Pyramid Schemes

by Don Boudreaux on April 21, 2011

in Complexity & Emergence, Creative destruction, Growth, Hayek, Reality Is Not Optional

Here’s a letter to the Wall Street Journal:

The tale told by Matthew Kaminski about Egypt is depressing (“Searching for Hayek in Cairo,” April 21).  As long as most Egyptians fear free, competitive markets and believe that their well-being is promoted by protected nationalized monopolies – as long as “privatization and liberalization are dirty words” (as Mr. Kaminski describes Egyptians’ anti-bourgeois attitudes) – Egypt’s economy will stagnate and ordinary Egyptians will continue to be among the poorest people on earth.

As the economist and historian Deirdre McCloskey notes at the end of her book on why the west grew rich, “in the long run the acceptance of creative destruction relieved poverty.  It has been in fact the only effective relief.  Wage regulations and protection and other progressive legislation, contrary to their sweet (and self-gratifying) motives, have only preserved poverty.”*

McCloskey understands what Hayek understood: prosperity comes only to societies that welcome entrepreneurial-driven economic change – only to societies steeped in the realization that better tomorrows are impossible if everyone is protected from every economic disappointment today.  Societies that reject this reality seal themselves in the awful amber of poverty.

Sincerely,
Donald J. Boudreaux

* Deirdre N. McCloskey, Bourgeois Dignity (University of Chicago Press, 2010), p. 425.

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{ 76 comments }

John V April 21, 2011 at 10:24 am

As I stated back in Feb.:

http://swordscrossed.org/diary/20110211/party-will-be-short-lived-egypt

The Party will be short lived in Egypt. The cycle of misery will simply enter a new phase.

vikingvista April 21, 2011 at 10:44 am

The autocrat is dead. Long live the autocrat.

Dan April 21, 2011 at 2:32 pm

From one ruler to the next. Like a failed business declaring bankruptcy, reopening under a different name but with the same failed business practice.

lukas April 21, 2011 at 11:01 am

“privatization and liberalization are dirty words”

Hmm. I’m sure this has nothing to do with the fact that these things have served as convenient justifications for oppression in Egypt and elsewhere.

While privatization and liberalization, done right, can be tremendous forces that free and empower people, it is unrealistic to expect the process to escape Egypt’s ubiquitous corruption. Can you blame Egyptians for wanting to avoid a replay of ’90s Russia?

Methinks1776 April 21, 2011 at 11:10 am

The Egyptians already have 1990′s Russia. What they’re asking for is a replay of 1950′s Egypt – that’s the problem.

Doc Merlin April 21, 2011 at 12:48 pm

” I’m sure this has nothing to do with the fact that these things have served as convenient justifications for oppression in Egypt and elsewhere.”

I don’t think you have been paying attention. Egypt’s economy is the military and a few well connected individuals as a series of monopolies. The reason for the corruption is this monopolistic, state controlled, structure.

lukas April 21, 2011 at 1:16 pm

Sure, but the military and other well-connected folks have aften done this under the guise of privatization.

When “privatization” becomes synonymous with “legal theft,” it should be no wonder that the populace hates it with a passion.

E.G. April 21, 2011 at 3:15 pm

The “populace” hates with a passion anything that is richer than themselves. This sort of populism is the standard in most developing countries. Its fueled by a number of factors.

Trying to explain it and rationalize it, is like trying to rationalize islamic fundamentalism. It just takes time and conditions to grow out of it.

JohnK April 21, 2011 at 3:28 pm

The traditional way of getting rich is plunder. So it is natural for the “populace” to hate rich people.

Show me a rich person in a developing country and I’ll show you someone with political connections who has amassed a fortune by less than honest means.

Why shouldn’t such a person be hated?

E.G. April 21, 2011 at 3:56 pm

Because its very far from true. This also includes the high middle class, almost all entrepreneurs and medium sized companies. Second, it doesn’t identify or address the real problem, which is the unlimited power of government in those countries. I see this all the time in my own country; and of course the solution is to just put “our guys” in charge of that power.

It has never worked, and yet thats the bases for all these “revolutions” in the ME.

JohnK April 21, 2011 at 4:04 pm

I was being somewhat sarcastic.

“Second, it doesn’t identify or address the real problem, which is the unlimited power of government in those countries.”

