1 00:00:03,580 --> 00:00:07,250 You can do. 2 00:00:08,120 --> 00:00:13,020 Good evening. I'm absolutely delighted to be able to introduce my friend and colleague, Stefan Kotok. 3 00:00:13,470 --> 00:00:20,730 Stefan is an associate professor in comparative politics at the LSC and he is one of the leading political economists of the MENA region. 4 00:00:21,030 --> 00:00:25,440 Today, we are absolutely delighted to be able to invite Stefan to present his new book, 5 00:00:25,960 --> 00:00:30,030 Locked Out of Development Insiders and Outsiders in Our Political Economies. 6 00:00:30,270 --> 00:00:34,490 I understand that it's currently unallocated on the CFP website for today. 7 00:00:34,500 --> 00:00:36,810 That's what I've been told and you can download it. 8 00:00:36,870 --> 00:00:42,300 I can see several of my students in the audience who have already read the book because I used it to teach it a couple of weeks ago. 9 00:00:42,780 --> 00:00:50,549 Stephan is a really brilliant scholar. His first book, which is another book I teach Princes, Brutalism, Bureaucrats, Oil and the State, 10 00:00:50,550 --> 00:00:57,420 and Saudi Arabia is probably the most important empirical account of frontier state theory applied to one case, 11 00:00:57,420 --> 00:01:01,049 looking at variation in forms of profligate behaviour, 12 00:01:01,050 --> 00:01:06,840 inefficiencies in public administration as a consequence of oil rents with a kind of empirical application to Saudi Arabia. 13 00:01:07,050 --> 00:01:13,170 We're now going to hear Stephan travelled to the Arab republics moving from allocation states to production states. 14 00:01:13,380 --> 00:01:16,510 I'm really excited for the talk. Stephan Floor, thanks so much. 15 00:01:21,000 --> 00:01:25,990 Thanks. It's great to be back. I think my natural case is that I do a book talk every every six years. 16 00:01:26,620 --> 00:01:30,130 I think it's fantastic to be back, I should say that. 17 00:01:31,080 --> 00:01:34,990 It's a it's a very, very emotionally attached and rooted it. 18 00:01:35,640 --> 00:01:41,850 So what I try to do in the next 40 minutes is to give you sort of a hypothesis driven 19 00:01:42,090 --> 00:01:47,430 account of what went wrong in Arab economic development from a policy economy perspective. 20 00:01:47,730 --> 00:01:52,920 And it's sort of a counternarrative to what I think is kind of the headline Morning View in the 21 00:01:52,920 --> 00:01:59,580 literature that it's all about sort of neo liberal reform and privatisation and sort of market driven, 22 00:01:59,820 --> 00:02:02,730 prying, open of Arab economies. 23 00:02:03,270 --> 00:02:09,630 And it's the first time that a recent policy framework I've been set beyond the Gulf of I'm quite bored of the Gulf now. 24 00:02:09,930 --> 00:02:18,270 I'm quite interested in the wider Middle East. So this is explicitly not about the Gulf, but it's about what I call the core Arab world, 25 00:02:18,330 --> 00:02:25,170 namely the main countries in the moderate and the marsh wreck that have not gone through an extended kind of civil war periods. 26 00:02:25,170 --> 00:02:28,050 Because obviously the cultural climate, those kinds of cases, is different. 27 00:02:28,380 --> 00:02:35,280 And my argument is that they share a number of features of the political economy that are quite striking in international comparison, 28 00:02:35,850 --> 00:02:40,469 and that those features are so causally linked to each other and lead to a kind of 29 00:02:40,470 --> 00:02:46,530 equilibrium that both locks in inefficient political and inefficient economic behaviour. 30 00:02:46,860 --> 00:02:49,260 And I get into what exactly I mean by that in a second, 31 00:02:49,500 --> 00:02:55,440 but this is the title that you should be looking for in the Cambridge University Press Elements website. 32 00:02:55,740 --> 00:02:58,799 It's very crisp. It only has like 38,000 words or something, 33 00:02:58,800 --> 00:03:05,000 so hopefully it's quite readable and it should be currently freely available for download, at least until tomorrow. 34 00:03:05,080 --> 00:03:12,809 It's a series called Cambridge Elements, which is halfway between articles and books which you for sort of a low energy 35 00:03:12,810 --> 00:03:18,990 scholar in a mid-life crisis just about there that that kind of person can show out. 36 00:03:19,830 --> 00:03:26,520 So I focus on the following seven core Arab states that Europe, Egypt, Jordan, Morocco, Syria, Tunisia and Yemen. 37 00:03:26,790 --> 00:03:30,329 So those are all countries that have low to moderate levels of rents. 38 00:03:30,330 --> 00:03:33,400 So they're not high hybrid countries like the Jesus of monarchies were. 39 00:03:33,420 --> 00:03:39,620 Obviously, economic and political dynamics are very different and they have not until recently been involved in major long term conflicts. 40 00:03:39,630 --> 00:03:42,959 Of course Syria has since I started the project. 41 00:03:42,960 --> 00:03:47,520 It's very welcome conflict for quite a bit, but I'm looking at Syria up to 2010 where it fits. 42 00:03:47,760 --> 00:03:52,140 So the general pattern described quite well until the outbreak of civil war there. 43 00:03:52,470 --> 00:03:57,060 And I would argue that historically those countries to varying degrees have been part 44 00:03:57,060 --> 00:04:01,770 of a shared ideological space that is influence development thinking since the 1950s. 45 00:04:01,770 --> 00:04:08,429 There's quite a bit of historical evidence that the way that economic development was tackled was ideologically framed, 46 00:04:08,430 --> 00:04:13,829 and one of those countries rebounded quite a bit among the needs of economic decision makers in the other countries. 47 00:04:13,830 --> 00:04:19,800 So with partial exception of Morocco, which was fairly peripheral to a sort of Arab nationalist economic discourse. 48 00:04:20,550 --> 00:04:26,850 Okay. So what are the main descriptive features of those capitalist systems or what are they? 49 00:04:26,850 --> 00:04:30,739 Until today, no state capacity and deep state interventions. 50 00:04:30,740 --> 00:04:36,930 So you have states state apparatus that try to do a lot and are not very good at it and short of resources at doing it. 51 00:04:36,930 --> 00:04:44,459 And I think this tension between high ambition and limited ability to deliver is something that explains a lot about 52 00:04:44,460 --> 00:04:51,930 the inefficiencies and distortions in those economies very heavily regulation and very heavy protection for insiders, 53 00:04:51,930 --> 00:04:55,739 as I call them, both on the labour market and among businesses, labour market insiders, 54 00:04:55,740 --> 00:05:02,399 mostly being public sector employees and business insiders, mostly being politically connected kind of crony businesses. 55 00:05:02,400 --> 00:05:09,840 And that's really so is the descriptive crux of my argument that there's a very deep segmentation between those relatively protected insiders in 56 00:05:09,840 --> 00:05:19,139 the case of workers in the public sector being sort of the the historic bedrock social constituency of Arab nationalist regimes and outsiders, 57 00:05:19,140 --> 00:05:25,410 on the other hand, which on the labour market would be mostly informal workers in the private sector that have worse incomes, 58 00:05:25,410 --> 00:05:30,840 much more precarious labour market status, no access to Social Security, no access to welfare. 59 00:05:31,170 --> 00:05:37,440 And of course, the insiders on the labour market, the public sector, because they're not doing well, it's not a great position. 60 00:05:37,440 --> 00:05:40,919 It's not a great status, but they're doing dramatically better than outsiders. 61 00:05:40,920 --> 00:05:49,260 And that kind of cleavage is particularly strong, I argue, and hopefully evidence with some data in the Arab world after all the reasons for doing so. 62 00:05:49,500 --> 00:05:55,290 Similarly, the distinction between well-connected sort of crony businesses that are close to 63 00:05:55,290 --> 00:05:58,920 the state apparatus and then outside of businesses without that kind of connection, 64 00:05:59,190 --> 00:06:03,599 again, mostly in form of small scale firms. That kind of distinction, that cleavages, 65 00:06:03,600 --> 00:06:12,110 particularly people that you're going to have some data to hopefully back that up as a result of of those various cleavages. 66 00:06:12,120 --> 00:06:16,319 I argue there are all sorts of inefficiencies in markets. 67 00:06:16,320 --> 00:06:19,680 I mean, it's not mostly it's not an economics book. It's more of much more political. 68 00:06:20,090 --> 00:06:25,639 But I think economic consequences following from those structures in a sense that the very 69 00:06:25,640 --> 00:06:29,630 limited mobility between inside and outside of the state is the high protection of insiders, 70 00:06:29,930 --> 00:06:35,030 the complete lack of protection for outsiders, that exposure to unmitigated market forces. 71 00:06:35,240 --> 00:06:42,080 They all prevent, first of all, so the common negotiation of a social contract that would bring those different 72 00:06:42,410 --> 00:06:46,290 factors together and would bring the region towards a new kind of development model, 73 00:06:46,290 --> 00:06:50,629 and that everyone on the inside just clings to the privileges and is also just extremely 74 00:06:50,630 --> 00:06:54,410 inefficient in market terms because the insiders are not exposed to competition. 75 00:06:54,410 --> 00:06:57,290 The outsiders really can't compete because they don't have the resources. 76 00:06:57,800 --> 00:07:04,879 And also as a result of this very low skill levels in labour market that get to it, that is linked to those other features. 77 00:07:04,880 --> 00:07:14,750 But here is this very involved graph that's in every book or article that's based on what's called Varieties of capitalism theorising. 78 00:07:14,990 --> 00:07:18,770 And that's sort of the broader comparative political economy framework that I've 79 00:07:18,770 --> 00:07:22,520 been inspired to for this book that hasn't been used in the Middle East yet, 80 00:07:22,520 --> 00:07:29,390 but that's quite dominant in thinking about comparative quality economy of countries and to some extent Latin America. 81 00:07:29,780 --> 00:07:35,749 The idea behind varieties of capitalism is that you have different features of different markets, 82 00:07:35,750 --> 00:07:40,400 different areas of economic exchange that are sort of interlinked and reinforce each other. 