Tuesday, February 1, 2011
Egypt's Economy is Near Paralysis
All of the chaos involving the Government in Egypt seems to overshadowing the economic concerns growing in the country. Foreign commerce, tourism, and banking have all stopped leaving businesses and individuals without work, money or food. Individuals are not able to receive their paychecks or use A.T.M.'s and in many cases are not able to put gas in their car because the fuel deliveries are not going into the country. The feeling of the general public is that they will be able to live like this for up to another week but any longer than that and the chaos will quickly escalate.
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This is the result of too much intervention from the government in the economy, which led to severe inequality. After several economic reforms, only the rich are getting richer and more powerful, while half of the population suffer in extreme poverty. The president needs to come up with a reform that appeal to the protesters towards democracy as Obama suggested to calm the people down and attract more aid from abroad.
I think one of the most interesting aspects of this article is that people are unable to access their money, and how that contrasts the American economy. In the United States, the ability to use credit and debit cards is practically universal. The media often features stories about how the need for actual cash is being nonexistent. However, in Egypt, where the economy is not as formal, and there are still undeveloped elements, people are still paid in wads of cash. Therefore, when chaos ensues, the Egyptian citizens are left without the necessary currency, and this contributes to their current declining standard of living.
I think the first step in solving the major issues in Egypt is to get the government out of power. People aren't being paid, food isn't being delivered, businesses are departing, and even banks remained closed. The citizens are getting by with what they have but how much longer can this last. Immediate action needs to take place. The government needs their power taken away or look for this crisis to continue and for people to flee the country.
According to the Human Development Report, Egypt is ranked 101 out of 169 countries by the Human Development Index which combines indicators of life expectancy, educational attainment and income. It is also important to notice that even though it is ranked 101, the spread between Egypt and Mali which is ranked 165, for example, is very small. Hence, 101 place in the ranking means the country performs poorly in terms of improving life standards. This and several other factors such as income inequality, poor economic and political systems can be used to explain causes of the current events.
This is clearly an issue for the entire country of Egypt. If the economy can not operate normally, the country will only fall deep into trouble. The chaos will most likely move further out through the country. Ultimately, the government needs to find a way to find a quick and easy answer to lessen the chaos. Bottom line is that people need to get back to work, banks need to be open, and businesses need to be run in order for this to not have a large long term affect on the economy.
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