"To Egyptians, the things that have
held them back include an ineffective and corrupt state and a society where
they cannot use their talent, ambition, ingenuity, and what education they
can get. But they also recognize that the roots of these problems are
All the economic impediments they face stem from the way political power in
Egypt is exercised and monopolized by a narrow elite. This, they understand,
is the first thing that has to change.
Yet, in believing this, the protestors of Tahrir Square
have sharply diverged from the conventional wisdom on this topic. When they
reason about why a country such as Egypt is poor, most academics and
commentators emphasize completely different factors.
Some stress that Egypt’s poverty is determined primarily by its
geography, by the fact that the country is mostly a desert and lacks adequate
rainfall, and that its soils and climate do not allow productive agriculture.
Others instead point to cultural attributes of Egyptians that are supposedly
inimical to economic development and prosperity. Egyptians, they argue, lack
the same sort of work ethic and cultural traits that have allowed others to
prosper, and instead have accepted Islamic beliefs that are inconsistent with
A third approach, the one dominant among economists and policy pundits, is
based on the notion that the rulers of Egypt simply don’t know what is
needed to make their country prosperous, and have followed incorrect policies
and strategies in the past. If these rulers would only get the right advice
from the right advisers, the thinking goes, prosperity would follow. To
these academics and pundits, the fact that Egypt has been ruled by narrow
elites feathering their nests at the expense of society seems irrelevant to
understanding the country’s economic problems.
In this book we’ll argue that the Egyptians in Tahrir
Square, not most academics and commentators, have the right idea. In fact, Egypt
is poor precisely because it has been ruled by a
narrow elite that have organized society for their own benefit at the expense
of the vast mass of people. Political power has been narrowly concentrated,
and has been used to create great wealth for those who possess it, such
as the $70 billion fortune apparently accumulated by ex-president Mubarak.
The losers have been the Egyptian people, as they only too well understand.
We’ll show that this interpretation of Egyptian poverty, the
people’s interpretation, turns out to provide a general explanation for
why poor countries are poor. Whether it is North Korea, Sierra Leone, or
Zimbabwe, we’ll show that poor countries are poor for the same reason
that Egypt is poor.
Countries such as Great Britain and the United States became rich because
their citizens overthrew the elites who controlled power and created a
society where political rights were much more broadly distributed, where the
government was accountable and responsive to citizens, and where the great
mass of people could take advantage of economic opportunities.
We’ll show that to understand why there is such inequality in the world
today we have to delve into the past and study the historical dynamics of
societies. We’ll see that the reason that Britain is richer than Egypt
is because in 1688, Britain (or England, to be exact) had a revolution that
transformed the politics and thus the economics of the nation. People fought
for and won more political rights, and they used
them to expand their economic opportunities. The result was a fundamentally
different political and economic trajectory, culminating in the Industrial
The Industrial Revolution and the technologies it unleashed didn’t
spread to Egypt, as that country was under the control of the Ottoman Empire,
which treated Egypt in rather the same way as the Mubarak family later did.
Ottoman rule in Egypt was overthrown by Napoleon Bonaparte in 1798, but the
country then fell under the control of British colonialism, which had as
little interest as the Ottomans in promoting Egypt’s prosperity.
Though the Egyptians shook off the Ottoman and British empires and, in 1952,
overthrew their monarchy, these were not revolutions like that of 1688 in
England, and rather than fundamentally transforming politics in Egypt, they
brought to power another elite as disinterested in achieving prosperity for
ordinary Egyptians as the Ottoman and British had been. In consequence, the
basic structure of society did not change, and Egypt stayed poor."
Daron Acemoglu and
James Robinson, Why Nations Fail
The Banks must be restrained, and the financial system reformed, with balance
restored to the economy, before there can be any sustained recovery.