Al-Ahram Weekly Online   15 - 21 September 2011
Issue No. 1064
Published in Cairo by AL-AHRAM established in 1875

Abdel-Moneim Said

Tale of two economies

Just as in the US, the Egyptian economy needs reviving. But how can it be done, asks Abdel-Moneim Said

It is still premature to talk of "the opposition" in Egypt. Here, the matrix is still defined by "revolutionaries" versus "counterrevolutionaries" or "the remnants of the former regime" and other such concepts that keep people in doubt over how to run a country the size of Egypt away from Tahrir Square. Still, every revolution eventually finds a way to attain power, at which point there will be an opposition that will vie for the helm of government through a free and fair electoral process.

At least that is what the Republicans are doing now in the US. At this time, I have many doubts with respect to Obama's prospects for a second term in office. Still, it is a ways off until the primaries, in which Obama is unlikely face serious opposition while the Republicans are at each others' throats, and then from there until the elections in November 2012, when -- who knows -- the US economy might be on the upswing again and Obama might have recovered sufficient popularity to stay in the White House.

Perhaps Obama's strongest card at this point is the fact that Republicans have so far failed to come up with anything new to spur the US economy out of its current slump. Their sole "solution" is to reduce taxes on the grounds that this will encourage people to spend more, and hence stimulate the economy. The obvious consequence of this will be to increase the national deficit and shrink public expenditure on social services. Therefore, Obama's plan is to reduce taxes on the general public and raise taxes on the rich, thereby producing the stimulus and boosting government revenues at the same time. However, there is a long way between the conception of a plan and its implementation. Obama needs to obtain approval from a predominantly Republican Congress that, in many people's opinion, has no strategy apart from saying "No" to Obama.

The assessment is an exaggeration, of course. However, what concerns us here is that everyone knows that the economy is in dire straits, that the situation is complex and that there are no easy solutions. They are also aware that all political and economic decisions have a price and that there was never such a thing as free food. Which brings me to the rub. Has anyone given serious thought to the economic consequences of setting lower and upper wage limits in Egypt? How much will this cost? How will we get the resources to fund these policies? Will it really have a positive impact on our country, such as generating more jobs? Or will it have the opposite effect and aggravate unemployment?

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