According to the renowned economist Paul Krugman, the US is a “low-tax” jurisdiction, with aggregate tax receipts amounting to slightly more than 30% of US Gross Domestic Product. Unsurprisingly, the Scandanavian social democracies have the highest overall ratio of taxes to GDP, with tax receipts in excess of 50% of GDP.  In Egypt, taxes represent only approximately 15% of GDP.  Any economic reform will require raising the ratio of tax receipts to GDP so that the state has the resources to make the necessary investments in public goods such as health, education and infrastructure.  Hopefully, if Egypt evolves into a democracy with meaningful public participation, its ability to collect taxes efficiently will improve dramatically. Indeed, Greece, which is notorious for its citizens’ non-compliance with tax law, still manages to collect tax revenues approaching 40% of its GDP.  I note that perhaps the Egyptian state’s ratio of taxes to GDP somewhat understates its access to resources given the fact that it still owns substantial productive assets; nevertheless, I suspect that there is a lot of room for rationalization (i.e., expansion) of the tax base in a fashion that would be highly progressive.  I have suggested that a property tax be introduced instead of raising marginal income tax rates because of its relative simplicity.  Presumably, a relatively low property tax rate applied widely enough could raise a substantial amount of revenue, and functionally, act as a clawback for state-owned property that was privatized using less than optimal procedures.  In any case, unless the Egyptian state can improve the efficiency of its tax-collection, raise the overall ratio of taxes to GDP, and invest the additional marginal revenue in public goods, it will be very difficult for Egypt to attract sufficient private capital to generate substantial enough growth to solve the structural unemployment problem.

It would be an understatement to say that westerners remain concerned about the role of Islam in democratizing Arab states.  Some, however, have suggested that secular democracy need not mean a complete exclusion of religion from the public sphere, but instead permit its participation against a background of institutions that serve to moderate the risk of a “tyranny of the majority.”   I agree that this is the most that can be reasonably obtained under present conditions in a country like Egypt.

In my opinion, modernist Islamic thought — the ideological basis of moderate Islamism –has been concerned primarily with equality before the law, establishing accountability of the government to the people, and eliminating arbitrary decision-making so as to better pursue the public good. They are attracted to democracy because they see democratic institutions as the best means to establish these ends.  Unfortunately, Islamic modernism (nor secular modernism in the post-Ottoman world, for that matter) has not been gravely concerned with pluralism as such.

Mona Eltahawy rejects Sarkozy but accepts the niqab ban, as she has expressed both in print and on tv.  I agree with Mona that the niqab is not an Islamic requirement; I also agree that many Muslims have a destructive conception of gender roles, and am sympathetic to her claim that many Muslims who encourage women to wear the niqab in fact propagate a version of Islam and religiosity that distorts Islam’s capacity to make us the kind of broad-minded individuals that God intends.  Nevertheless, I don’t think niqab bans are an effective way to fight the narrow-minded theology she rightfully rejects.

Al-Masry al-Youm (English) is reporting that Qaradawi has come out with strong criticisms of the Egyptian salafis.  Particularly important, I believe, is his criticism of their literalism in understanding Islamic texts and their opportunism in trying to exploit a revolution that they refused to participate in, and indeed, condemned as a kind of rebellion.  It is a bit ironic, now that the revolution has succeeded, that they see no obligation to obey the law, nor do they deem violent confrontation of those whom they condemn as engaging in immorality (taghyir al-munkar bi-l-yad) as rebellion, even though Islamic law condemns vigilantism as iftiyat.  Apparently, the salafis only seem to believe there is an obligation to obey the law of tyrants!

Some Egyptians are beginning a campaign to urge international creditors to forgive some of Egypt’s indebtedness on the grounds that it was used to benefit the previous ruling elite rather than the Egyptian people.  Debt relief for Egypt in these circumstances, however, would be a bit like giving more crack to an addict.  Certainly, some debts were questionable, but the real problem facing Egypt is structural: an inability to improve long-term domestic efficiency. Steps need to be taken to create a more equitable and efficient taxation system, and to develop and implement a realistic plan for investment in the capacities of the Egyptian people.   If that were achieved, Egypt’s debt position would not be so burdensome. In fact, Egypt is not a particularly over-leveraged country, with its overall debt representing 80.5% of its GDP, but its external debt amounting to only $30.6 billion, which puts it 65th in the world in terms of external indebtedness.  (To put it differently, that means that Egypt’s external debt to GDP ratio is about 15%, so the prospect of Egypt facing an immediate balance of payment crisis is remote.)  Egypt faces a long-term problem arising out of a chronic current account deficit which can only be remedied by increasing the productivity of its population.  This will require substantial long-term investments, however, and I hope that the new government turns its attention to figuring out how this can be accomplished.  Debt-relief at this stage, I fear, would only defer the pressure to make the needed structural reforms.