83 00:07:40,730 --> 00:07:48,080 So this is essentially the quite involved and in some part speculative argument of the whole book in one slide. 84 00:07:48,560 --> 00:07:55,730 And what you have on top, this interventionist state that's quite a vicious but relatively bereft of capacity, 85 00:07:56,240 --> 00:08:04,370 and it protects insiders on the labour market through public jobs, to some extent, through of regulation, protection of form of private sector jobs. 86 00:08:04,370 --> 00:08:09,950 So that's not not a big phenomenon. And that also protects insiders in the business sector. 87 00:08:10,370 --> 00:08:16,040 Mostly. It's sort of informally emerging from from crony connections, from political connections, 88 00:08:16,040 --> 00:08:21,619 but formally being articulated to all forms of market regulation and protection. 89 00:08:21,620 --> 00:08:27,530 And there's a lot of detail on that in the chapter on the firms and business sectors. 90 00:08:27,800 --> 00:08:34,510 And then in turn, because they have those insiders who have outside of constituencies who don't have access to these kinds of pages, 91 00:08:35,090 --> 00:08:40,550 and the insiders tend to be better organised, much more politically visible to regime, 92 00:08:40,790 --> 00:08:49,040 and they tend to be quite good at defending their entitlements and if anything demand more entitlements and choice how you 93 00:08:49,040 --> 00:08:54,710 get better at that than the labour market in size that just a lot of erosion of privileges of labour market insiders. 94 00:08:54,980 --> 00:09:01,430 But we're still in a situation where people in the public sector are quite significantly better off than the average private sector worker, 95 00:09:01,430 --> 00:09:06,080 even private sector workers with formal contracts and Social Security on average. 96 00:09:06,590 --> 00:09:11,540 If anything, when outsiders get mobilised, they also just ask for insider status. 97 00:09:11,540 --> 00:09:15,620 Sometimes they do so successfully that the boundary between inside and outside gets shifted a little bit, 98 00:09:15,860 --> 00:09:21,410 but it doesn't change anything about the system as a whole. Now, at the bottom of that scheme, 99 00:09:21,650 --> 00:09:32,150 there's also one key component that I think holds back the integration of the markets for firms and labour markets, which is low skill levels. 100 00:09:32,420 --> 00:09:40,040 And again, there are these kind of EEOC type mutual hours of causation where on the one hand to a segmented labour market, 101 00:09:40,040 --> 00:09:45,049 it's quite actually gets quite weak incentives for people to seek meaningful skills because you're protected inside. 102 00:09:45,050 --> 00:09:47,360 Insider You don't need good skills. You're safe. 103 00:09:48,080 --> 00:09:54,170 There's very, very limited mobility from inside a state as to anything else, once you got inside a job, you're pretty much safe for life. 104 00:09:54,560 --> 00:10:01,220 On the other hand, outside outsiders find it very hard to break into good jobs, so they also don't really have incentives to seek meaningful skills. 105 00:10:01,550 --> 00:10:03,800 On the other hand, because of those skill levels, 106 00:10:04,190 --> 00:10:09,710 in the few occasions when there would be an opportunity for mobility on the labour market, people can't use them, 107 00:10:10,010 --> 00:10:17,180 can't use those opportunities because the skills only and there's a similar sort of interaction with the private sector where 108 00:10:17,180 --> 00:10:23,659 again inside of firms are so well protected that they don't need to invest in skills or productivity and outside of firms, 109 00:10:23,660 --> 00:10:26,930 don't really have the ability to invest in that because they're just about 110 00:10:27,140 --> 00:10:31,790 scraping by for the sort of the jobs that just about managing outside of firms. 111 00:10:32,420 --> 00:10:38,960 And that's actually something that's more generally thought of as a low skill equilibrium, where you've got sort of a chicken and egg problem. 112 00:10:39,320 --> 00:10:44,750 People don't have good skills. So firms can't invest in technology that would require the skills. 113 00:10:45,170 --> 00:10:47,959 And, you know, the causality also runs exactly the other way around. 114 00:10:47,960 --> 00:10:54,980 It's just it's just more pronounced in the Arab world because of those particular deep patterns of segmentation in labour 115 00:10:54,980 --> 00:11:02,360 markets and firms that prevent sort of mobility and that to depress returns to skills and returns to investment space. 116 00:11:02,660 --> 00:11:05,239 So sorry, I was pretty involved in abstract, 117 00:11:05,240 --> 00:11:12,650 but it gets a bit more concrete when I walk through you through some of the sort of historical facts of those individual components. 118 00:11:14,570 --> 00:11:18,020 Quickly, the summary, because the item is a bit lengthy, is probably worth restating. 119 00:11:18,500 --> 00:11:19,700 So we've got a stretched and over. 120 00:11:19,990 --> 00:11:27,940 To the intervention to stay at that sort of rooted in the old era of Arab nationalist status development that creates deep inside, 121 00:11:27,940 --> 00:11:31,059 outside of divides because its resources are relatively restricted. 122 00:11:31,060 --> 00:11:36,190 So it can only cater to a limited or dwindling constituency that it continues to protect. 123 00:11:36,730 --> 00:11:46,629 And as a result, you have those deep cleavages between inside and outside that make it hard to negotiate economic policy in any coherent way, 124 00:11:46,630 --> 00:11:52,030 because the interest of inside and outside is so different, and you have an equilibrium flow of skills, 125 00:11:52,030 --> 00:11:56,740 a little proactivity that emerges from those very, very inefficient cleavages. 126 00:11:57,100 --> 00:12:04,629 And here's the main sort of, I guess, political argument that I differ quite a bit with literature, 127 00:12:04,630 --> 00:12:10,750 just to just blames all of those of the region on neoliberal reforms and excessive marketisation. 128 00:12:11,110 --> 00:12:16,870 Instead, I think what really characterises the reason is that there's just too much market for some, 129 00:12:17,080 --> 00:12:23,380 which is the outsiders who enjoy no protection, who enjoy no Social Security, and in the case of informal workers in the private sector. 130 00:12:23,890 --> 00:12:28,480 But there's also too much state and too much protection for the insiders. So you have too much state in some areas. 131 00:12:28,480 --> 00:12:29,889 You have too little state in other areas. 132 00:12:29,890 --> 00:12:37,120 So it's a very uneven distribution of the state and it's sort of protective efforts that really characterises the reason descriptively. 133 00:12:37,120 --> 00:12:42,130 And that, I would say, is the cause of you. It's one of the main factors that pulls back economic development. 134 00:12:42,430 --> 00:12:48,280 So this kind of neo liberalism for the poor chaps in the informal sector was actually a lot of old school 135 00:12:48,280 --> 00:12:54,280 Nasserist protections still in the public sector for a very significant component of the population. 136 00:12:54,790 --> 00:12:58,720 So the very uneven presence of the state, I think, is really what makes the region distinct. 137 00:12:59,650 --> 00:13:04,389 So this is typical of all developing countries, but some of those factors are quite generic. 138 00:13:04,390 --> 00:13:12,040 So low government capacity is a widespread issue of distinction between formal and informal is also relatively widespread. 139 00:13:12,490 --> 00:13:18,940 But I think in some regards, the reason does stand out and there's a lot of statistics in the book that I think underlines that. 140 00:13:19,210 --> 00:13:24,730 So the relative ambition and the relative importance of the state, the extent to which it continues to regulate, 141 00:13:24,730 --> 00:13:27,370 the extent to which it still employs people, 142 00:13:27,520 --> 00:13:32,920 to which it maintains sort of a dwindling Nasserist middle class constituency to public sector employment. 143 00:13:33,190 --> 00:13:38,940 That is still unusual. And there's much higher levels of public sector employment in the region than anywhere else in the global south, 144 00:13:38,950 --> 00:13:46,180 and with the exception of a few kind of communist regimes. So the relative side of the inside the coalition is really something that stands out. 145 00:13:46,480 --> 00:13:54,250 And also the rigidity of the boundaries between inside and outside that stands out in Latin America youth as inside their employment. 146 00:13:54,520 --> 00:14:02,800 When a new Mexican president gets elected, he breaks loads of people that tens of thousands of people with them as clients into the public sector. 147 00:14:03,070 --> 00:14:06,190 Then another president gets elected and those tens of thousands of people, they leave again. 148 00:14:06,430 --> 00:14:13,150 So there's actually quite a bit of turnover and we see that also labour market statistics just switch quite a bit between formal and informal, 149 00:14:13,420 --> 00:14:16,450 a different kind of labour market statuses in the Arab world. 150 00:14:16,480 --> 00:14:24,040 Once you're inside a good inside of your life, pretty much there's almost no downward mobility in terms of that form of labour market status. 151 00:14:24,040 --> 00:14:29,019 And that means that the interests of those inside are much more rigid because they know that ten, 152 00:14:29,020 --> 00:14:33,310 20 years down the line, they'll still be essentially in the same position as in Latin America. 153 00:14:33,670 --> 00:14:36,400 You know, you might be inside of one day. You might be outside another day. 154 00:14:36,580 --> 00:14:42,940 So you have sort of a veil of ignorance where your general economic policy interest is is perhaps more 155 00:14:42,940 --> 00:14:47,170 aligned with a status that you don't have now because you might have it at some point in the future. 156 00:14:47,470 --> 00:14:52,870 Similarly, the inside of protection for crony businesses seems to be stickier and more rigid. 157 00:14:52,870 --> 00:14:56,950 Many Middle East firms are older, crony networks are more resilient. 158 00:14:57,250 --> 00:15:03,070 So again, once you're on the inside, that status tends to be particularly persistent compared to other regions. 