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We're Better off Than Egypt - Right? Let's Take a Look.

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A tourist who was interviewed last night from Cairo spoke for millions of his fellow Americans when he said he couldn't imagine living a country like Egypt. It is hard, isn't it?

Imagine: A government run by and for the rich and powerful. Leaders who lecture others about "sacrifice" and deficits while cutting taxes for corporations and the wealthy. A system so corrupt that rich executives can break the law without fear of being punished. Increasing poverty and hardship even as the stock market rises. And now, a nation caught between a broken political system and a populist movement that could be hijacked by religious extremists at any moment.

No wonder they're upset! Why, we'd be marching in the streets too.

Here's the reality: Income inequality is actually greater in the United States than it is in Egypt. Politicians here have close financial ties to big corporations, both personally and through their campaigns. Corporate lawbreakers often do go unpunished. Poverty and unemployment statistics for US minorities are surprisingly similar to Egypt's.

And remember the ratings agencies that told us everything was fine with our country's banking system, right up to the moment it collapsed? Just two months ago, Moody's reassured investors that the Egyptian government had a "stable outlook" for the foreseeable future. Sure, the analogy only goes so far. But why is it so much easier to see what's wrong on the other side of the world than it is here at home?

How do you say "deficit commission" in Arabic?

Egypt's been plagued by the same contradictory "cut taxes and reduce the deficit" logic we're hearing in the US. And why not? It serves the same web of financial interests.

Spurred on by the IMF and the World Bank, Egypt eased corporate regulations and began privatizing its bank sector. It lowered individual and corporate tax rates, while at the same time setting new deficit targets for slowed-down government spending. that won praise from Middle Eastern news outlets and corporation-friendly multinational institutions. "Egypt - A successful reform story," read a typical headline.

The Heritage Foundation continued to celebrate Egypt's increased investment and trade "freedoms" and its lower tax rates, while chiding it for adopting a modest 1.5% stimulus program after the fiscal crisis. (This information can be found on the Foundation's unironically -- named "2011 Index of Economic Freedoms.") As their personal economic picture remained bleak, Egyptians were told that all was well. After all, as one government website explained, the country has been enjoying the benefits of "an open and flourishing stock market."

But profits didn't "trickle down." A UNICEF study showed that those years of stock market growth also saw an increase in the number of Egyptian children living in poverty. "This growth," said the report, "has not led to a proportionate reduction in income poverty or deprivation." And we saw this headline in the United States, just before the financial crisis struck: "U.S. Child Poverty Rates Increase Despite Rising National Incomes."

Egypt's government pressed on with privatization, despite a study which showed that "only 20% of citizens considered privatization to be beneficial to Egypt's economy" (just as in the US, a laundry list of the public's strongly-held opinions continued being ignored in Washington.) And despite soaring food prices, Egypt's government declined to boost food subsidies and promised to impose a "means test" that would restrict access to this form of assistance. (While the government held the line on food assistance, it did increase its subsidies for fuel -- a form of assistance which, unlike food aid, benefits domestic and foreign oil interests.)

This next statistic may sound familiar: There haven't been enough new jobs created in Egypt to keep pace with the number of new job seekers. Despite this stagnation,the austerity-minded government hasn't invested additional funds for jobs and economic growth. Apparently Egyptian officials thought that an unemployment rate of 9% could become the "new normal" without serious political repercussions.

Bad call. But, hey, they exceeded their deficit-reducing goals for last year! So why's everybody griping?

Crime Pays

Whenever political leadership is entwined with big-money interests, corruption's likely to follow. Some of that corruption may be legal, and even when it's not enforcement is often lax.

Few "legal" forms of corruption are more immoral than rampant bank speculation to drive up food prices. Yet there are several reports which suggest that US banks have done exactly that. If true, that would make them complicit in Egypt's political turmoil.

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Richard (RJ) Eskow is a former executive with experience in health care, benefits, and risk management, finance, and information technology. Richard worked for AIG and other insurance, risk management, and financial organizations. He was also a (more...)
 
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