Wisdom From Egypt’s New Finance Minister

Before Dr Hazem el-Beblawi was appointed as Egypt’s new Finance Minister, he had a distinguished career as an economist and academic. Among his many publications was a book, The Rentier State, that includes the following passage:

Under the new conditions, the Arab states must either complete their transformation into secular polities with basic democratic regimes and productive systems or increasingly rely on police and repression. The latter course may maintain power in the same hands for some time, but will contribute little towards solving the basic problem, which is to give increased strength to productive activity and rely on its progress to increase state revenue from domestic sources.

Efficient production, capable of sustaining the economy and competing on world markets, is in many cases possible. But it requires certain basic steps which governments have been understandably reluctant to take. The public must be convinced that it has to pay for the state, not rely on it. Public revenues must be devoted to productive uses, not to subsidising private consumption or paying for costly weapons systems or prestigious schemes. Reforms of public management must be undertaken and coherent policy decisions made on crucial policy variables such as subsidies, interest and exchange rates.

This, not standing in the streets chanting and throwing rocks, is what makes a revolution.

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