It is undeniable that the economic trends that ran throughout Mubarak’s rule played a major role in both the trajectory of his reign and the future of the nation. The popular “citizen Mubarak” who took power in 1981, declaring that “the coffin has no pockets”, slowly became the $70 billion dictator; at the same time, his early rule was characterized by a mish-mash of policies that leveraged one economic problem to manage the other and economists who were certain to “make sure the curves always sloped up.” In this sense, his rule represented an almost accidental economic management of the country. After the rebalancing reaction to the oil shocks of the 1970s and 1980s and the increase in tourism, the country seemed to hum along sustainably enough, and no one complained about the corruption. Corruption was not a factor until much later.
Indeed, the story of Egypt’s huge increase in inequality and Mubarak’s institution of the Washington Consensus after oil prices dropped in 1987 is a familiar story to those who study developing markets. In fact, Mubarak purposefully encouraged the amassing of enormous fortunes by private citizens through objectively corrupt practices in order to mimic what he saw in other Middle Eastern countries, where private citizens controlled enough cash to inject the economy with liquidity in tough times. Thus, the central bank became an instrument of embezzlement, until there was nothing left for Mubarak’s sons to steal.
Yet the regime continued chugging along, instituting the Milton Friedman school of leadership with Prime Minister Ahmad Nazif’s big-business cabinet in 2004. Numbers were cooked, inequality increased, and the gated cities that divided the rich from the poor seemed to prosper, until it all exploded in the revolution. The uprisings temporarily slammed the economy with a strongly contractionary quarter, but such upheaval was necessary in the wake of long-standing economic conditions. In the long run, a country with unsustainable economics is a country with unsustainable politics; when the dust settles, “bread, freedom, and social justice” must become more than a slogan if stability is to last.
Eeconomist, Economics Editor, and Assistant Editor-in-Chief at Egypt’s largest newspaper, Al Masry Al-Youm discussed the economic standstill and the Egyptian market upheaval during the revolution and Mubarak’s reign.