Thursday, October 21, 2010

Syrian Economics 101

Recently on this blog I posted The Syrian Private Sector: A Socioeconomic Farce. It did not impress me then as one of my more controversial pieces of writing. After all, I reckoned, I am merely stating the obvious; what everyone in Syria is already aware of and what the majority of the people believe to be very close to the truth. I had no idea that in doing so I had stomped over every modern economic theory out there. My unassuming yet commonsensical post was stripped naked, analyzed and criticised by the expert hands (and mind) of one of Syria’s leading online economists, Ehsani on Syria Comment and to tell you the truth I was not offended in the least. Although he cleverly stated that he found my amateurish wading in the realm of economics entertaining it must’ve touched a raw nerve.  As a matter of fact, I was flattered that my simple essay had inspired him to compose such a replete article.

My only squabble with Ehsani concerns two points in his critique. First, he discounted the social grievances as somehow frivolous in the grand scheme of economic reform. Second, and despite his very poignant title “The Sin in Syria is Low Wages" he absolved the private sector from this sin in the same manner a priest gives the Sacrament of Penance to a serial rapist.

The primary contention of my post was that the private sector is not only cheap and by cheap I mean greedy, base, mediocre, rotten and meretricious but that it is brutal, heartless, destructive, parasitic and hugely culpable for the rapid deterioration in the standard of living of most Syrians and for the further erosion and eventual disappearance of the middle class. I will not go any further in a game of numbers. I’d rather leave that to the experts since they themselves cannot justify it except by stating that the stakeholders would not pay anyone more than he or she is worth (to them). If there is a consensus among economists about the human validity of the above argument then the field of economics is the only social science that is openly void of any moral values.

Since the debate veered into private banking in Syria, shouldn’t I ask what did these banks contribute to the country and its economy. I could care less about the voraciously bovine shareholders being happy. Emperor Nero was happy too while Rome burned to the ground after he set it on fire. Besides channelling money back and forth between Syria and Lebanon and funnelling untraceable and untaxed cash profits to foreign accounts for the “big” clients what added value (a service that was not and is not already offered by the state owned banks) did these banks bring to the average Syrian?

“Fulfill your dream and buy an LCD screen with 24 easy instalments.”
“Now you too can have a laptop.”

Yes I know I’m punching below the belt but what is the real motivation behind these grand services? Are they provided in good faith to the millions of Syrian consumers with petty dreams of big screen television sets and portable computers or to the VIP clients, the importers of these consumer products? Let’s not kid ourselves, Syrian private banks are segregated institutions with long lines of lowly customers waiting for the next available teller and posh offices for the distingué clientele. The lines and the tellers are a front, a money-making one for sure, but it takes too much valuable real estate. Make the waiting area as small and intimidating as possible, populate the desks with unsmiling and unfriendly faces, hire a security prick with a bullying stare and here you have it ladies and gentlemen, the proverbial Syrian private bank. The LCD screens and laptops, in addition to fattening the bank accounts of the monopolist importers, are useful PR gimmicks too. Oh, give me a break and stop whining, an erudite reader might interject, banks are like this all over the world and not only in Syria. Well they are, but the point is that in Syria the private banks are serving the top 1% (in term of wealth) of the population. For all the rest, for the remnants of a once thriving and formidable middle class and for the poor masses, private banks are nothing but groveling and corrupt business outfits. That being said and out of the way, a few private bank managers are among my good friends. My verbal barrage was never against any person or persons employed in the banking industry but rather against the conceptual framework behind their debauched economic raison d'être in a country like Syria or anywhere else where the “social” price behind the board members’ profits is unacceptably too high.

From private banks to private schools the picture remains as bleak as ever. The mere fact that government owned banks and schools offered inferior services and education is not a license for these private institutions to be mediocre and ineffectual. Since free market economists are trying to convince us that highly-paid bankers are as hard to find as rocket scientists or brain surgeons what about school teachers? There are plenty of those around, aren’t there? From Algeria to Oman Syrian teachers have always been on the forefront of education in the Arab world. There are private schools and universities popping up everywhere in Syria now and charging premium tuitions (let’s not talk numbers). They could, if they wanted to, recruit and hire these highly skilled teachers and professors. They could lure them into leaving high schools in Saudi Arabia and colleges in the United States and bring them back to their own country to teach in style and dignity. Private schools are offering obscenely low wages, lower still than the government, and hiring inexperienced green teachers to save money and increase their profits. Private universities continue to enlist the part-time services of local PhD’s already employed by the state universities because they are required to have them on their faculty roster by the Ministry of Higher Education while throwing the bulk of the actual instruction on Master’s degree holders because they cost even less.

