International Analysis — Locked Out of Prosperity

Op-Ed by Hernando de Soto —The Mark News — 

It will soon be three years since Mohamed Bouazizi, a fruit vendor in the Tunisian town of Sidi Bouzid, stood outside the local governor’s office, doused himself in lighter fluid, and lit himself on fire. Bouazizi’s public self-immolation triggered the so-called Arab Spring, unleashing pent-up popular unrest that subsequently toppled authoritarian regimes in Tunisia, Libya, and Egypt, helped trigger a civil war in Syria, and sent seismic waves rippling through much of the Arab world.

Yet, where are we now? From a Western perspective, little progress has been made. Stable, functioning democracies have not mushroomed from nowhere. Economies have not blossomed. Unrest persists. Pundits scratch their heads trying to figure out why many of the same protesters who drove Egypt’s Hosni Mubarak from power gathered again in Tahrir Square last July to celebrate the military overthrow of Mohamed Morsi, his democratically elected successor. Neither peace nor prosperity reigns, and extremists or entrenched elites seem intent on hijacking popular revolutionary upheaval to serve their own regressive agendas.

It’s discouraging, to say the least. But if Western governments paid more attention to what exactly prompted 26-year-old Bouazizi to set himself on fire in December 2010, they would be in a much better position to help the Arab Spring yield the kind of fruit they hoped it would.

Bouazizi was not an ideologue. He was not taking a political or religious stand. Rather, he was protesting the confiscation of his wares. Because he was extralegal – governed by people and not the rule of law – when authorities turned against him they took not only his fruit and scales but also his right to do business, his right to a location, his right to credit and capital, and his ability to recover. With no legal recourse, he was ruined.

Less than a year after Bouazizi’s death, I asked his younger brother what he thought Bouazizi had hoped to achieve through his act of protest. His brother’s response was unequivocal: “That the poor also have the right to buy and sell.”

Interestingly – and mostly unnoticed by the media – more people self-immolated in the months that followed Bouazizi’s death. Of the 64 we know about (men and women in seven Arab countries), all were thwarted entrepreneurs. A majority survived to recount their motives and, despite their different situations, a common thread emerges: They were protesting because people more powerful than them expropriated their property. They felt economically excluded, and that their right to make a living was not respected.

Like the vast majority of working Arabs, these individuals did not have the protection of the rule of law. They were denied the kind of enforceable rules and standards that are essential to the functioning of a true market economy – the kind we take for granted in the developed world.

Such individuals know they will not become part of a bigger market economy in which they can compete at a global level as long as the markets they operate in continue to be dispersed, fragmented, and largely informal. They look bitterly at the minority of legal entrepreneurs within their countries and resent their exclusion from what is effectively a privileged club. If they try to gain entry, they find themselves barred by corrupt bureaucracies and seas of red tape.

It is going to be difficult for regimes in the Middle East and North Africa to reverse this tide of popular unrest. They must begin by making the necessary reforms so that functioning market economies can emerge, giving all citizens the opportunity to progress and enrich themselves.

Of course, for this to happen, stable political and legal systems have to be put in place. For a market economy to flourish, the rule of law has to apply equally to everyone.

A period of adjustment marked by trial and error is inevitable, and there will be conflict as the elite groups are forced to concede their privileged position.

But just as the Western world underwent the conflict and turmoil of the Industrial Revolution and came out the other side, so to must the Arab world undergo a period of transition. This is what is driving the Arab Spring; it’s an economic revolution.

Arab countries are undergoing a transformation that every developed nation has undergone at some point. They represent a huge untapped potential. Do not underestimate the capacity of people existing in systems that block their economic prospects. They know how to do business. Given the chance, they can lift themselves from poverty. The rest of the world will be missing a crucial opportunity if it continues to misinterpret what’s happening, and fails to recognize the aspirations of hundreds of millions of Arabs knocking on the doors of our globalized market economy.

Peruvian economist Hernando de Soto is the founding president of the Lima-based Institute for Liberty & Democracy. He was named one of the world’s 100 most influential people in 2004 by Time magazine. In 2005, he was also ranked 13th out of the world’s “Top 100 Intellectuals” in a joint survey done by Prospect magazine and Foreign Policy magazine. 

 

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