Right. And the lack of economic freedom. For every one of those “entrepreneurs and medium sized companies” there are a host of rich government officials on the take.

lukas April 21, 2011 at 4:23 pm

Yes, how dare the people hate those who tax their wealth away, crush their entrepreneurial spirit by regulations and steal public assets through phony privatizations. They should thank them, not envy them!

Methinks1776 April 21, 2011 at 6:01 pm

The “populace” hates with a passion anything that is richer than themselves.

I have never ever seen any evidence of this in Egypt. Never. Not even close. I have when I’ve gone back to Russia, but never ever in Egypt.

In fact, when my sister was stopped by the secret police during the revolution, she got better treatment because she was obviously from a higher class. She is educated and wealthy.

Even if you know nothing at all about Egypt and its history, your first clue should have been the distinct LACK of looting of the five star hotels right next to Midan al Tahrir. There was no looting of wealthy homes in tony Heliopolis either – even though those living in grinding poverty vastly outnumber the people who are wealthy. And that was without police presence.

You are quite simply WRONG.

E.G. April 21, 2011 at 7:08 pm

I may be wrong on Egypt, but your examples don’t really refute the populist collectivist tendencies. Egypt didn’t fall into lawlessness, and there tend to be private security guards in a lot of these places (judging from other countries). Either way, you don’t have to contradict me in everything, just cause you don’t like me anymore ; )

Methinks1776 April 21, 2011 at 8:06 pm

Does E.G. stand for “Enormous Git”?

What the hell makes you think that I contradict you “cuz I don’t like you anymore”? You are wrong. That is all.

Scott G April 21, 2011 at 11:08 am

Great letter and thanks as always for pointing out excellent reads. It will take multiple recommendations from people I trust (sometimes as many as 5) for me to actually purchase a book from an author who I know nothing about to start with. Even when I buy the book, I still need to keep hearing about it in order to read it (because I have so many other books on my to-read list).

One of the most valuable services that both Prof. Roberts and Boudreaux provide for me is examples of great communication. I can’t even begin to describe how Econtalk has helped me discuss sensitive issues with people. Reading Don’s letters has helped me write more clear and concise emails at work which has probably helped me outsource all kinds of tricky engineering problems to outside vendors.

Randy April 21, 2011 at 11:24 am

Question; What percentage of a population must accept the idea of creative destruction in order for that society to become or remain a productive society? That is, Egypt must have a few, but apparently not enough, and the US apparently has enough, but how close to the edge are we?

Methinks1776 April 21, 2011 at 11:32 am

Your question is too advanced. You need to start with: “what percentage of the population must be able to read”". Can’t understand that which you have no access to.

Methinks1776 April 21, 2011 at 11:33 am

to which you have no access.

Frank33328 April 21, 2011 at 12:34 pm

This is just a guess-imate on part but I would say that the percentage of Egyptians that accept creative destruction is roughly the same as the percentage of Americans. Outside of a few ideologues, I doubt Americans have a better knowledge of the economics of capitalism than any other group. What has, up to now, protected Americans is a certain cultural inertia in the belief in certain liberties/freedoms.

carlsoane April 21, 2011 at 12:55 pm

And widely distributed power…

Randy April 21, 2011 at 2:03 pm

I agree that belief in freedom is essential. And perhaps more specifically, belief in the freedom to fail.

John Dewey April 21, 2011 at 2:32 pm

“I doubt Americans have a better knowledge of the economics of capitalism than any other group.”

I don’t know. Many millions of Americans have owned their own business. Business ownership does teach quite a lot about capitalism and creative destruction. Many who have worked for small business owners also understand the need for continuously improving the offering to the public, and how the public reacts to the better mousetrap.

In an economy as strong as this one is and has been, the opportunities for entrepreneurism and the access to capital must be far greater than in Egypt. I don’t see how the typical Egyptian would have seen as many real-world examples of creative destruction.

I agree that some Americans cannot easily see the step beyond creative destruction, where resources released from inefficient and obsolete producers are re-channeled to more productive uses. But I don’t think Americans are as dumb as some would have you believe.

Dan April 21, 2011 at 2:49 pm

Egypt- There is little, if any, property protections. And little, if any, private property ownership.

JD- Not dumb, just easily led into disparity beliefs.

Frank33328 April 21, 2011 at 4:14 pm

One name: Donald Trump…..

