This wouldn’t cost much more money than what the government is paying out now, and the economic benefit of having a cleaner city would be significant. Tourism would increase. Foreign investment would increase. People would live happier lives, and their productivity would increase.

It’s a simply plan for a complicated problem, and I’m no economist, but I guarantee that it’s better than the status quo.

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