Once we realize that the board members of private banks in Syria, the founders of private schools, the board of trustees of private universities, the importers of consumer products, the sole agents for various brands of automobiles and the filthy rich merchants (new and old) are the same people we begin to understand the Syrian economic reform’s failings in a crystal clear way. The Syrian economy is driven by an avaricious elite, say the top three or four hundreds big names of the private sector. All the government can ever do is attempt to impose a speed limit in order to reduce the number of casualties. I leave it to the experts to evaluate government performance but for one who has been living in Syria for the last 24 years I can only state the obvious. We moved from bad to worse socially and economically. The poor are poorer and more numerous. The rich are richer and fewer. The Syrian private sector is indeed a socioeconomic farce.


Jad said...

Dear Abu Fares,
I salute your courage in saying the obvious without trying to sugarcoat the truth that with or without any degree in economy the average Syrian 'Abu Ahmad' not only understand it but he also live with it everyday.

I asked the same question you asked:
"Since the debate veered into private banking in Syria, shouldn’t I ask what did these banks contribute to the country and its economy."
I got no proper answer because obviously there is none. It's funny how the people's mentality change, asking such question will make you sound 'bad' as if doing good to Syria is something Taboo that nobody should ask and we should be ashamed of!!?

My friend, we are living in a Mad World and the answer to your big and dangerous question of:
"If there is a consensus among economists about the human validity of the above argument then the field of economics is the only social science that is openly void of any moral values."
is YES, in economics there is no place for Morals it has only Values and we the very few left average middle class Syrians are the big losers :)
Thank you.

abufares said...

Thank you for commenting (here and there). I appreciate your visit rather than agreeing with me.
I think that my point of view is shared by the vast majority of Syrians. Very few would rather stick to a state controlled economy and if anyone understood that I'm actually promoting going against the "reform" flow then they have terribly misunderstood me. However, I'm accusing the private sector (and I clearly mean the BIG Fish, the top two to three hundreds businesses) of evading not only taxes but their social responsibilities and obligations while at the same time fueling the resentment toward them.
I call them as I see them and I admit that there must be exceptions to my generalization. But by and large, very few of the large businesses in Syria are honest and innocent enough not to be responsible for the worsening economic conditions.
We can't blame it all on the government anymore.
Again, Many thanks.

Dubai Jazz said...

Habibi Abu Fares, awesome post. I couldn't have said it better.

First of all, thank you for an intelligent and healthy debate.

I understand where Ehsani is coming from. Having lived in a unapologetically capitalist country for the last few years, having listened to, debated, and had verbal shouting matches with the Ayn Rands of the UAE, and grappled with their Atlas Shrugged-ed ideologies; I understand where he comes from.

However, the bit that baffles me is that the concept of lassize faire economics, which Ehsani and others are advocating, is applicable as a whole in a free market society: emphasis on free. And I ask myself: to what degree are we free from our superstitions? To what degree are we free from incompetence? To what degree are we free from lopsided regulations? To what degree are we free from favortism and slanted assessments and credit ratings? I could ask more questions but I'll desist. The libertarian 'let the free market decide' concept is worth experimenting with but in the current conditions of Syria, we'd be fooling ourselves to think it could be applicable. The rich can't have their cake and eat it.....

Collective problems require collective solutions.

Once again, I salute you and Ehsani for this civilized debate.

abufares said...

It's been a while but it's always nice to see you here:-)
Being an active participant, and a member of the Private Sector (in a small way) had put me at odds with economic government policy for a good part of my working life in Syria. However, what happened later defies acceptance. We were so used to blaming the government then when the culprit actually changed some of us failed to see it. The government is responsible for its part of the damage no one is denying that. But the elite private sector which is actually controlling the Syrian economy today has reached a level of not only irresponsibility but of negligence which effect could be best described as manslaughter rather than premeditated murder.
For so long we cried for the government to take its hand out of the economy but trust me soon enough the people (the majority of the people) will demand a reverse of the trend.
The Private Sector screwed up bad and someone might have to pay. I hope it won't be the average Syrian.

Anonymous said...

salam Abu fares: I been following your blog on regular basis, (not commenting. You bot had a veiw of the seene, it is bad all over (private and goverment run market) I beleive in some regulation, Look at te mess that we are in here (USA). a lot of people suffered, But not the CEO's (they still make a lot of money despite the bad managment). I beleive in middel class as a powerful and vital player ( sadely the middl2 calss is shrinking everywhere).
Your Jar Gassan.

abufares said...