Dan April 21, 2011 at 6:09 pm

I Don’t trust ‘the Don’. Better a
Business man than an ideologue that espouses collectivism?
I guess…….

Methinks1776 April 21, 2011 at 6:05 pm

Business ownership does teach quite a lot about capitalism and creative destruction. Many who have worked for small business owners also understand the need for continuously improving the offering to the public, and how the public reacts to the better mousetrap.

What makes you think the average Egyptian doesn’t understand this? Many millions of Egyptians own small businesses. How do you think they feed themselves?

Dan April 21, 2011 at 6:16 pm

A church, I am familiar with, has sent members of the congregation over to Egpyt to live and run small businesses. Setting up shop used to be a gauntlet, even with the appropriate donations to speed up the process. I understand the process is much simplified, now. Yet, lack of private property protection remains sufficient enough.

Methinks1776 April 21, 2011 at 7:22 pm

Dan, you need something like 54 “licenses” (read: bribes) to open the simplest of small businesses officially. Or you need connections. Upon meeting a fellow Egyptian abroad, an Egyptian will annoyingly begin rattling off all of his friendships and acquaintances with this military officer or that bureaucrat. This vast bureaucracy, violation of property rights and lack of rule of law is fairly new in Egyptian history.

Until Mohamed Ali’s autocratic rule began in the 19th century, modern Egypt maintained rule of law and property rights, and a fair amount of social mobility. In fact, in the 14th century (when the trade routes went directly through Egypt), the wealthiest dozen people in world lived in Cairo. Why? Protection of property rights and rule of law.

There is much to dislike about Islam, but it does clearly outline property rights in a way that modern secular Egyptian law does not.

Methinks1776 April 21, 2011 at 7:41 pm

Since I can’t edit, I’ll just add in this post…

Egypt is often lumped in with the likes of severely backward, unsophisticated Afghanistan and Arabia. In fact, it is a dynamic culture dating back thousands of years and which had an advanced civilization while our ancestors were still rolling around in their own poop. Interestingly, the culture still bears the mark of ancient Egypt in its relationship to death and even the Egyptian Arabic dialect carries remnants of the ancient Egyptian language. This is not a people with no history of a dynamic economy, vibrant trade and culture, and a middle class.

Rule of law and property rights were severely eroded by Muhamed Ali’s neo-mercantilist policies in the first half of the 19th century. Nasser’s post-1952 nationalist and socialist policies further eroded both. It is a modern phenomenon in Egypt.

Dan April 21, 2011 at 8:26 pm

Ok. I understand and have not lumped them with the likes of Afghanistan regions, whose factional tribes have been secluded due to being landlocked. This has also led to the people not having advanced along with most of the globe. But, Egpyt has always been under a ruler and whose practices have still been oppressive.
Strongmen, using Islam as their tool, are unlikely to institute many private property rites. Did u find respect of property rites in the Sunnah or in surahs?
Egypts rich history is inexplicably tied to its locale. The Muslim Brotherhood does have prominence in Egypt and is likely to grow in strength. Should their visions for egypt be realized, I do not believe that it would conducive with greater liberties and economic success.

vikingvista April 21, 2011 at 8:43 pm

In any population with a culture of trade, property rights are naturally emergent. It is sufficient that the government does not violate property rights, for property rights to exist. The government need not protect property.

Methinks1776 April 21, 2011 at 9:17 pm

But, Egpyt has always been under a ruler and whose practices have still been oppressive.

“A ruler”? No. I’m guessing you aren’t familiar with the Mamluks. However, what you said can be said of Western Europe as well.

Did u find respect of property rites in the Sunnah or in surahs

No, one finds it in Egyptian history. It happens to be encoded in Sharia and Egypt might have (I don’t know) some property rights that predated that which is in Sharia.

By the way, a “surah” is a chapter of the Koran. The Sunnah is all of Islam. It is the cultural and religious practices of Muslims. It includes the Koran, the Hadith, Sharia, fatwas, cultural traditions – everything. Asking if protection of property rights is found in the Sunnah is literally asking me if property rights are found in Islamic society.

Egypts rich history is inexplicably tied to its locale.

What is inexplicable about it?

The Muslim Brotherhood does have prominence in Egypt and is likely to grow in strength. Should their visions for egypt be realized, I do not believe that it would conducive with greater liberties and economic success.

