Egypt Decides.

On Monday November 28th (28/11/11) Egyptians will go to the polls in the first round of voting for the Peoples Assembly. This will be the first such vote since the fall of the Mubarak regime was overthrown in January's revolution and should mark the start of the gradual transfer of power from the interim military leadership to a democratically elected civilian government. Unfortunately the election itself and the political discussion around the election look like they're going to be overshadowed by the recent violent protests. That is a shame because there are many more important but less dramatic issues that the Egyptian people should be considering when deciding who to vote for.

For example there is still the issue of food subsides. Following the food riots of the 1970's the Mubarak regime introduced a massive Communist style system of food subsides for all Egyptians. The system works by the Egyptian government basically controlling the entire market for wheat flour. Some of this flour is turned into Baladi bread which is sold at a loss at government run shops while the rest of flour is just given away. Although a nice idea that means no-one in Egypt goes hungry this system is massively damaging to the Egyptian economy. For a start it is hugely expensive costing around US$1.1 billion per year which is about 6% of Egypt's GDP. Secondly it is destroying the Egyptian farming industry because with only one customer - the government - farmers can only get one price regardless of how good or bad their produce is. Thirdly it distorts the wider economy through what is known as leakage. Basically this is richer people collecting their bread ration but rather then eating it selling it on, often to be used as animal feed. Obviously this drives down the price of other foodstuffs, reduces the profits of the people selling these other foodstuffs and reduces the number of people they're able to employ and the wages they can pay.

So there is a general agreement worldwide that Egypt's food subsidy system needs drastic and urgent reform before it bankrupts the country. The only question is what form that reform should take?

One option is to do away with the subsidies completely so if people can't afford to buy food they simply don't eat. Obviously this will create problems of further food riots and famine. Another option is to introduce means testing. This means that rather then giving subsidies to everyone subsidies are only given to people whose income is so low that they can't afford food. These people are then given ration cards similar to those used in the sugar and cooking oil system which they can show in shops to buy bread at a reduced price. Another option is to adopt a western style welfare system. This involves people who are unemployed or on a low income being given some help by the state. However rather then being given ration cards that allow them to buy certain goods at a price set by the government these people are simply given money that they can spend on whatever they like.

Then there is of course the issue of re-writing the constitution specifically the role of the military. I actually think that by proposing that the military budget appears as a single item and a single total in the national budget Egypt's interim military leadership are doing something very, very clever. So I would support the candidate that can explain what the military leadership are trying to do and how best for the civilian leadership to engage with them.