159 00:15:03,940 --> 00:15:10,150 In a sense, it's sort of a more extreme version of some forms of segmentation that we also see in other parts of the world also. 160 00:15:11,380 --> 00:15:15,130 Okay, so what goes through all of this in detail? 161 00:15:15,400 --> 00:15:21,969 But there's a lot of data showing that although there's been a lot of formal liberalisation, economically speaking, Arab states, 162 00:15:21,970 --> 00:15:30,670 by and large still intervene quite deeply in markets through price controls, through regulating access to markets, product standards, inspections. 163 00:15:30,880 --> 00:15:34,030 It's all still quite a bit heavier than most other regions. 164 00:15:34,420 --> 00:15:41,620 Perceptions of corruption are higher than in other regions, which is another sort of token of illicit state intervention. 165 00:15:42,250 --> 00:15:48,130 And all of this then opens many, many opportunities to modulate this kind of intervention, 166 00:15:48,340 --> 00:15:51,700 to benefit insights, to benefit inside of forms and qualifiers. 167 00:15:51,860 --> 00:15:58,809 There's just some data showing that most countries are seen as quite heavy on the Fraser Institute's regulation schools. 168 00:15:58,810 --> 00:16:02,799 That's, I mean slightly more liberally inflected that kind of school. 169 00:16:02,800 --> 00:16:06,670 But those are other types of schools that are still growing in the same picture. 170 00:16:07,150 --> 00:16:10,680 So that's just the lower you are here, the more heavily to regulate. 171 00:16:11,680 --> 00:16:15,040 And on the on the Y-axis, you just have GDP per capita. 172 00:16:15,940 --> 00:16:19,530 You also have deep state intervention in distributional terms, not only as a regular. 173 00:16:20,420 --> 00:16:26,329 So you have, as I mentioned, protection of inside of the business and labour markets through regulation of business practices, 174 00:16:26,330 --> 00:16:30,830 but also directly employment and subsidies that actually also benefit the privileged. 175 00:16:30,830 --> 00:16:36,409 Without the benefit insiders and despite decades of past liberalisation and fiscal crisis, 176 00:16:36,410 --> 00:16:41,569 this has survived remarkably unscathed compared to other parts of the global south. 177 00:16:41,570 --> 00:16:47,959 Let's say in sub-Saharan Africa, when you had structural adjustment programs in the wake of major fiscal crisis in the 1980s, 178 00:16:47,960 --> 00:16:51,410 they did things like let go half of their public sector workforce. 179 00:16:51,410 --> 00:16:54,440 In some countries, the Arab world has never seen anything like this. 180 00:16:54,620 --> 00:16:59,120 Even Egypt absolutely hates the bureaucracy and wants to get rid of it. 181 00:16:59,120 --> 00:17:06,890 And there haven't been any mass redundancies. There are still millions of them sitting in has been demolished with notes to it. 182 00:17:07,320 --> 00:17:09,290 Yeah. And that I think is emblematic. 183 00:17:09,290 --> 00:17:17,390 That's emblematic that they've been trying to demolish and mukoma for decades is just simply to promised the to technology investors, 184 00:17:19,520 --> 00:17:22,580 which is not to say that, you know, the old social contract has survived. 185 00:17:22,590 --> 00:17:28,459 Well, the insiders aren't doing well because those are countries under severe resource constraints all through their stages, 186 00:17:28,460 --> 00:17:32,630 has declined in real terms, but is still much better than the status of outsiders. 187 00:17:33,350 --> 00:17:40,129 And critically, because this kind of insider cartel of the old master, the status quo based social contract, 188 00:17:40,130 --> 00:17:45,590 eats up so many resources there's very little left for social safety mechanisms for the outsiders. 189 00:17:45,590 --> 00:17:53,210 So everyone is really behind when it comes to unconditional cash grants, non-contributory pensions and social safety payments, 190 00:17:53,660 --> 00:17:59,510 which is something that's weirdly overlooked in a lot of the policy economies that are trying the reason, 191 00:17:59,510 --> 00:18:04,520 which is all about, you know, the poor bureaucrats, their real salaries are dropping every year. 192 00:18:04,670 --> 00:18:08,870 And those are still people for like orders of magnitude better off than the army, 193 00:18:09,140 --> 00:18:13,820 the vast army of informally employed workers that people don't really speak about that much. 194 00:18:14,990 --> 00:18:20,540 So very high state employment with the exception of Morocco. Morocco is an interesting case with the employment is quite well paid, 195 00:18:21,020 --> 00:18:26,209 but there are not many of those and I think Morocco is also the exception in many other regards. 196 00:18:26,210 --> 00:18:31,850 It's really a peripheral case and it's not very close to the ideal type that I'm describing. 197 00:18:33,470 --> 00:18:40,640 Similarly, quite high energy subsidies, although they have been in some cases further reduced in recent years, 198 00:18:41,090 --> 00:18:43,580 and energy subsidies in principle are general. 199 00:18:43,790 --> 00:18:50,900 But again, they have sort of a middle class bias because richer households tend to consume more, so they benefit more in absolute terms. 200 00:18:51,020 --> 00:18:56,270 So even that which is seen as sort of a birthright of the poor in many ways is actually 201 00:18:56,270 --> 00:19:00,800 something that's that's quite regressive that benefits inside us more so than absolute terms. 202 00:19:02,120 --> 00:19:12,140 And here's one of my favourite survey results from the World Value Survey, which shows that this really, with the exception of Morocco, 203 00:19:12,500 --> 00:19:17,630 very unusually high expectation of citizens of these countries that the government should provide for them. 204 00:19:18,350 --> 00:19:28,219 And I think this is sort of an abiding legacy of this Nasserist type social contract that's been broken and sort of not lived up to in many ways. 205 00:19:28,220 --> 00:19:32,660 But people still expect in principle that the state should in some way take care of them, 206 00:19:32,660 --> 00:19:39,709 which is why I think the perception that insiders can't really be deprived of any of the promises is. 207 00:19:39,710 --> 00:19:41,060 So it's a deep seated. 208 00:19:41,960 --> 00:19:48,350 And I think that really goes back all the way to the fifties and sixties and the sky high promises that Nasser and others made where they said, 209 00:19:48,350 --> 00:19:52,819 okay, every university graduate and every secondary school graduate is entitled to a government job. 210 00:19:52,820 --> 00:20:00,170 And then everyone else, the in the region in Syria, Iraq, Tunisia, even Yemen copied these kinds of promises. 211 00:20:00,230 --> 00:20:02,690 So we're in the era I'm not going into the history here. 212 00:20:02,690 --> 00:20:08,780 There's a short history chapter in the book was published which actually spoke about more rather than through all these numbers that you. 213 00:20:09,110 --> 00:20:13,889 But I think there's a very interesting history of the Arab nationalist competition, 214 00:20:13,890 --> 00:20:20,390 the sort of Malcolm Kerr style on the nationalist economic program and the redistributive program of the time, 215 00:20:20,390 --> 00:20:27,590 which is not very well established in the literature, which looks much more about a sort of nationalist ideology and security issues. 216 00:20:28,190 --> 00:20:36,680 But if you look at the sort of economic programs that were adopted at the time with very ambitious redistributive programs, 217 00:20:37,040 --> 00:20:44,599 huge programs of public sector expansion, that was really a lot of copycat behaviour and there was a lot of competition that even the conservative 218 00:20:44,600 --> 00:20:48,830 monarchies felt they had to do a little bit of nationalism in order to prevent revolution. 219 00:20:48,840 --> 00:20:56,690 So, you know, if you look at what those are today or even the Saudis did at the time was often almost like a carbon copy of what Nasser did, 220 00:20:56,900 --> 00:21:00,860 just actually with better resources. In some ways, they could go further than anything else himself. 221 00:21:00,860 --> 00:21:03,710 That's right. Okay. 222 00:21:04,010 --> 00:21:12,380 So share of government spending in GDP still is higher than in other low to middle income countries, which is the bottom dotted line. 223 00:21:12,740 --> 00:21:19,510 So you see all the fiscal crisis of the seventies and eighties and the states did shrink very significantly, but then it plateaued sort of the level. 224 00:21:19,980 --> 00:21:27,930 Still considering above what you have in other developing countries and emerging markets, and no recent sign that this has been decided. 225 00:21:29,160 --> 00:21:34,709 Okay. So a few points on labour markets very quickly, 226 00:21:34,710 --> 00:21:39,080 and that for me should focus a bit more on the political economy rather than the 227 00:21:39,180 --> 00:21:45,540 descriptive stats where labour markets in the Arab world really stand out is that, 228 00:21:46,200 --> 00:21:49,560 first of all, you've got this very high state employment. 229 00:21:50,070 --> 00:21:54,690 And secondly, related to that most form of employment. 230 00:21:54,690 --> 00:21:56,480 So most employment where you have a contract, 231 00:21:56,490 --> 00:22:02,700 a form of Social Security and a reasonable job security is in the public sector rather than the private sector. 232 00:22:02,700 --> 00:22:06,360 And that's the opposite of what it is pretty much anywhere else in the global south. 233 00:22:06,900 --> 00:22:16,230 So you have your cases like Syria, Yemen and Iraq, for example, where almost all fall jobs with Social Security and a contract on the public sector. 234 00:22:16,600 --> 00:22:21,150 Latin America. In South Asia. In sub-Saharan Africa, it's the opposite. 235 00:22:21,510 --> 00:22:25,800 The majority of formal jobs, of reasonably good jobs are actually the private sector. 236 00:22:26,040 --> 00:22:30,000 So it means that the Arab middle class is still very, very state dependent. 237 00:22:30,390 --> 00:22:36,000 And there's a very small constituency only that has good jobs in the private sector 238 00:22:36,000 --> 00:22:39,390 and in that sense has sort of a vested interest in the private sector succeeding. 