Egypt Teaches Political Power Grabs Hurt Economic Development

Yesterday, Business Insider reported, “Egyptian Stocks Got Obliterated In One Of The Ugliest One-Day Charts We Can Ever Recall.” According to everything we hear in the media and in the Obama campaign, the key to economic growth is giving power to the few, or even to the one. The chart they derived from Bloomberg, may demonstrate that Egypt disproves that point of view.

 

According to Business Insider,

“Fears that Mohamed Morsi is screwing the whole revolution up with his “Morsilini” act is wreaking havoc on the Egyptian market. On Sunday the market fell nearly 10%. Today? Off another 4.6%. And we can’t remember seeing a chart quite this ugly, as in, down, down, down, down. Most down days usually catch a floor at some point, even if only temporarily.”

So the direct association here is that a man “gives himself” (in reality: robs society of) powers he never had before, and then the economy tanks because people don’t want to invest in an environment under the control of capricious personal power. What does that tell us about Obama’s consolidation of his power, his unconstitutional czars, and his use of executive authority to keep secrets and use departments to do his will? Even Obamacare is not really laws as much as the delegation of tremendous authority to bureaucrats.

Some will push back that the issue in Egypt is that there will be another round of conflict. Personal power is not the culprit for a tanking economy, but rather the struggle in society between those wanting to take power and those wanting to keep power is the problem.

But that just moves the question back a step. How often can an office-holder “give” new powers to his office—powers that used to belong to others—and not expect opposition? Obama makes great pretense of claiming to unite Americans, but he actually divides them. How could it be otherwise? He wants to take away power from others and give it to himself, mainly by taking wealth away from others and giving it to his supporters.

Of course, Democrats constantly accused Bush of stealing power and putting it into the presidency. Mainline TV shows were constantly bashing Bush over such behavior. Why didn’t the economy crash then? They might ask.

But they miss the point that it eventually did. It got especially bad right after Bush pushed through a “stimulus” plan to give Americans money to spend—money that had been originally taxed from the people or borrowed in the people’s name from China. The stock market didn’t like that authoritarian plan at all. So the issue is one of trust. American investors have a good deal more experience getting positive returns in the United States. Different people will lose faith in an executive-dominated country at different times in their lives. What happened in Egypt was much faster, because Egypt has no history that built up a level of trust.

But no matter how much trust American leadership earned in the past, the more it becomes a banana republic today, the more of that earned trust will disappear. We may not produce the ugliest one-day chart yet, but stay tuned.