Archives for the month of: May, 2011

Let me say that life has been rather hectic in the past three months, therefore I have not had enough time to write more econ-related posts, which was the original idea behind the blog.

Now that work life is a bit easier on me, I will start lecturing and pontificating about something most of you are not even interested in.

When I was working at a check out in a super market in Italy, I realised that there is a lot you can learn about a person’s life looking at how they spend their money on a daily basis. A single man going on a dinner date would buy wine, deodorant, a lot of food you cannot cook one single dish with and condoms. A working mother (with toddler) would rush through the supermarket on her way home and grab a disparate set of things such as baby food, comfort food, diapers, fruits, vegetable, staples, bottle of wine.

Because I do not have a life, I decided to apply the same approach to the Egyptian state so I went and downloaded the general budget final account data (available in Arabic for the year 2008/2009 here). The document looks at the budget commitments vs actual expenditures over the course of a fiscal year. So here’s some fun facts ( for comparison, 1 USD equals 5.9 EGP) :

On the revenue side:

  • Sales tax 64.5 million EGP (means on average every Egyptian pays less than 1 EGP per year in sales tax)
  • Taxes on employment 10.5 billion EGP (p.30) (on average 130 EGP p. capita p. year, but of course most of the people who pay employment taxes are those employed in the public sector and the few private sector companies that abide by labour laws).
  • Taxes on commercial and industrial activities 5.9 billion EGP (p.30)
  • Taxes on petrol agency and foreign partner (singular) 34 billion EGP (p.30)
  • Taxes on beer and alcohol: 330 million EGP  (p.59). This is higher than total sales tax (!) because places that sell alcohol are regulated as opposed to the rest of the economy.

On the expenditure side:

  • Subsidies to peasants committed 405 million EGP, spent 144.5 million (p.23). Maybe Egyptian peasants do not need subsidies – Meanwhile Egypt is reported to be the world’s largest importer of wheat. In 2010, the oil minister stated that Egypt imports 40% of its food, and 60% of its wheat (source: here).
  • Electricities subsidies 3 billion EGP committed, spent n/a ( considering it is one of the biggest line items one would expect a foot note but the document does not have an explanation as to why actual expenditure is not reported) (p.23)
  • Support to low-income housing 1 billion EGP committed and spent (p.23). (I wish I had the time to follow-up and see HOW these 1 billion EGP were spent).
  • Subsidies for Health and Drugs 399 million EGP (p.24)
  • Social security 1.2 billion EGP (p. 24) [compare with: expenditure on research and (feasibility?) studies for investment projects 1.5 billion EGP (p.27)]
  • Health insurance for the unemployed 14.4 million EGP (p24). With at least 2.3 million unemployed according to government sources, it’s an average expenditure of 7 EGP per person.
  • Subsidies for petrol resources 26 billion EGP (p. 24)
  • Subsidies for export promotion 3.2 billion EGP (p. 24)

This is of course a very superficial look at a complex issue such as expenditure allocation and social policy, however one could make a couple of observations:

  • Taxes revenues from sales are fairly low. This is partly because a lot of trade takes place in the informal economy. However, taxing sales (VAT style) means that does who consume more pay more – The same applies to tax revenues from employment which are much higher than tax revenues on industrial and commercial activities. At the same time, if you happen to be working in the formal economy or public sector, you will be paying a disproportionate amount of taxes on your income.
  • Expenditures seem to be geared towards subsidising consumption and the real estate market rather than, say, providing health insurance for the unemployed. Also electricity is subsidized – which is great, except these subsidies end up benefitting the ones that are better off .

