Today is a fantastic day in Egypt's history. The Parliament has finally removed any word that stated that Egypt is a socialist country from the constitution. We are, for all intents and pruposes, a capitalist country now. So, why am I not happy?
Maybe it's because I know that those are hollow words replacing even hollower words to begin with. A country is not a capitalist country just by calling itself capitalist, the same way a country is not a socialist country by calling itself socialist. What matters is the way they conduct themselves, the way they run the government. And in a country where education, healthcare, and food are subsidized, and where we hire people we don't need and can't by law fire them, is not a capitalist country, no matter what you call it. So why the change in name?
Well, the government in charge, in its ineptness, hasn't been able to run the hundreds of factories- many of them are in the red- that they own, which employ thousands of egyptian workers for a less than living wage (most don't get more than 50-60 $ a month). However, they can't close them down and fire the workers, because it's against the law for them to fire government employees. So, what they do is this: They sell a controlling interest in the factory to some foriegn investor, which makes the factory of the company private, and have him/her deal with the problem, which of course the investor has no interest in doing. He just wants the land of the factory or company, or the fact that it's one of the few companies that operate in that specific market sector and already has a huge share in, which allows them to become instant oligarchs thanks to government control of that sector before. Fine, all is well in good. Nothing against the basic principles of Capitalism here, right?
Ehh, not really! There are a few things that are against the principles of capitalism in that nifty litte model. First of all, those factories/Companies were owned by the government, through seizures or investment, which makes them funded and run by the taxpayer, which are egyptians like me. The fact that they can sell the factory that technicaly belongs to the people for whatever price they deem right, without oversight or accountability to the price of the sale or the money received, is bullshit. If it's public property, then the public owns the property and the government is the managment, so if a sale is negotiated, then the money should go to the public, directly in cash, and not in the hands of the government. No?
But even if we ignore that little problem, we have the problem of corruption in setting the sale price. Since the ministery of Investment has the portofolio of all public owned properties and is the one handeling all sales in that matter, it has unchecked power regarding who buys what for what price, which gives the minister in charge fantastic leeway to make croney business deals. Let's, for example, take the case of an unnamed Hotel in Luxor, which uswed to be owned by the government, which rented it to a foreign firm that ran it for 2 million dollars a year. You then receive a nice little news bit that last year the ministery of investment sold the entire Hotel for less than 4 million dollars a year to a very known egyptian billionaire. Now, if you studied Finance, you would know that the average payback period on any investment is anywhere between 3-5 years on average, so let's say 4 years. Since the Hotel sued to bring in pure income to the owners of 2 millions dollars a year, that makes its average price based on the payback period in order for the investor to break even about 8 million dollars. And mind you, this is just from renting it, which means that the revenue of running it must exceed that by at least another million dollar a year, i.e. 3 million dollars, which in turn makes the average price around 12 million dollars. How much was it sold for again? Less than 4 million dollars. This means that it was sold at a discount of 8 million dollars, or 66.6%. This of course makes no sense, unless the Minister pocketed some of that discount in his pocket, and let's say half of it, i.e. another 4 million dollars, which makes the discount on the price about 33%, which is still a good deal for the investor. Everyone wins, if by everyone we mean the investor and the minister. Meanwhile, publi property has been sold grossly below fair market price, and the egyptian budget defecit is closing in at 500 billion Egyptian Pounds thanks to mismanagment and corruption. And people wonder why the hell they keep pushing for this newer and tougher tax law. Well, someone has to pay for their newly pruchased by the government luxury cars. God forbid they use the money they stole to buy their own cars. That's for retirement pruposes! You don't want them to work in their old age, now do you?
Now, which brings us to the final problem with this new capitalistic model: It's not capitalistic at all. It's exactly what capitalism stands against. But they call it that, and that's what the people in the street see, so that's the view they get of capitalism and businessmen: corrupt exploiting croneys. In their heads, Capitalism ends up meaning: factories closing, less jobs, corrupt government and shady sales. And people wonder how socialism still has it's appeal in Egypt after ruining the economy for so many decades. Well, the so called socialist ruined it, and now the so called government capitalists are selling it for much cheaper than it costs. And slowly but surely you find yourself staring at a very nice and impending economic crisis. Good thing we are not called socialist anymore, huh?
A capitalist government should be one to encourage investment in new sectors and old ones, not one selling off all of its money making properties cheap during a fiscal crisis. A Capitalist government wouldn't allow such corruption or wouldn;t have the necessary system to keep the corrupt in their midst in check. A Capitalist government would start looking at its own out of control spending instead of creating new tax laws in order to collect money to keep it floating. A Capitalist government would harnass the power of capitalism to improve the economy and raise the standard of living for its people, like Ireland and Spain did, instead of selling everything off and hope for the best. But we are not that. We are capitalists now to justify corrupt and shady business deals and sales, the same way we were socialist to justify controlling the entire economy and making sure that nobody would have the money or the ability to oppose the government. What's in a name, really? It doesn't matter what you call it, what matters is how it works, right?