Arab re Awakening, Lebanon and Economics

Joseph Schumpeter one of the greatest minds in economics coined the term “creative destruction” in an effort to describe how capitalism moves forward by encouraging innovation and creativity. I believe , rather strongly that this idea applies rather neatly to the field of political science in general and to what is taking place in the Middle East in particular. What appeared to be hooliganism to Mr. Mubarak and his entourage and what is described as mobs and criminals by Saif Al Islam are anything but. This apparent spontaneous chaos is in effect nothing but the most creative of destructions that could give birth to a new free and democratic MENA.
Two down and seven to go might soon become three down and six to go. Wouldn’t it be grand if the move towards democracy, diversity and freedom is to finally take root in the Arab world?

Many of us have been calling for an “Arab awakening” a Gdansk moment or an Arab Berlin wall for a while. But if the revolution is to uproot the ruling structures in each of the Arab countries then why do we count only 9 dictators instead of 21? Well, in my case, at least, I think a radical change in the big 9 will force the others in the Gulf including Iraq and Lebanon to change also. The smaller countries are more dependent on their surroundings and none of them is strong enough to impose its beliefs but each of them will not be able to resist the tide to change and reform once that becomes the dominant form in the region.

Yet in spite of all of this I have been struggling to explain the difference between what is going on in Egypt, Tunisia, Libya, Yemen and the lack of any change in Lebanon. After a lot of soul searching I believe that to a large extent one can explain the respective differences between any of the major players and Lebanon in terms of another economic principle. In a major country such as Egypt or possibly Libya the power is concentrated in one person at the top of the pyramid. That single person embodies all powers in the country. This concentration of power is akin to that of a pure monopolist who is free to exploit and abuse the consumers/citizens. Lebanon on the other hand is closer to what Galbraith called the “counter vailing power” structure. This would be the fact when a pure monopolist in one field is not free to exploit, restrict and abuse since this monopolist faces an equally powerful monopolist on the other side of the enterprise. The interaction between these two monopolists will result in a solution somewhere in between what each of them would have liked to do. Theoretically the solution could be a total negation of the power of each and thus the citizen/consumer will contend with a solution that could be rather beneficial. A good example of this would be say an automotive giant who would have liked to impose its will on tire manufacturers but if the automotive giant faces a rubber giant then none of them would be in a position to exploit the other and the consumer will benefit.

Michael Young, of the Daily Star, has dealt with the issue of relative personal freedom in the Lebanese public square by attributing that relative freedom to the inability of any of the major sects to impose its own will unhindered. That is exactly what a counterveiling power does. This argument , however, is not to be construed as one in favour of sectarianism.

But this above argument, although it does lead to good outcomes, is just as badly in need of reform as any of the other single power dictatorships for the simple reason that the solution of the interaction between the oligopolists can never be determined in advance and if it does turn out to be efficient then that would be purely accidental. The system cannot guarantee efficiency/freedom and so the need to change and the need to adopt a fairer more competitive system are just as acute as in the case of a pure monopolist/dicatorship. As a result the revolutionary task in Lebanon is even more difficult than it was for the Tunisians and the Egyptians who had to organize against the person on top of the pyramid in an effort to uproot the regime that he represents. In Lebanon, we do not have that luxury, we have to organize against and get rid of the people at the top of a number of smaller pyramids whose individual constituents regard only the opposing pyramids as corrupt and inefficient. Each constituency appears to be relatively satisfied with its own mini pyramid and concentrates on blaming the opposing power structures. This problem fits very well the line from Luke:

“How can you say to your brother, ‘Brother, let me take the speck out of your eye,’ when you yourself fail to see the plank in your own eye? You hypocrite”. Is there any hope for a radical revolutionary reform in Lebanon? Only if we can shed our religious tribal affiliations and act as one. Unfortunately for us in Lebanon, Mouwatinieah and secularism are alien ideas.

Wikileaks Commotion: Does It Have Legs?

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It is no exaggeration to say that the world media is abuzz about Wkileaks, the not-for-profit international organization that has been making public leaked information regarding a gamut of subjects from a list of censored films by Lebanon, to files about the Afghan war, the Iraqi war and now 250,000 US diplomatic cables involving 270 embassies.

Many remember the Pentagon papers that revealed clearly that the “Administration had systematically lied, not only to the public but also to Congress, about a subject of transcendent national interest and significance". Many more remember with sadness the tendency of the Ford Pinto to explode essentially because the management had deliberately undertaken a cost-benefit analysis that showed that the corporation would be better served by not upgrading a dangerous fuel system that has the tendency to explode. There are many such examples, real and imagined where documents hidden from the public were meant to mislead and or cover up negligence and even criminal activities.

