How An Entrepreneur Sparked the Arab Spring

December 8th, 2011 at 12:00 am | 9 Comments |

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I recently had the great pleasure of hearing economist Hernando de Soto speak to a group of think tank types and media members about his perspective on the Arab Spring. De Soto is most famous as an advocate for property rights for the world’s poor.

Henando de Soto’s big argument about the Arab Spring is that despite where it may end up, its origin began with a protest over the inability for Tunisia’s poor to accumulate capital.

The case study he used to make this argument is about Mohamed Bouazizi, a street vender in Tunisia. On December 17th of 2010, Bouazizi had his vending cart seized by the police, and he lacked the funds needed to pay off the police. This action destroyed Bouazizi’s livelihood and completely derailed plans he had made to save up money to buy a truck to help with his business.

After failing in making an appeal to the authorities, Bouazizi doused himself in gasoline and immolated himself. Bouazizi’s death turned him into a martyr and his name was frequently invoked by many of the revolutionaries who took part in the Arab Spring, including the political parties in Tunisia.

What most interests de Soto is why Bouazizi immolated himself. A series of interview with friends and families of Bouazizi conducted by de Soto’s Institute for Liberty and Democracy found that his primary motivation was likely economic, not political. According to his sister, Bouazizi wanted to accumulate Ras el Mel (capital). His brother noted that Bouazizi’s ambition was “that the poor also have the right to buy and sell.”

Like many developing countries, Tunisia has a tiny formal economy and a large “extralegal” economy. To be clear this is not an illegal or underground economy, this is an economy where transactions take place for many common items but there is not even the most basic regulation and no enforcement on property rights. Bouazizi would not have been able to get his right to sell goods upheld in a court, partly because he would have had to wait years just to have his case heard. The agreements that he had to make let him run his business were not part of a broader enforcement of property rights. As he found out, they were also dependent on the whims of the police.

De Soto argues that aggressive reforms which take the extralegal economy and bring it into formal law would very positive development. What frustrates him is that there is very little discussion about this economic and property rights component to the Arab Spring.

As de Soto put it, a problem is that currently: “Bouazizi is seen as a martyr, but he is not seen as an entrepreneur.”

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9 Comments so far ↓

  • Graychin

    Odd spin.

  • valkayec

    In many ways De Soto is correct. Even in this country, the rules have changed to protect and advance the interests of the wealthy and powerful at the expense of everyone else. I suspect it will now take a Constitutional Amendment to re-align political power so that everyone, regardless of money and power, has a chance to succeed.

    Good post, Noah. You’re getting better all the time.

  • balconesfault

    Although I have to admit, setting yourself on fire because the state grabbed your stuff seems pretty damn crazy to me. I don’t remember our founding fathers self-immolating on the basis of taxation without representation.

    • Graychin

      When American billionaires start setting themselves on fire because Obama wants them to pay 3% more in income taxes, I’ll start to worry about the Hated Socialist Kenyan in the White House.

      • Fart Carbuncle

        Smargalicious’ name for him was the Half-Kenyan Reparationist. Use that one instead. :D

        • Graychin

          Pretty close to Smarg, are you?

          Thanks, but I’d rather mock the description of someone who matters – the likely Republican nominee for president. He referred to Obama’s “Kenyan anti-colonialist mindset.”

          Translation: Mau-Mau. Look it up.

  • Lonewolf

    Ridiculous. He was a merchant, plain and simple; an honourable man who couldn’t find a job and instead tried to eke out a living by selling fruit from a cart. Hardly an innovator, one vendor among hundreds, just a guy trying to get by as best he could. He killed himself in anger and frustration over the theft of his merchandise by corrupt police. To portray him as a “martyr to capitalism” who chose a painful death in order to “promote entrepreneurship” is base revisionism, and dishonours both his act and his memory. His suicide, while noble, was a random spark that just happened to ignite a tinderbox. It was not an act carefully calculated to change worlds.

    Closer to home, is NK-G prepared to laud the illegal immigrants who sell bags of oranges on San Diego street corners as “enterpreneurs”, and to publicly lobby for their immediate acceptance as full citizens? Certainly, that is honourable work, but is it really the economic panacea the author claims America needs?

    • Reflection Ephemeral

      As I understand de Soto’s point, it’s that Mr. Bouazizi was terminally frustrated at the lack of rights and fairness in Tunisian society. Now, maybe de Soto uses elsewhere the phrases “martyr to capitalism” and that he died to “promote entrepreneurship”, which would indeed appear to be a wild misreading of Bouazizi’s intentions, but I don’t see those terms in NKG’s post. de Soto, apparently, argues for individual rights in poorer countries. I don’t see why it’s far off for him to point to Bouazizi’s desperation as evidence of the importance of that cause.

      As to the Founding Fathers’ frustration, they were an ocean away from the rulemakers they found so galling. They could round up posses and militias of fellow dissenters without the near-certainty of being chucked into jail for torture and disappearance. Bouazizi lacked those options; until the whole of Tunisia was protesting, protesting wasn’t possible.

      I’m inclined to agree with this summary of de Soto’s views. I do think it’s important to bear in mind the comments of Harvard economist Dani Rodrik (para. #1), here via Matt Yglesias, whose comments are para. #2 of this block quote: http://thinkprogress.org/yglesias/2011/10/16/345198/the-state-of-nature/

      The Friedmanite perspective greatly underestimates the institutional prerequisites of markets. Let the government simply enforce property rights and contracts, and – presto! – markets can work their magic. In fact, the kind of markets that modern economies need are not self-creating, self-regulating, self-stabilizing, or self-legitimizing. Governments must invest in transport and communication networks; counteract asymmetric information, externalities, and unequal bargaining power; moderate financial panics and recessions; and respond to popular demands for safety nets and social insurance.

      In this regard, I think it’s quite interesting to read historical, anthropological, and sociological accounts of state formation and people living in non-state social orders. It’s common to represent the market as in some sense “given” and the state as a kind of positive presence against the market backdrop. But that’s not how any actual society seems to have developed. Instead, property rights and contract enforcement evolve in parallel with other elements of the modern regulatory and welfare state. Even something as fundamentally free markety as the floating exchange rate of the dollar is much newer than Social Security or the National Labor Relations Board, to say nothing of public schools.

      I think that misapprehension– that markets are the natural state of being– underlay our advice to the Russians in the wake of the USSR’s collapse, which, in the end, set back the cause of capitalism and democracy in Russia. (In addition to what we all already know about Russia, see this recent poll: http://www.pewglobal.org/2011/12/05/confidence-in-democracy-and-capitalism-wanes-in-former-soviet-union/ ).

      Doesn’t mean it would have been mere orientalism to advocate for greater enforceable property rights in Tunisia, but it’s also a mistake to think that, but for the evil government, it’d be Singapore-on-the-Mediterranean. Getting to what we in the US think of as a free market economy takes a lot of time & developments.

  • SFTor1

    “The rights of the poor to accumulate wealth?” Huh?

    Time to extinguish the smoking materials, NKG.

    The “rights of the poor to accumulate wealth” is also known as wealth redistribution. If you don’t include that mechanism, you will inevitably have what you see today: the rich get richer and the poor get poorer.

    Mr. Bouazizi lived in a country without most social goods people in the Western world take for granted: education, health care, and some sort of a social safety net. It’s basically laissez-faire capitalism and political cronyism.

    Therefore, NKG’s post is really nothing more than a ringing endorsement of social democracy.