The Corner

Economics, Muslim Brotherhood Style

The Arab Spring is headed for an economic meltdown. Spengler has been pointing this out for months. Now the New York Times is catching on. The Arab revolts are better understood as a societal collapse rooted in the lack of fit between traditional social practices and the demands of a modern economy than as a call for Western-style democracy. What we’re seeing isn’t a democratic revolution tragically hampered by economic crisis, but a new stage in a decades-long socio-economic catastrophe. It’s true that Egypt’s revolt is in some measure the product of rising expectations sparked by a liberalizing economic expansion. Yet that economic liberalization was discredited by crony capitalism, proving that endemic corruption undercuts even the most successful efforts at modernization.

Western reporting on the ideologies of the makers of the Egyptian revolution has been atrocious. While the (non-Islamist) revolutionaries are almost always called “secular liberals” or just “liberals,” in fact they are mostly hard leftists and Arab nationalists (believers in Nasser’s “Arab Socialism”), with a much smaller component of people who might actually be called liberals (and even most of these are intensely anti-Israel). At least today’s Times article acknowledges, if only in passing, that leftist parties are emerging as one of the major economic alternatives in Egypt. (I expect the Times to go back shortly to calling all non-Islamist Egyptians “liberal.”)

The most interesting tidbit from today’s news on Egypt’s economy is that the Muslim Brotherhood has put forward an economic plan. According to the Times, the Brotherhood would have “the government require all Muslims to contribute 7.5 percent of their income to a privately run charitable institution under government oversight–essentially a flat income surtax.”

We have no details here, but this certainly sounds like a plan to force Egypt’s tax system to subsidize the Muslim Brotherhood’s charitable infrastructure, the key to their political power. Islamist parties will likely control a plurality of the new Egyptian parliament, and so may get at least a limited version of this plan adopted in exchange for whatever else passes. That would lay the groundwork for a significant long-term entrenchment and expansion of the Brotherhood’s power, while also likely hamstringing any Western-style liberalization of the economy.

With Egypt headed for a food crisis amidst a broader economic meltdown, the prospects for public support of the Brotherhood’s plan, and/or an expansion of Egypt’s welfare state by the left, look good. In the long term, of course, Egypt’s Islamists and socialists will only intensify the country’s economic agony. But that seems to be the way things are headed.


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