How much do you know about the Muslim Brotherhood? Why do you think what you think?

E.G. April 21, 2011 at 11:18 pm

I understand that you have a personal interest in the matter, but I don’t understand why you are just telling us the “official” version of Egyptian history that you get from every Egyptian who feels insecure in front of a Western audience; ie use examples that are at least 700 years old, as if they matter one tiny bit today? Throw in some ancient Egyptian stories for good effect. Yeah Mohamed Ali was at fault for everything! Because when he took over, Egypt wasn’t a backwater in a backwater empire? There’s a lot more complex issues going on there, and a lot of it comes down to one thing; economic development. There’s a 700 year lag there, and Egyptians (and Arabs more broadly) need to recognize today’s condition and not rest on the laurels of a millennium ago.

Methinks1776 April 22, 2011 at 1:27 am

So, what you’re basically asking me, E.G., is why I’m not spewing your fact free, ignorance instead?

I dunno. I guess I prefer historians and economists to “unofficial” history concocted by raging lunatics.

Dan April 23, 2011 at 11:56 am

From what I have read and from tutorials from Islamic friends, the Sunnah is in respect to Muhammad’s life. From why the canine cannot reside in one’s house and still conduct prayer to the taking of multiple wives who had been widowed,the Sunnah is, for lack of proper articulation, living by Muhammad’s examples.
From what I understood the process of gaining license to business in Egypt could take years and more approvals than even the ’54 licenses’ you say are required now.
And, absolutely, much of Egypt’s prominence is in respect to location…..as you had mentioned about trade routes.
I do not have much liking for rule by theocracy, which can be attributed to Iran. While much of the residents of Iran may not practice An oppressive form of Islam, the govt is no friend of liberty.
Mamluks were not rulers? A kind of feudal lords system. Rulers nonetheless.
I am not arguing, only discussing.
I have not traveled to Mideast. Can only learn from books, little tv( don’t watch much) and from friends who travel often or are from areas like Morocco, which I will be visiting soon.

Methinks1776 April 23, 2011 at 12:47 pm

No, Dan. That is not the Sunnah, per se. What you describe is the Haddith – and the Haddith is not Sharia. The Haddith is part of the Sunnah. So are Surahs in the Koran. Thus, “did you find it in the Sunnah OR the Surahs?” is a nonsensical question. The Surah is part of the Sunnah. “Where in the Sunnah did you find evidence of this?” is the appropriate question.

The Mamlukes were not “a ruler”. The warring Mamlukes represented decentralized power. Theoretically, the Ottoman Sultan was the ruler, but he delegated all the power to the Mamlukes.

You are right that starting a business in Egypt absolute hell. Gaining title to one’s own property is hell too. Once it is gained, though, there is no guarantee that the property will not be stolen via some scheme concocted by a crony of the government. No Rule of Law. No protection of property rights for the ordinary, unconnected Egyptian.

dan April 23, 2011 at 1:00 pm

Ah………Haddith is the utterances…….Sunnah is observed actions

Islam 6th edition by Daesar E. Farah, Ph.D
Then, John Espsoito ‘Unholy War’, ‘What everyone needs to know about Islam’. Retaining information when discussion are few and far between are a little difficult. All was of memory, until just now…..I need to stop skipping around in my English translation of the Koran. And read more of it.

dan April 23, 2011 at 1:01 pm

That’s Ceasar E. Farah, Ph.D

Methinks1776 April 23, 2011 at 1:07 pm

I do not have much liking for rule by theocracy, which can be attributed to Iran. While much of the residents of Iran may not practice An oppressive form of Islam, the govt is no friend of liberty.

And so you seem to understand that the impediment to liberty in Iran is the totalitarian state, not Islam, per se. In practice, the Soviet state was as much a Theocracy as Iran – it’s religion was Communism and Socialism.

dan April 23, 2011 at 1:27 pm

Certainly, Islam need not be instituted in a way to oppress, but it often has been. I do understand that Islam is used more as a tool for oppression. But, While the percentage of the population that would enforce Islam/Sharia as compulsory compliance is smaller than that of the population who would not, the few are louder than the many. And, Sharia is not conducive with liberty.
There is much to dislike about Sharia, but my close friends who are of the faith of Islam, would not espouse Sharia as law mandated on others, either.

dan April 23, 2011 at 1:30 pm

I am confident of one thing………. The yearning of masses for the ability to make choices free of mandates and imposition. They will out number the other natural human behavior of wanting to have control. While a ‘state’ may bring about a new autocrat through use of a religion, eventually, the masses will not be happy with them either.

