It isn’t every day that the world gets to watch the birth of a new constitutional democracy. As the political drama in the land of the Pharaohs unfolds, the Western commentariat seems totally focused on the extent to whichEgypt‘s new constitution will be informed by Sharia law. Alas, nary a peep can be heard about a far greater threat to Egypt’s freedom and prosperity.
The drafters of the new Egyptian constitution are blessed with having the history of two centuries of constitutional democracies to study. Evidence abounds on what works and what doesn’t, of which economic policies lead to rapid growth and which to stagnation and bankruptcy. Yet with all this information at their fingertips, the Egyptian people appear set to go to the polls to endorse … socialism.
Let’s peel back the draft Egyptian constitution and count the ways in which it paves the road to ruin.
PART I: Chapter Three: Economic Principles
National economy shall be organized in accordance with a comprehensive, constant development plan, ensuring the increase of national income, enhancement of standard of living, elimination of poverty and unemployment, increase of work opportunities, and increase of production.
The development plan shall establish social justice and solidarity, ensure equitable distribution, protect consumer rights, and safeguard the rights of workers, dividing development costs between capital and labor and sharing the revenues justly.
Wages shall be linked to production, bridging income gaps and establishing a minimum wage that would guarantee decent living standards for all citizens, and a maximum wage in civil service positions with exemptions regulated by law.
Bang, right out of the blocks—a centrally planned economy. No doubt this will be managed by just and wise bureaucrats, appointed on their merits and without regard to connections, and magically immune to graft—given how corruption is so rare in Egypt’s political culture. How could central planners possibly fail with all the tools the constitution puts at their disposal, like wage and price controls, unconstrained income redistribution, and centralized allocation of capital?
Agriculture is an essential asset of the national economy. The State shall protect and increase farmland, work on the development of crop and plant varieties, develop and protect animal breeds and fisheries, achieve food security, provide the requirements of agricultural production, its good management and marketing, and support agricultural industries.
The law regulates the use of land, in such a way as to achieve social justice, and protect farmers and agricultural laborer from exploitation.
A centralized farm policy, no doubt based on its long track record of success in other democracies. I wonder how long it will be before the Egyptians build their first cheese cave?
Industry is an essential asset of the national economy. The State shall protect strategic industries, support industrial development, and import new technologies and their applications.
Long live protectionism! And whose businesses do you think will be declared “strategic,” earning the right to be shielded from competition? Only your lobbyist—or uncle ensconced in a government ministry—knows for sure.
The natural resources of the State belong to the people, who have a right to their revenues. The State is committed to preserving such resources for future generations and putting them to good use.
Communal ownership of all natural resources. No private investment or development here! Prospectors be gone, Allah forbid that the one large Arab country not awash in oil might encourage entrepreneurs to search for shale gas deposits.
Workers shall have a share of the management and profits of enterprises. They shall be committed in turn to the development of production, to protecting its means and to the implementation of plans in their production units, in accordance with the law.
Workers shall be represented on the boards of directors of public sector units within the limit of 50 percent of the number of members of these boards. The law shall guarantee for small farmers and small craftsmen 80 percent of membership on the boards of directors of agricultural and industrial cooperatives.
A lesson in corporate governance straight from the Jimmy Hoffa School of Management. This will surely attract multinational companies to rush in and set up lots of cooperatives, well-known engines of progress.
Saving is encouraged and protected by the State. The State shall also safeguard insurance and pension funds, in accordance with legal regulations.
The new government isn’t even functioning yet and it’s already being set up for TARP on the Nile.
Chapter Three: Economic and social rights
High-quality education is a right guaranteed by the State for every citizen. It is free throughout its stages in all government institutions, obligatory in the primary stage, and the State shall work to extend obligation to other stages.
Yes, high quality and free because wishing it so will make a great education fall like manna from heaven.
All educational institutions, public and private, local and otherwise shall abide by the State educational plans and goals, and realize the link between education and the needs of society and production.
Don’t forget central planning of all curricula, including private schools and universities. That should contribute to progress and diversity.
The State shall guarantee the freedom of scientific and literary research. The autonomy of universities, scientific and linguistic academies, and research centers shall be safeguarded; the State shall provide them with a sufficient percentage of the national revenue.
Because nothing ensures the “independence” of scholars and scientists like putting them on the government dole.
Healthcare is a right of every citizen, and the State shall allocate a sufficient percentage of the national revenue.
The State shall provide healthcare services and health insurance in accordance with just and high standards, to be free of charge for those who are unable to pay.
All health facilities shall provide various forms of medical treatment to every citizen in cases of emergency or life danger.
The State shall supervise all health facilities, inspect them for quality of services, and monitor all materials, products and means of health-related publicity. Legislation to regulate such supervision shall be drafted.
Obamacare, meet Morsicare. Top quality for all, of course. But it doesn’t stop there. Get a load of the parade of goodies to be provided by the new government. Egypt’s new founding fathers must be wealthy indeed to make all these promises.
The State guarantees for every worker the right to fair pay, vacation, retirement and social security, healthcare, protection against occupational hazards, and the application of occupational safety conditions in the workplace, as prescribed by law.
The State shall provide social insurance services. All citizens unable to support themselves and their families in cases of incapacity, unemployment and old age have the right to social insurance guaranteeing a minimum sustenance.
The State shall provide an adequate pension for small-scale farmers, agricultural workers, casual workers, and all who do not have access to the social insurance system. All are subject to law regulations.
Do you think Egypt will adopt the successful Chilean private pension model for its Social Security system? Nah. If you are going to establish a Ponzi scheme the salad days are right at the outset! No doubt all of the money collected from Egyptians’ payroll taxes will be safely invested in a trust fund. Maybe Al Gore can lend them his lock box.
Adequate housing, clean water and healthy food are given rights. The state adopts a national housing plan, its basis in social justice, the promotion of independent initiatives and housing cooperatives, and the regulation of the use of national territory for the purposes of construction, in accordance with public interest and with the rights of future generations.
What good is democracy if it doesn’t guarantee a roof over your head? I hear the executives that used to run Fannie Mae and Freddie Mac are looking for work; perhaps they can land a good gig showing the Egyptians how it’s done.
The State shall provide care for children and youth; shall support their development spiritually, morally, culturally, educationally, physically, psychologically, socially and economically; and shall empower them for active political participation.
What the people of Egypt need is neither sharia nor socialism but free enterprise, which doesn’t even merit a passing mention in the draft constitution. If rich countries like those in Europe and the U.S. are running out of other people’s money pursuing redistributionist central planning, how is a basket-case economy like Egypt’s supposed to pay for similar schemes? What entrepreneur in his right mind would not book the first flight out after this constitution passes seeking a better life where he can keep what he earns? (Not that there are many countries like that left.)
If you want proof that human beings are incapable of learning from history, the new Egyptian constitution is exhibit A.
Bill Frezza is a fellow at the Competitive Enterprise Institute and a Boston-based venture capitalist. You can find all of his columns, TV, and radio interviews here. If you would like to have his columns delivered to you by email, click here or follow him on Twitter @BillFrezza.