239 00:22:39,780 --> 00:22:42,300 The private sector does a very little for people. 240 00:22:42,420 --> 00:22:52,080 It provides tons of terribly informal jobs, you know, the taxi drivers and the street merchants and very, very few formal good jobs. 241 00:22:52,860 --> 00:22:56,819 And I think that explains a lot of. So it's vested interest in that system, 242 00:22:56,820 --> 00:23:03,900 what people think so much to the public sector entitlements because there's so little good opportunity available outside of public sector. 243 00:23:04,710 --> 00:23:12,510 Informal employment, very large, although that is not unusual in countries in the global south, have very high informal employment generally. 244 00:23:12,720 --> 00:23:18,390 What's really unusual is that among the formal put jobs, the majority is in the government sector. 245 00:23:19,230 --> 00:23:28,860 Now here is are some margins plus don't have to look at this too closely I just verbalised that essentially all of the things being equal, 246 00:23:29,370 --> 00:23:32,940 hourly pay is still by far the best in the public sector, 247 00:23:33,300 --> 00:23:35,520 even compared to formal private sector jobs, 248 00:23:35,970 --> 00:23:42,060 which is sort of the opposite of what it is in many other countries where you get a better salary in the private sector. 249 00:23:42,240 --> 00:23:50,160 In return, you take the risk of, you know, relatively less job security or less Social Security provision in the Arab world. 250 00:23:50,370 --> 00:23:56,399 You've got much higher job security. You got much better welfare provision and you got higher hourly wages still in the public sector. 251 00:23:56,400 --> 00:24:00,720 And again, those are not good jobs. Those are not people who particularly cushy lives. 252 00:24:00,900 --> 00:24:06,990 I'm just saying that they're still better off than the people in the private sector, even people with formal jobs in the private sector. 253 00:24:08,040 --> 00:24:15,120 So it's quite it's really quite unusual. And again, explain to you why people cling to these types of privileges. 254 00:24:15,720 --> 00:24:20,879 And then there's also extra low mobility between those different labour market segments, 255 00:24:20,880 --> 00:24:27,570 between being a public sector insider, having a formal private sector job, or having a informal private sector job. 256 00:24:27,840 --> 00:24:32,909 So there's all sorts of export labour market transition matrices that the labour 257 00:24:32,910 --> 00:24:37,080 market economists have cobbled together that show that once you're on the inside, 258 00:24:37,320 --> 00:24:42,900 you're very likely to stay on the inside. If you're an informal outsider, you likely to stay an informal outsider for very long. 259 00:24:43,230 --> 00:24:46,230 Whereas in Latin America, you might be driving a taxi for many one year, 260 00:24:46,440 --> 00:24:49,300 but the next year you might actually have a formal job in the company years and 261 00:24:49,320 --> 00:24:52,920 you might some point potentially behind in government as much more turnover. 262 00:24:53,460 --> 00:24:58,340 In the Arab world, the bonuses are very rigid. The ones who in one particular segment, you stay there. 263 00:24:58,380 --> 00:25:03,660 And I think it's politically very, very consequential because it gives people a much stronger vested interests. 264 00:25:05,100 --> 00:25:09,660 The share of long term unemployed among all unemployed is also comparatively high, 265 00:25:09,690 --> 00:25:14,970 which is another sign that, you know, once you are in a bad spot, you tend to be stuck there for longer. 266 00:25:15,990 --> 00:25:24,030 And conversely, if you're on the inside, your social benefits tend to be unusually generous and international comparison. 267 00:25:24,510 --> 00:25:28,260 So we have seen gross replacement rates around the world by level of earnings growth. 268 00:25:28,260 --> 00:25:33,270 Replacement rate is how much you get relative to your last salary when you retire. 269 00:25:33,810 --> 00:25:41,730 So it's your pension relative to your last salary, and it'll make your assessment this week when you see that in some countries in MENA, 270 00:25:41,790 --> 00:25:45,270 you actually get more the moment you retire and what's your last salary? 271 00:25:45,720 --> 00:25:48,930 So you assess this somewhere here. 272 00:25:51,090 --> 00:25:57,569 So again, a non-wage benefit that's very significant and that is only available to those insiders, 273 00:25:57,570 --> 00:26:01,740 only available to this limited but politically very consequential. 274 00:26:01,740 --> 00:26:06,809 If dwindling middle class constituency now is very expensive, you know, 275 00:26:06,810 --> 00:26:11,310 those pension systems that even if those are still down populations, they're very expensive to maintain. 276 00:26:11,670 --> 00:26:14,910 And as a result, there's very little cash left for other types of social spending. 277 00:26:15,240 --> 00:26:19,320 So if you look at statistics on social safety spending, which is. 278 00:26:19,710 --> 00:26:21,050 That's not contribution based. 279 00:26:21,150 --> 00:26:26,730 That's not based on formal Social Security involvement, which is contingent on having a formal job, which is typically in the public sector. 280 00:26:26,970 --> 00:26:32,160 There's very little of that. So there's been some experimentation, some expansion of those programs. 281 00:26:32,160 --> 00:26:38,399 But by and large, the reason still lags behind are the reasons that do much more in terms of general state pensions. 282 00:26:38,400 --> 00:26:44,580 That's including foreign workers, cash grants for people, minimum income guarantees, that sort of stuff. 283 00:26:44,590 --> 00:26:47,669 Other reasons are really quite a bit ahead of the Arab world because the Arab 284 00:26:47,670 --> 00:26:52,350 world is fiscally exhausted by catering to those inside the constituencies. 285 00:26:53,790 --> 00:26:58,589 Now, the politics of the labour market are quite interesting, and I just wrote a little op eds, 286 00:26:58,590 --> 00:27:02,760 hopefully coming out in foreign policy in a week or so on this. 287 00:27:03,240 --> 00:27:10,560 Everyone loves the utility in Tunisia because it's gotten the Nobel Prize that was a guarantor of the temporary democratic transition. 288 00:27:11,070 --> 00:27:18,930 So from a political perspective, it is a really problematic actor because it's the best organised inside a lobby in the whole Middle East. 289 00:27:19,230 --> 00:27:25,980 There are actually organisations for outsiders, for the people on temporary contracts, for a young graduate unemployed. 290 00:27:26,190 --> 00:27:29,729 And those organisations don't get along well with Egypt at all because the 291 00:27:29,730 --> 00:27:34,770 resistance is essentially representing vested interests of public sector insiders, 292 00:27:35,280 --> 00:27:44,100 pushing against any pensions reforms, against any redundancies in the public sector, pushing for a salary increases as a result of which Tunisia has, 293 00:27:44,430 --> 00:27:49,650 I think, the highest of one of the highest shares of public sector salaries in GDP in the whole world. 294 00:27:50,550 --> 00:27:53,190 So they're very good at representing those types of insiders. 295 00:27:53,460 --> 00:27:58,290 But as a result, there's very little resources left for anyone else, including people who are actually poor. 296 00:27:58,980 --> 00:28:03,710 And it's just a bit of an outlier in the sense that this is a very powerful union. 297 00:28:03,720 --> 00:28:08,370 Most unions in the rest of the region are much more tightly controlled by the state, 298 00:28:08,790 --> 00:28:15,330 but all across the board, unions tend to represent insiders, particularly public sector employees. 299 00:28:15,420 --> 00:28:19,979 To the extent that there is sort of collective mobilisation over labour rights that 300 00:28:19,980 --> 00:28:23,460 tend to be tends to be insiders who are better off representing their rights. 301 00:28:23,530 --> 00:28:27,719 It's also very visible in Egypt during the temporary liberal period. 302 00:28:27,720 --> 00:28:34,560 Precisely it was the first independent unions came into being was a tax collectors union and close to the public sector employees. 303 00:28:34,920 --> 00:28:40,430 The only law under Sisi that the parliament rejected initially was a civil service reform, 304 00:28:40,860 --> 00:28:49,800 but very tame Sisi Parliament actually did not dare to ratify a policy measure that would have that would have dented inside the privileges. 305 00:28:50,340 --> 00:28:57,030 So there are also political feedback loops that reproduce this kind of system, because insiders tend to be better organised in many cases, 306 00:28:57,030 --> 00:29:01,410 even when the system is very authoritarian, they can't really organise any particular fashion. 307 00:29:01,680 --> 00:29:06,270 They're more recognised as a political constituency by by the regime. 308 00:29:08,130 --> 00:29:14,610 And you know, to the extent that anyone started the Arab uprisings, it was easy in Tunisia. 309 00:29:15,060 --> 00:29:21,620 And he's, of course, the quintessential outsider. He's a he's a street vendor who didn't have access to any of those inside of the. 310 00:29:21,830 --> 00:29:30,210 So if you go back to the record of public mobilisation and contestation and unrest across the region, 311 00:29:30,510 --> 00:29:35,040 it's it's very it's becomes very easily manageable through an insider outsider lens. 312 00:29:35,040 --> 00:29:40,290 It's often insiders defending their privileges or it's outsiders claiming sort 313 00:29:40,290 --> 00:29:44,459 of their share of the pie of not asking for wholesale reform of the system, 314 00:29:44,460 --> 00:29:48,000 but rather asking to be made inside us, unfortunately. And that works. 315 00:29:48,040 --> 00:29:55,079 You know, you have organisation in peripheral towns and in Tunisia where the demand is every 316 00:29:55,080 --> 00:29:59,700 family should have at least one government job and in some cases that this works. 317 00:29:59,700 --> 00:30:04,080 But of course it doesn't change. The system is just shifts the boundaries between inside and. 318 00:30:05,480 --> 00:30:08,690 Okay. So that was that was essentially this part of the diagram. 319 00:30:09,140 --> 00:30:14,390 So speed up a little bit and talk about business sectors and cronies. 