Methinks1776 April 23, 2011 at 1:47 pm

BTW, Dan, nothing beats actually reading the Koran, the hadith and a bit about pre-Islmaic Arabia if you seek to understand it. That’s a better starting point than Scholarly opinion.

In college, I eventually found myself taking nothing but economics and finance classes, so I decided to pick a country I knew nothing about and explore it. I randomly chose Saudi Arabia. I found I could not really understand Arabia without researching oil and Islam.

Methinks1776 April 23, 2011 at 2:00 pm

Certainly, Islam need not be instituted in a way to oppress, but it often has been.

No more than Christianity.

And, Sharia is not conducive with liberty.

I don’t think that’s necessarily true. Sharia is not code. It’s not only open to different interpretations but is also, in fact, interpreted differently everywhere in the Muslim world. It does, however, explicitly outline property rights.

I’m not making an argument for Sharia law in the West, BTW. I just don’t see any reason to accept the argument that Sharia is necessarily incompatible with liberty in the Muslim world.

dan April 23, 2011 at 2:01 pm

just minimal……. Arabia pre-Islam….factional tribes….. their little huts of Gods……. Muhammad sought to bring them together under one God and unified rather than factional warring amongst themselves.
Islam spread more in the hundred years after his death than did during his life.
Islam is supposed to cause no harm to those who submit to law under Islam.
Apostasy is worse than taking up arms against Islam. All apostates must be put to death.
The killing of Daniel Pearl, I assume was in violatio of Islam.
Non-believers are to pay a type of fine… forgot the word.
and so on………… Islam spread quickly under the European control as the Europeans encouraged religion as a means of control.

dan April 23, 2011 at 2:05 pm

I would be more inclined to believe that law imposed by religion is likely to fall into tyranny. If not as soon as implemented, than over a generation or two. Religion is easily re-interpreted with many diffferent people proclaiming their knowledge of the laws of God. Just as our Constitution has been intepreted to give govt power to do anything under Welfare Clause.

dan April 23, 2011 at 2:07 pm

Muhammad was run off to the mountains where he recieved the ‘word of God’ and returned with followers to dispose of those who opposed him. They then began their conquests of spreading Islam and using the wealth taken along the way to finance their continuation. From Spain to Indonesia, mostly after his death, did they conquest.

Methinks1776 April 23, 2011 at 2:08 pm

The reason your Muslim friends are not in favour of forcing you to submit to Sharia is that Sharia is law to govern Muslim life. Thus, often in Muslim empires, non-Muslims have not been subject to Sharia law.

Of course, we’re speaking in aggregates. Egypt is very different from Arabia and the Indonesians are very different from the Pakistanis and there are different sects in Islam with their own interpretations of everything. A conversation about “the Muslims” can become irrelevant very quickly because “the Muslims” are really quite different.

dan April 23, 2011 at 2:10 pm

No more than Christianity, in the past. Unaware of present circumstance that have Christianity used as a tool for oppression. Under a ‘soft tyranny’……….uh, ok. I would prefer to compare that of Iran or Saudi Arabia in its scope as opposed to any references to US ‘soft tyranny’ under Christianity……if there are any to mention.

dan April 23, 2011 at 2:17 pm

I agree, they are very different. For them, as Moroccans, a form of Sharia would be personal and for them to impose within thier household and unto themselves. Is very interesting to see them change. Becoming assimilated into American life. There is many reasons to prefer life in America as oppose to life in Morocco. They don’t particularly care for attitudes and conducts of Moroccan people aside from their own families.
But, much of it is not due to religion.
But, each region is very different from the next. From the Wahhabis of Saudi Arabia to Shia and Sunni, etc.,……..then the breakdown of Islamic followers in Pakistan…….

dan April 23, 2011 at 2:20 pm

Favour…………do you also spell labor as ‘labour’?

Methinks1776 April 23, 2011 at 2:29 pm

Apostasy is worse than taking up arms against Islam. All apostates must be put to death.

That’s actually a modern invention. Historically, apostacy was not punishable by death or imprisonment because accepting the religion must be completely voluntary to be valid. One became Muslim by uttering the Shahada – “I witness that there is not God but God. Mohamed is a prophet of God”.