The documents released by Wiki leaks in connection to the conduct/misconduct of war in Afghanistan and Iraq meet the above aim that public disclosure will shine a bright light on events and developments that were meant to deceive and even deny justice. But is this the case in the sensational revelations that have caused so much coverage, the world over, when Wiki leaks made public the contents of 250,000 US diplomatic cables from all over the world? Of course not.

These cables are in essence the private analysis of employees that were required to provide their employer in confidence their non public evaluation of events and political leaders. The other highly sensational and even inflammatory issue in these cables was the public disclosure of the private opinions of various government officials all over the world who met with and were urged to discuss in strict confidence their views regarding a large variety of matters that range from the Iranian nuclear standoff to the UK military performance in Afghanistan.

Many countries and possibly most have adopted the legal principle of privileged communications that prevents certain parties, say physicians, from testifying against their patients by making their privileged information public. Courts will not admit into evidence such information on the grounds that the patient/client is protected from having the doctor, the priest, her lawyer or her suppose use her words against her under any set of circumstances. Don’t you think that a politician should have just as much right to keep his views private if he chooses? We do have a very wide understanding when practically every single one of us either seeks advice in confidence or offers it with the expectation that the ideas will not be plastered across the internet screens all over the globe.

Nothing more than embarrassment of some will result from these leaks. No higher purpose will be served and no one’s welfare will be protected by their release. Their effects will be momentary at best, until the novelty and shock value of such revelations die out. What did anyone gain from the knowledge that the King of Bahrain spoke freely about his fears from a nuclear Iran or from the fact that some US analysts suspect that the Russian mafia might have infiltrated the highest level of the Russian government. Was it really unexpected to hear Elias Murr, the Lebanese Minister of Defense telling the US ambassador that the Lebanese army will not engage the Israelis if and when a war between them and Hezbollah is waged? Yes it is highly embarrassing for a defense minister to speak so openly about the impotency of his armed forces but should that be a surprise when the Lebanese army is underequipped, undertrained. It’s an army without ammunitions.


I am not suggesting that the media organizations should not have covered the leaks. It’s a news story and that is the sole rationale for their existence. Even Wiki leaks itself had to distribute the information once that information was given to it. All calls by some to prosecute and even assassinate Mr. Assange the Wiki leaks human face are deplorable but those that delivered the information to Wiki leaks should be prosecuted to the fullest extent of the law in this case. It is immensely important not to confuse the forest for the trees; private opinions given in confidence are not the same thing as conspiracies to defraud and cover-up illegal and criminal activities. And this too shall pass without any major repercussions. The leaks in question have been highly titillating and will cause lots of discomforts to the principals but no higher purpose will be served as a result of these essentially stolen private remarks opinions that were not meant for public consumption.

What Ails The Lebanese Political System.

The modern concept of sovereignty of a nation state and all its implications to the inviolability of borders, the sacredness of its territorial integrity and the supremacy of the state are traced to the treaties that ended the thirty year war through the Peace of Westphalia. I mention this only to highlight that this took place almost 400 years ago.

A young nation state can be excused, during its first few formative years, for its inability to exercise its sovereignty immediately at its inception despite the fact that independence for a nation state is usually based on the idea of sovereignty. Realistically no society can be expected to make the transition from dependence to independence overnight. Institutions have to be created, elections held, laws promulgated and citizens informed and educated. But a learning curve of 65 years that fails to make any progress whatsoever is only a sign of total failure in the effort to establish a viable independent sovereign state. Under such circumstances one must wonder whether the experiment that has so far gone awry is worth continuing or whether it would be more advisable to just stop the pretense and dissolve the state.

As you might have already guessed, the above scenario is not fictitious. It is a perfect description of what passes for political leadership in the nation state of Lebanon and for either the inability or the refusal of its citizens to act responsibly by demanding accountability from their so called leaders.
There is no doubt that the present is the sum total of our past decisions and choices. We are what we have become because of our history. But it is wrong to even suggest that the past shapes our future. The only time that the future becomes an identical image of the past is when we keep making the same decisions and choices over and over again. The future doesn’t have to be an extension of the past since its most significant feature is that it embodies immense possibilities. Whether these possibilities are actualized or not is a function of the decisions that we undertake in the present. Our present is the history of the future moment.

So it is not enough to dream about equality, dynamism, individual freedom, economic prosperity, responsible government or a sovereign state. We need to take action that is commensurate with our objective if that goal is to ever stand a chance of being fulfilled. But we can never set our sights high and yet proceed to act as we always have when we were greatly displeased with the outcome. The same input will result in the same output irrespective of our hopes. For our hopes to be fulfilled, we must have the courage to reject business as usual. It will always fail to deliver on our dreams and aspirations because if we cannot change our actions then our goal would be only a wish. Lipstick on a pig.