320 00:30:14,900 --> 00:30:21,110 So again, there's a legacy of deep state intervention that divides the private sector into insiders and outsiders like the legal market, 321 00:30:21,950 --> 00:30:26,720 heavy regulation, unresponsive bureaucracy, extensive protection and subsidy regimes, 322 00:30:27,170 --> 00:30:34,969 all sorts of mechanisms that make it very easy to protect certain connected firms in a discretionary way and 323 00:30:34,970 --> 00:30:41,120 then create high barriers of entry to any outsider firms and prevent them from competing with the insiders. 324 00:30:41,510 --> 00:30:48,470 And there's a great research agenda, and the Republicans in the audience who was a key protagonist of that, 325 00:30:48,680 --> 00:30:52,370 there are a lot of great economists and political scientists have done 326 00:30:52,550 --> 00:30:56,690 econometric research on the impact of cronyism on the sources of state business. 327 00:30:56,690 --> 00:31:00,200 Cronyism in the Arab world so drawn that quite heavily in that chapter. 328 00:31:00,920 --> 00:31:08,960 The really striking findings about the extent to which cronies are privileged take friends unproductive, suppress job creation. 329 00:31:09,490 --> 00:31:16,160 So I'm not going to go into that in any detail other than point you to to this sprawling range of great papers. 330 00:31:17,210 --> 00:31:24,680 I'll just say that a segmented market for firms where you have insiders are well and outsiders who can't really compete over small, 331 00:31:24,680 --> 00:31:28,220 informal businesses like shops, mom and pop corner shops. 332 00:31:28,670 --> 00:31:32,749 It's not a set up where you have incentives to invest in productivity, 333 00:31:32,750 --> 00:31:36,680 either for inside outsiders or the ability to invest the productivity of outsiders. 334 00:31:36,920 --> 00:31:43,190 Your fellow dynamism firms find it very hard to grow because growing means at some point having to kind of become an insider, 335 00:31:43,190 --> 00:31:46,370 which is very hard, and that's the so-called missing middle. 336 00:31:46,400 --> 00:31:50,780 So you've got all those ways, those gigantic, very well-connected crony firms, 337 00:31:50,780 --> 00:31:54,940 and you have all of those tiny suffering, informal firms and almost nothing in between. 338 00:31:54,960 --> 00:31:58,700 Often it's middle sized firms in other economies that are the most productive, 339 00:31:58,910 --> 00:32:03,620 that are most innovative, and both those are missing in this kind of insight outside the system. 340 00:32:05,470 --> 00:32:10,690 Yeah. Heavy regulatory environment is your body of work and your business rankings. 341 00:32:11,200 --> 00:32:15,220 Very heavy perceptions of corruption, according to World Bank enterprise surveys. 342 00:32:15,790 --> 00:32:21,920 Interesting exception of Jordan, you know, and very differential barriers to to administrative access. 343 00:32:21,940 --> 00:32:26,290 So some companies are very good at getting administer paperwork done. 344 00:32:26,410 --> 00:32:32,200 So they're doing 50 days, obviously 168 days, which just suggests that those guys are very well-connected. 345 00:32:32,200 --> 00:32:39,070 They know how to work the system. And here's the bulk of everyone else who queues for 168 days in the government, which is a pretty modest 20 years. 346 00:32:42,400 --> 00:32:45,630 Just some striking facts from colleagues. 347 00:32:46,060 --> 00:32:50,889 92% of loans extended to the private sector in Egypt in 2010 went to firms with political 348 00:32:50,890 --> 00:32:57,670 links to board members were identified as being close to Mubarak and the party in some way. 349 00:32:58,030 --> 00:33:05,410 In Egypt, politically connected companies and Mubarak accounted for only 11% of total employment, but 60% of total net profits among listed firms. 350 00:33:05,710 --> 00:33:11,600 So clearance of applicants, clearly they were not exposed to real competition and so on and so forth. 351 00:33:11,620 --> 00:33:16,749 Similar statistic for Ben Ali and similar results also after the Arab Spring for those cases. 352 00:33:16,750 --> 00:33:19,840 So these kind of protest structures have not really disappeared. 353 00:33:19,870 --> 00:33:24,880 Even Ahmed is the emblematic, most hated crony in Egypt. 354 00:33:25,300 --> 00:33:30,640 He's out of prison and his his companies are making three figure million dollar profits again. 355 00:33:32,080 --> 00:33:43,320 Sign here that it's really hard to break into markets and become a normal mid-sized firm and that very few companies that are registered as LLC, 356 00:33:43,330 --> 00:33:49,840 this limited liability company, which is sort of the typical form of that sort of dynamic mid-sized firms, 357 00:33:49,840 --> 00:33:55,389 takes a very few of those that created in the cases where we have data and again, 358 00:33:55,390 --> 00:33:59,230 very low mobility like on the labour market between inside and outside of certain. 359 00:33:59,230 --> 00:34:06,190 So large firms tend to be older, small and informal firms tend to stay small and informal for longer. 360 00:34:06,220 --> 00:34:14,320 So very limited mobility, very limited dynamism. Yeah, it's just a graph with this missing middle in Egypt here. 361 00:34:14,320 --> 00:34:19,190 So you've got the winds here this morning from the companies here and then very little in between. 362 00:34:19,210 --> 00:34:22,090 It would look quite different for a case like Turkey, for example. 363 00:34:22,900 --> 00:34:27,760 And the politics again is sort of analogous to what's happening on the labour market, 364 00:34:27,760 --> 00:34:31,560 but with inside has been even better organised, even better connected. 365 00:34:31,870 --> 00:34:37,359 So you've got the equivalent of the city and all the business sectors in terms of 366 00:34:37,360 --> 00:34:42,850 informal crony networks that are very effective at protecting their interests, 367 00:34:42,970 --> 00:34:51,129 serving in the administration, also shaping policy. And so there's a great paper by actually find a table in that year that shows that in 368 00:34:51,130 --> 00:34:56,470 sectors where there's a tariff reduction because of free trade agreements with Europe, 369 00:34:56,880 --> 00:34:59,890 as suddenly loads of non-tariff trade barriers pop up. 370 00:35:00,340 --> 00:35:06,520 If crony firms are present in that sector, that shows that even if there's formal liberalisation in one area, 371 00:35:06,850 --> 00:35:11,230 cronyism can pull political strings in order to create new barriers to entry, 372 00:35:11,410 --> 00:35:17,680 new forms of protection for themselves and in the shape of other protective tools and regulations. 373 00:35:19,570 --> 00:35:27,260 As a result, business really isn't very popular, so most Arabs really have a deep distrust of large businesses. 374 00:35:27,260 --> 00:35:35,739 So yes, the percentage of respondents with no confidence at all in large companies, according to recent World Value Survey on the Arab world, 375 00:35:35,740 --> 00:35:41,979 really stands out that interestingly, the general attitudes to enter apprenticeship or private markets aren't that bad. 376 00:35:41,980 --> 00:35:50,800 So it's really seems to be specifically large companies that I would interpret as cronies in the eye of the respondents that I particularly dislike. 377 00:35:51,550 --> 00:35:57,160 Okay, so that was the right side of the story question of the state protecting insiders in the private 378 00:35:57,160 --> 00:36:03,640 sector and that then that pattern reproducing itself and generally producing very weak trust. 379 00:36:04,120 --> 00:36:09,790 The study, the wider population. And the last I just say something for two or 3 minutes. 380 00:36:10,630 --> 00:36:16,180 The Arab world is also characterised by low skills as reflected in most standard statistic 381 00:36:16,210 --> 00:36:22,090 that we have in terms of PISA or TIM Schools sort of scholarly aptitude measures. 382 00:36:22,420 --> 00:36:30,400 Also, according to all sorts of enterprise surveys, the labour force is seen as is relatively unscathed or lacking practical skills. 383 00:36:30,820 --> 00:36:37,540 And I think this again is to some extent at least a by-product of this kind of segmented system where you just 384 00:36:38,080 --> 00:36:43,390 don't have strong incentives to invest in skills because you're going to be locked out quite likely anyway, 385 00:36:43,780 --> 00:36:48,340 or you're an insider. So it doesn't matter either. You can be very unskilled, you know, to lose your job. 386 00:36:48,670 --> 00:36:54,850 And similarly, firms either don't have strong incentives to invest in skills, the productivity for the insiders, 387 00:36:54,850 --> 00:37:00,070 or they don't have the ability because to outsiders and they don't get any support and they're just about scrape by. 388 00:37:01,240 --> 00:37:04,959 Firms do very little to provide skills, so very little in-house training, 389 00:37:04,960 --> 00:37:08,360 although they complain that skills up at the actually don't do much about it, 390 00:37:08,360 --> 00:37:14,950 but suggest that at least the insiders probably don't do because they simply don't have to that protected from competition. 391 00:37:15,670 --> 00:37:23,920 And there was a particularly bad talent year according to the World Economic Forum, that measure of how good firms are at leveraging talent. 392 00:37:24,370 --> 00:37:28,689 And there's also all sorts of evidence, some statistical, some anecdotal, 393 00:37:28,690 --> 00:37:33,370 that sort of nepotistic hiring is particularly bad even in private sectors in the Arab world, 394 00:37:33,370 --> 00:37:39,550 which again would kind of reinforce that kind of insight outside of that dynamic, even on the private parts of the labour market. 395 00:37:40,750 --> 00:37:46,920 Okay. So that was the skill story that's in there because skills are often part of the field. 396 00:37:47,080 --> 00:37:52,989 But I also think it's substantially important in this very imperative work on actually education and skills in the Arab world, 397 00:37:52,990 --> 00:37:56,020 which I think is a very important and neglected topic. 