Justice Antonin Scalia, in addition to being an originalist, also apparently believes in magic.  Or so we must conclude.  In yesterday’s argument over whether to certify a class-action alleging gender discrimination at Wal-Mart against female employees, the employees’ lawyers argued that Wal-Mart, by adopting a policy of delegating pay decisions to local managers, fostered a culture whereby pay and promotion decisions would knowingly result in decisions systematically biased in favor of male employees.  Scalia’s reaction to this argument was that the company had an “announced policy against sex discrimination” and expressed disbelief when the lawyer representing the women argued that the reality was just the opposite. I guess it must be the case that because Wal-Mart promulgated this policy, we can then assume, magically, that it was in fact implemented and observed in good faith.  An employer would of course never announce a policy that it had no intention of complying with in order to do something so crude as trick people into thinking they are in compliance with the law or that they are a progressive employer. Especially not a company like Wal-Mart, which already enjoys a stellar reputation as an exemplary employer.

Rolling Stone has just published a gruesome expose of the actions of a unit in the US Army that engaged in a killing spree of Afghan civilians for sport, even severing body parts for personal trophies.  The article makes clear that this was not the conduct of a few bad apples; rather, it was born of a deep hatred for Afghans that led Jeremy Morlock, a corporal in the US Army and of the soldiers accused of these crimes to say to one of the investigators “None of us in the platoon – the platoon leader, the platoon sergeant – no one gives a fuck about these people.”  It is probably the case that the scenes described in this story are being repeated on a wide scale in Afghanistan.  If the reports in this story are true, the only conclusion one can reach is that the US Army has now become depraved to the point of barbarism, something I say with deep sorrow.  The article clearly shows that the actions of this “rogue” unit were well-known, and they saw no need to hide what they had done.  In short, the evidence is pretty damning that the Army was aware of the conduct, and did nothing to stop it, until it was forced to, and even when it did respond, it has failed to take any action against officers who either knew, or were recklessly indifferent, to the conduct of soldiers under their command.  Even someone like myself who is not a flag-waving American nationalist likes to believe that the US Army tries to live up to the ideals of the American Republic.  This story shows with clarity that it no longer has the capacity to do so.  I also think that it follows from this conclusion that we have no business in Afghanistan and should leave immediately.

This detailed statistical analysis of the referendum vote, on a province by province basis, along with socioeconomic statistics such as voter turnout, literacy, per capita GDP and its ranking on the Human Development Index, provides very good evidence that the transformation we desire in Egypt will require substantial investment in the human capacities of the Egyptian people, in particular, in the countryside.  Click on “read more” to see the details.

Now that the official results of the March 19^th referendum are in and the constitutional amendments have been approved, one can confidently say that a new era of competitive politics has dawned in Egypt.  Whether it will lead to a progressive future, or one dominated by narrow sectarian and class politics, however, is a question that will only be answered over the next few years.  In the near term, there will be parliamentary elections, and most analysts seem to assume that these will be dominated by the only two organized political forces in Egypt: the Muslim Brotherhood and the remnants of the National Democratic Party.

I posted some thoughts on the March 19th Referendum earlier this week the sum and substance of which were that there were good arguments on both sides, but that ultimately, the result did not matter because the military was still in control, and it has proven that it will not make any changes unless the people force it to change.  Since that post, however, I have had occasion to revisit this agnosticism and now wish to clarify something important that was missing from my initial analysis.  While I continue to be agnostic regarding the substantive decision to approve or reject, I do think the following points are important:

1. Turnout needs to be high.  A weak turnout will be taken as a signal to the military the population is more or less satisfied with what has happened, i.e., the removal of Mubarak, and that this was about nothing more than succession.  The problem has been taken care of, and we need not worry about torture, democracy, etc.

2. Results must be transparent and voter fraud should be minimal and where instances of vote-rigging or vote-buying are documented, they should be aggressively publicized and punished.  There needs to be a strategy in place to monitor voting sites throughout the Republic.

3. Ideally, whatever the results are, it should be close.  A close outcome will signal a deeply engaged public that is going to keep the military on the hot seat with respect to the transition.

I don’t believe the current Egyptian military has the stomach for a long fight over democracy with the Egyptian people, but they also are not keen in having Egypt become a democracy either.  They will come along, but only crying, kicking and screaming, like a spoiled-child.  The parents, in this case, the Egyptian people, have to be patient enough to put up with their spoiled behavior, which is a reflection of the 50-plus years of privileges they have enjoyed.