Black markets are the most pure examples and expressions of free markets. They provide any and all manner of goods and services that the "formal", "regulated" and "managed" markets cannot provide or do so at artificially inflated (and hence unreachable) prices. Yet, for some "strange" reason governments insist in squashing black markets. The latest attempt was exposed by the newspaper Egypt Independent in its article "Reforming Egypt's black market - high hurdles, big rewards". Today we are going to take a critical look at the idiocy of government arguments since they have educational value. To task.
The black market is pervasive in Egypt. It is estimated that such free market is worth about 220 billion Pounds and all this wealth is out of government reach. About 60% of Egyptians have unregistered assets in Egypt.
These are few of the reasons the article provides to explain such state of events:
"government has chronically neglected basic duties"
This is, of course, nonsense. To begin with, who decides what are those "basic duties"? The government. If they are not providing them, then the people does not want them otherwise peoples' representatives would have voted for them. After all, isn't Egypt a democracy? To say otherwise would indicate that democracy does not respond to peoples' wishes. Either way, democracy does not work.
"in many cases leaving citizens to fend for themselves and find ways around laws and bureaucracy that hinder more than help"
This is, of course, true. Anybody that knows anything about Egypt knows that it is the land of pharaohs and bureaucracy. Egypt is the cusp of bureaucratic power where bureaucracy is stuck in a positive feedback loop on steroids. For aparatchniks the only way to escape poverty is to rise in hierarchy which means inventing more work out of thin air to justify more subordinates. This indeed leaves people trapped in red tape and their only escape is the free market; and judging by the size of the burgeoning free market, they are doing just fine, thank you very much. If it is true that it is possible to have laws and bureaucracy that help markets, then it is up to the government to prove it. So far every single government on earth has failed in this subject. Good luck with that!
"Peruvian economist Hernando de Soto"…[implied that there is] "a narrow window of opportunity to address Egyptians' pervasive suspicion of government"
Suspicion of government arises from experience. How is this going to be addressed? Through some mysterious process to re-earn the public trust in governments. Aha. What are they going to do? They can't remove the bureaucracy and if they would do just that, they would end up with a free market which is where they have today!
"Egyptians"…" not going to hand in names or data"
That's right! Why would they? What is in it for them in so doing? Well, nothing! Why would anybody spend a millisecond of their lives providing names and data to the government unless the government forces one to do so? The ridiculousness of this statement is the belief that somehow people should hand over names and data to the government.
Legal and bureaucratic reforms giving rise to voluntary disclosure should "double economic growth within five years by giving people access to credit and the protections of legal status"
Right. To begin with, it is an economic forecast made by an economist. How accurate do you think it is? Secondly, who says that credit dos not exist in the free market? Don't be ridiculous! Of course there is credit. The difference is that it is hidden. There are money lenders in every free market, it's just that they also operate in the free market. Thirdly, who says that legal status offers any significant protection? This is, of course, baloney! The vast majority of "legal" business operating anywhere in the world where government pressure is intense gain absolutely no protection from its legality. When was the last time you saw a supermarket suing a customer? Or a painter going to court over a debt? The idea that legality offers protection is a myth. It only offers additional protection for very large corporations, the rest simply operate in the market. The fact that Egyptian free market operates so well is proof that legality is irrelevant and unnecessary.
"De Soto's initiative is part of efforts to restore public finances, attract foreign investment and revive an economy battered by three years of political turmoil and unrest,"
So…dismantling the free market is good because it will steal money from people and will deposit it into government coffers? The same government whose laws and bureaucracies "hinder more than help"? Aha…And all this stolen money will attract foreign investment how exactly?…we can only guess that must be the scent. Perhaps they will issue new money with pheromones that will attract global investors. Other than that, how exactly is taxing a free market going to be good for investments? Any third rate economist will tell you that lower taxes = higher investment. It is the bureaucracy and laws that hinder investment, not free markets. And lastly, who battered the economy? Political turmoil and unrest; aka the government and the bureaucracy. We see. So… taxing the free market will stop political turmoil and unrest. We swear, we must be stupid, stupid, stupid, since we don't see the connection between those facts.
" Sisi [the Egyptian president] had begun appointing officials to form an agency which would run a communications campaign"
Finally the light comes on. A communication campaign will be unleashed on people and for that a new agency with new bureaucrats is required! Yeah! That's right baby! Sisi's government will fight bureaucracy with bureaucracy! Yeah! That really makes sense.
But that's OK because Sisi met with De Soto to discuss "a vision for the future of the informal economic sector in Egypt"
In other words, here we have a fully functioning free market that supplies all the goods and services Egyptians need and it does so efficiently and at accessible prices and yet it needs to be "managed" by a "vision". Got it. Question. What were Sisi and De Soto smoking at the time? It seems that it was good shit. They should share.
"Sisi" who "won 93% of votes"… "has already expended some political capital on tax hikes and subsidy cuts"
In other words, the president has hiked taxes and cut some meaningless subsidies. And how exactly is this relevant to the free market? Answer: it isn't. It is a statement leading the reader to believe that Sisi can actually succeed where other presidents have failed: in reforming the economy. Got it. In other words, here we have a fully functional free market in need of "reform". Question. What is the "reform" going to provide better and in larger quantities than the free market already does? Answer: nothing.
De Soto called the symptoms of informality "a disease of government". This is of course idiotic and ridiculous! Free markets existed tens of thousands of years before any government. How can they be a disease of government? Government represses free markets. If anything, governments are the diseases of free markets!
In Egypt we have "Unlicensed vendors flood the streets, hawking everything from clothes and electronics to vegetables and seafood."
The horror!!! The free market is providing everything that people need! Quick, regulate, regulate and regulate!!! This must not stand.
In addition "The microbuses that many Egyptians rely on for transport skirt meaningful regulation". Of course! It is regulation that makes microbuses run, not entrepreneurship! Who cares about logistics, maintenance and the price of fuel, it is regulation that keeps microbuses running! Silly us!
"Whole districts spring up inside major cities and operate beyond government control, a phenomenon that has become regarded as normal."
And why exactly should this not be normal? Why is that something operating on private property needs to be controlled by the government? How much more ridiculous can a statement get?
"Meanwhile, Egypt's massive public sector puts up red tape in the way of millions of Egyptians who resort to living and working beyond the law."
What a surprise! People fed-up with red tape decide to ditch the system altogether. Hummmm… we would have never believed it! Why would all these people do so considering all the advantages and benefits we enjoy thanks to governments!
"The key to his plan, said de Soto, is for Sisi to "create enough enthusiasm for the idea of being able to work within a system where everybody obeys the law..."
This is yet another classic example of idiotic thinking. If people are doing well on their own, why would they prefer to work in a system where everybody is being equally oppressed by laws, rules and regulations they reject? Answer: they would not.
It's quite simple; rules and regulations can never beat free!
Egypt is simply experiencing the initial phases we described in the article When Countries Dissolve. This is exactly how the sunset of governments begins. People simply stop following any rule other than common sense and contractual agreements. People simply begin to ignore governments and as this movement is so massive, governments find themselves powerless to do anything. We welcome with open arms the evolution of Egyptian people into Libertarianism. You should do too, but then again, it is your choice.
Note: please see the Glossary if you are unfamiliar with certain words.