398 00:37:57,130 --> 00:38:03,970 I certainly do. It is trying to do so. We're very keen to get the views of the historians in the in the room about this. 399 00:38:04,240 --> 00:38:08,260 I do think there's an interesting story that I tried to unearth a little bit based on 400 00:38:08,260 --> 00:38:15,220 secondary sources in the history segment of the book where you had this nationalist, 401 00:38:15,700 --> 00:38:25,540 populist, revolutionary regimes in most of Egypt, but then also Syria and Iraq that kind of created this template of very ambitious state led, 402 00:38:25,720 --> 00:38:32,380 public sector led development that put the monarchies under pressure to keep up to some extent if they wanted to avoid revolution, 403 00:38:32,680 --> 00:38:36,520 as we know, not all of them did about revolution, but those that didn't want revolution. 404 00:38:36,520 --> 00:38:41,410 Jordan in particular, actually copied quite a bit of that sort of nationalist economic development template. 405 00:38:41,800 --> 00:38:49,240 And I think the reason is also because stands out in international comparison of being a relatively integrated ideological space. 406 00:38:49,240 --> 00:38:53,500 I think what Nasser said or what was inside a lot of redoubt and across the region, 407 00:38:53,500 --> 00:38:59,799 much more ideologically put the fear of God into the minds of the monarchs across the 408 00:38:59,800 --> 00:39:03,990 region in a way that you wouldn't have had in Latin America or sub-Saharan Africa. 409 00:39:04,130 --> 00:39:08,010 There wasn't the same amount of ideological transnational competition. 410 00:39:08,080 --> 00:39:14,200 I think this is part of why the region looks relatively homogenous on some of the indicators 411 00:39:14,200 --> 00:39:18,880 that are shown and why there is sort of a shared type among at least some of those states. 412 00:39:19,150 --> 00:39:24,850 But that's in some ways an open research agenda, because I haven't looked at any primary sources in that regard. 413 00:39:24,850 --> 00:39:32,340 But I think it's a very interesting puzzle where the region came to look relatively, relatively similar in terms of its political economy. 414 00:39:33,670 --> 00:39:42,729 All that being said, the republics are the worst offenders. So if you put all of those various indicators in the book on this nice fight each other, 415 00:39:42,730 --> 00:39:47,440 the greater the social system put together for me, then the country at hand. 416 00:39:47,440 --> 00:39:53,190 In this case, Algeria is the black line. The median grey line is low to middle income countries. 417 00:39:53,200 --> 00:39:58,570 So these are just other developing countries. And the light blue line is the global average. 418 00:39:58,930 --> 00:40:00,520 And if you're closer to the centre, 419 00:40:00,520 --> 00:40:09,610 then you're closer to sort of the segmented dualist ideal type that I've developed in this book is that Algeria is like a perfect fit. 420 00:40:09,930 --> 00:40:13,060 Like it's doing terribly in every regard. 421 00:40:14,470 --> 00:40:19,630 So it's one of the republics that really messed up things quite badly with regard to economic development. 422 00:40:19,750 --> 00:40:24,930 It's kept afloat, obviously, by oil. That's what has got to have to do something about this early on. 423 00:40:25,570 --> 00:40:28,510 Morocco is the least best fit. Morocco is very badly behaved. 424 00:40:28,520 --> 00:40:36,550 You know, it's sort of much more of a normal, average country in some regards, but it's still on the inside in more cases than its on the outside. 425 00:40:37,060 --> 00:40:42,370 But if you look at Egypt, it looks pretty much as bad as Algeria. 426 00:40:42,370 --> 00:40:50,220 Syria for the indicators where we have data looks quite bad and then gradually kind of countries move away a little bit from that ideal type. 427 00:40:50,320 --> 00:40:54,000 Jordan still is pretty close to that as to that kind of material pattern. 428 00:40:54,000 --> 00:40:59,820 And Morocco, is that the furthest away it? I don't think we need to talk about policy issues. 429 00:40:59,830 --> 00:41:02,920 I don't think we need to talk about any of the things that are in the slides that remain, 430 00:41:03,160 --> 00:41:06,700 because I think I've taken up enough time looking forward to take questions and. 431 00:41:13,580 --> 00:41:17,140 Great. Thank you so much, Stefan. So it's always tradition. 432 00:41:17,150 --> 00:41:21,620 I have to ask you the first question. So I've read this book nearly twice now. 433 00:41:21,740 --> 00:41:28,910 Reading it and rereading it. I have some questions for you. We've had some exchange about this email, but I think it would be worth just areas. 434 00:41:29,510 --> 00:41:37,820 What does it mean to be a labour market insider in Egypt in 2023, where forecasted inflation for this quarter is 33%? 435 00:41:38,660 --> 00:41:46,460 All these insider benefits are real. And if they're not real, can we talk about processes of not segmentation, but segmentation? 436 00:41:46,850 --> 00:41:50,510 That's a great question and I don't have the answer. 437 00:41:51,110 --> 00:41:54,410 What I do know is that at previous evaluations, 438 00:41:55,070 --> 00:42:00,410 there was always talk about the end of the Egyptian social contract and the insiders were doing quite badly. 439 00:42:00,410 --> 00:42:04,370 And then when you looked at the household income and consumption statistics afterwards, 440 00:42:05,090 --> 00:42:10,940 the insiders still did better and they also still got a worse hit from the devaluation than the insider. 441 00:42:10,970 --> 00:42:18,440 It could be different this time because previously Sisi compensated the insiders through nominal wage increases for devaluation. 442 00:42:18,740 --> 00:42:21,440 Often they were on a lower level in real terms than they were before. 443 00:42:21,920 --> 00:42:25,979 But the hit to outsiders that didn't get that kind of compensation often was worse. 444 00:42:25,980 --> 00:42:30,140 So the most recent labour market survey data we have is in 2019. 445 00:42:30,830 --> 00:42:34,520 Those were these graphs and the insight is that we're doing very significantly better. 446 00:42:34,820 --> 00:42:38,930 There is a potential that this time Sisi can't compensate or doesn't want to, 447 00:42:39,740 --> 00:42:49,520 and that the system does get segmented through complete polarisation that essentially everyone becomes an outsider in terms of the material status, 448 00:42:49,520 --> 00:42:53,059 just that you have more job security as an insider, that could happen. 449 00:42:53,060 --> 00:42:58,400 I think it's a really critical moment to watch it, but it's the result of that moment, 450 00:42:58,400 --> 00:43:04,700 of that model just having run for so long that everything's been destroyed and it's completely exhausted. 451 00:43:04,700 --> 00:43:09,560 So the only way out of that model that way would be complete polarisation, desperation for everyone. 452 00:43:10,400 --> 00:43:18,700 Great. So a follow up question then. So the thesis of labour market utilisation seems to me to be completely not just 453 00:43:18,710 --> 00:43:23,550 plausible but compelling that you have extremely ambitious third orders development, 454 00:43:23,550 --> 00:43:29,510 developmental states that embark on these processes of talking, industrialisation, import substitution policies. 455 00:43:29,840 --> 00:43:35,899 And this I'm thinking here of Fernando Gil's work about, you know, social dictatorships, 456 00:43:35,900 --> 00:43:43,340 that these are often autocratic regimes that then expand the kind of support coalition into society through having labour market insights. 457 00:43:43,970 --> 00:43:47,660 How then and this is something that there's a slight tension I found running through the book. 458 00:43:47,990 --> 00:43:54,140 How should we expect that labour market utilisation will pattern participation in things like anti systemic uses? 459 00:43:54,470 --> 00:43:58,459 Yeah. So in the book, for example, you cite Kevin Liza's work a lot about Syria. 460 00:43:58,460 --> 00:44:03,560 He finds that Syrian Sunnis who are public sector employees, labour market insiders, 461 00:44:03,560 --> 00:44:08,720 are much less likely to mobilise against the regime than Syrian Sunni labour market outsiders. 462 00:44:09,080 --> 00:44:13,880 And this is there's a lot of parallels here with the thesis put forward by another by the former Nuffield historic 463 00:44:14,180 --> 00:44:19,910 Win Rosenfeld about the so-called autocratic middle class that we often think in kind of democratisation studies, 464 00:44:20,180 --> 00:44:23,220 that the middle class should be the agent, the vanguard of globalisation. 465 00:44:23,510 --> 00:44:27,889 But where you have labour market utilisation that this kind of privileged relationship 466 00:44:27,890 --> 00:44:31,550 to the state that labour market inside is enjoys a basically demobilise you. 467 00:44:31,620 --> 00:44:35,420 Yeah I wonder how sustainable that is looking looking across the media which is 468 00:44:35,570 --> 00:44:39,530 certainly so sorry at least who's one of Stefan's former students you know, 469 00:44:39,620 --> 00:44:44,090 looking at Algeria and Britain's participation in recent mobilisations there. 470 00:44:44,420 --> 00:44:50,930 And in that case, labour market insiders are really the key constituency here, at least reporting in-person surveys that they're protesting, 471 00:44:51,200 --> 00:44:56,540 you know, Egypt in 2011, again, it's the same kind of constituency that we get from kind of things like our barometer data. 472 00:44:56,750 --> 00:45:03,470 So I wondered what is their expectation? But is your your argument that leaving look it outsiders will tend to not be anti systemic. 473 00:45:03,680 --> 00:45:07,430 They'll just argue for insight. This latest thing is totally plausible and it shows up in all kinds of ways. 474 00:45:07,700 --> 00:45:11,030 But then what is our expectation about about labour market inside this thesis? 475 00:45:11,330 --> 00:45:12,260 That's another great question. 476 00:45:12,260 --> 00:45:19,120 I've thought about this a bit recently, and I don't think my theory predicts that it's either one or the other protesting. 477 00:45:19,400 --> 00:45:22,610 I think I think it can capture both of these. 478 00:45:23,150 --> 00:45:27,650 It's more about the nature of demands and what triggers protests. 479 00:45:28,040 --> 00:45:33,829 So I think you're quite right that in Tunisia tended to be more the outsiders they tend to be more the was easy to mobilise I think 480 00:45:33,830 --> 00:45:40,730 2010 2011 in Egypt it was more the insiders probably because those was inside of that been on a longer trajectory of relative decline. 