Sunday, February 20, 2011

Egypt’s Military and Crony Capitalism

Crony capitalism is the name given to the faux capitalism practiced in many developing countries, where the “capitalism” is mostly about tax and regulatory breaks for politically connected enterprises.

It’s not politically correct in the U.S. to say this, but this is essentially the system that the Nazis practiced in Germany, and Fascists everywhere tried to ape.† Unfortunately, such systems are capable of delivering real economic gains, and are often politically popular because of that. Case in point: the Nazis were politically popular in Germany until Allied bombers started showing up over core German cities in mid-1943.

Around the world right now, the big crony capitalists in the news are China – where Red Army officers often get lucrative positions and kickbacks, and Iran – where the Revolutionary Guards are the biggest producers of stuff.

Which brings me to the Egyptian Army, as explained in the article entitled “Egyptians Say Military Fights Open Economy” in the February 18th issue of The New York Times:

… It also runs day care centers and beach resorts. Its divisions make television sets, jeeps, washing machines, wooden furniture and olive oil, as well as bottled water …

… The military pays no taxes, employs conscripted labor, buys public land on favorable terms and discloses nothing to Parliament or the public.

Do you think this might have anything to do with why the people in the streets complain about a lack of opportunities?

† This economic system is distinct from the Fascist political system. It’s become trendy over the last decade to throw around the term Fascist with regard to political decisions in developed countries. There may be problems with those decisions, but they really don’t fit the Fascist mold, so this name-calling is more akin to prejudice.

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