Lebanon’s Voodoo economics explained
Any outside person who tries to make sense of consumption patterns in Lebanon is confused by what she sees. Lebanon is notorious for low wages (Wanted: Architect with minimum 5 years experience. $800), yet it is impossible to deduce that from observing the cars on the streets, the people in clubs, in restaurants and in fancy shops mushrooming here and there.
My brother, who recently graduated from LAU and tried working in Lebanon, came up with a theory. He concluded that in Lebanon, we have two kinds of employees:
The first kind is made of the people who are stuck in the rat race. They struggle to make ends meet and to save at the end of each month. They sometimes have two jobs. They are always angry at the government and are constantly complaining from low pay. Their ultimate goal is to find a rich spouse, a job in the Gulf or an immigration ticket to Canada.
The second kind is the more interesting one for this post. It’s made of the sort of people who net $900 a month but drive $70,000 cars. They work for pleasure, prestige, or for the pursuit of a sense of accomplishment and growth, but not to pay the bills. They are mostly women who graduated from top universities but whose fathers wouldn’t let them travel. They are a special breed of YUPPIES: their pay-cheques are their disposable incomes, but the essentials (accommodation, utilities, transportation, cell-phone bills, health-insurance) are simply “taken care of.”
This stereotyping is of course just a caricature, but there is nothing that can symbolize the Lebanese economy better than that second category. As economist Marwan Eskandar
explained in Annahar today, the Lebanese economy is a different kind of beast.
In response to an IMF official who predicted for the last 10 years that the Lebanese economy should soon collapse, Mr. Eskandar explained that this would be the logical conclusion for any economist who doesn’t account for that most important of Lebanese factors, Lebanon’s sugar daddy: the mighty Diaspora.
Mr. Eskandar proceeds with figures: 35% of able and willing Lebanese workers work outside of Lebanon. Their remittances to their families exceed the sum of all wages paid in Lebanon. This accounts for the uninterrupted expenditure on consumption and for the surplus in the balance of payments.
Another significant statistic he sites is this one: Bank deposits are almost 60 Billion Dollars (much higher than Lebanon’s GDP,) 83% of which belongs to Lebanese people. This statistic is not necessarily a healthy thing, he concedes, but it’s very important because it injects the economy with an estimated 2.5 Billion Dollars in interests yearly. Add that to the estimated 5 Billion dollars the Lebanese abroad send every year as remittances, and you have 7.5 Billion dollars primarily aimed for local consumption.
Mr. Eskandar warns that focusing the government’s economic efforts on academic studies on the different sectors would be bypassing one of the major pillars of our economy: Lebanese-owned Multinational companies who chose to have their headquarters in Larnaca and Dubai instead of Beirut because of complex politics and excessive red-tape and taxation.
He sites 10 Lebanese family groups with a collective turnover of 12 Billion dollars per year. They employ 100,000 Lebanese who send remittances that cover the salaries and pensions of 500,000 employees inside Lebanon. Those groups work in Industry, like the
Frems and
Ghandours, Hi-tech, like the
Hariris and the
Miquatis, Trade, like the
Daguers and the
Dahers, Air and Sea Transportation services like the
Ghandours and the
Saadehs, Software like the
Eddehs, and Education like the
Bustanis,
Saads and
Abushakras.
Mr. Eskandar asks the politicians to leave their squabbling aside and ask those Lebanese Entrepreneurs about what should be done for them to bring their businesses to Lebanon.
That simple step, he says, will help invite many others to come and invest here.