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The rich get richer and the poor get poorer
Published in Daily News Egypt on 01 - 03 - 2007

A free global market minus social equality and government control is disastrous, says author
CAIRO: Under the umbrella of the new free market economy, growth rates have gone remarkably up and multinational companies are operating extensively. But has the system really brought welfare and reduced unemployment?
In Egypt most people would say "no to that. But when the same concerns are voiced by an economist who belongs to one of the bastions of capitalism, we all need to listen up.
In his "Economy that Exudes Poverty that was released in Arabic last month, German economist Horst Afheldt is not urging a return to the socialist era but is calling for cementing liberal economy with social equality. He believes that the system all over the world has regrettably rushed towards the accumulation of wealth only to aggravate nations problems at a time many believed it was the only way out.
After Egypt's socialist revolution in 1952, the country underwent drastic social and economic changes: Land was distributed among the peasants and farmers, factories and companies were nationalized to protect the workers against exploitation and the government began to assume a holistic role.
But these policies took a back seat as the years proved their shortcomings and a fresh approach aimed at re-adopting liberal economy, in its global form, became necessary.
But following decades of implementing the new system, we feel we are inviting the ills of the feudal era that many of us had only heard about, obsessed as we are by the failings of the post-revolution socialist propaganda and overlooking some of the old system s positive aspects.
Egypt was the first country in the region to dabble with the free market economy in an attempt to encourage foreign investments, overcome the unemployment problem, boost growth and improve the standard of living.
Afheldt's book, translated by Dr Adnan Abass Ali, was published by the National Council for Culture and Arts in Kuwait, as part of the Alam Al Marifa series that issues a new title every month.
It is a warning against the dangers of globalization and free trade agreements that are taking over the global economy.
Germany is a case in point. When it was divided into two parts, the country experienced both the socialist Marxist restrictions in the east and the luxuries of free market economy in the west.
After the fall of the Berlin Wall, experts decided to compare conditions before and after that historic turning point.
In his introduction the translator underlined economist Paul Samuelson s statement:
I don t care who writes a nation s laws if I can write its economics textbooks.
This is a statement that should urge many to consider the current economic policies aimed at abiding by one economic global system.
Through extensive analyses and relevant statistics, Afheldt offers evidence to prove that, since unified Germany has adopted the crude free market economy, the country has become more divided than ever before.
Despite the high growth levels and the increase in the wealth of investors, the workers revenues have remained fixed.
In 1970 the number of people that needed social subsidies was put at 1.5 million as compared to 4.5 million in 2002, wrote Afheldt.
In 2004, the year when we had to watch our expenses, the investors revenues had slowly increased and by that year they had gone up by 10 percent as those of wage workers, who make up 90 percent of any population, remained fixed so they had to bear the brunt of low incomes as well as the decline of government aid due to the introduction of the market economy, the author added.
Why are citizens getting poorer in spite of the fact that growth has more than doubled? What kind of economy is that in which national growth coincides with poverty?
If there is a deficit, where has the profit acquired through mass production gone?
According to the author, the procedures followed by governments to deal with the resultant socio-economic problems are just a waste of time.
This is because the root problem lies in the restrictions-free world market that is fast integrating local markets worldwide through the Free Trade Agreement.
The governments are in a dilemma about who has to shoulder the responsibility of the fallouts: the laborers or the investors?
Through statistics the author proved that tax revenues from investors have gone down by half since 1970.
The Free Trade Agreement has also affected the labor force - the German industrial sector has pushed some 2.8 million job opportunities outside the country.
In the second part of the book Afheldt emphasizes the fact that the world is in dire need of a new economic system.
The initiative should be carried out by nations through pulling out from the Free Trade Agreement either unilaterally or collectively.
However this can only be achieved through efficient political leadership and the cooperation of all members of the European Union, says Adheldt.
Through that new approach the governments will not only achieve economic stability and contain fallouts, but will also raise the standard of living, boost the principle of social equality and ensure fair distribution of wealth to reduce the social and economic gaps between citizens.
For the author, in the absence of social equality there is no peace, no prosperity and no development. The government must reassume its economic role so that it can enforce the principles of social equality.
The book is a strong warning against the free market and globalization. Perhaps its time to consider it before the situation in Egypt gets out of hand?


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