The author of this article is a professional neoliberal specializing in explaining why the privileged poor must sacrifice more for the underprivileged super-rich if any economy is to be stable.
The article is about subsidy reform in Egypt, India, and Indonesia. He praises El-Sisi for boldly tackling the “entitlement culture” of the poor and hungry in Egypt, even though he entered office with no popular mandate, while criticizing Modi in India for not doing so, although he was elected by a “whopping democratic majority.” As if it is surprising that a democratically elected leader would consider the views of his constituents, while an un-democratically elected leader would not. But we’ll leave that aside.
He repeats the usual fallacy about the urgent need for reform of subsidies in Egypt, and suggests replacing them with conditional cash transfers to the poorest of the poor. And this is what will happen. It is the recommendation of the IMF, the World Bank, the Cato Institute, Brookings, and all the other neoliberal think tanks aligned with the corporate imperial system; so it will be Sisi’s policy. He is a dictator who receives dictation; that’s why he is there.
There are a couple points here. First of all, the rationale for why subsidies need to be removed is fake. It is repeated by all the institutions mentioned above, by people like Ahmed Heikal of Qalaa Holdings (formerly Citadel Capital), and every investment firm interested in predatory capitalism, that Egypt must tackle its deficit. This is a complete falsehood. Egypt’s debt to GDP ratio is about 14%. That is one of the lowest deficits in the developing world, and about five times less than the US deficit, six times less than the debt-to-GDP ratio of the UK, and fifteen times lower than Japan’s deficit. No. Egypt’s debt is not a genuine economic imperative at all.
The other problem is, cash transfers don’t work. When you remove subsidies, especially on fuel, the prices of everything skyrocket. Cash transfers do not reflect inflation. Maybe you give the poor some cash to buy bread, but the price of bread is not fixed, it fluctuates, and with the cost of production and transportation increased, the price of bread increases. And not only bread. A poor family with a pocketful of cash transfers will find them miserably inadequate trying to sustain themselves in an unregulated market.
These programs have been tested before Egypt, and studied. They can only be regarded as successful if the only criterion for success is the servicing of the deficit and the ability of multinationals to make local profits that reflect international market prices.
Which, of course, is all they are designed to do.
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