For instance, let us look at petrol subsidies that absorb over 4.4 billion USD every year (incidentally you may wish to compare this to Obama’s offer of debt relief totaling roughly $1 billion “over a few years“). Let us imagine that on a given day a well-off expatriate (whom we shall call Mr Economic Revolution) fills his car with 30 litres of petrol. Now the price of each litre is 2 EGP half of which is subsidies (I am using a fictitious amount just to make the explanation simpler). Therefore the Egyptian state just paid 30 EGP towards the consumption of Mr Economic Revolution who happens to be a wealthy Italian expatriate working in Egypt. Ms Minimum Wage is an Egyptian mother who works as a public servant. She does not own a car so she uses public transportation to get around town. Because she shares the cost of a ride with many passengers her daily consumption of petrol is lower, say 1 litre per day (again, fictitious). Everyday, the Egyptian state spends 1 EGP ensuring that Ms Minimum Wage can get to work.

So basically, the morale of this blog post is that even a cursory look at the Egyptian budget reveals a regressive social policy (i.e. a policy that takes more in terms of percentage of income from the poor than the rich, check here). The expenditure pattern mirrors the one of the ficticious single man going on a date: i.e. one of instant gratification.

Of course the issue of subsidies and social policy is way too complex to be tackled here. However, one may only wish that the way public money is spent in Egypt is geared towards investment in public services (i.e. treating citizens as a resource) rather than towards subsidising consumption (i.e. treating citizens as consumers).

Of course I am not arguing for a blanket elimination of subsidies neo-liberal style, as some of them do play an important role in creating a safety net (especially food subsidies). What I am arguing for is a bolder vision of economic and social policy (an economic revolution, perhaps?). One way could be to eliminate some of the subsidies and redirect the savings towards better wages for public servants and conditional cash transfer programmes for the poor. I am including a link to a World Bank’s review of conditional cash transfer programmes to prove that I am not talking about sci-fi but mainstream public policy discourse spurred by socialist governments and embraced by the liberals as well.

I will conclude with two links. The first to a recent article on the Guardian on social policies and the second to the findings of a recent study of 750 Egyptian youth. Surprisingly (not), the youth interviewed viewed jobs and employment as their top priority. Corruption came second, followed by security with constitutional reform fifth and democracy/free elections at the bottom of the list (original link here)

Try growing up gay in small town Southern Italy in the late 1990s. When I came out to my parents almost 10 years ago I had never met a gay person in real life. The closest role model I had was this transgender woman who adopted the son of my neighbour because the biological father was in jail (yay!). The only gay themed movie ever to be shown on Italian public TV was Philadelphia. Do not get me wrong, it is always great to see Antonio Banderas, but it would have been even nicer if instead of one of the guys dying of AIDS the couple would have ended up buying a house in the suburbs, an SUV and maybe even have a dog. Although I guess it would have not made it one of the highest impact LGBT movies in history.

Now in my country and many others, teenagers see positive role models on TV, they can meet gay people in places other than public urinals (unless they want to), some work places mention in their vacancies that they are an equal opportunity employer etc… (I got a message from our legal department today about IDAHO, what a pleasant surprise!)

Still, if the quality of life for the average LGBT person has improved, we still have a long way to go:

  • Recently even the UN realised that since LGBT people are humans, LGBT rights are human rights (shock horror!). Yet, homosexuality is still illegal/punishable by death and/or imprisonement in a number of countries.
  • A lot of countries recognise some type of same-sex partnerships, mostly in Latin America, Canada, Australia, the US, South Africa and most of Western and Central Europe except the Vatican Republic of Italy. My personal resolution is that if by 2014 Italy has not passed any type of law on civil unions I will marry the first national of one of the civilised countries above (Brazilians encouraged to apply).
  • Violence and hate speech (especially against gay teenagers and transsexuals) is still prevalent in environment such as schools, prisons and religious establishments (not making any value judgement by putting these places in the same category!). Just to throw in some random stats “lesbian, gay, and bisexual youth are up to four times more likely to attempt suicide than their heterosexual peers

Personally, my gay coming of age has been, all in all, a lot of fun. The big step I took some 9 years ago coming out has paid off and I know of a lot of people who took very risky and bold steps to live their lives the way they wanted, lost some friends and in very few cases family members for some time or indefinitely, but at least managed to lead happy and fulfilling lives as people and not as half-dead walking lies (sorry if this offends you, Mr/Miss closeted reader). I have taken some shit by some people, but by far and large I have had the fortune to be surrounded by amazing people that just see me as a person and not as a gay man (and yes, for some of the Arabophobes out there, that includes people from all walks of life I have met while living in Egypt).

