Political Elasticity (PE) Theory: Doing for the Social Sciences what Darwin did for the Biological Sciences by Prof. Herbert H. Werlin

In The Washington Post, Secretary of State Hillary Clinton is reported to have pledged to the new government of Egypt tens of millions of dollars of financial aid and business incentives in addition to the more than $1 billion already available to Egypt by the Overseas Private Investment Corporation to fund small and medium size businesses and stimulate job growth [1]. The trouble with this is that, unless there is fundamental administrative reform, not much good can be expected of this financial aid.

Just how bad things have become since the overthrow of Mubarak is indicated in an article by Niall Ferguson in the June 13 and 20, 2011 issue of Newsweek [2]. Egypt‟s economy is predicted to contract this year by 4 %; inflation is now above 12 %; the Egyptian stock market is currently trading at 23 % below its pre-crisis peak; $30 billion has left Egypt since the onset of the Arab Spring; and the country‟s foreign-exchange reserves fell by as much as a third in the first three months of the year. The reason for this situation, according to Ferguson, has to do with “soaring crime in the cities, the difficulty of carrying out normal transactions, and, above all, nerve-racking political uncertainty” [2].

I became aware of the administrative troubles of Egypt during the 1970s when I was partly responsible for preparing a USAID-funded rural-development project which attempted to get government-employed medical doctors to work in rural areas where medical conditions were very bad. I soon discovered that medical doctors were being paid so poorly by their government that they were reluctant to leave their private patients in urban areas. The project eventually had to be abandoned.

In the l980s, while a researcher, writer, and editor at the World Bank, I encountered an education project for Egypt that attempted to evaluate innovations before and after examinations. The project went ahead because it was USAID-funded despite the opposition of the Education Minister to examinations. The Minister‟s opposition, it turned out, was based upon the fact that, in 

as much as teachers are paid very little, exam results are determined by bribery rather than anything else.

Costa Rica, with just five million populations, exports more than Egypt, with a population of about 80 million. The jobless rate among youth is between 30 and 40%, and 44% of the population subsists on less than $2 a day. To halve this figure by 2015, GDP must grow by 8 to 10% a year, but the growth rate has been only about 3% a year. Over the past decade, the Egyptian pound has lost almost half its value against the U.S. dollar.

Organizations associated with Hernando de Soto and Mo Ibrahim has identified some of the reasons for this misery: More than 90% of Egyptians hold their property without legal title. While the value of this property is estimated to be thirty times greater than the market value of registered companies, it can be called “dead capital” (without access to financial and governmental assistance). To open a small bakery requires more than 500 days, including 56 government agencies and repetitive government inspections. To get legal title to a vacant piece of land requires more than 10 years of dealing with red tape. Because the informal sector (unauthorized business) does not adhere to any financial requirements having to do with social security, taxes, or labor laws, it can undermine or unfairly compete with enterprises that are officially registered … http://www.onlineresearchjournals.org/JSS

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