Monday, January 31, 2011

Unemployment and Regime Change

The events in Tunisia and Egypt have, so far, been truly monumental, with the path ahead in Egypt still very unclear.  The majority of the analysts interviewed from a variety of think tanks (Chatham House,  Brookings Institute) and reliable news sources (NPR, Al Jazeera) to the Council on Foreign Relations, all seem to agree that unemployment and poverty, particularly among young men, is the major impetus for this demand for change.  Government corruption and inefficiency, cronyism, political and personal repression for decades have led to economic stagnation for most people not friendly with the ruling elite.  With regime change, people are pinning their hopes on a future that includes opportunities for work and a better life for their families.

I am reminded, sadly, of two vastly different situations where regime change has not dramatically improved people's economic lot.  The first is South Africa.  After the first free elections in 1994, one of the new government's major goals was to reduce the unemployment rate, particularly among young black men. 
  From Wikipedia: "In post-apartheid South Africa, unemployment has been extremely high. While many blacks have risen to middle or upper classes, the overall unemployment rate of blacks worsened between 1994 and 2003.[30] Poverty among whites, previously rare, increased.[31] While some have attributed this partly to the legacy of the apartheid system, increasingly many attribute it to the failure of the current government's policies. In addition, the current government has struggled to achieve the monetary and fiscal discipline to ensure both redistribution of wealth and economic growth."  Currently, the total unemployment rate is officially 25.2%, and much higher amongst black men aged 18-35.  And this in the continent's largest economy.  The government has been unable to improve education and vocational training amongst the poorer classes inorder for these people to be attractive employees to new manufacturing ventures.  The people in South Africa have been remarkably patient and hopeful: for how much longer.  How are Tunisia and Egypt going to fare any better?

The second example is the USA:  with all the hopes that the new administration (our regime change) in 2009 would be able to actually activate "shovel ready" projects to help get the newly laid off back at work and give businesses tax breaks so that they would employ the unemployed....where are we?  Still at an average unemployment rate of 9.6%.  Businesses are making profits again, not hiring; banks are hanging onto their  cash, not lending; local and state governments seem unable to get those shovel ready programs jump-started and have severe budget problems.  If we can't do it in a hurry, how are Tunisia and Egypt going to fare any better?

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