Guest Post: Shish tawouk? Thank Nasser

Guest post from Bradley Hope, The National‘s Cairo correspondent. 

If it wasn’t for Egypt’s lavish subsidies, Egyptians wouldn’t be eating chicken.

One of the interesting areas in economics is the unintended consequences of policy-making. Under Gamal Abdel Nasser, the army officer who helped lead the 1952 topping of Egypt’s monarchy, the government sought to bring social justice through land redistribution and increased subsidies of basic goods.

But what was meant to be a tool for improving lives for Egyptians has become vastly distorted over time. Bakeries sell much of the subsidized flour to private bakeries, who use it to make high-end pastries at a lower cost. The only losers in the equation are regular Egyptians, who wait in long queues only to find there isn’t enough aish (the Egyptian word for “bread”, which is also the Arabic for “life”) to go around.

These subsidies are a mainstay of Egypt’s economy more than 60 years later. Bread, a staple of the Egyptian diet, is sold for 25 piastres a piece from bakeries that receive subsidized flour from the government.

John Waterbury, the former head of the American University of Beirut and one of the most famous political economists in the US, studied this phenomenon in Egypt since the 1960s. One of his more interesting anecdotes relates to how subsidies for flour led to the creation of Egypt’s chicken farming industry.

Here’s the video of a speech he gave at AUB in 2008.

“The objective was to make sure at least the poor had access to bread, as part of the socialist commitment that certain necessities of life were available to the broadest strata of Egyptian society,” he says.

But “one of the most perverse” impacts was the correlation to the rise of the poultry business.

“Other than pigeons and doves, chicken had never been a big part of the of Egyptian rural production or consumption,” he says. But with Nasser’s reforms, businessman began feeding chickens cheap bread and selling the birds onto middle- and upper-class Egyptians. Nowadays, chicken is an important ingredient in Egyptian cuisine, so much so that it is hard to imagine it was not always the case.

Waterbury describes this as part of a major topic of his study, “the pitfalls of public policy interventions”.

  • By Guest post: The Spectre of 1977 « REBEL ECONOMY on August 19, 2012 at 12:46 pm

    […] Rebel Economy’s past posts on subsidies here (Egypt Subsidy Withdrawal, with graph) and here (Shish tawouk? Thank Nasser). More money is spent on Egypt’s fuel subsidies than healthcare and education combined. […]

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