Murphy's Law: It's The Economy, Stupid!


June 10, 2011: The rebellions in so many Arab countries this year is making the world pay attention to something that is generally ignored. That is, Arab economies are very fragile, and depend a lot on government jobs, tourism and corruption to keep going. This is largely the result of Arab countries not modernizing their economies in the past century. The introduction of large amounts of oil money has not changed anything. In some ways, the oil money has made things worse. For example, the nation with the most oil revenue (Saudi Arabia) has an unemployment rate of 12 percent. Yet many of those men are unemployed by choice. Arab men tend to have a very high opinion of themselves, and most jobs available, even to poorly educated young men, do not satisfy. Thus most Arabs prefer a government job, where the work is easy, the pay is good, the title is flattering, and life is boring. In the non-government sector of the economy, 90 percent of the Saudi jobs are taken by foreigners. These foreigners comprise 27 percent of the Saudi population, mostly to staff all the non-government jobs. This means most young Saudi men have few challenges.

The Saudi employment situation is not unique. The UAE (United Arab Emirates) has foreigners occupying 99 percent of the non-government jobs. The unemployment rate is 23 percent, but only a tenth of those are actually looking for a job. A survey indicated that most of the unemployed are idle by choice. Kuwait is more entrepreneurial, with only 80 percent of the non-government jobs taken by foreigners. The other Gulf Arab states (which have less oil) have a similar situation. This includes Tunisia, Libya, Egypt and Yemen.

Thus the revolutions that overthrow governments, create a huge amount of economic disruption. This is because many, if not most, of the foreign workers will flee (until things calm down), tourists and foreign investments will not come, and large segments of the government will shut down (putting lots of people out of work.) Then there's the problem of corruption, which extends to people getting government jobs with the expectation that these employees will be very loyal to whoever is running the government. During revolutions, it often takes a while for the many rebel factions to select a new leader, who will then decide who gets to keep their government jobs, and who can get those that are now available.

All this has to be done with some sensitivity to what various rebel factions believe they are owed for their recent sacrifices. This is a difficult and time consuming process. That's because most Arab countries are a patchwork of different tribes and groups, and Arab leaders survive by playing one group off against another. Loyalty is to one's group, not the nation. Most countries are dominated by a single group that is usually a minority, as in Bedouins in Jordan, Alawites in Syria, Sunnis in Iraq (formerly) and Nejdis in Saudi Arabia. All of which means that officers are assigned not by merit but by loyalty and tribal affiliation.

Then there are the Islamic schools, which are so popular in Moslem countries, which favor rote memorization, especially of scripture. Most Islamic scholars are hostile to the concept of interpreting the Koran (considered the word of God as given to His prophet Mohammed). This has resulted in looking down on foreigners who are brought in to get things done. Arabs prefer to fake it, and pretend it's all in their head. Improvisation and innovation is generally discouraged. Arab governments go by the book, while Westerners are constantly rewriting the book and thus usually ahead economically and in other areas as well.

In Arab bureaucracies, initiative is considered a dangerous trait. So subordinates prefer to fail rather than make an independent decision. Important projects are micromanaged by senior leaders, who prefer to suffer a disaster rather than lose control of their subordinates. Even worse, an Arab leader will not tell foreign advisors he will not make the decision (or even that he cannot make it), leaving Westerners angry and frustrated because the Arabs won't make a decision. The Arab leaders simply will not admit that they do not have that authority. This is what's going on in Tunisia, Egypt, Yemen and Libya, where the rebels have taken control of all, or much, of the country. You have no agreement on who is in charge, because several groups and individuals claim they are.

While all this posturing and bargaining is going on, the economy has collapsed, much of the workforce is unemployed and families are hungry and desperate. Just the sort of atmosphere that will quickly generate another revolution, one that will favor another dictator, "who is strong enough to get things going." Freedom to starve is not what the people are looking for, but given the condition of Arab countries, it's what often results when a government is overthrown. For that reason, the more perceptive Western diplomats are urging their governments to send in food and basic consumer goods, while the new leaders are pressed to get the government workforce back on the payroll, and switch to a market economy so that the government doesn't have so much control over things it cannot manage well.





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