Tunisian situation--a lesson in effective economic governance

Economy did him in

The political situation in Tunisia should provide a valuable lesson to President Benigno Noynoy Aquino--when you sleep on your job, you'll find yourself packing your bags and going on exile.


Former Tunisian president Ben Ali just got the end of the stick when he:


1. Failed to arrest the sudden decline of the Tunisian stock market---it was the coup d'grace, many of Ali's big business supporters lost billions when the stock market slumped to its lowest in twenty years. It likewise, decisively weakened the economy. The elites blamed him for the crash.


2. Rise of unemployment--at least 2/3rds of the Population were jobless. This is a regional phenomenon, yet, Ali was unable to adequately explain this to the public.


3. Food price hikes---The general population suffered from a phenomenal price hike adjustments across the board. Hunger pervaded throughout the country. People were'nt able to buy essential goods, even the basic staple. The purchasing power of Tunisian dinar diminished almost overnight.


If you noticed, Ali's ouster was not precipitated by any political scandal---the economy "did him in", so to speak. 

Noynoy Aquino should keep the economy
in check

When Ben Ali managed the economy like an effective technocrat, no one even dared oppose him. No one in the Tunisian elites called for his resignation. The elites and even the general population tolerated his administration. And for twenty two years, the political situation was stable. 


Things shifted from bad to worse when problems in the regional economy suddenly reached the shores of Tunisia's local economy. 


Food became so expensive, people went hungry. Rising inflation discouraged investments, thereafter, affecting the performance of the market. Companies started losing money and their stocks naturally depreciated. Many of Tunisia's elite lost money. Re-investing the money to the economy became slower than usual, since elites were saving up rather than re-capitalising. Of course, job generation ceased. 


The suffering masses and the elites all blamed Ali for mismanaging the economy. To be fair, Ali actually has nothing to do with it. Fact is, even if Ali use all of the state's resources to save the ailing economy, it would not be enough. Pressures coming from external economic forces are so strong, no one, even an expert economist, was able to arrest the slide of the local economy.


Notice that this transition was not political--it was economic. The bad shape of the economy forced a political transformation. 


This transition is nothing spectacular, it was actually a classic one. The Russian Revolution of 1918 was more economic than political. The Chinese Revolution of 1949 and the Cuban Revolution of 1959 were all revolutions based on the presumption that the Socialist model was more effective than the capitalist one. 


Russians cried for bread than bullets, so did the Chinese and the Cubans. This should serve as a lesson for any leader--that when you mismanage your economy and isolated yourself from the masses and the elites, you risked your political fate.


In the case of Noynoy, the President and his cabinet are very confident that nothing of that sort will happen in our country.


For one, Noynoy, according to their perception, still enjoys a high political capital. People still love him. 


They also believe that the economy remains bullish, joblessness is still manageable and inflation in check. What they don't know is the prospect of this "good situation" turning into a nightmare, can actually be faster than expected. 


The SWS has already given them a forewarning---hunger incidence has risen over the past six months due to the rise of commodity prices and oil. There are more than 3 million Filipino families going hungry every day. GOvernment's response---give them cash allowances. This is just a palliative. The most obvious solution of providing jobs remain a hard challenge. 


Unemployment rate remains at 7% and experts say it will get into the double digits very soon (possibly when 3 million graduates again flood the job market this March). 


Inflation is expected to rise with these price hikes in gasoline, MRT/LRT, toll and others. 


There is a tinderbox waiting for an ignition. The ignition will definitely come from the gut.