If we are dissatisfied with the performance of the political regime and with all the politicians in Lebanon, as we should be then we have no right to complain if we do not have the courage to show our outrage at their incompetence, exploitation and feudalism. Note that the 4.5 million Lebanese sheeple find it easier to put up with the inconvenience of having one of the most outdated unreliable and expensive public electric power system in the world by installing private generators, at a great expense, rather than demand a solution to a problem that is simple to solve but that has persisted for over a decade. Why did we reelect the same rascals who created the problem in the first place? We complain about the lack of law and order but when the politicians elect a president by violating a very clear constitutional clause no one questions the decision. How can we expect a person to respect the sacred constitution when the same person accepted to be elected under unconstitutional grounds? The message is simple. Laws, including the constitution were made for the convenience of the Lebanese oligarchy. Their disregard to the constitution and the rights of the citizens is all around us. Its best manifestation is the unworkable new interpretation of a national unity government whereby the executive branch is a tower of Babel, the legislative branch has for all practical purposes been subsumed by the cabinet and the judicial branch has been abrogated. I ask you, have you seen any demonstrations against the above?

Then we have our “Progressive Socialist Party” that is everything but progressive or socialist. It is run by a feudal lord and its leadership is passed along as part of the inheritance. Actually the ever charismatic head of the party regaled us on a recent popular TV show by the analysis that part of the current Lebanese political problem is that PM Hariri represents the Sunni while President Suleiman does not have the support of the Maronites. And that from a progressive socialist. Somebody should remind Mr. Jumblatt of the high regard that Karl Marx had for religion. He went on to say that he; Jumblatt; will not accept an invitation to visit Iran unless King Abdallah of Saudi Arabia gives him his blessings. And that from a progressive socialist in Lebanon. (What is true of the incongruity of the positions of Mr. Jumblatt is endemic of all other parties bare none.

Given the above few examples, and they hardly scratch the surface, it should be clear to any observer that Lebanon is neither independent, nor sovereign. Its inhabitants talk the talk but never walk the walk. If freedom, democracy and sovereignty are important then let us act as if they are by vowing to hold all the current politicians accountable. We need to remind them that they work for us and we should make it sure not to reelect any of them again. The problem of Lebanon is not its politicians. It is its voters. Unless we learn to act upon our convictions then we deserve the government that we get.

Cabinet Formation in a Parliamentary Democracy

Parliamentary democracies, as a general rule, assign legislative power to an elected parliament and assign executive power to the Prime Minister. Usually a role is also given to the president that is essentially ceremonial although in some cases the president is given a consultative role and some executive powers. The Lebanese constitution is no different. It follows the above formula to a great extent. Articles 16 and 17 of the Constitution speak to this very clearly:

• Article 16 Legislative power is vested in a single body, the Chamber of Deputies.


• Article 17 Executive power is entrusted to the Council of Ministers to be exercised it in accordance with the conditions laid down in this constitution.


• As for the presidential powers, they are discussed in great detail in Article 53.

The powers range from accrediting ambassadors, presiding over official functions, granting pardons to the right to preside over cabinet meetings without casting a vote. Then obviously there is the judicial arm which is to ascertain that the laws of the land are being applied in accordance to the constitution. This system of separate Legislative, Executive and Judicial functions has evolved primarily to make sure that the majority do not ride rough shod over the minority and to assure all citizens of equal protection under the law.

The right to dissent without the fear of unjust retaliation by the ruling party is an elemental right for a vigorous and robust democracy. The above schema forms the basis of democratic governments whether they are the mature parliamentary system of the United Kingdom, the German Federation, the state of India or the Russian Federation just to name a few. This nearly universal system of parliamentary democracy seems to work to the satisfaction of most but for one reason or another it is not deemed to be good enough to the Lebanese who I might add have willingly adopted the constitution mentioned above.

For the past three years the opposition has waged a well determined campaign that has effectively paralyzed the country to demand participation in the cabinet and to be given the right of veto. Unfortunately the majority gave in , a “national unity” government was formed and new parliamentary elections held. The opposition failed to gain a majority of the seats in the Chamber of Deputies but yet has been waging another determined campaign with the equally absurd interpretation that the cabinet must be composed of all parliamentary groups each according to its share of the parliamentary seats. The previous cabinet, where all factions were represented, turned out to be a disaster as many have predicted. It was simply a tower of Babel. The new demands are equally absurd.