481 00:45:40,850 --> 00:45:48,330 It was to better off than outsiders. So I don't think we can on the basis of this, predict that it's going to be constituency or constituency B, 482 00:45:48,650 --> 00:45:53,240 but we can still make those protest legible in terms of the content of the demands. 483 00:45:53,690 --> 00:46:03,080 And we can probably predict that insiders are more likely to protest when the material status is affected by an outside, 484 00:46:03,170 --> 00:46:06,950 are more likely to to protest when they see a chance to become an insider. 485 00:46:07,460 --> 00:46:11,860 But yeah, I think it's perfectly compatible. With insiders and outsiders protesting. 486 00:46:11,860 --> 00:46:18,790 I think what what would sort of falsify it was inside and outside is went out at the same time asking for the same thing. 487 00:46:18,940 --> 00:46:22,270 And I don't think we've I think we've seen that. They both protest in different ways. 488 00:46:23,380 --> 00:46:29,650 So you also the 40 fluent and cogent. Let me let me try to think of something slightly more difficult. 489 00:46:30,010 --> 00:46:38,560 So in the thesis that you have, you there's a question here which is your sub setting into a set of Arab Republic produce economies. 490 00:46:39,070 --> 00:46:43,030 What is the status of the rentier states in this story? 491 00:46:43,360 --> 00:46:50,320 Because one expectation you talk about, because there's a question about case independence is one is that you have this kind of development with 492 00:46:50,330 --> 00:46:56,430 state to state diffusing from south to other or whatever through a number of contacts and then maybe, 493 00:46:56,440 --> 00:47:00,280 maybe even some competition amongst the Arab publics about who has the more generous social contract. 494 00:47:00,940 --> 00:47:06,880 What then happens, though, in 1970s, when you obviously have forms of retrenchment, the model no longer works, is no longer sustainable. 495 00:47:07,150 --> 00:47:15,430 Nobody wants to buy Egyptian cars. But there's also coeval to this process unfolding where you have very significant forms of 496 00:47:15,430 --> 00:47:20,620 South-South migration in which a lot of seemingly labour market insiders from contexts like Egypt, 497 00:47:20,620 --> 00:47:24,950 from Syria, but really Egypt are going to the Gulf. How could it be? 498 00:47:24,970 --> 00:47:29,560 Because one of the stories that I was kind of wanting to hear more about in the book is What is the status of remittances, 499 00:47:29,560 --> 00:47:34,900 for example, in all things like remittances, maybe insulating labour market inside these people, 500 00:47:34,900 --> 00:47:40,750 you have all kind of maybe privileged in these kind of South-South migration patterns because of the labour history, 501 00:47:40,750 --> 00:47:43,060 because the university graduates almost exclusively. 502 00:47:43,450 --> 00:47:49,060 And this may be heading a kind of Nasserist social cultural structure, allowing it to endure over time. 503 00:47:49,510 --> 00:47:54,850 I think one thing that the book doesn't explain sufficiently is why the model is quite so resilient. 504 00:47:55,330 --> 00:47:58,510 I think that's quite right. You put your finger on that quite rightly. 505 00:47:58,930 --> 00:48:03,880 I mean, some of it is those political feedback loops. But at some point, if you completely run out of money, you know something? 506 00:48:03,930 --> 00:48:07,389 I mean, this as economists said, something can't continue forever. 507 00:48:07,390 --> 00:48:10,660 It has to stop at some point. And I think this moment is now there in Egypt. 508 00:48:10,680 --> 00:48:12,460 We'll have to see. We'll have to see what's next. 509 00:48:13,000 --> 00:48:21,129 I think remittances are probably a factor, certainly in Egypt, that Egypt consume much more than its productive capacity, warranted for decades. 510 00:48:21,130 --> 00:48:25,120 And I think remittances are an important part of that. And also aid from the Gulf countries. 511 00:48:25,690 --> 00:48:29,490 Also geo political patronage to some extent from the United States. 512 00:48:29,500 --> 00:48:35,110 I think these are all auxiliary factors that lock this kind of system in place for longer than we 513 00:48:35,110 --> 00:48:41,349 would have had some of the more ambitious kind of socialist regimes surviving in sub-Saharan Africa, 514 00:48:41,350 --> 00:48:44,920 like Tanzania. It blew apart because no one was supporting it. 515 00:48:45,130 --> 00:48:51,430 That said, you know, Syria lurched on for 20 years after the end of the Soviet Union with very little external support. 516 00:48:51,430 --> 00:48:55,270 So there was something so internally coherent and strong about it. 517 00:48:56,650 --> 00:49:00,490 One thing about the Gulf, so I think Saudi Arabia is actually the only country, 518 00:49:00,730 --> 00:49:05,200 the only major Arab country that really fully implemented a Nasserist economic program. 519 00:49:05,920 --> 00:49:12,850 Because if you read the ten points by King Faisal from 1962, when they had a number of failed military coups, 520 00:49:12,850 --> 00:49:20,530 turmoil within the family, sort of bringing sort of Nasserist and Baathist ministers into his cabinet out of fear of of revolution. 521 00:49:21,580 --> 00:49:24,010 They took the program and they had the money to run with it. 522 00:49:24,370 --> 00:49:31,330 So if you look at the size of the public sector, the extent of public sector industrialisation, they did a lot more than Nasser ever promised. 523 00:49:31,830 --> 00:49:35,000 And I've got a paper on labour market segmentation of the Gulf. 524 00:49:35,000 --> 00:49:36,670 Then I'm happy to send it to you. 525 00:49:37,660 --> 00:49:47,800 Well, Thomas Cook, I'm not convinced that what you're saying actually contradicts neo liberalism the way you say that it does. 526 00:49:48,520 --> 00:49:56,350 And primarily because people academics, right. About neo liberalism aren't just equating liberalism with smart state. 527 00:49:57,310 --> 00:50:00,880 They aren't actually even arguing that the state necessarily shrinks. 528 00:50:01,390 --> 00:50:05,200 What they are doing is that there's an upward redistribution as well. 529 00:50:05,680 --> 00:50:10,180 And I don't think that that actually contradicts what you're saying very much. 530 00:50:11,170 --> 00:50:15,340 One thing that you are arguing, which may be a bit different than what most people. 531 00:50:16,510 --> 00:50:25,290 Saying That's all I needed to hear is that you are claiming a larger group of insiders than. 532 00:50:26,600 --> 00:50:34,250 You know, it was claim, but I think that there are tiers within your category of Labour insiders. 533 00:50:34,970 --> 00:50:39,270 I don't think that's sort of denying it because you keep saying you keep putting a caveat. 534 00:50:39,680 --> 00:50:46,070 You don't turn necessarily great jobs. I think actually at the lower tiers of these public sector workers, 535 00:50:47,000 --> 00:50:54,170 it is true that people want these jobs because they do provide some level of security, but it's not a very high level of security. 536 00:50:54,500 --> 00:50:58,800 And what they actually do very often I mean, you just alluded to this talking about. 537 00:51:00,120 --> 00:51:03,420 Working in both of public sector jobs. 538 00:51:03,780 --> 00:51:11,940 But many public sector employees actually moonlight in the private sector, and so they get their secure income from public sector jobs. 539 00:51:12,390 --> 00:51:14,400 But they work in the private sector. 540 00:51:14,820 --> 00:51:21,840 And there are other ways that we have realism effects for people that isn't necessarily just so you can reduce to jobs. 541 00:51:21,840 --> 00:51:29,550 It's also things like the provision of education and healthcare, which are things that, you know, part of the is. 542 00:51:30,880 --> 00:51:34,810 The state would provide these things and it actually doesn't provide. 543 00:51:35,220 --> 00:51:43,920 Well for public sector workers or for people, the private sector, many people to have these public sector workers inside jobs are just, 544 00:51:43,980 --> 00:51:52,590 as, you know, finding it just as necessary to go to the private sector with things like education and actual good health care. 545 00:51:53,570 --> 00:51:56,630 People who are in this insecure private sector. 546 00:51:57,110 --> 00:52:00,030 So I. I don't disagree with anything you're saying. 547 00:52:00,050 --> 00:52:07,820 I just think that actually most of what you're saying fits perfectly well within the political analysis. 548 00:52:08,330 --> 00:52:18,680 It is political. I mean, I agree that some of the more sophisticated authors are talking about stage redeployment rather than, say, withdrawal. 549 00:52:18,950 --> 00:52:24,620 Well, I actually but I'm not going to give you even like the very general, like David Harvey's wisdom. 550 00:52:25,620 --> 00:52:32,780 Well, that's always part of it. They're not arguing that neo liberalism is just part physician treating the state. 551 00:52:33,410 --> 00:52:38,960 They're pretty much all saying that, you know, something else is going on. It's actually the state may actually be in there. 552 00:52:38,990 --> 00:52:44,960 It's just that there's a we actually look at the history in Egypt during this era. 553 00:52:45,620 --> 00:52:53,180 Most of the at the top insiders were people who had a foot in government, like government ministers also were making money off private sector. 554 00:52:53,540 --> 00:53:00,739 Once you get into an apartheid era, then more of the top level like the Wales actually completely outside the public sector. 555 00:53:00,740 --> 00:53:05,490 They're completely private. People are gone. It is like the really big capitalists. 556 00:53:05,500 --> 00:53:10,420 They're no longer like innocent people, their cronies and, you know. 557 00:53:11,050 --> 00:53:16,200 Neo liberal writing doesn't actually say anything about cronyism. 558 00:53:16,210 --> 00:53:20,130 Not. Yeah. I mean, two answers. 559 00:53:20,130 --> 00:53:25,400 One is that I think the labour market inside a constituency is really very significant. 560 00:53:25,410 --> 00:53:27,760 It's the most important part, I think, of this political economy, 561 00:53:27,760 --> 00:53:33,209 and I think that's really neglected or is misrepresented in a lot of the literature that focus on neoliberalism. 