BTW…do you know who the most important prophet in Islam is? According to Mohamed, it’s Jesus Christ. It will be Jesus Christ, not Mohamed, who will return to earth to gather the Muslims (“those who submit to God” – which, incidentally, includes the Jews and Christians) and take them to heaven at the end of time.

Non-believers are to pay a type of fine… forgot the word.
and so on

Yes, that’s “Jizya”. A tax levied on able-bodied non-Muslim males of military age. The payment of the tax was considered submission to Muslim rule. In return, the Muslim ruler protected the Dimmi (non-Muslims) from outside aggression, exempted them from military service and the zakat obligatory for Muslim citizens, allowed them the free practice of their faith and a measure of autonomy within their community. This is the reason that so many Jews were attracted to areas of Muslim rule.

If you do further research, you’ll find other interesting things – why the one God was called “Allah”, how much of the pre-Islamic pagan faith made it into Islam, how much of ancient Egyptian culture and religion is woven into the fabric of Modern Muslim Egyptian life and culture and that the first half of the Koran is almost completely contradicted by the second half. That fact last alone will serve to better your understanding of the modern Muslim world.

Methinks1776 April 23, 2011 at 2:34 pm

Non-believers are to pay a type of fine… forgot the word.
and so on

Yes. Also, colour and Neighbour and theatre. I’ve tried to break the habit, but I’m too old now. Since it is a correct spelling, none of my American teachers have ever tried to make me change it.

Methinks1776 April 23, 2011 at 2:35 pm

That fact last alone = That last fact alone.

dan April 23, 2011 at 2:51 pm

Yes, I am aware of two parts to the Koran. As the 2nd part is supposed is supposed to be read first. Any contradictions in the second is supposed to supercede the first.
Jesus is accepted as a profit like Moses, not as deity or Son of God.
Jesus is supposed to come back in Islam and when you die Jesus greets you and tells you the truth, which is that he was a profit and not the son of God as Christians believe.
In Christianity, Jesus rose from the dead. In Islam, Judas face was transformed to look like Jesus and Judas was put to death on the cross.
The ‘our’ in favor of ‘or’ on words is just clues. Age and or origin of birth or culture……… other than typical Americana.
I wonder what, or if, religion is to come that will claim to be a follow up to the other three that preceded it.

Methinks1776 April 23, 2011 at 3:10 pm

Yes, I am aware of two parts to the Koran…. …Any contradictions in the second is supposed to supercede the first.

Ahhhh….but that right there is only AN interpretation – usually of the freaks who want to justify violence. The fact that the Koran contradicts itself presents a terrible problem for Muslims because every word in the Koran should be true and every part of the Koran is to be followed. No part of the Koran should abrogate any other part – it is presented as a cohesive and complete work. So, how can such an obviously contradictory text be the word of the all-powerful, all-knowing God? How can something which so violently contradicts itself guide human behaviour (and that’s before we get to the contradictions in the Haddith – the most accepted compiler, if you choose to read it, is Bukhari)?

BTW, Mohamed was an illiterate trader (he eventually married his employer, the much older Khadija). As a trader, he would have had a lot of contact with both Jews and Christians. Islam always struck me as a cross between Christianity and Judaism. Let’s face it, Mohamed concocted Islam by mixing the two religions.

As the 2nd part is supposed is supposed to be read first.

Where did you get that idea? That is incorrect.

dan April 23, 2011 at 3:16 pm

The second part is supposed to be read first……… for a person reading to understand, who has not read or learned about it before. The English translation from Morocco states it in the book.

E.G. April 21, 2011 at 12:46 pm

I don’t think its the idea of creative destruction, and its understanding, that is a necessary condition for development along the US model. It is a feature that doesn’t need recognition. Its like asking animals to recognize natural selection, in order for it to exist.

John Dewey April 21, 2011 at 2:34 pm

Very good point, E.G.

Dan April 21, 2011 at 2:52 pm

Economists gave a name to replacement of old ideas(products and services) with newer ones. Out with the old and in with the new.

Don Boudreaux April 21, 2011 at 7:49 pm

I seldom disagree with John Dewey – but in this case, I do disagree. People surely don’t need to understand HOW creative destruction works its improvements over time, but they certainly DO need to be culturally and rhetorically disposed to accepting the reality of creative destruction.

