I have always had problems with the flawed way Egypt implemented socialism after the July 23 Revolution. In one of my previous posts, I talked about one of my pet peeves: inheritable rent controlled flats. As I mentioned in that post, the idea of inheritable rent controlled flats is very shortsighted; by fixing the rent of flats, and making this rent inheritable, the state almost guaranteed that social injustice would occur at some time in the future.
Unfortunately, this flawed concept of “socialism” extends beyond rent control. Virtually every single economic reform created in the name of socialism after the July 23 Revolution ensures social injustice rather than social justice. For example, I have always thought that the subsidy system in Egypt is completely flawed. By making blanket subsidies, the government is essentially subsidizing consumption by all citizens. Since the better off economic classes tend to consume more, these subsidies end up benefitting the economically advantaged more than the economically disadvantaged.
During a recent discussion on Facebook, one of my friends pointed out this article. I was pleased to know that someone else shared my opinion about the flawed implementation of socialism in Egypt. The petrol subsidy example in that article is illustrative of the flaw in Egyptian socialism. Specifically, the better off economic classes – those of us who can actually afford to buy cars – are going to consume more petrol than the disadvantaged economic classes – those of us who have to use public transport. So, for example, a guy who owns a gas-guzzling Jeep Cherokee is going to get more out of the petrol subsidy than a poor person who commutes to work using Microbuses. The cost of the petrol used in the Microbus is divided among its passengers so that, per capita, the actual amount of subsidy spent on each passenger is less than the amount of subsidy spent on the owner of the Jeep Cherokee. The same goes for all other blanket subsidies. Flour, medicine, electricity, and any other commodity that is subsidized by the government for all citizens is going to benefit the upper echelons of society more than those who are in actual need of help.
So, once again, the government, in its infinite wisdom, created a policy that promotes social injustice rather than social justice. Looking at all these flawed policies, one wonders how any responsible official would have come up with them. Even more puzzling is the fact that nobody has done anything to correct these glaring mistakes in the decades that followed. Oh well, government inertia seems to be a well established force in Egypt.
So what can we do about this? Before I answer that question, I should let you know that I am, ideologically, a capitalist. I believe in free market economics and minimizing government interference in private business. However, I am also aware of the huge disparity between the rich and poor in Egypt. I am aware that there are people who live on less than a dollar a day in this country, while others spend thousands of dollars daily.
I believe that the best way to solve this problem is to eliminate blanket subsidies and implement means-based social security. Those of us who can afford to pay full market prices for commodities should not get assistance from the government. The government should set up a mechanism to determine the earning power of individuals. Once this is done, it can provide aid to the economically disadvantaged – those who earn less than a pre-set national minimum wage – in the form of direct financial assistance. This would solve two problems; first, it would ensure that the aid went to those who are truly in need of help. Second, it would save the state a huge amount of money.
Just to clarify, this post is not an indictment of socialism, it is, rather, an indictment of the flawed version of socialism that Egypt implemented after the July 23 Revolution. Another flawed aspect of said socialism is the “workers” and “farmers” quota in parliament. The result of this ludicrous quota system is a barely literate legislature that is incapable of managing the affairs of a major country in the 21st century. But that is the topic for another blog post.