562 00:53:33,210 --> 00:53:38,160 I think that the stickiness of this old middle class social contract is underestimated, 563 00:53:38,490 --> 00:53:47,490 and the decline of that constituency is often attributed to kind of nefarious redistributive sort of conspiracies, 564 00:53:47,490 --> 00:53:55,890 whereas in many ways it's just those models being exhausted and not being able to to live up to their promises because they're extremely inefficient. 565 00:53:56,190 --> 00:54:02,129 So I think I think the efficiency questions that are that are very much neglected by both literature and a 566 00:54:02,130 --> 00:54:09,360 lot of the exposure of people to markets and the shrinking of this old social contract is is structural, 567 00:54:09,360 --> 00:54:16,050 is unintended. I think they would have been very happy to keep the Nasserist system if they could afford it, to keep the Nasser system. 568 00:54:16,650 --> 00:54:22,049 And when those systems were fiscally exhausted, they just had to do something about creating, 569 00:54:22,050 --> 00:54:29,190 try new sources to generate new sources of growth or something like this, which in many cases then led to cronyism and inequality. 570 00:54:30,000 --> 00:54:33,389 I think a lot of the insight outside the cleavages emerged because of resource 571 00:54:33,390 --> 00:54:36,990 constraints and not because of a deliberate kind of ploy to redistribute. 572 00:54:39,480 --> 00:54:44,790 Did you get thinking of an earlier synthesis on political economy? 573 00:54:45,120 --> 00:54:49,740 Springborg and Henry, he characterised a lot of the countries you focussed on. 574 00:54:50,520 --> 00:54:54,390 Certainly Algeria. Egypt, Syria. Yemen as. 575 00:54:54,510 --> 00:54:58,700 Bunker. Petroleum and the bunker was. 576 00:54:58,740 --> 00:55:05,490 All of the features that you're referring to about control over aspects of the labour market and distribution of state goods. 577 00:55:05,940 --> 00:55:07,829 But the Praetorian Guard reflected, of course, 578 00:55:07,830 --> 00:55:14,010 their military origins that these were all countries that had governments that emerged in that moment of enthusiasm. 579 00:55:14,020 --> 00:55:17,520 The 56 years military governments to power. 580 00:55:18,590 --> 00:55:26,690 Each of which was to complicate the stage in a way that you don't seem to reflect here, in that the state and the army are often not the same thing. 581 00:55:27,260 --> 00:55:32,200 Certainly in the case of Egypt, you had the sense that you take the army off the states books. 582 00:55:32,210 --> 00:55:38,780 It was given free reign over bits of the economy, the limits of which we still haven't really been able to study with any precision. 583 00:55:39,230 --> 00:55:42,380 So I just wonder whether there's a point to bringing the Army back in. 584 00:55:42,390 --> 00:55:48,890 Certainly when one looks at this very ambiguous Algerian government and the role of the military there in Egypt. 585 00:55:49,340 --> 00:55:56,510 I mean, Yemen and Syria are such messes now. But clearly the role of the military in holding it all together is absolutely central. 586 00:55:56,840 --> 00:55:59,120 And is there something to complicate a little bit, 587 00:55:59,120 --> 00:56:04,190 the discussion about the state that brings the army into it in a slightly competing way with the state? 588 00:56:05,870 --> 00:56:14,599 Yeah, I think definitely if I was to I mean Henry and Springborg most to do kind of within reason comparisons. 589 00:56:14,600 --> 00:56:19,399 So they take the Middle East as their universe and then they create subcategories within that. 590 00:56:19,400 --> 00:56:24,469 So the distinctions are much finer than mine. But my perspective as global comparison, 591 00:56:24,470 --> 00:56:32,090 I try to figure out what makes those core Arab says distinct and global sort of global global south comparative terms, 592 00:56:33,260 --> 00:56:36,740 but with a more fine grained comparative lens within the region. 593 00:56:36,750 --> 00:56:44,360 I think the army is is critical and is probably what's made a lot of the things worse in Egypt and Algeria. 594 00:56:44,660 --> 00:56:50,000 But that being said, Tunisia is also quite close to my ideal type in the army was completely closed. 595 00:56:50,120 --> 00:56:54,620 The it was obviously a republic and a very strong security apparatus. 596 00:56:55,070 --> 00:56:57,270 But the army as such was not part of politics. 597 00:56:57,590 --> 00:57:02,410 Perhaps it's more about having a strong Republican security apparatus rather than the army specifically, 598 00:57:02,430 --> 00:57:06,050 but it's just the devolving of parts of the economy. Yeah. 599 00:57:06,350 --> 00:57:10,700 I think would be different. Yeah. Yeah, he's in Egypt maybe compared to Turkey or something. 600 00:57:10,910 --> 00:57:17,330 Yeah. I mean, there are definitely more state owned enterprises in Egypt and energy area compared to Tunisia because of those vested interests. 601 00:57:17,330 --> 00:57:25,100 And those are part of the of the public sector. But looking at total employment, it's a fraction of what's in the rest of the bureaucracy. 602 00:57:25,100 --> 00:57:29,000 So it's for the broader labour market story. It would make a huge difference. 603 00:57:31,680 --> 00:57:32,040 You know. 604 00:57:33,540 --> 00:57:42,980 I think at some point you said I could be supporting you, but the resources of the state is depleted in part because states declare war exhausted. 605 00:57:44,790 --> 00:57:48,269 But there's also something that I think I have heard you talk about, 606 00:57:48,270 --> 00:57:52,589 which is that at least two countries are already constrained in their resources 607 00:57:52,590 --> 00:58:00,240 to begin with the goal and maybe it's on what level of expenditures on military. 608 00:58:00,630 --> 00:58:09,720 So yes, maybe this in Asia on all their states they will not be spend roughly an average, maybe a small amount, 609 00:58:09,720 --> 00:58:16,830 about 5% of GDP, but military that's significantly higher than all the global south and also all those countries. 610 00:58:17,250 --> 00:58:21,270 And that rate by itself takes significant part of existing resources. 611 00:58:21,270 --> 00:58:26,490 That would be then, you know, distributed, whether for Social Security, social welfare, health care, whatever. 612 00:58:26,820 --> 00:58:30,510 And that, I think, is a very important part of their story. That seems like the. 613 00:58:34,110 --> 00:58:41,210 So how does this fit in with. You know, but that's because the state is depleted, that the state is obsessed with trying to stay alive. 614 00:58:41,420 --> 00:58:48,290 Yeah, I think it's an auxiliary factor, but it also links to the labour market story because a lot of employment of 615 00:58:48,290 --> 00:58:52,519 young males in the military sector is kind of a form of insider employment. 616 00:58:52,520 --> 00:58:56,150 So if you think of of Jordan and the work of Tyreke Teller, 617 00:58:56,600 --> 00:59:05,719 much of the growth of the security sector is to absorb young male Jordanian citizens and give them a sort of middle class ish status, 618 00:59:05,720 --> 00:59:08,510 often for for people who only have secondary education. 619 00:59:08,600 --> 00:59:14,450 So I think that the labour market dimension of the military sector actually plays quite into what I say. 620 00:59:14,450 --> 00:59:19,010 I think it would be a different story if there was huge procurement of foreign military kids. 621 00:59:19,400 --> 00:59:22,240 So we need to see how much would they spend on salaries. 622 00:59:22,240 --> 00:59:26,480 And then my hunch is they spent more in salaries, proportionally speaking than most other militaries. 623 00:59:26,690 --> 00:59:31,730 How much do they spend on on sort of military kits, which then would be sort of a story of it's own? 624 00:59:33,610 --> 00:59:39,530 It's almost like a thank you. A very interesting and very well communicated. 625 00:59:39,830 --> 00:59:44,120 Yes. At the end, you skipped a few slides for lack of time. 626 00:59:44,360 --> 00:59:48,740 And so some keywords to comment about to show students in the arts and humanities. 627 00:59:51,210 --> 00:59:55,910 Yeah. I accidentally left in the the old grass there rather than the nice scatterplot. 628 00:59:56,240 --> 00:59:59,320 But there's a general pattern that higher education. 629 00:59:59,360 --> 01:00:04,399 The Arab world has a disproportionate amount of students in subjects that are sort of 630 01:00:04,400 --> 01:00:09,080 considered a bit remote from the skills that you would need in the private sector, 631 01:00:09,500 --> 01:00:11,060 and that includes people like us. 632 01:00:11,510 --> 01:00:19,040 So just for the arts, humanities, religious studies and the reason for that, to the extent that I could find that out, 633 01:00:19,040 --> 01:00:25,340 talking to people is that those programs are very cheap, comparatively speaking, to expand. 634 01:00:25,700 --> 01:00:31,650 So it's much easier to make everyone ABC in literature or geography than make everyone A, B, C, 635 01:00:31,670 --> 01:00:37,999 in engineering or anything that requires equipment and also teaching staff who are more 636 01:00:38,000 --> 01:00:41,930 expensive because they're the they can be hired at higher wages in the private sector. 637 01:00:42,320 --> 01:00:47,540 And I think it's, again, part of the old Nasserist social contract. We promised everyone higher education. 638 01:00:48,050 --> 01:00:50,540 Everyone then can get a government job. 639 01:00:50,540 --> 01:00:57,080 But how do we do this when we have resource constrained and we've got to grow our university system by 20% each year, 640 01:00:57,380 --> 01:01:03,410 we go into the subjects that are completely irrelevant for the private labour market, but that we can expand on the cheap very quickly. 641 01:01:03,730 --> 01:01:10,549 I think that legacy creates with some of the skewed or deficient skills distribution in the 642 01:01:10,550 --> 01:01:15,500 private sector and was originally set up for people who then went on to work in the government. 643 01:01:15,500 --> 01:01:21,170 And it didn't really matter if you had sort of a B.A. in geography, but nowadays in the private sector it would matter. 644 01:01:21,170 --> 01:01:25,310 But you have this legacy of those mass programs that are not fit for purpose. 645 01:01:26,980 --> 01:01:30,460 That's a great question and answer. Can we thank Speaker Stephan?