E.G. April 21, 2011 at 2:15 pm

You can replace “Egypt” with the name of 100 other countries, and the story would apply perfectly. The issue, judging from my experience, is the inability to identify the problem. The problem is never the actual power these regimes have over the people. It is always, supposedly, the people in charge of it. This leads to other nonsensical measures such as applying a copy-paste policy for laws and regulations from European countries. Developing countries absolutely love to just copy-paste whole swaths of W. European mumbo-jumbo into their codes, and pretend that THIS is what was missing from development. One example of this, in the capital of my country the incredibly dictatorial mayor introduced a new “urban plan” complete with minute micro-management details on every activity imaginable. The reason? It was copy-pasted from Italian codes. And all the sheep that live in that city, welcomed it as a major step towards achieving the same level of development as Italy!

This is what passes for “reform” in the developing world. Populism and collectivism are also pretty standard. And lets face it, Islamic fundamentalism is a major obstacle, even though the author doesn’t think so. Look at Iran. Religion in general is usually hostile to free markets.

Dan April 21, 2011 at 2:54 pm

Religion is a means of control….. Free markets don’t like to be controlled

Methinks1776 April 21, 2011 at 3:59 pm

Huh? Do you know anything at all about Egypt?

E.G. April 21, 2011 at 4:37 pm

No I don’t. I wasn’t talking about Egypt, however. What I know about Egypt is what I hear from Egyptian-Americans who are oh so “hip” and “liberal”. Yet the best even these “liberals” who have had exposure to America, can muster up, are constant conspiracy theories. I haven’t ever heard even a basic concept of economic development, other than simple redistribution and protectionism. My opinion of the “liberal educated young middle class” which is supposed to lead this “revolution”, kind of takes a nose dive after all I hear are conspiracy theories.

Methinks1776 April 21, 2011 at 6:12 pm

Oh, my mistake. You’re just using this thread about Egypt as an opportunity for another one of your diatribes where you lump all and sundry into your fantasy of what the false aggregate of the “developing world” must be like.

In fact, I will tell you something about Egypt – “Islamic fundamentalism” is actually not a major obstacle at all. And, paradoxically, Iran is perhaps one of the least religious countries in the Middle East. It boasts the smallest percentage of people who claim to fast during Ramadan. You should learn at least these minor details before you foam at the mouth next time.

E.G. April 21, 2011 at 7:18 pm

Well look. First of all the topic here isn’t really “Egypt”, but rather the developing world. Egypt is an example of what is common everywhere. So yeah, I just pointed out that this mentality of collectivism and failure to identify the real drivers behind their inability to get out of poverty, is common elsewhere too.

Now you didn’t like this for some reason, and decided to contradict me for the heck of it. I know, I know, I hurt your feelings on Libya. But you didn’t really tell me what I got wrong? Help me understand!

As for Islam and Iran, the people of Iran aren’t the problem. Persians are usually more concerned with their hair gel than with Ali, but this speaks of Persian culture, not Islamic. And it doesn’t refute the fact that Islamic theology tend to be ideologically opposed to free markets, entrepreneurship and the individual. Iran represents this pretty well in the way the government there monopolizes and strong-arms businesses.

Methinks1776 April 21, 2011 at 8:00 pm

First of all the topic here isn’t really “Egypt”, but rather the developing world. Egypt is an example of what is common everywhere.

So, besides changing the topic, you are also taking another opportunity to showcase your ignorance in the worst possible light. Well done.

And it doesn’t refute the fact that Islamic theology tend to be ideologically opposed to free markets, entrepreneurship and the individual.

I haven’t the time and energy to begin to adequately attack this confused knot of popular ignorance on this thread. Have you ever considered (being “half Muslim” and all) actually…I dunno…looking into Islam? Perhaps studying its history? Examining sharia? Crack a book sometime. You might even learn something.

I hurt your feelings on Libya.

I admit that I actually burst out laughing when I read this. How could such an ignorant, bloviating, parlour revolutionary ever presume he/she/it could begin to touch my feelings? You are a cartoon.

E.G. April 21, 2011 at 10:42 pm

I’m glad you liked my joke.

