Well I guess the problem of Libya as of all the countries in the Middle East is a problem of what might be called Political Economy or as Bill Clinton’s campaign team said: ‘It’s the economy, stupid!’ Though from today’s posting from Tom Friedman below, it is clearly also about tribalism. But in essence, if we put Libya in a global perspective, it is hard not to think that the real issue is one of how the majority of people in a country can simply earn a decent living, and how tribal or other divisions create the mistrust and zero sum game playing that prevent people earning their living or creating a modern cooperative economy where which tribe dominates is irrelevant.
Of course, paradoxically as I posted earlier this year,
oil is a curse, rather like winning the lottery that destroys much value add activity in country, just as lottery winners who give up their day jobs. Oil revenue is disproportionate to the effort needed to mine the oil, because oil is in vital and in short supply. So there is a massive profit to be reaped and from Texas to Saudi Arabia this profit tends to end up in the hands of local elites, who use it to corrupt the political process, and buy off popular unrest with some sort of living standard. This is one way to understand George W Bush and the Bush dynasty in Texas. It is also one way to understand Margaret Thatcher in the UK: North Sea oil allowed her to move Britain into a financial services and dependency consumerist culture, weakening the demonized unions and throwing manufacturing out with the bath water. In my posting I suggest the attempt to spread the resulting financialist free market economics can be thought of as a sort of free market fundamentalist Wahabiism
So relying on oil to earn its living in the world, Libya is basically screwed in terms of creating a modern industrial society. Who would not rather live in South Korea, which has no mineral resources, than Libya or Saudi Arabia. Of course the oil also allows traditional society to freeze in place, and in the case of Saudi Arabia, to export societal freezing to places like Pakistan via the Wahabi version of Islam. And traditional society means among other things oppressing women, keeping them uneducated and thus dooming your society to lack of education.
So personally I am more optimistic for the future of Egypt which has no real choice but to continue to modernize and create a competitive economy if it wants to survive in the modern global economy. The building blocks for creating such an economy are in place and Egypt does not suffer from the tribalism Tom Friedman talks about.
As for Libya, don’t hold your breath. I can’t really see any way with the curse of oil, that it can become a competitive economy, providing meaningful value add jobs to the majority of its population. Human beings do not live by bread alone or bread and circuses as per Qaddafi. Human beings whether live in small town America wracked by meth amphetamine addiction or Libya need meaningful work that contributes to the supply of what they consume. They cannot live for long on hand outs to keep them quiet or the crumbs off the table of the elite who own oil or financial services.
So I suppose that the only hope for Libya is that the oil dries up fast….then it can face the necessity of earning its living sans the oil lottery. Not going to happen soon.
But whether it is Libya or Egypt, the answer is not going to be socialist state bureaucracy nor free market economics, but some new hybrid. There is a lot to worry about in the Chinese economy, but it does seem there is some potential in the combination of hyper competitive capitalism and state led economic landscape gardening. In the meantime beware of folks bearing simple answers.