Yes the middle class is shrinking at different rates all over.
The transformation to a free market economy is a troublesome path. It shouldn't be taken lightly, casually and "fast". Educating the rich (haves) before the poor (have-nots) is of utmost importance. In Syria where the tax system in primitive and ineffectual a possible solution is to estimate and regulate profits, put a cap on them and tax them fairly.
Let's consider the large importers. In a non-productive market( primitive and/or light industry) trading becomes the major income/profit source. It's possible to account for all imports of a certain company. It's also possible (in the Syrian context) to put a percentage ceiling on profits. Why do doctors, engineers, ...etc. have to adhere to a rate while businessmen don't? And yes I agree with these fixed rates.
Exclusive agency rights in all their forms should be ended once and for all. They want FREE? Let's get rid of the parasitic agents who make a percentage and hold a monopoly over almost all imported products. Syria won't be the first country to abolish exclusive agencies.
The big whales don't like it and will move their investment somewhere else?! Good riddance, several smaller dolphins will move in. We have more social problems today with the economical elite than with the political one.
My ramblings are not valid in the economic circles?! I could care less. Economists already screwed up bad in the US and all over the FREE world as you pointed out. I'm sure these steps I'm advocating are as good as their pseudo-science if not better.

Karim said...

Dear Abu Fares,

I tend to agree with most of what you said, and I can add a bit of my own experience teaching at one of the private universities. I'm one of the master's degree holders you mention, and the only reason I chose to teach was for a sense of fulfillment - an attempt to give something back; it wasn't for the money, I can assure you (I spent more money on gasoline getting to and from the university than I made in wages). My experience is that these 'universities' are a flawed experiment simply because they are for-profit enterprises Shamelessly, their mantra is 'the customer is always right', so how dare you admonish a student, let alone fail him/her. I'm happy to tell you that I quit after 3 semesters teaching.

As for the public/ private sector argument, I don't believe one is inherently better than the other. What determines how an economy performs is the underlying institutional framework, which in the case of Syria is sadly extremely deficient. Economics is not an exact science, and it is certainly not devoid of morals (although some schools of thought in economics tend to be). For valuable insights, I highly recommend that you read "The Truth About Markets" by John Kay and "Globalization and its Discontents" by Joseph Stiglitz.

abufares said...

I went for the interview to teach in one of the private universities. Just like you, I hold a master's degree and just like you I wanted the job for a sense of fulfillment. The fact that I had to drive a minimum of 3 hours everyday, have to teach from an absentee's professor's notes and get paid a low salary stopped me from transforming my love for teaching from a dream into a reality.
And you're right neither the public nor the private sector is better than the other. That was my original point. I can't defend feudalism even though my great grand parents were landowners. I can't advocate that the public sector is a victim not a predator although I belong (in a small way) to this group.
Thank you for your reading recommendation. I look forward to it.

Anonymous said...

Dear Abufares, it is global problem, everything is becoming privet and it is very bad,most lakes riveres where we used to fish are closed and privet, we have to pay the licence to the goverment and pay the fee to fish,

ahhhhhhhhhhhhhhh ya Abufares, when i remember how i was free to fish and hunt wherever i wanted all the Eufates was mine, I didn´t loose time,

just have a look at south america it is the same,

companies should never be more poweful than the governments

abufares said...

Tell me about it. The government here is taking its hands off almost everything in reality although on the surface it seems the other way.
There's already hardly any free beach left for the people. Me, a Tartoussi for at least 6 generations have to drive for at least 15 km to get to a public beach!
Very sad but true.

Anonymous said...

the world is becomeing a big cattle

Anonymous said...

Abufares, do you remember the AKIRA KRUSAWAS´ movei DERSU USALA, if not, just find it and watch it, and you´ll understand where the humans are going

abufares said...

I haven't seen the movie but asked a friend to get it for me.
I'm sure I'll like it :-)
Thanks for your suggestion.

Rime said...

Even better than the first post dealing with the economic farce, and that was an excellent post already! Well said ya Abufares!

abufares said...

Ohhh!!! So nice to see you here. I hope you and yours are doing great. You are always missed you know but what can one say! Sigh!!! Facebook does this to the smartest of us :-)

I'm glad you enjoyed my digressive economics. Rather than being an expert on the matter I am very much a disgusted (not disgruntled) insider. And believe me, it's even worse than I depicted.

Thank you for coming this way again. You're always welcome.