As for your advice to “read a book”, the most tired example used by Arabs, but also muslims in general, to contradict the point, are examples dating back to the 14th century and before (as you did with Egypt a bit above). I’ve heard them countless times: Sharia is so advanced and beneficial to trade, that Christians and Jews routinely preferred to go to a Sharia court to settle business cases. And this is usually followed by: “Even today in Dubai Christians prefer to be judged in Sharia courts in matters of business!”. And of course the usual “Sharia was the first to give economic rights to women…” etc etc. All wonderful, and true to a degree. Except there’s one problem; all examples date back at least 700 years. What has Sharia and Islam been doing ever since? The error is in comparing Sharia with its contemporaries, instead of with today’s counterparts.

Simply put, I have no interest or patience to read Islamic law. But I don’t need to read it, to see it in practice. And its the practice, which is the law “interpreted”, that matters. Can you name me one country that has incorporated aspects of Sharia, that can be called anything other than extremely authoritarian? All religions tend to be hostile to economic freedom. That doesn’t mean they are not “pro business” or “pro property”. But neither of this is equivalent to economic freedom.

Methinks1776 April 22, 2011 at 12:05 am

Simply put, I have no interest or patience to read Islamic law.

Or history, but that will never stop you from pontificating on the topic endlessly based on what you think you see from your backward Baltic village with its brand new Italian style bureaucracy, eh?

If you happened to crack a book from time to time, you will find that Egypt is not ruled by Islamic law. It is a secular country. Sharia law in Egypt is limited to family law – and then only for Muslims. You will also find that one doesn’t need to go back to the 14th century for examples of rule of law and property rights in Egypt – Muhamed Ali weakened both in the 19th century and Gamal Abdul Nasser did so further after the 1952 revolution. You would find Arab feminism, born in Egypt at the end of the 19th century, hit its stride in the 1920′s – only to be repressed by Nasser and not to re-emerge until the 1970′s with the likes of Nawal al Sadawi. You might find out many interesting things if you read Amira El-Azhari Sonbol or Hernando De Soto, for instance. I doubt that you will as it will interfere with your favourite pastime – passing judgment on things haven’t even begun to try to understand.

E.G. April 22, 2011 at 10:37 am

I am well aware that Egypt is not ruled by Sharia. Thanks. And the rest of what you said is the typical embellishments and 1/4 truths (they’re not even half) you get in the “Arab street”, from well-to-do liberals of course who typically don’t even speak Arabic in their own homes.

Anyway, yeah Egypt’s problems all started with Mohamed Ali, and evil Naser. Before then, there was a “feminist” movement (yeah, for the upper upper classes!), and supposedly a rich and vibrant middle class. Except that no one can find archeological evidence of this.

This is part of the typical problem of the developing world, at least as far as the mentality of the people is concerned. The problem is always “some guy!” back in the day who killed a wonderful prosperous great civilization. That guy is usually some evil foreigner (Ali?), or some evil local installed by a foreigner. And everything can be fixed once we get “our guys” into power, and then they can make things better for us. Of course. Heard it a million times before.

Its the victimization game, and the mania of looking at the past. What about looking at what’s ahead, instead of talking about the past? I’d like Arabs to do that, just for once.

E.G. April 22, 2011 at 10:50 am

No reason to get “defensive” about this, of course. If we can’t talk about the realities on the ground today, than what are we supposed to talk about? History from 700 years ago? Don’t worry, the idiots who inhabit my village behave the exact same way. This is a standard mechanism for rationalizing what is wrong with your surroundings. A “libertarian” ought to be able to tell us something about the sever economic deficiencies and the severe limitations to economic freedom and individualism in such a society. Instead, you chose to give us the usual story that one gets in every third world country: Its that guy’s fault!

Methinks1776 April 22, 2011 at 10:54 am

All evidence suggests that you are your village’s idiot in chief.

Methinks1776 April 21, 2011 at 6:14 pm

My opinion of the “liberal educated young middle class” which is supposed to lead this “revolution”, kind of takes a nose dive after all I hear are conspiracy theories.

And my opinion of you falls every time I’m treated to one of your ignorant, fact-free diatribes which you admit are based on the two Egyptian dudes you met in class one day.

Ike April 21, 2011 at 3:23 pm

seal themselves in the awful amber of poverty.

Brilliant analogy. Well played.

Russell Nelson April 24, 2011 at 1:47 pm

The second half of the Koran creatively destroys the first. :)

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