Tuesday, 1 March 2011
Saudi rulers need Capitalism to survice and prosper
Plenty of people are writing that Saudi Arabia will be fine because there is so much money around to spray on the locals that they won't kick up a fuss. I have a theory that this is not going to work in the medium term and perhaps not even in the short term.
However, this ignores the key drivers of human behaviour. the key one is the search of self-worth and self-esteem. In Capitalist societies the accretion of money does mainly achieve these ends for most people; so the work ethic pays.
In societies which are not capitalistic, like Saudi Arabia, the dynamics are different. The population is given money and does not want to work for low wages (an extreme form of the UK benefits trap); also because they have money anyway it does not generate self-worth relative to others. So people look for other avenues, politics is denied to them by the state too. One such route is religion and seeking solace from the next life. Unsurprisingly Saudi Arab is is the home of some of the worst Islamic extremists including Osama Bin Laden. Perhaps the saying is true, that the devil makes work for idle hands?
The upshot of the above is that it is not the lack of money that causes problems in Saudi, it is the lack of opportunity. Dubai has at least in economic terms tried to build a non oil economy. This has been de-railed somewhat by the Financial crisis, but it is a start. Many other OPEC countries, Iran included, just don't bother as the structural issue caused by the high level of social payments is too hard to overcome.
What the Saudi's should do is promise to build a real economy, with real, non-oil jobs for people to do; look to China for a model if you don;t want the democratic element or to Dubai. It can be done, but the capitalist economy of work and production is the way forward - not handing out subsidies.
Of course, when you are an extended ruling family that inherited all your wealth coming to this realisation is not going to be easy unfortunately.