A government that represents everyone is a government without any accountability. Which political group is to get credit for effective and popular policies and who is to carry the blame for the failure to act during emergencies or in face of social, political, economic and military challenges. If no one party is to be held responsible for either the success or the failure then why bother and hold elections. Mr. Sa’ad Hariri, the Prime Minister designate, has not formed the cabinet yet, but he has given every indication that he intends to form a government that has a large proportion of the opposition in it. That will be a tragic mistake not for rigid ideological reasons but for simple logical ones. A member of a government cannot be expected to be an advocate for a position and yet at the same time be opposed to it. If the opposition is to be integrated into the cabinet then that means that there is essentially no opposition and that does not a healthy government make. Dissent promotes growth.

It is unfortunate that Mr. Hariri is getting all sorts of advice to proceed and form such a mish mash of a cabinet that will not be able to function and whose very essence would be undemocratic and illogical. I wonder why is it that Mr. Sarkozi does not follow his own advice to Sa’ad Hariri by forming a French cabinet that includes all factions represented in the French parliament? And Mr. Hariri must never forget that the advice or pressure that he is under from either Saudi Arabia or Egypt is from countries that might have the best intentions for the Lebanese state but unfortunately this advice does not come from democratic practitioners and so how can they teach that which they do not understand. Mr. Hariri needs to understand that the electorate voted so that the winning coalition can implement its platform, it did not vote to see the winners equivocate and go back on their promises.

Mr. Hariri has to realize that a victory margin of 55% vs. 45% is a respectable margin by any standard and that he should not blow this margin away through indecisiveness and appeasement. And finally let me be very clear about this, Sa’ad Hariri is not to blame for this. The fault lies squarely on our shoulders, the Lebanese citizens. Our whole political culture is at fault.

A Lebanese daily ran a great caricature recently which said that the Lebanese political leaders have failed to teach the citizens anything about accountability. That political cartoon would have been so insightful had it been exactly in the reverse. Governments and politicians are a reflection of the values, sophistication and mores of the populace.

Clean Wind Energy vs. Wasteful Spending

Part not apart from...

The Lebanese media has been abuzz recently with the news about the grandiose plans to construct an artificial island off the Damour coast in the shape of a Cedar Tree, as if the shape of such an environmental monstrosity is supposed to make it acceptable.

No country, rich or poor, can possibly justify spending precious human and environmental resources in order to create an artificial habitat whose only purpose is to cater to the whims of the rich and privileged. Homo sapiens, at least the variety in Lebanon, do not seem to have learned the most basic of ecological principles; we are part of nature and not apart from it. This implies that we have a moral obligation to respect other specie and not to act as if everything was created for our benefit. A basic environmental truth is that the more we do then the less we will have. All of that is made absolutely clear by the Second Law of Thermodynamics; entropy; which has been described by no less of an authority than Einstein as the supreme law of nature.

Lebanon is not the only country in the world that faces many challenges in practically all fields but yet it is a country whose challenges appear to be daunting whether one is to consider its political stability, economic progress, social coherence or ecological sustainability. Lebanon’s political existence is challenged daily both from within and from without but what is even more essential is the fact that its social structure is fractured , its economic modus operandi rests on inequality and exploitation, its political system is tribal and its ecology is unsustainable. Such a set of circumstances must relegate the destructive ideas of building small gardens within troubled areas as totally unacceptable and ultimately selfish. It looks that the invisible hand has demonstrated its shortcomings and grotesque failure the world over except in Lebanon where the idea of individual gain still trumps the common good and that is sad.

What is even more deplorable is the complicity of the Lebanese state in the promotion of these environmentally degenerate projects. The most ardent advocates of the free market enterprise system admit that in many instances the forces of the market fail to find the theoretical optimal allocation and the proverbial efficient solution. The name of the economist Pigou , a strong advocate of traditional mainstream economics during the early part of the 20th century, will always be associated with the notion of externalities that prevent the actual market forces from performing their magic. An equally important circumstance that prevents the free market from working efficiently is that of Public Goods.

The ultimate question in regards to the Cedar Island and the Hotel opposite Saint George in Beirut is that of ownership of the sea bed on which these projects are to be constructed. Who owns the sea bed? Obviously it is not individuals, nor corporations or a handful of politicians. The closest thing to an international law regarding the ownership of beaches and waterways is the Public Trust Doctrine which simply states that the citizens are the ultimate owners of these resources and that each and every one of us has the right to protect these natural endowments even if we have to sue on their behalf. The beaches are our natural patrimony and we have an obligation to protect them on behalf of the future generations.

What Lebanon needs, and very badly for that matter, is not a Hotel on stilts in the sea or an artificial island for the rich but a serious investment in clean and renewable energy that will cut down on our carbon footprint and yet supply us with the electricity that we need. We must ask those that are running for elections about their positions on these existential issues and vote accordingly. Good citizens have no choice but to act in a manner that will promote the integrity of the ecosystem as Aldo Leopold , the great environmental ethicist, has taught us.