So – I will go out to enjoy International Day Against Homophobia (aka I ain’t taking shit from nobody day). If any of you is contemplating suicide (hopefully not as a result of reading this blog) please watch this cute little video:

etc…

I am writing this on my last day in Benghazi. I was supposed to leave on a flight at 8 am but I am stranded here because my flight has been, ehrm, delayed. So delayed I might end up driving back to Egypt tomorrow instead. The flight operation was managed between Italy, Malta and Egypt – the only way this could get worse is if the flight attendants were French. Of course none could have seen this cock-up coming.

I wish I could blog about my five weeks in Benghazi – but partly because I do not feel that a blog is the best platform to bitch and moan (or boast) about my work and partly because I am drained I do not think I will. Or maybe in the future I will, who knows. So you will not hear me talk about being given a morality check by a petroleum engineer; or sitting through endless coordination meetings that look like this; or having the pleasure to be on the receiving end of some 20 phone calls every day from journalists that cannot take no for an answer or being called a misogynist racist over-paid aid worker by a Spanish journalist that then called me a faggot.

So what I am going to talk about is the reactions I have been getting from people when I tell them that I will be leaving Egypt in August. Reactions from foreigners who just got off the boat but also some well seasoned expats that have been marinating in the region since Anwar El Sadat was in elementary school.

When I say that I will be taking unpaid leave from my job and thus leave Egypt in June, jaws drop and I am usually asked why I would live the region right now when things are getting ‘real exciting’. The same way you would tell someone who is leaving the cinema room in the midst of a gory murder scene to go buy pop corn.

I do not know why but I get slightly offended by these comments, by the superficiality of it. I feel like people are saying: why would you voluntarily give up a front seat as angry Arabs try to fight for their freedom? Maybe you will get to take a snap shot as the tanks roll into Deraa and get to post it on flickr or maybe you will be telling the grand-children that you watched the revolution as it took place on twitter and conversed with the local activists over Turkish coffee and shisha, part Robert Fisk part Lawrence of Arabia.

If you are enjoying watching churches being burnt down on TV in your flat in Zamalek and then blogging about it for the friends back home, than darling please call yourself by your real name: a free rider. Not paying any of the costs yet enjoying the benefits. (Sorry if this offends anyone – maybe I am also an opinionated, holier than thou free rider, but at least I am ok with it).

So here it is my thoughts on why I am not dying of fear of missing out:

  • Things are not just getting interesting. The region (and the world even, shall we say) is an interesting place even when things do not make headlines.
  • In my personal opinion, the real revolution has not even started and probably it will not start until a few months down the line. The symbols of power have been taken down, but the link between power and money has not been severed (let’s think large monopolistic interests linked to strategic industries such as the military). Ahmed Ezz maybe in prison, but I did not see many headlines on how the steel monopoly in Egypt is going to be open up to free and fair competition. Never been a fan of economic liberalism nor I am arguing that it is a cure, but I feel that if things change they will change when resources (especially public ones) are more equally redistributed and this is one of the issues that could be a litmus test – more so than democratic elections that can be used as a way to pacify outsiders and insiders’ anxiety about democratic reform (read: psychosis of a take-over by the Muslim Brothers) without really creating a shift in they way a country is run (again, not saying elections are useless, just they might end up being more of a symbol rather than a real process until they become an established pattern).

So let me get on with my life for a year or two and maybe come back when things will get even more interesting, yet they most probably will not be making the news (also, on a slightly different topic, a screenshot of what’s hot on aljazeera today, bonus material just for kicks).