Thursday, December 13, 2007

Figures, not opinions!

I love the economics page in Al-Akhbar. Here's an article by Mohammad Zbib called: "These are figures, not opinions" (my translation).

"The Lebanese government does not admit that there are real monopolies in Lebanon, and therefore does not find a justification for acting in this area. In fact, it uses legal and illegal methods to protect the exclusive trade dealerships, usually owned by ministers, deputies and friends of presidents...This in spite of the fact that a study commissioned by the Ministry of Economy and Trade shows that in every major economic supply chain of the Lebanese economy, less than 5% of the businesses control more than 50% of the sales and profits.

And because the government denies the existence of monopolies, it therefore also denies their role in increasing prices and costs, and does not find enough reasons to address the recent wave of price increases, which it attributes exclusively to external factors. The government's sole response has been to subsidize the wheat cartel, and to fabricate a mazout (fuel) subsidies mechanism that only benefits the chalet owners. The price of 20 liters of fuel is 23,300 Liras, and the cost of heating a rural house is about 250,000 liras per month, or 83% of the minimum wages.

Which brings us to the minimum wage, which has been frozen since 1996 at 300,000 Liras, to serve the big investors and the capitalists. Whenever ministers are cornered on this issue, their answer is ready: "no one in Lebanon earns the minimum wage". This in spite of the fact that the surveys from the central bureau of statistics and the Ministry of Social Affairs and the UNDP and the World Bank show the opposite. According to these sources, 8% of the Lebanese or nearly 300,000 live in abject poverty, and are unable to meet their basic needs as they live with under $2.4 per capita per day. The surveys also show that 28.5% of the Lebanese live below the poverty line, on less than $4 per day.

Of course, the government does not admit to all that, and does not see the danger of its economic and financial policies of increasing the cumulative taxation such as the VAT that will be raised to 12% or the gazoline tax that will be raised to 6,000 Liras on every 20 liters. It insists that there is no danger, because its sole raison d'etre is to represent the rich consumers who are not affected by this kind of taxes. It sees no harm in the fact that the poorest 20% of the Lebanese consume 7% of the national consumption, while the richest 20% consume more than 43%."

1 comment:

Ms Levantine said...

My favorite slice of Leb. economy is the big fight a few years ago when Rafic Hariri claimed that most the monoplies were in Christian hands, and that according to Taef they should be given to Sunnis, close to Hariri of course.

If I am not mistaken Mr. Challak was the pointman in the fight. A uniquely Leb. phenomenon: sectarian redistribution of monopolies.

In the end the whole thing just died down. It was not worth the aggravation since The Republic of Merchants had been replaced by The Republic of Bankers.